UK’s second largest drugmaker beats analyst estimates as blood thinner Brilinta helps offset the falls in its older medicines
AstraZeneca is investing more in research and development to prop up its pipeline Photo: Bloomberg
By Ashley Armstrong9:33AM BST 30 Jul 2015 CommentsComment
Strong sales of AstraZeneca’s blood thinning medicine, Brilinta, has helped offset declines in its older drugs leading the UK pharmaceuticals company to beat expectations for the first half of the year.
AstraZeneca, which fended off a £60bn bid approach from US rival Pfizer last year, said that revenues dropped by 6pc to $12.3bn during the first half of the year.
Pre-tax profits also slipped from $1.5bn to $1.3bn in the first six months ending 30 June.
However, the drug maker increased its revenue forecast for the year and said it expects a low single-digit percentage decline, against a mid-single digit previously.
The uplift in revenue guidance comes as AstraZeneca’s chief executive, Pascal Soriot, attempts to turn the business round by accelerating investment in research and development, particularly in cancer treatment, to bolster the UK drugmaker’s pipeline.
The drug maker said that it has recently gained US regulatory approval for a lung cancer drug Iressa and regulatory submissions for another lung cancer drug in the US and EU as well as an ovarian cancer treatment. In June the company showed that its AZD9291 drug reduced the size of lung cancer tumours in 40pc of patients.
AstraZeneca has for years been dogged by questions from investors around how it will replace lost revenue streams as its billion dollar drugs lose their patent protection.
AstraZeneca said that it had increased its spending on R&D from $1.3bn to $1.4bn year-on-year.
In the US sales fell by 9pc to $4.5bn. And sales of its branded drugs dropped by 2pc after new competition from a copycat rival to its blockbuster heartburn treatment Nexium caused sales of the drug to fall by 32pc. Sales in Europe dropped by 20pc, or 5pc on a constant currency basis, to $2.6bn
Sales of Brilinta, its blood thinner drug, rose by 27pc to $275m, helping to offset the 11pc revenue declines of its former blockbuster cholesterol medicine Crestor, which still generates $2.4bn in sales, ahead of analyst estimates.
Nexium, Crestor and Seroquel, for bipolar disorder, made $10.6bn in sales last year, over 40pc of AstraZeneca’s revenues. Analysts expect that sum to halve by 2017 as the drugs face generic competition.
Smith & Nephew
Elsewhere, Smith & Nephew, the orthopaedics company, reported a 5pc lift in half-year revenues to £1.2bn on the back of strong sales of knee implants and its woundcare business.
The medical devices business said that its knee implant division grew sales by 7pc while its advanced woundcare division saw a 12pc uptick in sales.
The company also said that its emerging markets business now accounted for 16pc of group revenue, compared with 8pc in 2010. Smith & Nephew also said that its trading profits were up 6pc to $512m while it had increased its profit margin by 70bps to 22.5pc as part of its efficiencies drive.
“In the first half of 2015, we delivered higher underlying revenue growth, trading profit margin and earnings year-on-year,” said Olivier Bohuon, chief executive of Smith & Nephew. “We made a number of acquisitions, strengthening our technology and product portfolio and emerging markets business. Our efficiency programmes are progressing to plan, enhancing the bottom line.”