AstraZeneca Profit Lifted by Tax Gain--Update

By Denise Roland 

LONDON-- AstraZeneca PLC's net profit climbed in the third quarter as a one-off tax windfall helped offset sharply lower sales of the company's best-selling cholesterol pill, after several cheap generic versions launched earlier this year.

The drug giant posted net profit of $1 billion for the three months to Sept. 30, 32% higher than in the same period a year earlier, while revenue dipped 4% to $5.7 billion. Analysts had expected net income of $731 million and revenue of $5.87 billion.

Cambridge, England-based Astra said profit was lifted by a $453 million payment relating to agreements between the Canadian tax authority and those of the U.K. and Sweden. Core operating profit, a measure that strips out certain one-time gains and losses, declined 2% to $1.7 billion.

Stripping out currency effects, net profit increased 4%, revenue fell 4% and core operating profit declined 13%.

Astra is leaning on a string of new drugs such as blood-thinner Brilinta and cancer drug Tagrisso to return the company to sustainable growth after years of flat or falling revenue, as old best-sellers lose out to cheaper copycats after losing patent protection.

Those new products did drive revenue growth, but not enough to offset the sharp decline in sales of old blockbusters such as Crestor--which lost patent protection earlier this year--and heartburn medicine Nexium. Crestor sales slumped 44% to $688 million in the third quarter, while Nexium revenue declined 20% to $516 million.

Chief Executive Pascal Soriot has said the company's recently-launched medicines, plus several still in clinical testing will increase revenue to $45 billion by 2023 compared with $25 billion in 2015. That promise was a key part of his defense against an unsolicited, and ultimately failed, takeover bid by Pfizer in 2014. Mr. Soriot said that strong growth trajectory should start in the second half of next year.

At the same time, drug company revenues are under pressure from increasingly cost-conscious governments and health insurers, especially in the lucrative U.S. market. Mr. Soriot said the election of Donald Trump in Tuesday's election wouldn't alleviate that pressure. He also said it was too early to predict how a repeal or substantial modification of the Affordable Care Act--one of Mr. Trump's campaign promises--would affect the industry.

"The U.S. marketplace has always been [one] that supports innovation and new differentiated medicines," he said. "We hope it will remain the same."

Astra's revenue was also boosted by $674 million in so-called externalization revenue, or the proceeds from the sale of rights to drugs that fall outside its core therapy areas of cancer, respiratory and cardiovascular disease.

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

November 10, 2016 05:55 ET (10:55 GMT)

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