AstraZeneca warns of declining profits in 2016

Astrazeneca's shares dropped on Thursday after warning that the expiry of the patent on its anti-cholesterol drug Crestor will cut its profits this year on competition from cheaper generic versions.

The FTSE 100 company said it sees a low to mid single-digit percentage decline in both sales and profits in 2016 as it reported its full year results for 2015.

Astrazeneca expects to lose exclusive rights to Crestor, one of the world's leading statins, in May. Crestor achieved global sales of more than $5bn (£3.4bn) last year, surpassing other AstraZeneca drugs.

"As we face the transitional period of patent expiry for Crestor in the US, we're confident that our strong execution on strategy, combined with the benefits of focused investments and new launches, keeps us on track to return to sustainable growth in line with our targets," said chief executive Pascal Soriot.

Meanwhile, the company reported full year 2015 core earnings per share rose by 7% on a constant exchange rate to $4.26 (£2.92), and by 22% in the fourth quarter alone.

Pre-tax profits, however, fell 1% to £3.07bn from the previous year as revenue came in broadly flat. Its total revenue growth for the year was 1%, to $24.7bn, with its gross margin on product sales up one percentage point.

AstraZeneca said its top-line and gross margin growth underpinned its continued investment in research and development, with core costs there up 21% during the year, reflecting investments in the pipeline.

The pharmaceutical firm also held true to its promise to cut costs, with selling, general and administrative costs down by 2% over the year and 11% in the quarter.

"We delivered a strong pipeline and financial performance in 2015, as we begin the next phase in our strategic journey", said chief executive Pascal Soriot.

"The growth platforms delivered an 11% rise in product sales that, along with the 7% increase in core earnings per share, demonstrated the underlying strength of our business", he added.

Core operating profit was up 6% on a constant exchange rate basis to $6.9bn, with reported operating profit up 100% to $4.1bn.

Broken down by the company's key growth platforms, Respiratory grew by 7% prior to the takeover of Takeda's respiratory business.

Brilinta grew by 4%, underpinned by a recently-extended US label and a positive Committee for Medicinal Products for Human Use opinion, while Diabetes was up 26%, including 76% in emerging markets.

Emerging markets themselves were up 12%, including China and Latin America each growing by 15%. Separately, Japan grew by 4%, including 8% in the fourth quarter.

New Oncology was included as a key growth platform for the first time, and contributed $119m. The platforms themselves represented 57% of total revenue.

AstraZeneca will pay a second interim dividend of $1.90 per share, bringing the divident for the full year to $2.80.

The board also reaffirmed its commitment to a progressive dividend policy.

AstraZeneca's board said its full-year guidance for 2016 on a constant exchange rate basis was for a low-to-mid single digit percentage decline in total revenue and core earnings per share, taking into account the dilutive effects from recent transactions.

Shares fell 5.16% to 4,184.50p at 1317 GMT.