Last checked at 
LONDON (Alliance News) - AstraZeneca PLC lowered its full-year forecast Thursday, as it saw revenue and pretax profit decline in the full year ended December 31, 2013, due to the loss of exclusivity on several of its brands and increased competition from generics.
The pharmaceutical giant posted revenue of USD25.71 billion, down 8.1% from USD27.98 billion in the previous year. Pretax profit was USD3.27 billion, down 57% from USD7.65 billion in the previous year. Pretax profit was hit by GBP1.42 billion in restructuring costs, and its USD1.76 billion impairment charge related to the under-performance of type-2 diabetes treatment Bydureon.
For the fourth quarter AstraZeneca posted a pretax loss of USD715 million, wider than analyst consensus expectations of USD562 million.
AstraZeneca lowered its full-year guidance for 2014, saying it expects to see low-to-mid single digit percentage decline in revenue at constant exchange rates, with core earnings per share expected to decline in the teens.
Previously, at its third quarter results, AstraZeneca said it continued to expected mid-to-high single-digit decline in revenue on a constant currency basis for the full year.
Despite the grim near-term forecast, AstraZeneca reaffirmed that it continues to expect revenues to be return to 2013 levels by 2017. Noting that whilst in the near-term headwinds remain challenging, it was confident it could grow faster than anticipated.
Following the results an analyst at Deutsche Bank said the "initial conclusion is that guidance will disappoint and consensus EPS forecasts will fall by at least several percent, while recognizing that the share's recent performance owes little to near-term fundamentals and much to longer-term pipeline hopes."
Berenberg agreed that AstraZeneca was betting on its long term prospects, noting that "AstraZeneca's long-term future looks increasingly secure, but the near-term outlook is increasingly bleak."
Berenberg also noted that AstraZeneca would be facing rising generic competition for its acid reflux treatment Nexium, which would make 2014 a challenging year. The company's recently acquired diabetes portfolio also underperformed expectations with sales of just USD199 million, Berenberg said.
In the full year, US revenues were down 9%, hit by the loss of exclusivity, and revenue in the rest of the world was down 4%. In the fourth quarter US revenue was down 7% as it saw generic competition on its high blood pressure treatments Atacand and Toprol-XL.
In Europe revenues dropped 2% in the quarter as revenue increases from its heart attack treatment Brilique, lung disease treatment Synagis, and flu vaccine Fluenz could not offset declines caused by generic competition to its bipolar disorder treatment Seroquel, Atacand, Nexium and skin treatment Merrem.
In other established markets, revenue was down 10% in the quarter as it saw generic competition for cholesterol medication Crestor, Atacand, Seroquel XR and Nexium.
In emerging markets the company saw revenue rise 6%, driven by strong growth in China, as Crestor, asthma treatment Pulmicort and Nexium sold well. Sales in South Korea also grew well. However, this growth was offset by inventory adjustments in Mexico. Excluding these adjustments, Emerging Markets grew 8% in the quarter.
AstraZeneca is continuing to pare down its operations through a restructuring programme, and expanded this programme in order to create further headroom to invest in its pipeline and key growth platforms. As a result of the expanded restructuring, AstraZeneca now expects to lay off around 5,600 staff between 2013 and 2016 and incur costs of around USD3.2 billion.
The company said it had strengthened its pipeline via the acquisitions of Pearl Therapeutics and Omthera Pharmaceuticals. As a result of strong research and development progress during the year, the company said that its late-stage pipeline had grown faster than expected, now containing 11 new entities in Phase III trials or under regulatory review. This has led to AstraZeneca achieving its 2016 target volume for its Phase III pipeline ahead of schedule.
The company said that it had 19 candidates for potential Phase III trials to start in 2014 to 2015.
AstraZeneca acquired Bristol-Myers Squibb's share of the two companies' diabetes alliance for an initial consideration of USD2.7 billion, with a further USD1.4 billion regulatory, launch and sales related payments up until 2015.
AstraZeneca announced a second interim dividend of USD1.90 per share, bringing its full year dividend to USD2.80, flat on 2012.
Its shares were trading down 1.8% at 3,804.00 pence Thursday morning, the biggest faller on the FTSE 100.
Fellow pharmaceutical giant GlaxoSmithKline PLC announced its full-year results on Wednesday, meeting analyst forecasts as it saw pretax profit and revenues increase slightly, and confirmed that it expects to launch late stage clinical trials on ten new drugs over the next two years. GlaxoSmithKline's shares were trading up 0.7% at 1,591.50 pence Thursday.
Next Wednesday another FTSE 100 pharmaceutical company, Shire PLC, will announce its results. In January, Shire said that it expects to deliver full-year earnings per share growth at the upper end of the mid-to-high teen range. Shares in Shire were trading up 1.8% at 3,131.00 pence Thursday.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
Copyright © 2014 Alliance News Limited. All Rights Reserved.
