AstraZeneca sought to ward off Pfizer from making a fresh approach for the UK drugmaker by highlighting the increased risk of transatlantic inversion deals since the clampdown on US companies using overseas acquisitions to pay less tax.
Pascal Soriot, AstraZeneca chief executive, said new US Treasury rules had “almost entirely removed the tax benefits” available to American companies seeking to shift their tax home offshore.
AstraZeneca on Thursday championed its standalone prospects by announcing a third consecutive increase in quarterly revenues and raising full-year guidance.
Mr Soriot used the upbeat third-quarter results to trumpet AstraZeneca’s “positive momentum” as he tries to convince investors to keep faith with his go-it-alone strategy.
The UK drugmaker rejected a £69.4bn offer from Pfizer, its US rival, in May. But Pfizer would be allowed under UK takeover rules to mount a fresh approach when a six-month cooling off period ends later this month.
Mr Soriot said AstraZeneca’s board would consider any fresh offer and do what was in the best interests of shareholders.
But he said the collapse of US-based AbbVie’s £32bn takeover of UK-listed Shire had sent a “very strong signal that the tax inversion risk is serious”, noting that it had “cost AbbVie a lot of money and caused Shire a lot of distraction”.
Both Pfizer and AbbVie had wanted to use their failed acquisitions to reduce exposure to the 35 per cent US corporate tax rate – the highest in the developed world. More than a dozen such deals have been attempted by American companies this year, prompting a political backlash in Washington.
Ian Read, Pfizer chief executive, last month admitted that inversions had become more difficult but insisted they could still offer “ meaningful value” and said the company continued to “aggressively” consider its acquisition options.
AstraZeneca said full-year revenues were now expected to increase in the low single-digits – the first annual growth for five years – compared with previous guidance for sales to be flat.
However, some investors were disappointed that this had not led to a bigger increase in earnings guidance, sending the stock down 0.6 per cent to £45.91. This leaves it well adrift of the £55 a share offered by Pfizer in May.
Core earnings per share were forecast to decline about 10 per cent over the full year, an improvement from previous guidance but held back by increased spending on research and development.
AstraZeneca is racing to bring new products to market – particularly some promising cancer drugs– as it chases a target set by Mr Soriot during the takeover battle with Pfizer to increase revenues by three quarters over the next decade.
The company said it had 14 products in late-stage development, up from eight last year.
Strong growth in diabetes, respiratory and cardiovascular medicines all helped lift revenues by 5 per cent to $6.54bn, excluding some exceptional items and adjusted for currency fluctuations.
Double-digit expansion in emerging markets, especially China, was another factor, as was the delayed arrival of generic competition for the company’s Nexium heartburn pill.
Core earnings per share were $1.05, down 8 per cent from last year but in line with the market’s consensus forecast.
AstraZeneca has more challenges ahead with looming patent expiries on Nexium as well as its Crestor cholesterol treatment. But 2015 earnings were projected to be no less than the lower end of the upgraded guidance for this year.
Finances will be bolstered by the $325m sale of a rare disease drug called Myalept to Aegerion Pharmaceuticals in a deal announced on Thursday.
Andrew Baum, analyst at Citigroup, said the case for investment in AstraZeneca remained heavily focused on long-term growth prospects as well as the potential for a renewed offer from Pfizer.
Mr Soriot declined to comment on speculation linking him with the vacant chief executive’s seat at Sanofi, AstraZeneca’s bigger French rival, after the firing of Chris Viehbacher last week. But the Frenchman joked that he identified more with Australia – where his family is based – in an apparent effort to distance himself from the job.
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