5th Nov 2015 12:42
LONDON (Alliance News) - Drugmaker AstraZeneca PLC upgraded its revenue guidance for 2015 again on Thursday, having done the same at its interim results, as the decline in sales for the third quarter met expectations and as the group continued to invest in its drug pipeline in order to head off further generic challenges it will face in 2016.
Shares in the group were up 4.4% to 4,307.50 pence on Thursday, the best performer in the FTSE 100.
AstraZeneca upgraded its revenue guidance for the full year in constant currencies to expectations for a broadly flat performance against 2014, having previously guided to a low-single-digit percentage decline. That decline had itself been an upgrade issued at the company's interim results in July, after it had previously guided to a mid-single-digit percentage decline.
The group also upgraded its core earnings per share guidance for the year, a closely-watched gauge of the company's performance. It now expects a mid-to-high single-digit percentage increase year-on-year for 2015, upgraded from its prior expectation for a low single-digit increase.
Total revenue in the first nine months fell to USD17.43 billion from USD19.41 billion, due to lower product sales but offset by better externalisation revenue, which rose to USD875.0 million from USD419.0 million. Externalisation revenue includes development, commercialisation, partnership and out-licence revenue.
Pretax profit for the group rose to USD2.27 billion from USD1.83 billion, as an improvement in the group's gross margin and a big rise in its operating income from royalties and disposals offset the lower sales and the higher research and development costs.
Product sales for the first nine months of the year fell to USD17.43 billion, compared to a USD19.4 million a year earlier, primarily due to a sharp sales decline for its Nexium acid reflux treatment in the US, where it has been suffered from the introduction of generic competitors since February.
For the first nine months, Nexium sales fell 26% to USD1.93 billion, with the majority of that decline coming in the US, where sales dropped 48% following the loss of exclusivity, which directly hit both pricing and volumes. Sales in Europe also fell 10% but emerging markets sales for the drug were broadly stable, while Latin American sales rose 19%, an exception to the overall performance. The drug also performed well in Japan, where it has been co-commercialised by AstraZeneca and partner Daiichi Sankyo Co Ltd, the Japanese drugmaker.
Product sales were lower across the board in the first nine months on a reported basis, however, though broadly rose in constant currencies. The group's Infection, Neuroscience and Gastrointestinal drugs, in which Nexium is categorised, saw sales fall 24% on a reported basis in the first nine months, the worst performing division. Sales for the division also fell in constant currencies, down 18%.
But constant currency growth was flat for the first nine months for the group, as those declines were offset by AstraZeneca's other units, though adverse currency effects dragged down the reported figures.
The group's Respiratory, Inflammation & Autoimmunity product sales were boosted by a strong performance for asthma treatment Pulmicort, while its Oncology unit saw robust sales for its Zoladex prostate cancer and Faslodex breast cancer treatment products.
Sales for products in its Cardiovascular & Metabolic Disease portfolio diverged wildly, as type 2 diabetes treatment Farxiga sales nearly doubled and unstable angina treatment Brilinta and Bydureon, also a type 2 diabetes treatment, both performed well, though this was offset by its legacy brands, including anti-cholesterol statin Crestor.
Crestor is a key concern for AstraZeneca going into 2016, as it is set to fall off the patent cliff and face generic competition which, akin to Nexium, will hit pricing and sales volumes. Crestor is the company's biggest-selling product but AstraZeneca is confident that its pipeline of new drugs and the investments it is making in its future products will help to offset this from 2017 on.
"Our financial performance in the year to date, including an 8% increase in core EPS in the third quarter, underpinned today's upgrade to full-year guidance. 2016 will be a pivotal year in our strategic journey as we face the impact of loss of exclusivity to Crestor in the US," said Pascal Soriot, AstraZeneca's chief executive.
"Looking ahead however, the continued performance of our growth platforms and upcoming launches will combine with our increasing focus on costs and cash generation to help offset short-term headwinds and return AstraZeneca to sustainable growth," he added.
By Sam Unsted; [email protected]; @SamUAtAlliance
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