AstraZeneca plc has received major jolt during the first quarter ended March 2012 due to stiff competition and loss of exclusivity on several key brands. Its net profit declined sharply by 25.7 per cent to $2,319 million from $3,126 million in the corresponding period of last year. Its revenues also declined by 11.4 per cent to $7,349 million from $8,292 million. Core EPS was $1.81 in the first quarter, a 19 per cent decline compared with the first quarter last year.
David Brennan, CEO, said, “The anticipated impact from the loss of exclusivity on several brands, together with challenging market conditions, has made for a difficult start to the year in revenue terms. Delivery on our restructuring plans and continued discipline on operating costs, together with the benefits from a lower tax rate, will only partially mitigate the revenue pressures. As a result we have lowered our Core EPS target for the full year to the range of $5.85 to $6.15.”
“The recently announced collaboration with Amgen on a portfolio of five clinical stage projects in the filed of inflammation illustrates our willingness to look beyond our laboratories to invest in innovative science wherever it originates. Our agreement to acquire Ardea Biosciences will add a promising phase III project for the chronic management of hyperuricaemia in patients with gout,” Brennan added.
Its revenue declined by 11 per cent due to disposal of Astra Tech during last year. Further, loss of exclusivity for several products, chiefly Seroquel IR, Nexium and Arimidex accounted for 8 per cent of the decline in revenue. Shortfalls in the supply of some products caused by the implementation of a new enterprise resource planning IT system at the company's manufacturing plant in Sweden reduced revenues by nearly one percent in the first quarter. Its US revenues declined by 12 per cent due to generic competition for Seroquel IR. Revenues in the Rest of the World was down by 11 per cent and that in Europe was down by 19 per cent.
AstraZeneca is making good progress in implementing the third phase of restructuring announced in February 2012, as evidenced by the $702 million in restructuring charges taken in the first quarter. The programme is on track to deliver the $1.6 billion in annual benefits by the end of 2014.