AstraZeneca’s new chief executive Pascal Soriot (pictured) endures a baptism of fire as third quarter sales dip by 15 per cent.
The Anglo-Swedish firm’s revenue was down to $6.8 billion compared to this time a year ago, a dip of 15%, due mainly to the loss of exclusivity on several key brands, and costs relating to the discarding of its former Astra Tech and Aptium Oncology units.
Antipsychotic Seroquel IR was a major factor in the revenue slide, dropping 83% to $169 million for the quarter as generic copies flooded the market.
Diabetes drug Onglyza grew by 42% to $84 million whilst its lung drug Symbicort was up 11% to $785 million. Sales of its biggest selling drug Crestor, to help reduce cholesterol levels, fell 3% $1.5 billion.
Geographically AZ did best in emerging markets, were its revenue increased by 6% at constant exchange rates and saw 23% revenue growth in China and in Russia in the third quarter.
But US revenues were down 19% in the third quarter, as a result of the loss of exclusivity for Seroquel IR. The negative impact of US healthcare reform also hit the firm, wiping around $150 million from its revenue stream.
The firm did see an additional $44 million in new revenue, however, from the recognition of the company’s share of the Amylin diabetes portfolio, a deal that began to pay out for AZ in August.
Revenue in Western Europe was down 20% due to the patent expiration on four key products: Seroquel IR, blood pressure medicine Atacand, acid reflux drug Nexium and infection treatment Merrem – all of which accounted for 70% of the revenue decline, with a tough economic climate making up for the rest.
Pascal Soriot, who took up the role of chief executive at AZ earlier this month after leaving Roche, said: “As expected, the company’s financial performance in 2012 largely reflects the on-going impact from the loss of exclusivity for several brands in key markets, as well as the challenges that confront the pharmaceutical industry as a whole.
“Since joining AstraZeneca, I’ve been deeply impressed by the commitment, talent and passion of our people and by their determination to deliver against our targets. As I take up my new role as chief executive, my priority is to restore the company to growth and scientific leadership.”
Analyst comment
Ana Nicholls, healthcare analyst at the Economist Intelligence Unit, was not impressed with the results, but said they were to be expected. In an analyst’s note she said: “AstraZeneca’s results were as disappointing as expected given the effect of patent expiries on the company. The company has reached the edge of a steep patent cliff, with drugs accounting for a fifth of its $33.6 billion sales in 2011 set to lose US patent protection by 2015.”
Nicholls said that investors are ‘waiting impatiently’ for a decisive strategy from AZ’s new leader, who in his previous job helped to oversee Roche’s successful integration of US biotech firm Genentech.
His predecessor, David Brennan, focused his efforts on R&D investment, but the company still has nothing very substantial in its late-stage pipeline, says Nicholls, who adds that Soriot is more likely to focus on in-licensing and partnerships.
“Since he cancelled the share buyback in early October, there have been rumours he is putting money aside for a major acquisition, though the chief executive will only say that he is considering ‘several options’,” she added..
The rumour mill has it that AZ may make a possible bid for the Danish oncology firm Topotarget, who needs funds for lead candidate Belinostat for blood and solid cancers. So far, the firm is keep mum on all takeover rumours.
