AstraZeneca Boosted by Licensing Deals

By Denise Roland 

LONDON-- AstraZeneca PLC on Thursday reported an increase in second-quarter revenue, driven by income from licensing deals, though profit continued to fall as the company plowed heavy investment into new drugs it hopes will replace its old blockbusters.

The U.K.-based drug maker said revenue increased 2% at constant currency to $6.31 billion in the second quarter, while core operating profit, which strips out certain one-off items, fell 4% at constant currency to $1.81 billion. The strong dollar cut into the results, with revenue down 7% and core operating profit slumping 11% in reported terms. Analysts surveyed by The Wall Street Journal expected sales of $5.71 billion and core operating profit of $1.73 billion. Net profit slumped 12% to $697 million.

AstraZeneca has started including income from partnerships and licensing deals, what it calls "externalization revenue," in its top line as this is becoming an increasingly significant revenue stream for the company. Stripping out the effect of the strong dollar, product sales fell 1% to $5.84 billion in the second quarter but externalization revenue increased 54% to $471 million.

The rise in externalization revenue was largely driven by a $450 million upfront payment from Celgene Corporation for the rights to develop one of Astra's immune-oncology medicines, MEDI4736, in certain blood cancers.

Write to Denise Roland at [e-mail]

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