AstraZeneca Posts $3 Million Loss
July 28 2016 - 04:30AM
Dow Jones News
AstraZeneca PLC posted a loss in the second quarter as it
furiously invested in its next-generation drugs while battling
falling sales of its aging blockbuster Crestor, and took a
restructuring charge relating to a cost-reduction program.
Cambridge, England-based AstraZeneca posted a net loss of $3
million in the three months to June 30, compared with a net profit
of $697 million in the same period a year earlier. Revenue slipped
11% to $5.6 billion. Analysts had forecast net profit of $403
million and revenue of $5.6 billion.
The net loss reflects a $308 million restructuring charge
relating to a recently launched program to slim down the company's
sales force by 2018. The program is expected to cost $1.5 billion
and yield $1.1 billion in net savings from 2018 onward.
AstraZeneca's newer drugs target more specialized disease areas
that require fewer sales representatives.
Core operating profit, a measure that strips out one-time gains
and losses, fell 22% to $1.4 billion, beating market expectations
of $1.3 billion.
The strength of the dollar dented Astra's results. Stripping out
currency effects, revenue fell 10% and core operating profit
declined 21%.
Astra's downbeat results reflected a steep decline in sales of
the company's cholesterol-lowering drug Crestor after a cheap
copycat version launched in early May.
Sales of the drug, Astra's biggest seller, declined 29% in the
quarter to $926 million, dragging overall product sales down 5% at
constant exchange rates to $5.5 billion. Falling sales of another
old blockbuster, Nexium for heartburn, also weighed on total
sales.
The launch of generic Crestor marks the end of a succession of
patent expirations for Astra's old blockbusters that have dented
revenue and earnings for several years.
AstraZeneca is relying on a string of new medicines to return
the company to growth and fulfill Chief Executive Pascal Soriot's
pledge to increase sales to $45 billion by 2023, compared with $26
billion in 2015. That goal was a key plank in his defense against
an unwelcome and ultimately unsuccessful takeover bid by Pfizer
Inc. in 2014.
Some of those are already generating sales growth. AstraZeneca
said revenue from its so-called growth platforms increased 8% to
$3.7 billion in the quarter. That includes revenue from
recently-launched respiratory, diabetes and cancer drugs, its new
heart medicine Brilinta and sales in the emerging markets and
Japan.
AstraZeneca also generated $134 million in the quarter by
unloading de-prioritized research programs to other companies in
exchange for upfront payments and royalties.
The company backed earlier guidance to say it expects a low to
mid-single digit decline for both revenue and core earnings per
share.
Write to Denise Roland at Denise.Roland@wsj.com
(END) Dow Jones Newswires
July 28, 2016 04:15 ET (08:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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