AstraZeneca PLC First Quarter Results 2010
Revenue for the first quarter increased by 7 percent at constant
exchange rates (CER) to $8,576 million.
-Emerging Markets revenue increased by 19 percent at CER; Company provides enhanced regional revenue reporting.
-Crestor sales increased by 27 percent at CER.
Core operating profit increased by 10 percent at CER to $3,857
-Benefit from revenue growth and cost discipline, partially offset by lower gross margin.
Core EPS increased by 23 percent at CER to $2.03.
-Core EPS benefited by $0.13 from net adjustments to tax provisions as a consequence of the previously disclosed settlement with UK Tax Authorities and developments in other transfer pricing matters. The effective tax for the quarter was 21 percent. Company continues to anticipate the full year tax rate to be around 27 percent.
Reported EPS increased by 23 percent at CER to $1.91.
Net debt was $759 million at 31 March 2010.
-Strong cash generation from operations more than offset by the payment of the second interim dividend of $2,367 million, first instalment of the tax settlement, and investment in external pipeline opportunities during the quarter.
Core EPS target for the full year increased to the range of
$6.05 to $6.35.
David Brennan, Chief Executive Officer, said: “The first quarter results reflect continued strong market performance for key brands like Crestor, Seroquel and Symbicort. We saw revenue growth in all major regions, including another strong quarter in Emerging Markets. Looking forward, revenue comparisons will become more challenging in the second half of the year as a result of the uplift from Toprol-XL and H1N1 vaccine sales in 2009 and the expiration of the Arimidex patent later this year. Based on the first quarter performance and the outlook for the remainder of the year we have increased our Core EPS target. Our pipeline has been further strengthened during the quarter by the addition of a new late-stage development project in rheumatoid arthritis from Rigel Pharmaceuticals.”
All narrative in this section refers to growth rates at constant exchange rates (CER) unless otherwise indicated Gastrointestinal First Quarter CER % 2010 $m 2009 $m Nexium 1,239 1,192 - Losec/ Prilosec 249 211 +12 Total 1,520 1,427 +2 • In the US, Nexium sales in the first quarter were $653 million, down 7 percent compared with the first quarter last year. Dispensed retail tablet volume declined by 6 percent, although Nexium market share of dispensed units was up 20 basis points in March 2010 compared with December 2009. Average realised selling prices were around 6 percent lower than last year.
• Nexium sales in other markets were up 10 percent to $586 million. Sales in Emerging Markets increased by 21 percent, including good growth in China. Sales in Western Europe were up 8 percent.
• Prilosec sales in the US were down 6 percent to $18 million.
• Losec sales in other markets were up 14 percent to $231 million. Sales in Emerging Markets were up 33 percent, chiefly on a 45 percent increase in sales in China. Sales in Japan were up 15 percent.
Cardiovascular First Quarter CER % 2010 $m 2009 $m Crestor 1,300 969 +27 Seloken / Toprol-XL 367 288 +24 Atacand 373 323 +7 Plendil 66 61 +5 Zestril 42 47 -15 ONGLYZATM* 4 - n/m Total 2,287 1,810 +20 *ONGLYZATM is recorded as “Alliance Revenue.” This does not represent ex-factory sales, but rather AstraZeneca’s share of the gross profit from its collaboration with Bristol-Myers Squibb on this product.
• In the US, Crestor sales in the first quarter were $583 million, a 22 percent increase over last year. Crestor total prescriptions increased by 15 percent, nearly 5 times the 3.2 percent growth in the US statin market. Crestor share of total prescriptions in the US reached 11.5 percent in March 2010; Crestor dynamic share (new and switch patients) is now 15.7 percent.
• Crestor sales in the Rest of World were up 32 percent to $717 million. Sales in Western Europe were up 30 percent. Sales in Established ROW were up 37 percent on strong growth in Japan and Canada. Sales in Emerging Markets increased by 29 percent.
• US sales of the Toprol-XL product range, which includes sales of the authorised generic, increased by 34 percent to $236 million. Competition from the third entrant, Watson, has been limited to the 25mg and 50mg dosage strengths, although regulatory approval for the remaining strengths was recently announced.
• Sales of Seloken in other markets were up 9 percent on 18 percent growth in Emerging Markets.
• US sales for Atacand were down 8 percent in the quarter, to $56 million. Sales in other markets were up 10 percent to $317 million on good growth in Western Europe (up 10 percent) and in Emerging Markets (up 13 percent).
• Alliance revenue from the ONGLYZATM collaboration with Bristol-Myers Squibb totalled $4 million in the first quarter. The launch rollout continues, with launches having now occurred in 12 markets.
AstraZeneca PLC 6 Respiratory and Inflammation First Quarter CER % 2010 $m 2009 $m Symbicort 701 515 +29 Pulmicort 243 292 -20 Rhinocort 55 64 -19 Oxis 17 12 +25 Accolate 17 16 +6 Total 1,068 935 +8 • Symbicort sales in the US were $173 million, a 75 percent increase over the first quarter last year. Symbicort share of new prescriptions for fixed combination products reached 18.4 percent in March 2010, up 1 percentage point since December 2009. Market share of patients newly starting combination therapy is now over 26 percent.
• Symbicort sales in other markets in the first quarter were $528 million, 18 percent ahead of last year. Sales in Western Europe were up 11 percent. Sales in Established ROW increased by 59 percent as a result of first launch sales in Japan. Sales in Emerging Markets were up 27 percent.
• US sales of Pulmicort were down 47 percent in the first quarter to $92 million, a result of the re-launch of the Teva generic budesonide inhaled suspension (BIS) product in December 2009. Pulmicort Respules share of BIS prescriptions was 22.2 percent in the quarter.
• Sales of Pulmicort in the Rest of World were up 19 percent, driven by a 55 percent increase in Emerging Markets.
Oncology First Quarter CER % 2010 $m 2009 $m Arimidex 511 463 +7 Casodex 143 236 -42 Zoladex 265 232 +6 Iressa 83 68 +19 Faslodex 71 59 +15 Nolvadex 21 20 - Total 1,097 1,083 -3 • In the US, sales of Arimidex were up 11 percent in the first quarter to $244 million. Total prescriptions for Arimidex were down 6 percent.
• Arimidex sales in other markets were up 3 percent to $267 million. Sales in Western Europe were up 4 percent.
Sales in Established ROW were up 7 percent on a 15 percent increase in Japan.
• Casodex sales in the US were down 94 percent in the first quarter to $3 million, as a result of generic competition that began in the third quarter last year.
• Casodex sales in the Rest of World were down 26 percent to $140 million. Sales in Western Europe were down 47 percent. Sales in Japan were 19 percent below last year. Sales in Emerging Markets were down 11 percent.
• Iressa sales in the first quarter were up 19 percent to $83 million, including $6 million of sales in Western Europe.
Sales in Japan were up 9 percent. Sales in China were unchanged.
• Faslodex sales were up 19 percent in the US and were up 12 percent in the Rest of World.
AstraZeneca PLC 7 Neuroscience First Quarter CER % 2010 $m 2009 $m Seroquel 1,307 1,125 +13 Zomig 106 101 - Total 1,647 1,432 +11 • In the US, Seroquel sales were up 14 percent to $913 million. Total prescriptions for the Seroquel franchise were up 1.4 percent, as the 210 percent increase in Seroquel XR more than offset declines in the immediate release formulation. Seroquel XR now accounts for 13 percent of total prescriptions for the franchise in the US.
• Seroquel sales in the Rest of World increased by 12 percent to $394 million in the quarter. Seroquel XR sales nearly doubled, and now account for 29 percent of franchise sales outside the US. Total Seroquel franchise sales in Western Europe were up 5 percent. Sales in Established ROW were up 31 percent on good growth in Japan and as sales in Canada have stabilised following the significant declines from generic competition experienced in 2009. Sales in Emerging Markets were up 18 percent.
• Zomig sales in the US were down 2 percent to $42 million. Sales in the Rest of World were up 2 percent to $64 million in the quarter.
Infection and Other First Quarter CER % 2010 $m 2009 $m Synagis 459 545 -16 Merrem 233 202 +8 FluMist 2 2 - Non seasonal flu vaccine 39 - n/m Total 761 792 -6 • Sales of Synagis in the US were down 25 percent to $351 million, as new guidelines published by the COID have continued to negatively impact usage. Outside the US, Synagis sales were up 46 percent to $108 million, reflecting timing differences in shipments to Abbott, our international distributor, rather than underlying sales trends.
• Revenue of $39 million related to the 2009 US government order for Live Attenuated Influenza Vaccine (LAIV) against Novel Influenza A (H1N1) was recorded in the first quarter. Cumulative revenue of $428 million has now been recorded against the total contract value of $453 million.
This project has been funded in whole or in part with Federal funds from HHS/ASPR/BARDA, under Contract No.
AstraZeneca PLC 8 Geographic Sales First Quarter CER % 2010 $m 2009 $m US 3,698 3,624 +2 Western Europe 2,465 2,176 +7 Established ROW* 1,156 925 +12 Emerging ROW 1,257 976 +19 *Established ROW comprises Canada, Japan, Australia and New Zealand.
• In the US, revenue increased by 2 percent. Excluding Toprol-XL and H1N1 influenza vaccine sales, US revenue declined by around 1 percent. Strong growth from Crestor, Seroquel and Symbicort nearly offset the declines in Synagis, Pulmicort Respules, Nexium and Casodex.
• Revenue in Western Europe was up 7 percent, on good growth for Crestor, Symbicort, Nexium and Seroquel.
• Revenue in Established ROW was up 12 percent, on good double-digit growth in Japan and Canada, with Crestor the key growth driver.
• Revenue in Emerging Markets was up 19 percent, with growth coming from key brands as well as the broader portfolio. Revenue in China was up 36 percent.
AstraZeneca PLC 9 Operating and Financial Review All narrative in this section refers to growth rates at constant exchange rates (CER) and on a Core basis unless otherwise indicated. These measures, which are presented in addition to our Reported financial information, are non-GAAP measures which management believe useful to enhance understanding of the Group’s underlying financial performance of our ongoing businesses and the key business drivers thereto. Core financial measures are adjusted to exclude certain significant items, such as charges and provisions related to our global restructuring and synergy programmes, amortisation and impairment of the significant intangibles relating to our acquisition of MedImmune Inc. in 2007 and our current and future exit arrangements with Merck in the US, and other specified items. More detail on the nature of these measures is given on page 37 of our Annual Report and Form 20-F Information 2009.
First Quarter All financial figures, except earnings per share, are in $ millions. Weighted average shares in millions.
Reported 2010 Restructuring and synergy costs Merck & MedImmune Amortisation Intangible Impairments Core 2010 Core 2009 Actual % CER % Revenue 8,576 - - - 8,576 7,701 11 7 Cost of Sales (1,654) 28 - - (1,626) (1,352) Gross Margin 6,922 28 - - 6,950 6,349 9 4 % sales 80.7% 81.0% 82.4% -1.4 -1.8 Distribution (78) - - - (78) (64) 21 11 % sales 0.9% 0.9% 0.8% -0.1 - R&D (991) 18 - - (973) (980) (1) (6) % sales 11.5% 11.3% 12.7% +1.4 +1.5 SG&A (2,462) 49 101 - (2,312) (2,236) 3 (1) % sales 28.7% 27.0% 29.1% +2.1 +2.1 Other income 252 - 18 - 270 293 (8) (10) % sales 2.9% 3.2% 3.8% -0.6 -0.6 Operating Profit 3,643 95 119 - 3,857 3,362 15 10 % sales 42.5% 45.0% 43.6% +1.4 +1.2 Net finance expense (124) - - - (124) (160) Profit before Tax 3,519 95 119 - 3,733 3,202 17 12 Taxation (740) (20) (20) - (780) (910) Profit after Tax 2,779 75 99 - 2,953 2,292 29 23 Minority Interests (2) - - - (2) 2 Net Profit 2,777 75 99 - 2,951 2,294 29 23 Weighted Average Shares 1,452 1,452 1,452 1,452 1,452 1,447 Earnings per Share 1.91 0.05 0.07 - 2.03 1.58 28 23 Revenue grew by 7 percent to $8,576 million.
Core gross margin of 81.0 percent was 1.8 percentage points lower than last year. Higher royalty payments (0.1 percentage points) combined with regional and product mix factors (2.1 percentage points) were only partially offset by lower payments to Merck (0.4 percentage points).
Core SG&A costs of $2,312 million were 1 percent lower than last year. Continued investment in Emerging Markets and recently launched brands was offset by operational efficiencies across the US and Western Europe.
Core other income of $270 million was $23 million lower than last year chiefly as a result of the 2009 Abraxane® disposal only being partially offset by royalties received from sales of Teva’s generic version of Pulmicort Respules.
Core Pre-R&D Operating Margin was 56.3 percent, down 0.3 percentage points, with lower gross margin and disposals in other income offsetting the impact of sales growth and efficiencies within SG&A.
Core R&D expenditure was $973 million, 6 percent lower than last year, as increased investment in biologics was more than offset by productivity initiatives and lower project costs resulting from several late stage development projects completing their Phase III programmes.
Core operating profit was $3,857 million, an increase of 10 percent at CER or 15 percent on an actual basis. In comparison with last year against the dollar, the euro was 6 percent stronger (increasing sales and costs), the Swedish krona was 17 percent stronger (increasing costs) and sterling was 9 percent stronger (increasing costs). Core operating margin increased by 1.2 percentage points to 45.0 percent of revenue as result of leveraging sales growth and lower R&D expenditure.
AstraZeneca PLC 10 Core earnings per share in the first quarter were $2.03, up 23 percent, as a result of the increase in Core operating profit, lower net finance expense and a lower effective tax rate due to net adjustments to tax provisions.
Reported operating profit was up 10 percent to $3,643 million. Reported earnings per share were $1.91 up 23 percent.
Finance Income and Expense Net finance expense was $124 million for the quarter, versus $160 million for the first quarter of 2009. Fair value gains of $5 million were recorded on the long-term bonds in the quarter, versus fair value losses of $21 million in the first quarter of 2009. In addition to this, there is reduced interest payable on lower debt balances partially offset by higher net interest expense on pension obligations.
Taxation The effective tax rate for the quarter was 21.0 percent compared with 28.6 percent for the same period last year. The effective tax rate for the quarter includes an adjustment in respect of prior periods following the announcement in February that AstraZeneca had settled a long-running transfer pricing issue and certain other outstanding UK tax matters with the UK Tax Authorities. As previously disclosed, AstraZeneca has provided in its accounts for the outcome of this complex transfer pricing issue which has taken many years to resolve. The effect of this settlement and developments in other transfer pricing matters resulted in a net benefit to earnings during the first quarter of $194 million. The Company continues to anticipate the full year tax rate for 2010 to be around 27 percent, in line with guidance provided in conjunction with the settlement announcement.
Cash Flow Cash generated from operating activities was $1,739 million for the quarter, compared with $2,227 million for the first quarter of 2009. The drop of $488 million is primarily driven by strong underlying performance being offset by the first instalment payment of $562 million (£350 million) in respect of the UK tax settlement (for which the second final instalment of £155 million is due in March 2011) and outflows due to working capital movements reflecting increased receivables, largely due to higher sales, and lower payables.
Net cash outflows from investing activities were $1,263 million in the quarter compared with an inflow of $74 million for the first quarter of 2009. The increase of $1,337 million is due primarily to the movement in short-term investments and fixed deposits of $772 million, and increased externalisation activity with the acquisition of Novexel and the upfront payment related to Targacept’s late-stage investigational product for major depressive disorder (MDD). In the first quarter of 2009 the proceeds from the disposal of the Abraxane® co-promotion rights of $269 million were received.
Net cash distributions to shareholders were $2,457 million through payment of the second interim dividend for 2009 of $2,367 million and the net share repurchase of $90 million.
Debt and Capital Structure As at 31 March 2010, outstanding gross debt (including loans, short-term borrowings and overdrafts) was $10,332 million (31 December 2009: $11,063 million). The reduction in gross debt of $731 million during the quarter was principally due to the repayment on maturity of the Euro 500 million 18-month bond issued in July 2008. Of the gross debt outstanding at 31 March 2010, $1,277 million is due within one year (31 December 2009: $1,926 million). Outstanding net debt of $759 million has increased by $1,294 million since 31 December 2009 as a result of net cash outflows during the quarter as described above.
AstraZeneca PLC 11 Share Repurchases In the first quarter of 2010 the Group re-purchased 4.8 million shares for a total of $214 million. In the quarter, 3.1 million shares were issued in consideration of share option exercises for a total of $124 million.
In conjunction with the Full Year 2009 financial results, the Board announced that the Company will undertake net repurchases of up to $1 billion in shares during 2010.
The total number of shares in issue at 31 March 2010 was 1,449 million.
Calendar 29 April 2010 Annual General Meeting 29 July 2010
Announcement of second quarter and half year 2010 results 28
October 2010 Announcement of third quarter and nine months 2010
results David Brennan Chief Executive Officer Media Enquiries: Neil
McCrae (London) (020) 7304 5045 Chris Sampson/Sarah Lindgreen
(London) (020) 7304 5130/5033 Tony Jewell (Wilmington) (302) 885
4594 Ann-Leena Mikiver (Södertälje) (8) 553 260 20
Analyst/Investor Enquiries Karl Hard (London) (020) 7304 5322
Jonathan Hunt (London) (020) 7304 5087 Clive Morris (London) (020)
7304 5084 Ed Seage/Jörgen Winroth (US) (302) 886 4065/(212)
For charts link to http://info.astrazenecaevents.com/phoenix.zhtml?c=78566&p=irol-earnings
Posted: April 2010