London - AstraZeneca, the second-largest UK drugmaker, said earnings fell in the first quarter as sales of two of its biggest medicines continued to decline and currency fluctuations took a slice from revenue.
Profit excluding certain items slipped to $1.37 billion, or $1.08 a share, from $1.47 billion, or $1.17 a share, a year ago, the company said in a statement. That matched the average estimate from 13 analysts surveyed by Bloomberg. Total revenue was $6.06 billion, compared with $6.46 billion a year ago.
Sales of two of AstraZeneca’s best-selling products - acid reflux drug Nexium and Crestor, a cholesterol pill - are falling as patents expire. Revenue will slump this year and next before returning to growth in 2017 when new drugs for cancer, diabetes and heart disease propel earnings, the company has said.
AstraZeneca faces pressure on near-term goals and on Chief Executive Officer Pascal Soriot’s pledge to boost annual revenue to $45 billion by 2023 from $26 billion last year, analysts at Barclays Plc including Simon Mather said in a note before the earnings announcement. The company must deal with patent expirations and investment needs, and has “optimistic pipeline expectations”, the analysts said.
“Our pipeline progressed well in each of our therapy areas,” Soriot said in the earnings statement. “We also continued to reinforce our oncology franchise.”
Astra is seeking new revenue sources, including marketing partnerships. The company announced last month that Tokyo-based Daiichi Sankyo will jointly sell Movantik, a drug for constipation resulting from opiates, in the US in exchange for a $200 million upfront fee and sales-related payments of as much as $625 million.
The company said today it will collaborate with Celgene to develop an AstraZeneca immuno-oncology compound called MEDI4736 for blood cancers. Celgene will pay AstraZeneca $450 million upfront.
AstraZeneca now has 72 oncology trials under way, including 31 in immuno-oncology. The company is aiming to submit AZD9291, a potential $3 billion lung cancer treatment, for regulatory submission before July.
The strong US dollar is also crimping AstraZeneca’s earnings, which the London-based company reports in that currency.
The company reiterated its forecast that revenue will decline by a mid single-digit percentage in 2015, at constant exchange rates, with core earnings per share rising by a low single-digit percentage on the same basis.
Soriot made his aggressive sales prediction last year as he successfully fought off a $117 billion takeover attempt by Pfizer. Astra said last month that new medicines for cancer may generate a quarter of sales by 2023, up from 12 percent last year.
One new drug in Astra’s stable is Lynparza, an ovarian cancer treatment approved in the US in December. Sales of the drug in the US reached $4.5 million in March, almost double the amount in February, Bloomberg Intelligence analysts Michael Shah and Sam Fazeli reported yesterday, citing Symphony Health data.
Nexium and Crestor together accounted for a third of AstraZeneca’s 2014 revenue, or $9.2 billion. Analysts expect that to fall to $7.2 billion this year after a generic version of Nexium debuted in February. Crestor’s patent expires in 2016.
Sales of Nexium fell 31 percent to $644 million, while Crestor fell 12 percent. The losses were stemmed by sales growth in Brilinta, an anti-clotting drug, which rose 32 percent to $131 million, and diabetes drugs Bydureon, up 54 percent, and Onglyza, up 13 percent.
Bloomberg