AstraZeneca warned on Thursday that revenue and earnings would drop this year due to the arrival of cheap generic rivals to Crestor, its top-selling cholesterol drug, which will offset growth in sales of newer medicines.
The drugmaker, which saw off a takeover attempt by Pfizer in 2014, is expected to see a trough in profits this year and next before a hoped-for resurgence on the back of a promising pipeline of experimental drugs.
For 2016, AstraZeneca said that would mean a low to mid single-digit percentage decline in both revenue and core earnings per share, which exclude certain items, at constant exchange rates.
With currencies expected to have a further adverse impact of about 3 per cent, the downbeat outlook had dragged the shares down.
Many investors had expected AstraZeneca to predict broadly flat earnings in 2016, in part because long-term management incentives are tied to keeping earnings at or above $4.20 a share. The new guidance implies a figure of about $4.
Chief executive Pascal Soriot said AstraZeneca faced a "transitional period" due to the expiry of Crestor's US patent in May, but the company was poised for a comeback and it would continue to plough investment into drug research.
R&D spending this year is expected to stay around 2015 levels.
“Clearly, 2016 will be a challenging year due to the loss of exclusivity for Crestor in the United States. It is a very, very big product,” Mr Soriot said.
But he reiterated AstraZeneca’s ambition to build a business with annual sales of at least $45 billion by 2023, up from $24.7 billion in 2015.
Revenue in the fourth quarter of last year fell 5 per cent to $6.4 billion, hit by earlier drug patent expiries, generating core earnings per share of 94 US cents, up 26 per cent. Industry analysts had on average forecast sales of $6.29 billion and earnings of 95 cents.
– (Reuters)
