29th Apr 2016 09:10
LONDON (Alliance News) - AstraZeneca PLC on Friday reiterated its full-year guidance for 2016 at constant currency, as it said revenue rose 5% in the first quarter on a constant currency basis, driven by a significant increase in externalisation revenue.
The company also outlined a cost cutting plan, with an aim to create benefits of USD1.1 billion by the end of 2017, at the cost of one off USD1.5 billion in restructuring charges, as it looks to increase its investment in its oncology business.
AstraZeneca reported a pretax profit of USD723 million for the quarter, up from USD678 million the year before, as revenue rose at actual exchange rates by 1.0% to USD6.12 billion from USD6.06 billion a year before.
AstraZeneca said it expects an adverse hit to its revenue of around 2% from currency movements based on average exchange rates in the full year 2016.
Revenue was boosted by a big step up in externalisation revenues, which comprise development, commercialisation, partnership and out-licence revenue, such as royalties and milestone receipts, together with income from services or repeatable licences. Externalisation revenue rose to USD550 million, which helped bolster a smaller increase in product sales, up 1%.
The company said its product sales had been hampered by the introduction of generic competitors to its acid reflux treatment Nexium, as well as competition hitting sales of its asthma and chronic obstructive pulmonary disease treatment Symbicort.
AstraZeneca reiterated expectations for its core earnings per share and total revenue both are for a low- to mid-single-digit percentage decline in 2016, including dilutive effects arising from its acquisitions of Acerta Pharma and ZS Pharma during 2015.
AstraZeneca's core results exclude amortisation, impairment, charges and provisions related to restructuring and other exceptional costs.
Core earnings per share was down 7% at constant currency in the first quarter.
AstraZeneca is targeting a total revenue goal of USD45 billion by 2023, and said that it "continues to make significant progress" towards this end.
As part of this plan it will undertake further streamlining of its operations, it said, primarily in commercial and manufacturing. This, along with a drive for greater efficiency, is expected to deliver a "material decline" in its core selling, general and administrative costs in 2016 and 2017.
"We delivered a first-quarter performance in line with expectations, with the growth in total revenue underpinned by the performance of the Growth Platforms. I was particularly pleased with the results in China, where we continued to deliver double-digit sales growth, and with the progress of our New Oncology launches," said Chief Executive Officer Pascal Soriot in a statement.
"As we continue to make encouraging progress with our priorities and our pipeline grows faster than anticipated, we are further sharpening our strategic focus on our main therapy areas, intensifying our efforts in Oncology and accelerating collaborations in opportunistic areas. We are also driving greater efficiency across the organisation to support the advancement of our strategy," Soriot added.
Shares in AstraZeneca were up 0.2% at 3,967.50 pence Friday morning.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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