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New generic competitors weighed on revenues at Anglo-Swedish drugmaker AstraZeneca in the first quarter, but the company said it is making strong progress in the development of new drugs in what will be a “pivotal year” for the company’s future.

Revenues were 12 per cent lower than the same period last year, at $5.4bn, in line with analyst forecasts after patent expiries on some of its major drugs led to a decline in sales. A number of new generic competitors to the company’s Crestor cholesterol medication were introduced last July, and AstraZeneca said the poor year-on-year comparisons will recede in the second half of the year. The company said currency movements will add a further negative impact to its full-year revenues on a reported basis.

Overall, the company predicted full-year revenues will decline by “low to mid single-digit” percentage points, while core earnings per share will fall further, by a low to mid teen percentage.

Astra has been betting on new product development to help bring an end to five years of sales declines and offset the impact of the patent expiries. The company has recently sold commercial rights to a number of existing drugs to allow it to focus on research and development in new areas such as immuno-oncology, and earlier this year reported positive results in a series of key trials.

Ratings agency Moody’s yesterday noted that AstraZeneca has one of the strongest pipelines of new products in development among global pharmaceuticals groups.

Today’s results come after a fellow FTSE 100 pharma group GlaxoSmithKline reported a decent start to the year yesterday, but also warned about the potential impact of generic competitors.

However, in a separate report also published on Wednesday, Moody’s warned that growth across the pharmaceuticals industry as a whole is likely to be lower than it previously expected over the next 12 to 18 months.

Moody’s predicted that aggregate earnings before interest, tax, depreciation and amortisation will grow by only one to two per cent over the period, down from its previous forecast of two to three per cent growth.

Pascal Soriot, AstraZeneca chief executive, said:

Our good start to the year supported our guidance for 2017. Notably, emerging markets became our largest region, representing 32 per cent of sales. The pipeline continued to deliver in what we expect will be a pivotal year for AstraZeneca as we announced important developments, in particular in oncology.

The total revenue performance reflected the transitional impact of recent patent expiries, which is expected to recede in the second half of the year. Importantly, we anticipate the significant progress of the pipeline to continue, including our immuno-oncology and targeted treatments. We will also maintain our commitment to drive efficiency across the company to support our efforts to bring new medicines to patients.

Photo: Bloomberg

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