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* Low-to-mid single digit percent fall seen in 2014 sales
* 2014 earnings set to drop "in the teens"
* Forecast declines steeper than market expected
* Q4 sales $6.84 bln vs consensus $6.88 bln
* Q4 core earnings per share $1.23 vs consensus $1.16
By Ben Hirschler
LONDON, Feb 6 (Reuters) - AstraZeneca expectsearnings to keep falling in 2014 as generic competition to itspopular heartburn and ulcer drug Nexium takes a big bite out ofU.S. profits from late May.
The British drugmaker said on Thursday that group sales thisyear were likely to decline by a low-to-mid single digitpercentage figure, with earnings per share falling "in theteens", due to the loss of such profitable medicines.
The decline was steeper than investors expected and theshares fell 3 percent by 1045 GMT. Analysts had been forecasting2014 sales to fall by 1.5 percent and earnings by 9.4 percent,according to Thomson Reuters data.
"In the near term these headwinds will remain challenging,however I am confident that we can return to growth faster thananticipated," said Chief Executive Pascal Soriot.
He reiterated a prediction that 2017 revenue would bebroadly in line with 2013 and said a restructuring programme hadnow been expanded to deliver a total $1.1 billion of annualbenefits.
Despite the tough backdrop, AstraZeneca has decided to keepinvesting in priority areas such as diabetes, where its presencehas been bolstered by a recent $4 billion deal to take fullcontrol of an alliance with Bristol-Myers Squibb.
But the diabetes business is highly competitive andAstraZeneca had to take a $1.76 billion impairment charge due toweak sales of the medicine Bydureon.
AstraZeneca is also throwing resources behind its new heartdrug Brilinta, which has got off to a slow start but is seen asa long-term winner. The drug sold $92 million in the fourthquarter.
Brilinta's prospects have become less certain, however,since it was revealed in October that U.S. authorities werelooking into a major clinical trial called PLATO that was usedto win marketing approval.
Soriot said he was confident of the integrity of the studybut acknowledged that media attention surrounding the case hadhit demand for the blood-thinning pill.
"It is creating uncertainty and it is impacting us," Soriottold reporters. "We will stay focused on promoting this productand, hopefully, as soon as the investigation concludes we cansee some growth again."
Symbicort for asthma and smoker's cough was a bright spotwith sales up 11 percent at $976 million in the quarter as ittook market share from GlaxoSmithKline's Advair.
Overall sales in the fourth quarter of 2013 fell 6 percentto $6.84 billion, generating "core" earnings, which excludecertain items, down 28 percent at $1.23 a share.
Industry analysts had, on average, forecast sales in thequarter of $6.88 billion and earnings of $1.16 a share,according to Thomson Reuters.
TURNAROUND A LONG HAUL
Soriot, who has been in the job for just over a year, haspreviously warned that turning around AstraZeneca will takeseveral years - but he is making progress in rebuilding apipeline of new medicines to replace those going off patent.
This has involved striking a number of bolt-on deals andaccelerating in-house research programmes, with the result thatthe group is now more focused on developing internal projectsthan buying in experimental medicines from other firms.
"AstraZeneca's long-term future looks increasingly secure,but the near-term outlook is increasingly bleak," said Berenberganalyst Alistair Campbell.
The company now has 11 new-drug programmes in late-stagePhase III testing, almost double the number a year ago, and 19candidates that could start late-stage Phase III trials in 2014or 2015.
Hopes are particularly high for its cancer research, whereit has started trials for immunotherapy combination treatmentsfor which the first results are anticipated in 2014/15.
AstraZeneca is behind the likes of Bristol-Myers, Roche and Merck & Co in the race to developimmunotherapies - a hot new area of cancer research - but it isbetting on combination treatments to help it to catch up.
Soriot put a floor under the group's decline last month bypredicting 2017 revenue roughly in line with 2013, whilestopping short of giving a medium-term target for earnings.
Britain's second-biggest drugmaker is already suffering fromgeneric competition to its antipsychotic Seroquel, whiletop-selling Crestor, for high cholesterol, faces U.S.competition from cheap copycat drugs in 2016.
Loss of Nexium patent protection in the United States fromthe end of May 2014 comes as a further heavy blow.
The patent expiries are putting downward pressure onAstraZeneca's sales at a time when many of its rivals have puttheir biggest patent losses behind them.
