Oct. 31 (Bloomberg) -- AstraZeneca Plc said third-quarter profit fell 31 percent as sales of the Brilinta heart drug failed to offset generic competition for its best-selling medicines. The company also named a new chief financial officer.
Profit excluding restructuring costs and certain other items declined to $2.03 billion, the London-based drugmaker said today in a statement. On that basis, earnings were $1.21 a share, missing the $1.27 average estimate compiled by Bloomberg. AstraZeneca said Marc Dunoyer will replace Simon Lowth, who leaves today to take on the same role at BG Group Plc, as CFO.
Sales for the quarter fell to $6.25 billion from $6.68 billion, below the average estimate of $6.38 billion. Having a new CFO raises investors’ expectations that the company will quicken the pace of acquisitions to replace revenue lost to generic competition, said Fabian Wenner, an analyst with Kepler Cheuvreux in Zurich. AstraZeneca this year has announced five acquisitions that are valued at least $1.29 billion.
“The key issue is the top line,” Wenner, who rates AstraZeneca reduce, said in an interview. “They can counter by cost-cutting but the question is what’s going to happen long-term?”
Dunoyer, currently executive vice president of global portfolio and product strategy, joined AstraZeneca in June from larger U.K. rival GlaxoSmithKline Plc, where he was global head of rare diseases and chairman of the Japan business.
Soriot repeated that the company is considering small to mid-sized acquisitions and that no change to that strategy is planned. He didn’t rule out a larger deal if it would add value.
The company said it received a civil investigative demand on Oct. 21 from the U.S. Justice Department for documents related to the Plato clinical trial for Brilinta. Chief Executive Officer Pascal Soriot said he was “very confident” in the results of the trial, which compared Brilinta with the Plavix blood-thinner from Sanofi and Bristol-Myers Squibb Co.
AstraZeneca also got a subpoena from the U.S. Attorney’s office in Boston seeking documents related to the safety profile of antipsychotic drugs Seroquel IR and Seroquel XR. The company said it intends to cooperate with both inquiries, and Soriot declined to comment further during a conference call with reporters.
AstraZeneca fell 0.6 percent to close at 3,309 pence in London. Before today, the stock had gained 21 percent this year including reinvested dividends, compared with a 24 percent return in the Bloomberg Europe Pharmaceutical Index.
For the year, AstraZeneca still expects sales to fall by a “mid- to high-single-digit percentage” at constant exchange rates. The company said core operating costs will increase by a percentage in the low-to-mid single digits this year.
Three of AstraZeneca’s top four sellers are facing competition from cheaper generic products. Revenue from Crestor was down 11 percent at constant exchange rates to $1.36 billion, while sales of the ulcer pill Nexium fell 5 percent to $918 million. Revenue from Seroquel IR plunged 21 percent to $423 million.
Sales of Brilinta, which is sold in Europe as Brilique, were $75 million, up from $24 million a year earlier, beating the $72.4 million average estimate compiled by Bloomberg.
AstraZeneca is testing Brilinta, also known as ticagrelor, for longer-term care of patients who have suffered a heart attack and are at risk of further complications. The trial called Pegasus will determine whether taking Brilinta and aspirin reduces that risk more than aspirin alone. Results are expected next year.
Future growth of Brilinta is “dependent” on expansion into new territories and long-term outcome studies such as Pegasus, Barclays Plc analysts said in an Oct. 15 note to investors.
In China, the company’s revenue grew faster than the market, though sales industry-wide slowed during the quarter because of government probes into drug pricing and corruption, Soriot told reporters today.
The company is advancing three cancer therapies into late-stage trials by year end, including olaparib for ovarian cancer, which the U.S. Food and Drug Administration has granted orphan drug status. AstraZeneca was able to reverse a $285 million pretax impairment charge during the quarter for starting the trial after previously terminating the program.
AstraZeneca is cutting costs and said Oct. 24 that it would close an environmental lab in Brixham, England, which employed 71 people.
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