AstraZeneca earnings see serious fall in first half

Drug giant AstraZeneca posted its first half results on Thursday, with total revenue down by 3% at constant exchange rates to $11.718bn as expected, reflecting a 2% decline in product sales to $11.034bn..

The FTSE 100 firm said this was driven by patent expiries, in particular Crestor in the US, with the phasing of externalisation revenue towards the second half.

Reported and Core R&D costs increased by 6% and 9% respectively, AstraZeneca’s board said, with reported selling, general and administrative costs stable, with Core SG&A costs declining by 5%, supporting full-year commitments.

The company’s reported operating profit slid 24% to $1.341bn, with core operating profit dropping 14% to $2.999bn

Reported earnings per share declined 45% to 51 cents, which the company said were negatively impacted by restructuring charges related to the recently-announced cost reduction programme.

Core earnings per share declined 20% to 20 cents, reflecting the phasing of externalisation revenue to the second half of the year

AstraZeneca’s board declared an unchanged first interim dividend per share of 90 cents, and left its 2016 guidance unchanged.

Among the commercial highlights, AstraZeneca said its ‘Growth Platforms’ grew by 7% in the half.

Of the six platforms, the performance included a 7% rise in Emerging Markets and 11% growth in China, an 18% improvement for Diabetes underpinned by the success of Farxiga, and growth of 1% for Respiratory led by strong emerging markets sales of Symbicort, as well as pricing compression in the US and Europe.

New Oncology also saw sales of $251m, reflecting the successful ongoing launch of Tagrisso.

“Our performance in the first half was in line with expectations, reflecting the anticipated near-term patent expiry challenges and the phasing of externalisation revenue in 2016,” said AstraZeneca chief executive Pascal Soriot.

“Our ‘Growth Platforms’ continued to advance and made up over 60% of total revenue.

“Importantly, our transformed pipeline is advancing quickly and delivering a rich flow of differentiated medicines, boding well for our return to growth,” Soriot added.

He said that alongside positive results for the company’s first potential respiratory biologic medicine, benralizumab, and for Tagrisso in second-line lung cancer, the board was encouraged by the rapid patient recruitment in its immuno-oncology durva/treme combination programmes.

“This strong scientific momentum is set to continue, in particular where we anticipate key Immuno-Oncology data,” Soriot explained.