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LONDON (Alliance News) - AstraZeneca PLC raised its full-year revenue and earnings guidance Thursday, despite seeing profit fall sharply in the half year to end-June.
The company now expects revenue for the full year to be in line with 2013 at constant currency, up from its previous guidance for a low-to-mid single digit percentage decline. Core earnings per share are expected to decrease in low double digits at constant currency, improved from previous guidance of a percentage decrease in the teens.
AstraZeneca recommended a first interim dividend of USD0.90, as part of its aim to set its first interim dividend at around a third of the previous full-year's dividend of USD2.80. It said the payout underpins its confidence in the execution of its strategy and its underlying performance.
The company has adopted a progressive dividend policy, it said. However, it said it will not make any share repurchases in 2014 so that it has flexibility to invest in its business.
The pharmaceutical giant posted a pretax profit of USD1.50 billion in the recent half year, down from USD2.39 billion in the same period a year before, as revenue rose to USD12.87 billion from UDS12.62 billion, although this was offset by higher cost of sales, selling, general and administrative costs.
This increase of costs was due to the inclusion of 100% of the costs associated with AstraZeneca's diabetes portfolio, and investment in growth drivers such as type 1 diabetes treatment Farxiga in the US, as well as continued targeted investment in emerging markets such as China.
Revenue rose 3% at constant currency, and 2% at actual currencies in the first half. Whilst the loss of exclusivity on some drugs continued to hit the company, this hit was reduced and was more than offset by AstraZeneca's growth drivers, it said.
AstraZeneca's biggest seller, cholesterol treatment Crestor, saw revenue decline 2% during the second quarter, hit by generic competition in Australia, and lower total prescriptions in the US, although sales were up 33% in China.
Second biggest seller, acid reflux treatment Nexium, saw sales down 18% in the US, which offset 14% growth in other markets.
In the US, second quarter revenue was up 8%, as the decline in Nexium and high blood pressure treatment Atacand, offset the boost from buying back Bristol-Myers Squibb Co's shares in their diabetes joint venture.
In Europe, generic competition continued to hit bipolar disorder treatment Seroquel XR in some markets and Atacand, and competition and pricing pressure hit asthma and chronic obstructive pulmonary disease treatment Symbicort, which offset the benefits from the acquisition of the diabetes venture share.
In the the established rest of world, second quarter revenue was down 9%, as growth in Nexium and the launch of type 2 diabetes drug Forxiga in Japan were more than offset by competition to Crestor and Seroquel IR, and inventory depletion in Japan due to a planned manufacturing site change.
The company said its pipeline had continued to grow during the half year, and now includes 114 projects, 100 of which are in the clinical phase of development. In the second quarter, 19 projects progressed to their next phase; four projects were withdrawn.
On Wednesday, AstraZeneca said it had entered into an agreement to acquire Spanish pharmaceutical company Almirall SA's respiratory franchise for an initial USD875 million.
The deal could be worth up to USD1.22 billion including development-, launch- and sales-related milestones, AstraZeneca said, and it also has agreed to make sales-related payments to Almirall.
On Thursday the company reiterated that the deal offers "multiple benefits and long-term value" to its respiratory franchise, which it said is a key growth platform and an area of strategic priority. The acquisition is expected to add to earnings from 2016, it said.
The company fought off an approach from US drugsmaker Pfizer Inc in May, after rejecting the company's final GBP69 billion takeover proposal as it still felt that the offer undervalued the company. Pfizer had pledged not to go directly to AstraZeneca shareholders with a hostile offer, and under UK takeover rules, Pfizer has to wait at least six months to make another offer.
On a call with journalists, Chief Executive Pascal Soriot said he could not comment on what may or may not happen with Pfizer, due to the restrictions of the takeover code.
"The quality of transformation we are seeing across all core areas of our business further underpins our confidence in AstraZeneca's longer-term prospects," said Soriot in a statement.
Shares in AstraZeneca were trading down 0.6% at 4,330.00 pence Thursday morning.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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