28th Apr 2005 10:00
AstraZeneca PLC28 April 2005 AstraZeneca PLCFirst Quarter Results 2005 "Record quarterly profits, with first quarter Earnings per Share up 33 percent.Sales up 9 percent." Financial Highlights (Financial statements prepared in accordance withInternational Financial Reporting Standards) Group 1st Quarter 1st Quarter Actual CER 2005 2004 % % $m $m Sales 5,743 5,074 +13 +9 Operating Profit 1,453 1,052 +38 +34 Profit before Tax 1,486 1,084 +37 +34 Earnings per Share $0.63 $0.47 +34 +33 All narrative in this section refers to growth rates at constant exchange rates(CER) • First quarter sales were $5,743 million, up 9 percent. Underlying sales of key growth products up 33 percent. • Progress on productivity continues; combined R&D and SG&A expenditure down 4 percent. • Operating profit in the first quarter increased 34 percent to $1,453 million. • Free cashflow of $1,322 million in the quarter; share repurchases in the first quarter totalled $481 million. • NexiumTM sales were $1,055 million in the first quarter, up 11 percent. Intravenous formulation approved in the US on 31 March 2005. • CrestorTM sales in the first quarter were $273 million, and have reached $1,052 million in the last 12 months. • SeroquelTM sales were $633 million in the first quarter, up 39 percent. • ArimidexTM sales were $256 million in the first quarter, up 49 percent. Sir Tom McKillop, Chief Executive, said: "These record profits derive from astrong sales performance, especially for our key growth products, and fromongoing productivity improvements in R&D and SG&A. This excellent start to theyear has set us on track to deliver our financial targets for the year." London, 28 April 2005 Media Enquiries: Steve Brown/Edel McCaffrey (London) (020) 7304 5033/5034 Staffan Ternby (Sodertalje) (8) 553 26107 Rachel Bloom-Baglin (Wilmington) (302) 886 7858 Analyst/Investor Enquiries: Mina Blair (London) (020) 7304 5084 Jonathan Hunt (London) (020) 7304 5087 Staffan Ternby (Sodertalje) (8) 553 26107 Ed Seage/Jorgen Winroth (US) (302) 886 4065/(212) 579 0506 Business Highlights All narrative in this section refers to growth rates atconstant exchange rates (CER) unless otherwise indicated Sales in the first quarter increased 9 percent at CER, or 13 percent on an asreported basis (including positive exchange rate benefit of 4 percent). Salesoutside the US were up 9 percent. Sales in the US in the first quarter were up10 percent. Adjusted for inventory movements (principally wholesalerstockbuilding in the first quarter 2004) estimated underlying sales growth inthe US was 17 percent. Good management of expenditure in R&D and SG&A continues to benefit operatingresults. In aggregate, these expenses were 4 percent lower at CER than firstquarter 2004 (and broadly unchanged as reported). Operating profit was up 34percent. Earnings per share in the first quarter were $0.63 versus $0.47 in2004, an increase of 33 percent. NexiumTM sales were $1,055 million in the first quarter, up 11 percent.Dispensed tablet volume in the US was up 15 percent, whereas reported salesgrowth was up 3 percent as a consequence of wholesaler stockbuilding in thefirst quarter 2004. NexiumTM sales outside the US were up 30 percent. CrestorTM sales in the first quarter were $273 million, more than double thesales in the first quarter last year. In March, CrestorTM share of newprescriptions in the US statin market was 6.0 percent, up from 5.8 percent inJanuary 2005. On 14 March, based on a thorough analysis of clinical trialsafety data and post-marketing data, the US Food and Drug Administration (FDA)formally denied Public Citizen's Health Research Group's (HRG) petition toremove CrestorTM from the market, and as part of their formal response,reaffirmed that CrestorTM is safe and effective when used according to theprescribing information. Sales of IressaTM were $81 million in the first quarter. Sales in Asia Pacificwere up 18 percent which includes sales made since launch in China in February.Sales in Japan were down 8 percent. Sales declined by 41 percent in the USsince the announcement of the ISEL trial results, where promotion of IressaTMremains voluntarily suspended whilst the FDA completes its assessment of theimplications of the full ISEL trial data set. Good sales growth in the first quarter was achieved for SymbicortTM (up 23percent), CasodexTM (up 16 percent), and SeroquelTM (up 39 percent). ArimidexTMsales were up 49 percent to $256 million. In the US, ArimidexTM newprescription share of hormonal treatments for breast cancer reached 31.4 percentin March, a market-leading 1.3 percentage point increase since December 2004. Future Prospects The Company continues to anticipate full year earnings per share in the range of$2.35 to $2.50. In contrast to the quarterly progression of earnings last year,the growth rate in earnings per share in 2005 is anticipated to be stronger inthe first half than in the second half of the year. Disclosure Notice: The preceding forward-looking statements relating toexpectations for earnings and business prospects for AstraZeneca PLC are subjectto risks and uncertainties, which may cause results to differ materially fromthose set forth in the forward-looking statements. These include, but are notlimited to: the rate of growth in sales of generic omeprazole in the US,continued growth in currently marketed products (in particular CrestorTM,NexiumTM, SeroquelTM, SymbicortTM, ArimidexTM and CasodexTM), the growth incosts and expenses, interest rate movements, exchange rate fluctuations and thetax rate. For further details on these and other risks and uncertainties, seeAstraZeneca PLC's Securities and Exchange Commission filings, including the 2004Annual Report on Form 20-F. Sales All narrative in this section refers to growth rates at constant exchange rates(CER) unless otherwise indicated Gastrointestinal First Quarter CER % 2005 2004 NexiumTM 1,055 935 +11LosecTM/ PrilosecTM 427 540 -25Total 1,499 1,496 -3 • In the US, dispensed tablet volume for NexiumTM increased by 15 percent in the first quarter, nearly double the rate of growth for the prescription PPI market. Market share of total prescriptions in March reached 27.5 percent, up nearly 2 points over March 2004. Reported sales for NexiumTM in the US were up just 3 percent as a consequence of wholesaler stocking which occurred in the first quarter last year. Although pricing had little impact on sales growth this quarter, the Company expects that volume growth for the full year will be partially offset by lower realised prices. • Sales of NexiumTM in markets outside the US were up 30 percent in the first quarter. • PrilosecTM sales in the US were down 34 percent in the first quarter. Sales of LosecTM outside the US were down 22 percent, although sales in Japan continue to grow (up 22 percent). Cardiovascular First Quarter CER % 2005 2004 SelokenTM / Toprol-XLTM 408 333 +21AtacandTM 235 209 +7PlendilTM 93 111 -19ZestrilTM 87 105 -22CrestorTM 273 129 +106Total 1,257 1,055 +15 • Sales of SelokenTM/Toprol-XLTM were up 21 percent in the first quarter, chiefly on the 24 percent increase in sales of Toprol-XLTM in the US. • Sales for AtacandTM were up 7 percent in the first quarter. Sales outside the US were up 19 percent. Total prescriptions for AtacandTM in the US were down 9 percent, but reported sales were down 18 percent as a result of wholesaler stocking in the first quarter 2004. • On 23 February, AtacandTM became the first angiotensin receptor blocker in the US to receive regulatory approval for heart failure, based on data that showed reductions in both cardiovascular mortality and hospitalisations in patients with heart failure. • CrestorTM sales in the first quarter were $273 million, up 106 percent versus the first quarter last year. Sales in the last 12 months reached $1,052 million. • In markets outside the US, CrestorTM sales were $119 million in the quarter. Volume share of the statin market is now at double-digit levels in Canada (12.2 percent), Italy (11.8 percent), and the Netherlands (10.4 percent). Good progress continues in France, with market share reaching 5.0 percent in the latest month. Market share in the UK is 3.5 percent, down slightly from that reported at the year end. • In the US, CrestorTM sales in the first quarter were $154 million. For the month of March, CrestorTM share of new prescriptions in the US statin market was 6.0 percent, up from 5.8 percent in January. In the week ending 15 April, CrestorTM share of new prescriptions was 6.2 percent. Market share in the dynamic segment (new and switch patients) was 8.3 percent. • On 14 March, based on a thorough analysis of clinical trial safety data and post-marketing data, which involved more than 15 million prescriptions and 4 million patients, the US Food and Drug Administration formally denied Public Citizen's Health Research Group's (HRG) petition to remove CrestorTM from the market. • The launch of CrestorTM in Japan, announced on 27 April, will be followed by implementation of a programme of Post-Marketing Surveillance studies at specific medical institutions. The programme will take approximately 18 to 24 months to complete. Significant sales of CrestorTM in Japan are not anticipated before completion of an interim report in late 2006 which will determine the subsequent full-scale launch schedule. Respiratory and Inflammation First Quarter CER % 2005 2004 SymbicortTM 247 188 +23PulmicortTM 314 282 +8RhinocortTM 92 81 +13AccolateTM 28 30 -7OxisTM 23 25 -16Total 746 648 +11 • Sales of SymbicortTM in the first quarter were up 23 percent to $247 million. In February, SymbicortTM market share in the fast growing combination products segment of the asthma and COPD markets was up more than 2 points versus the same month last year. • On 9 March, the Company announced that the European Patent Office has ruled that the European combination patent for SymbicortTM is still valid, despite a challenge from several generic manufacturers. • PulmicortTM sales were up 8 percent, as sales increased by 11 percent in the US, and increased by 5 percent elsewhere. • Sales of RhinocortTM were up 13 percent. Sales growth in the US (up 20 percent) was ahead of the prescription trend (down 4 percent) as a result of wholesaler destocking in the first quarter 2004. Oncology First Quarter CER % 2005 2004 CasodexTM 277 229 +16ZoladexTM 231 213 +3ArimidexTM 256 166 +49IressaTM 81 93 -15FaslodexTM 29 26 +8NolvadexTM 28 31 -13Total 905 762 +14 • CasodexTM sales were up 16 percent in the first quarter, fuelled by an 18 percent growth in markets outside the US, including a strong performance in Japan (up 21 percent). Sales in the US were up 11 percent in the quarter, ahead of estimated underlying sales growth of around 4 percent. • ArimidexTM sales increased by 49 percent in the first quarter, with strong growth recorded in the US (up 63 percent), Europe (up 42 percent) and Japan (up 38 percent). ArimidexTM is the only aromatase inhibitor indicated for primary adjuvant treatment of early breast cancer. • In the US, ArimidexTM new prescription market share for hormonal treatments for breast cancer reached 31.4 percent in March, a market-leading 1.3 percentage point increase versus December 2004. • Sales for IressaTM in the first quarter were $81 million, down 15 percent. Sales in Asia Pacific were up 18 percent, which includes sales since launch in China in February. Sales in Japan were $26 million, 8 percent below the first quarter last year. During the first quarter, IressaTM was reviewed by an Expert Committee advising the Japanese Ministry of Health, Labour and Welfare, who recommended no change to the indications for use in Japan, and recommended that prescribing information be updated to make reference to the IressaTM -specific treatment guidelines issued by the Japanese Lung Cancer Society. • IressaTM sales in the US declined by 41 percent to $30 million in the first quarter. It is believed that these sales largely represent prescriptions dispensed to previously treated patients who, in consultation with their physician, wish to continue treatment with IressaTM. In the US, promotion of IressaTM remains under voluntary suspension whilst discussions with the FDA continue. In March, new prescriptions for IressaTM in the US are nearly 70 percent below the level in November 2004. Neuroscience First Quarter CER % 2005 2004 SeroquelTM 633 448 +39ZomigTM 68 95 -32DiprivanTM 107 122 -14Local anaesthetics 127 130 -7Others 17 17 -6Total 952 812 +14 • SeroquelTM sales in the first quarter reached $633 million, up 39 percent, on good growth in the US (up 35 percent), Europe (up 56 percent), Canada (up 35 percent), and Asia Pacific (up 20 percent). • In the US, the 35 percent growth in SeroquelTM sales was somewhat ahead of estimated underlying sales growth of around 28 percent as wholesalers edged up inventories toward the upper end of the target range. In March, new prescription market share in the US was 28.6 percent, up a full percentage point versus December 2004 and 2.8 points clear of its closest competitor. • The Company recently received a request from the FDA that the product labelling for all atypical antipsychotics, including SeroquelTM, be updated to include a black-box warning noting an increased risk of mortality in elderly patients with dementia-related psychosis taking these drugs, compared to patients taking placebo. The proposed warning also notes that these drugs are not approved for treatment of elderly patients with dementia-related psychosis. The Company is reviewing the FDA request. • Sales of ZomigTM in markets outside the US were up 12 percent in the first quarter. • In the US, supply sales of ZomigTM to Medpointe Inc. were only $9 million (down 80 percent) in anticipation of the end of the partnership arrangement on 31 March. Effective 1 April 2005, AstraZeneca assumed full responsibility for the US commercialization of ZomigTM. Geographic Sales First Quarter CER % 2005 2004 US 2,500 2,279 +10Europe 2,165 1,875 +8Japan 337 290 +12RoW 741 630 +11 • Underlying sales growth in the US in the first quarter was estimated to be 17 percent when adjusted for the wholesaler stocking that occurred in the first quarter 2004. The key growth drivers in the quarter were NexiumTM, CrestorTM, SeroquelTM, Toprol-XLTM and ArimidexTM. • Sales growth in Europe was driven by NexiumTM (up 31 percent), oncology products (up 22 percent), SeroquelTM (up 56 percent), SymbicortTM (up 23 percent) and CrestorTM (up 115 percent). • First quarter sales in Japan reflect a strong performance for oncology products (up 14 percent) and LosecTM (up 22 percent). Financial Review All narrative in this section refers to growth rates at constant exchange rates(CER) unless otherwise indicated Operating Results Reported sales increased by 13 percent and operating profit by 38 percent. Atconstant exchange rates, sales increased by 9 percent and operating profit by 34percent. In the US, sales in the quarter were unaffected by wholesaler inventorymovements, as inventory levels were near target levels specified in theInventory Management Agreements. Sales in the first quarter 2004, however, didbenefit from inventory movements. Adjusting for these, underlying US salesgrowth is estimated at 17 percent, compared with 10 percent reported growth.European sales benefited by an estimated $50 million due to accelerateddeliveries at the end of the quarter, ahead of a brief shut down to allow asystem upgrade. The weakness of the US dollar benefited EPS by around 1 cent. In comparison toquarter one last year, the dollar weakened against the euro (5 percent),benefiting sales, and also against the Swedish krona (6 percent) and sterling (3percent), increasing costs. Should the exchange rates stay at current levelsfor the remainder of the year, no further benefits are expected to accrue. Reported operating margin increased by 4.6 percentage points from 20.7 percentto 25.3 percent. Currency depressed operating margin by 0.1 percentage points,implying an underlying margin improvement of 4.7 percentage points. Gross margin decreased by 1.8 percentage points to 75.4 percent of sales.Payments to Merck at 4.5 percent of sales were 0.5 percentage points lower thanfirst quarter last year. Currency benefited gross margin by 0.2 percentagepoints which, combined with Merck, implies an underlying decline in margin of2.5 percentage points. The resulting underlying decline in gross margin isattributable to IFRS fair value adjustments of foreign exchange contracts andtermination of the Medpointe ZomigTM distribution agreement in the US. In aggregate, R&D and SG&A expenses of $2,872 million decreased by 4 percentover last year due to continued disciplined management of expenditure and somephasing to the benefit of the first quarter. In comparison to the first quarterlast year, R&D and SG&A expenditure decreased by 3 and 4 percent respectively,and combined added 6.7 percentage points to operating margin. Fair value adjustments arising from financial instruments amounted to a $44million charge in the quarter, of which $23 million was charged to cost ofsales, $22 million was charged to R&D, with a $1 million benefit to interestincome. Interest and Dividend Income Net interest and dividend income for the quarter was $33 million, compared with$32 million for the same period last year. This includes net interest income of$5 million arising from employee benefit fund assets and liabilities as requiredby IAS 19, "Employee Benefits". Taxation The tax rate for the quarter is 29.8 percent compared to 26.3 percent for thefirst quarter of 2004. The increase is attributable to a different geographicalmix of profits and the impact of IFRS. For the full year the tax rate isanticipated to be around 29 percent. Cash Flow Cash generated from operating activities in the quarter was $1.5 billion, about$500 million higher than in the corresponding quarter of 2004. Higher tradingprofits and lower working capital outflows were the main drivers of thisimprovement, offset by a slight increase in tax paid. Cash outflows from investing activities of $29 million in the first quartercompare with $555 million outflows in the equivalent period in 2004. Netcapital expenditure, including fixed asset investments, fell by $73 million to$226 million. However, the change was primarily as a result of short termmanagement of funds on deposit - inflows in the current quarter of $158 millioncontrasted with outflows of $265 million in the first quarter of 2004. Free cash flow (which represents cash flows before returns to shareholders andfinancing and which therefore excludes the effects of short term management offunds) for the period was $1,322 million compared to $721 million in the firstquarter of 2004. After accounting for net issues and repurchases of shares of$477 million, the $1,079 million dividend payment to shareholders and foreignexchange effects, there was a $88 million decrease in cash and cash equivalents. Cash and cash equivalents at 31 March 2005 amounted to $3,839 million comparedto $742 million at 31 March 2004. The apparent increase reflects a movement ofshort term deposits into cash equivalents in the latter part of 2004. Share Repurchase Programme During the quarter 11.95 million shares were repurchased for cancellation at atotal cost of $481 million. The total number of shares in issue at 31 March 2005 was 1,633 million. Calendar 28 April Annual General Meeting 28 July Announcement of second quarter and half year results 27 October Announcement of third quarter and nine months results Sir Tom McKillopChief Executive This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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