S&P lowers rating on Astrazeneca, says outlook is negative

The ratings agency said lost sales to generic competition and significant costs accrued from investments into new drug research and marketing had hurt profits and cash flow.

"Under our base-case scenario, we do not expect profits to recover over the next 24 months to levels that would enable AZN to restore its debt protection metrics to levels that we would view as commensurate with the current rating level of 'AA-'," S&P said.

"The negative outlook reflects the possibility of a further downgrade over the next 24 months as we estimate that the company will continue to face increasing competition from generics on a number of its drugs, such as Crestor and Nexium, and that it might fail to improve its profitability to levels that would enable it to maintain debt protection metrics in line with a "modest" financial risk profile."

The company has been in the wars amid lost lawsuits against rivals making cheaper generic versions of its drugs.

A lawsuit filed against AstraZeneca in Texas in October 2014 that alleges the drug maker illegally marketed its Seroquel antipsychotic is ongoing. Its one among several, some of which have been settled.

S&P estimates that the company will be able to generate sales of about $24bn-$25bn and earnings before interest, tax, depreciation and amortisation (EBITDA) of about $6bn-$6.5bn per year over the next three years. The agency assumes unchanged discretionary spending, mainly dividends at about $3.5bn -$4bn and acquisition spending of about $2bn-$1bn per year.