AstraZeneca earnings fall less than expected, faces US lawsuit from Array

Chief executive Pascal Soriot reaffirmed the board's commitment to the progressive dividend policy though the full year dividend was kept at $2.80 with the declaration of a second interim dividend of $1.90 per share.

He said: "AstraZeneca's revenues improved over the course of the year, a sign of how our company is steadily turning a corner."

Of group total turnover of $22.5bn, 'externalisation' revenues, from selling licensing rights to its drugs, increased 37% to $2.3m over the year, as the strategy to increase this form of sales saw ongoing external revenues representing 35% of the 2017 total from 21% the prior year.

This was a key driver that allowed the FTSE 100 group to keep a lid on costs, with research & development expenses falling 2% and core R&D costs down 4% to $5.4bn, with selling, general and administrative costs increased 9% to $10.2bn but core SG&A costs shrinking 4% to $7.9bn.

Reported EPS of $2.37 were down 14% on a reported basis and 15% at constant exchange rates, while core EPS of $4.28 were down 1% reported and 2% CER.

EPS benefited from a $617m fourth-quarter boost to reported profit after tax due to Donald Trump's lower US federal income tax rate, with a $321m benefit to reported and core taxation in the quarter and a fall in the core tax rate for the full year to 14%, driven by reductions in tax provisions.

Soriot hailed Astra's "strong commercial execution", "making the most" of its pipeline of new drugs, with "encouraging progress" made across the group's main therapy areas and with strong growth of 15% CER delivered in China.

He highlighted the reaching of blockbuster status for Brilinta and Farxiga in the cardiovascular, renal and metabolic diseases segment, the launch of the group's first respiratory biologic medicine, Fasenra, and new biologic cancer medicines, Imfinzi and Calquence.

"As well as bringing five new medicines to patients last year, we continued to find more potential uses for existing treatments, including Lynparza and Tagrisso," he added.

For the coming year he guided to product sales growth of a "low single-digit percentage" and core EPS of $3.30-3.50, both at CER.

Overnight, US-based Array BioPharma Inc hit AstraZeneca with a lawsuit that accusing the UK company of refusing to pay required royalties for a cancer drug after entering into its collaboration with Merck & Co.

Astra said the complaint was filed was December in New York State court, alleging, among other things, breaches of contractual obligations relating to a 2003 collaboration agreement between AstraZeneca and Array. The agreement is related to the drug known as selumetinib.

Array, which is seeking at least $192m, said the agreement allowed AstraZeneca to use selumetinib as a cancer treatment in return for a 12% royalty from future sub-licensees, but complained that Astra had offered an “absurdly small” fraction of an expected $1.6bn upfront payment from Merck.

Both companies agreed to have disputes under the agreement decided by New York courts, Array said.