AstraZeneca Posts $3 Million Loss

AstraZeneca PLC posted a loss in the second quarter as it furiously invested in its next-generation drugs while battling falling sales of its aging blockbuster Crestor, and took a restructuring charge relating to a cost-reduction program.

Cambridge, England-based AstraZeneca posted a net loss of $3 million in the three months to June 30, compared with a net profit of $697 million in the same period a year earlier. Revenue slipped 11% to $5.6 billion. Analysts had forecast net profit of $403 million and revenue of $5.6 billion.

The net loss reflects a $308 million restructuring charge relating to a recently launched program to slim down the company's sales force by 2018. The program is expected to cost $1.5 billion and yield $1.1 billion in net savings from 2018 onward. AstraZeneca's newer drugs target more specialized disease areas that require fewer sales representatives.

Core operating profit, a measure that strips out one-time gains and losses, fell 22% to $1.4 billion, beating market expectations of $1.3 billion.

The strength of the dollar dented Astra's results. Stripping out currency effects, revenue fell 10% and core operating profit declined 21%.

Astra's downbeat results reflected a steep decline in sales of the company's cholesterol-lowering drug Crestor after a cheap copycat version launched in early May.

Sales of the drug, Astra's biggest seller, declined 29% in the quarter to $926 million, dragging overall product sales down 5% at constant exchange rates to $5.5 billion. Falling sales of another old blockbuster, Nexium for heartburn, also weighed on total sales.

The launch of generic Crestor marks the end of a succession of patent expirations for Astra's old blockbusters that have dented revenue and earnings for several years.

AstraZeneca is relying on a string of new medicines to return the company to growth and fulfill Chief Executive Pascal Soriot's pledge to increase sales to $45 billion by 2023, compared with $26 billion in 2015. That goal was a key plank in his defense against an unwelcome and ultimately unsuccessful takeover bid by Pfizer Inc. in 2014.

Some of those are already generating sales growth. AstraZeneca said revenue from its so-called growth platforms increased 8% to $3.7 billion in the quarter. That includes revenue from recently-launched respiratory, diabetes and cancer drugs, its new heart medicine Brilinta and sales in the emerging markets and Japan.

AstraZeneca also generated $134 million in the quarter by unloading de-prioritized research programs to other companies in exchange for upfront payments and royalties.

The company backed earlier guidance to say it expects a low to mid-single digit decline for both revenue and core earnings per share.

Write to Denise Roland at [e-mail]

(END) Dow Jones Newswires

July 28, 2016 04:15 ET (08:15 GMT)

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