AstraZeneca, the UK drug giant, posted a massive 45% jump in operating profits for the third quarter to $1.7 billion, or $0.76 a share, as expenses stayed relatively level while revenues grew 9% to $5.8 billion.
Five key growth products led the pack - the antiulcerant Nexium (esomeprazole), Crestor (rosuvastatin) for cholesterol-lowering, the asthma drug Symbicort (budesonide/formoterol), Arimidex (anastrozole) for cancer and its antipsychotic Seroquel (quetiapine) - with combined sales up 25% to $2.7 billion.
Nexium topped the bill, reaping in excess of $1.1 billion for the three-month period, up 18%. However, others also saw good growth: Symbicort jumped 28% to $240 million, Arimidex soared 36% to $303 million and Seroquel rose 32% to $706 million.
But a disappointing uptake of the cholesterol-lowerer Crestor in the crucial US statins market, capturing just 6.8% in the quarter, has set off some warning signals. The drug generated turnover of $325 million for the period, reflecting strong growth of 23%, but substantially undershooting analysts’ expectations of $343 million.
And third-quarter sales growth, although moderate, failed to reach general expectations of $5.91 billion, depressing enthusiasm for the stock, which slipped 0.5% to close at £25.89 on the London Stock Exchange on October 27.
AstraZeneca’s chief executive, Sir Tom McKillop, remained upbeat, commenting: "A continued strong sales performance, especially for the five key growth products, together with benefits arising from productivity initiatives across the entire company has produced an outstanding result for the nine months, and is reflected in an increase in our financial targets for the full year." The company now anticipates earnings per share between $2.85 and $2.95 for the full year.
But industry observers are voicing some concern over the imbalance between the group’s sales and profit growth, claiming that this underscores its reliance on lower spending to boost income. These concerns have been fuelled by recent news that development of two candidate drugs, for heart arrhythmia and incontinence, has been terminated on poor clinical trial results.
In addition, recent patent challenges to the group’s blockbusters Nexium (esomeprazole) [[19/10/05c]] and Seroquel (quetiapine) [[29/09/05a]], which collectively pulled in revenues of $6 billion last year, is also denting confidence in the group’s future performance, adding to rumblings about the state of the group’s long-term pipeline.