AstraZeneca posted a 26% hike in operating profits in the fourth quarter of 2005, ahead of analysts’ expectations, but said prospects for the coming year are clouded by the possibility of early generic competition to blood pressure drug Toprol XL.
The Anglo-Swedish drugmaker reported an 8% hike in sales to $6.28 billion in the quarter, driven by robust growth for a core of five key products, while net income rose 30% to $6.7 billion as cost-control measures took effect.
But loss of a crucial patent infringement lawsuit for Toprol XL (metoprolol succinate) in the USA last month is giving AstraZeneca investors the jitters, and the strong financial figures could not prevent a 3.5% fall in the company’s shares yesterday to £26.38.
The court defeat opens the way for generic firms to launch their own versions of the $1.74 billion drug, although no copycat versions have yet been granted approval, and AstraZeneca is appealing the verdict.
Jonathon Symonds, AstraZeneca's chief financial officer, told investors yesterday that generic competition to this product could cost the firm 45 cents a share in 2006, and the fall in the company’s share price seemed to occur because this exposure was higher than expected. Assuming Toprol XL evades competition, AstraZeneca is predicting earnings per share in the $3.40-$3.60 range for 2006.
For the full year sales rose 12% to $24 billion, on the back of a 27% combined hike in turnover for gastrointestinal drug Nexium (esomeprazole), Seroquel (quetiapine) for schizophrenia, lipid-lowerer Crestor (rosuvastatin), Arimidex (anastrozole) for breast cancer and combination asthma treatment Symbicort (budesonide and formoterol). EPS came in at $2.91.
Nexium sales rose 18% to $4.63 billion in 2005, while Seroquel rocketed 36% to $2.76 billion - although AstraZeneca is having to defend both of these products in court from generic challenges.
Leading the charge in terms of growth rates was Arimidex, up 44% to $1.18 billion, while Crestor gained 38% to $1.27 billion, although it remains to be seen whether it will be able to maintain this growth rate once generic versions of Merck & Co’s Zocor (simvastatin) and Bristol-Myers Squibb’s Pravachol (pravastatin) reach the US market.
Symbicort climbed 22% to $1 billion, and could provide a major upside in 2006 if it can win approval in the USA.
David Brennan, AstraZeneca’s chief executive, described the firm’s financial performance in 2005 as ‘excellent’, but cautioned that it still has more to do to strengthen its pipeline in the wake of recent late-stage product disappointments.
A hole was knocked in the firm's near-term product pipeline after antithrombotic drug Exanta (ximelegatran) was rejected by the FDA towards the end of 2004, while there have been delays and terminations for other projects which led to R&D spending actually dipping 4% in 2005 to around 14% of net sales. Brennan said he expected this proportion to rise in 2005.
On the positive side, “we have now six products in Phase III development where last year at this time we just had two,” he said. AstraZeneca signed four major deals to bring in new products in December 2005.
