AstraZeneca Profit Down on Heavy Competition in US
From Associated Press (January 27, 2011)
LONDON -- Competition from generic drugs in the United States contributed to a 5 percent drop in net profit for AstraZeneca PLC in the fourth quarter, the pharmaceutical firm reported Thursday.
The Anglo-Swedish company reported a net profit of $1.63 billion from revenue of $8.6 billion, which was down 4 percent from a year earlier when sales were boosted by sales of H1N1 vaccine.
In the United States, the company’s biggest market, revenue dropped by 12 percent due to tougher competition from generic drug makers for products such as asthma drug Pulmicort and prostate cancer drug Casodex. Revenue from all other regions rose by just 5 percent.
"Despite government pricing pressures and anticipated patent expiries in the U.S. and Western Europe, our revenues remained in line with the previous year driven by excellent performance of our key brands and continued growth in emerging markets," said Chief Executive David Brennan.
AstraZeneca shares opened 0.9 percent higher at 3,100 pence on the London Stock Exchange.
The full year dividend of $2.55 was up 11 percent, and the company announced that it intended to buy back $4 billion in shares in 2011, up from $2.1 billion last year.
"The scale of this return demonstrates the cash generative abilities of the company, although from a strategic perspective we would prefer to see the company reserve a significant war chest to allow it to effectively compete for strategic assets when the opportunity arises," said Brian White, analyst at Shore Capital.
One key patent expiration was for AstraZeneca’s cancer drug Armimidex. Sales for the drug in the United States were down 90 percent in the fourth quarter and 44 percent for the full year. In other markets, sales declined by 7 percent. Generic competition knocked U.S. sales of the prostate cancer drug Casodex down by 89 percent in the fourth quarter and 18 percent in all other markets.
U.S. sales of the asthma drug Pulmicort fell 70 percent in the fourth quarter and 62 percent for the full year, losing market share to Teva’s generic version.
The anti-cholesterol drug Crestor was the company’s top seller at $1.59 billion for the fourth quarter, up 26 percent led by a 36 percent gain in the United States.
For the full year, the company’s net profit was up 5 percent to $10.98 billion and revenue was 1 percent higher at $33.3 billion.
A 7 percent revenue drop in the United States was offset by a gain of 7 percent in all other markets, the company said.
Posted: January 2011