AstraZeneca undershoots expectations

Restructuring and higher amortisation helped depress pre-tax profits for the first quarter by 5 per cent to $2.1bn (£1.1bn) at AstraZeneca.

The Anglo-Swedish pharmaceutical company maintained its guidance on the back of “core” profits up 12 per cent to $2.7bn, but charges and pressure on sales delivered figures below market expectations.

The shares, which have fallen nearly 24 per cent over the past year, closed down 12p at £21.20.

The weaker dollar lifted sales 10 per cent higher than the first quarter last year to $7.7bn and allowed AstraZeneca to raise 2008 core earnings per share guidance to $4.45-$4.75.

David Brennan, chief executive, said: “The first-quarter performance puts us on track to achieve our full-year financial targets.”

He also stressed AstraZeneca’s regulatory filing in the US for the drug motavizumab, and the stability brought about by the recent settlement of a patent dispute with Ranbaxy of India over the risk of a launch of generic Nexium, its pivotal ulcer drug, in the US.

However, Nexium sales fell 9 per cent globally and 15 per cent in the US, on the back of new commercial
policies with higher rebates that maintained volumes
at the expense of lower prices.

The company indicated a “mid single-digit decline” in sales for the full year.

In a research note entitled “A step in the wrong direction”, analysts at UBS, the investment bank, wrote that the “ramifications of [the first-quarter results] could be far reaching”, with the decline in Nexium sales “an irreversible trend likely to lead to further downward revisions”.

Sales from MedImmune of the US, acquired last year, helped offset declines from Toprol XR and there was strong growth in emerging markets, notably in Asia.