AstraZeneca's Q1 profit hit by falling Crestor sales

London

ASTRAZENECA'S first quarter profit was hit by generic competition to cholesterol fighter Crestor and higher costs, but the drugmaker expects a better second half and said it remained on track for a promised return to sales growth in 2018.

Core operating profit tumbled 46 per cent to US$896 million, well below market forecasts, and Crestor sales fell 38 per cent as cheap copycat versions of the drug stole market share in Europe and Japan.

Chief executive Pascal Soriot said on Friday that the performance was in line with his expectations, adding that the company's latest arrivals - Imfinzi for cancer and Fasenra for severe asthma - had both got off to a good start.

Investors were more sceptical and the shares fell 2.5 per cent in early trading. "Astra shoots for stars, but misses," Mike van Dulken at Accendo Markets wrote in a note to clients.

China sales continued to be a bright spot and Mr Soriot said the effects of the Crestor patent expiries would "recede materially in the second half".

Still, the weak quarterly numbers show the battle that AstraZeneca faces as it strives to replace former blockbuster medicines with newer products.

The drugmaker has suffered the industry's biggest patent cliff since 2012, wiping out more than half of its sales, but analysts are now forecasting that the company will show strong growth in the years ahead as new drugs deliver.

Total product sales in the three months rose a modest 3 per cent, helped by a weaker dollar, but were down 2 per cent in constant currencies, which is the benchmark AstraZeneca uses for measuring its return to growth this year.

Total revenue fell 4 per cent in dollar terms to US$5.18 billion, reflecting investment in new drug launches and a lack of divestments compared with a year earlier. Core earnings per share, which exclude some items, slumped 51 per cent to 48 cents.

Analysts, on average, had forecast earnings of 60 cents on revenue of US$5.28 billion, Thomson Reuters data showed.

The company continues to predict 2018 core EPS of US$3.30 to US$3.50.

Mr Soriot, who saw off a 2014 takeover bid from Pfizer in part by promising annual sales of US$45 billion by 2023, has presided over a volatile period at AstraZeneca. Its shares suffered their biggest ever daily fall last July on disappointing initial results from a lung cancer immunotherapy trial dubbed Mystic. The stock has since rallied, helped by good news from two other studies.

More data from the Mystic trial is due in the second half of this year. REUTERS