AstraZeneca’s second quarter beats estimates
pharmafile | July 31, 2014 | News story | Research and Development, Sales and Marketing | AstraZeneca, Nexium, Pfizer
AstraZeneca posted a set of healthy financial results today as key platforms performed well for the company.
Revenue in the second quarter was up to $6.45 billion, a growth of 4% at constant exchange rates, whilst half year sales were up 3 per cent. Result for Q2 beat analysts’ estimates, who had forecast sales of $6.33 billion.
This growth was driven predominately by its newly expanded diabetes business; emerging markets (especially China); and a strong showing in its respiratory drug unit.
Sales in emerging markets were up 11% for the quarter, with growth in China rising by 23% – especially impressive given the trouble most of big pharma are currently having in the region.
Whilst fellow UK pharma firm GSK announced its respiratory drugs were struggling to gain traction in its financials this week, AZ has no such problems as its business grew 9%, driven primarily by US sales of its COPD and asthma drug Symbicort that saw sales reach $928 million, also up 9% on last year.
Its diabetes business, which is recently took full control of from previous partner Bristol-Myers Squibb, also grew 128%, following the integration of BMS’s assets, coupled with a strong US launch of type II diabetes pill Forxiga (dapagliflozin).
After a slow start the heart pill Brilinta also looked to be picking up its trajectory, growing 77% to reach $117 million.
AZ was also helped by a one-off $200 million payment from Pfizer, its former suitor, for rights to an over-the-counter version of Nexium (esomeprazole), the blockbuster heartburn treatment.
But the company needs new drugs to help offset the loss of revenue from patent expiration of three of its best selling drugs, namely: Nexium, Crestor (rosuvastatin), its cholesterol drug, and anti-psychotic medication Seroquel (quetiapine).
Nexium has seen a number of patent battles over the past four years but AstraZeneca believes that generic versions of the medicine will hit the US from October, decimating the once $5 billion plus in annual sales it was achieving at its peak. The drug dropped 4% in the quarter, down to $971 million.
Crestor, still its biggest-selling medicine, fell 2% to $1.45 billion whilst the Seroquel range brought in just under $400 million.
Sales came predominately from the longer acting Seroquel XR range, which made $304 million, although this was 11% less than this time last year. Seroquel IR had its patent lapse last year and saw sales of just $89 million, 8% down on Q2 for 2013.
Pipeline
AZ says it now has more than 100 experimental medicines in its pipeline; something it hopes will encourage shareholders that an independent strategy free from Pfizer is the best path forward.
Pascal Soriot, AZ’s chief executive, was bullish about its drug portfolio, saying: “We now have one of the most exciting pipelines in the industry with 14 assets in late stage development. Over recent weeks, we have presented compelling data that demonstrate our potential to significantly advance the way patients are treated, including in immuno-oncology.
“The quality of transformation we are seeing across all core areas of our business further underpins our confidence in AstraZeneca’s longer term prospects.”
Fabian Wenner, an analyst at Kepler Cheuvreux in Zurich, explains to Bloomberg: “Definitely, they’re [AZ] doing a great job at communicating their pipeline. But the pipeline products will only kick in in three or four years, so they really have to bridge that gap they’re facing from losing Nexium, Seroquel and Crestor.”
AZ is still in a tight spot, however, as despite having 100 medicines in clinical trials, this doesn’t mean they will pass muster with regulators, or produce the sort of high revenue the firm enjoyed with its big blockbusters.
In fact in the past three years the firm has seen a slew of costly late-stage failures, notably in cancer, which has collectively wiped billions from its books.
It has during this period been snapping up small to medium sized firms and deals to help re-populate its pipeline.
The latest of these came yesterday when AstraZeneca announced it was buying the rights to Almirall’s respiratory drugs for $875 million, and could pay an additional $1.22 billion if the drugs meet development and sales goals.
Pfizer advances
Pfizer could mount another takeover bid in August should AZ’s shareholders want to play ball. If not, it will have to wait until November under the UK’s merger rules.
AstraZeneca, the UK’s second largest pharma firm after GlaxoSmithKline, will hope a strong 2014 and its string of deals will do enough to rebuff any further Pfizer advances – or at least increase its market price.
Pfizer would not be drawn on its plans for AstraZeneca when it reported its financial results earlier this week, but did tell analysts that it was still ‘considering big deals’.
Ben Adams
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