AstraZeneca Net Profit Boosted By Licensing Deals -- Update

By Denise Roland 

LONDON-- AstraZeneca PLC's net profit increased in the fourth quarter, as a rise in mostly one-time proceeds from royalties and licensing deals helped offset a sharp fall in revenue from its biggest-selling drug.

The Cambridge, England-based company said net profit more than doubled to $1.8 billion in the three months to Dec. 31 from $808 million in the comparable period a year earlier. Analysts had expected net profit of $616 million. Revenue slipped 13% to $5.6 billion from $6.4 billion a year before, in line with analysts' expectations.

Adjusting for currency fluctuations, net profit rose 94% and revenue fell 12%.

The boost in net profit was largely thanks to a rise in proceeds from a string of licensing deals struck by AstraZeneca to unload drugs that fall outside its core areas of focus, to raise funds for developing new medicines. The company raised $1.1 billion from these deals in the fourth quarter, compared with $471 million in the same period a year earlier.

That helped cushion the blow as the company battled falling sales of its cholesterol-lowering drug Crestor, which has faced competition from cheaper, generic copycats since 2016. In the fourth quarter, sales of Crestor declined 52% to $631 million.

AstraZeneca has posted flat or falling revenue for several years, as sales of newer drugs struggle to eclipse the steep losses accumulated when old blockbuster drugs face generic competition.

That is set to continue: Astra said it expected revenue to fall by a low to mid single-digit percentage and for core earnings per share to decline in the low to mid teens in 2017.

But the company hopes its fortunes will pick up thereafter. Later in 2017, it is due to complete a string of crucial clinical trials on its biggest bet: drugs that harness the body's immune system to fight cancer. If successful they would boost Astra's revenue growth from 2018 onward.

As well as these so-called cancer immunotherapy drugs, Astra is leaning on new cardiovascular and respiratory medicines, as well as treatments for diabetes to usher in a phase of strong sales growth. Chief Executive Pascal Soriot hopes these medicines will increase revenue to $45 billion by 2023, nearly double the $23 billion for 2016. That promise was a key part of his defense against an ultimately failed takeover play by Pfizer Inc.

Write to Denise Roland at [e-mail]

(END) Dow Jones Newswires

February 02, 2017 04:13 ET (09:13 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.