Thursday, January 31, 2013
AstraZeneca's new boss has warned the company faces another tough year as its biggest-selling drugs come up against competition from lower-cost rivals.
Pascal Soriot, who joined Astra from rival Roche in October, announced a 38pc drop in pre-tax profits to 7.7bn US dollars (£4.9bn) for 2012 and said the loss of exclusivity on several brands would continue to hurt performance this year.
His strategy for restoring growth will be revealed in March, with a review expected to focus on "scientific leadership" after a series of recent disappointments over the development of new products.
The impact of generic competition on several brands, including for its best-selling antipsychotic drug Seroquel, meant revenues for last year were down 17pc to 28bn US dollars (£17.75 bn).
For 2013, Mr Soriot said challenging market conditions will persist, particularly as austerity-driven governments look to make further savings on healthcare.
Shares fell by as much as 5pc today after the company forecast a mid-to-high single digit decline in revenues on a constant currency basis this year.
Keith Bowman, equity analyst at Hargreaves Lansdown stockbrokers, said: "Unlike rivals, Astra does not enjoy the cushion of alternative revenue streams such as consumer healthcare.
"Austerity and government efforts to curb health spending are not helping, whilst the general lack of optimism surrounding its developmental pipeline potentially dampens its attractiveness."
Former chief executive David Brennan quit in June following shareholder pressure over recent profit warnings and poor performance.
The Cheshire-based group has been slashing jobs and cutting costs to offset the downturn, having announced its intention to axe 7,300 roles in February, of which 6,300 have now been removed.
Mr Soriot has already suspended Astra's share buy-back programme and announced his first major deal, buying the rights to experimental kidney drugs for up to 272.5 million US dollars (£170m).
It has sold marketing rights for its heartburn pill Nexium to US rival Pfizer in a move that generates 250 million US dollars (£156m) upfront for Astra before milestone and royalty payments.
Mr Soriot added: "Our performance in 2012 reflects a period of significant patent expiry and tough market conditions globally."