AstraZeneca Earnings Beat Estimates as New Drugs Take Hold

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AstraZeneca Plc, the U.K.’s second-largest drugmaker, reported earnings that beat analysts’ estimates as sales of diabetes treatments and the blood thinner Brilinta helped offset declines in older medicines.

Core operating profit, a measure used by the company that excludes some costs, fell to $1.81 billion, or $1.21 a share, in the second quarter from $2.03 billion, or $1.30 a share, a year earlier, the London-based company said in a statement. Analysts had predicted $1.06 a share, according to the average of estimates compiled by Bloomberg.

AstraZeneca raised its full-year sales forecast, saying that revenue will decline by a low single-digit percentage at constant exchange rates. It had previously predicted a mid-single-digit drop. The company maintained its earnings forecast.

Revenue is falling as Astra faces the loss of patents for some of its biggest-selling drugs, including Nexium, Crestor and Seroquel. Chief Executive Officer Pascal Soriot has promised investors that the company will return to growth in 2017 when new cancer treatments reach the market.

“Astra has one of the most impressive pipelines in the European industry,” Emmanuel Papadakis, an analyst at MainFirst Bank AG, said before earnings were announced. “The company is clearly in a transition phase. It needs to deliver on the clinical data and commercial execution to return to growth in 2017.”

Astra shares rose 2.2 percent to 42.83 pounds at 8:03 a.m. in London. That pared the decline this year to 6 percent.

Soriot successfully fended off a $117 billion bid by Pfizer Inc. last year in part by pledging that Astra would reach $45 billion in revenue by 2023. Analysts estimate 2015 sales of $24 billion.

Licensing Deals

To fill the gap, the drugmaker is striking deals to license or sell medicines, a strategy it calls “externalization.” It received $450 million from Celgene Corp. in the quarter for the rights to develop treatments for blood cancer with MEDI4736, AstraZeneca’s experimental immune therapy drug.

Sales in the quarter were $6.31 billion, down from $6.45 billion or a restated $6.76 billion a year ago. Analysts estimated $6.09 billion on average.

Revenue from Brilinta was $144 million for the quarter, up 23 percent, while Bydureon, a diabetes medicine, recorded $140 million in sales, a 25 percent increase. Some older drugs did better than analysts expected, with cholesterol drug Crestor raking in $1.31 billion versus the average analyst prediction for $1.28 billion. Nexium revenue declined 33 percent, though the acid reflux pill beat estimates.

The company announced that it submitted lung cancer drug AZD9291 to regulators in the U.S. and Europe for approval. The company last year estimated peak annual sales of $3 billion for the drug.

Nexium, Crestor and Seroquel, for bipolar disorder, combined for $10.6 billion in sales last year, or 41 percent of AstraZeneca’s revenue. Analysts expect that sum to decline to about $4.5 billion in 2017.

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