The news that the European patent watchdog has revoked a key patent on its blockbuster asthma drug Symbicort has hit AstraZeneca shares hard and a leading analyst has downgraded the stock.

The company was taken aback by the news that the European Patent Office appeals board had made a final ruling that the patent covering the manufacture of Symbicort (formoterol and budesonide) has been revoked, following an appeal from a group of generic firms including Liconsa, Miat, Generics UK and Norton Healthcare, as well as Chiesi Farmaceutici, Zambon and Yamanouchi. This is a major blow given that that the inhaler generated $1.18 billion in worldwide sales in 2006, and the vast majority came from Europe.

AstraZeneca chief executive David Brennan said that “although we are clearly disappointed” with the EPO’s decision, “Symbicort will remain an important part of our growth potential over the next few years in Europe and over the long term in other major markets, including the USA and Japan”. He added that the ruling will not have “an immediate impact in the EU or any impact on the USA or Japanese patents” and the firm noted that the product is also protected by other patents. These include one covering the Turbohaler delivery device which is valid until 2019 and data exclusivity valid until at least August 2010 in most major European markets.

However this optimism is not shared by Gbola Amusa at UBS who has downgraded the stock from ‘neutral’ to ‘sell’. In a research note, the analyst wrote that the Symbicort news, “on its own, is worth at least 2% downside based on free cash flows”, but the firm also faces a host of problems elsewhere, notably possible patent expiries on the antiulcerant Nexium (esomeprazole) and Seroquel (quetiapine) for schizophrenia.

“The [Symbicort] news may focus the market on other big risks in AstraZeneca that we believe are largely ignored and will lead to further discounting in the name,'' Mr Amusa concluded.

Manufacturing of some chemicals outsourced to China

Meantime, The Times has reported that AstraZeneca has begun to outsource the production of lactam, one of the active ingredients used in the manufacturing of Seroquel, to contract manufacturers in China as part of its bid to cut costs by $900 million by 2010.

A company spokesperson told the newspaper that the outsourcing is only in its start-up phase, saying “there are still many steps involved, including internal assurance that standards are met, followed by submissions to appropriate regulatory agencies for approval”.