|AstraZeneca CEO Pascal Soriot|
The story AstraZeneca ($AZN) is telling about its 2013 results is a familiar one: We've heard it from almost every Big Pharma since the patent cliff claimed its first megablockbuster victim. Generics are sapping our lifeblood, but don't worry, growth will come soon.
In the meantime, we're cutting costs--$1.1 billion this year, in AstraZeneca's case. And there's a tasty dividend and buyback plan to keep shareholders loyal till our story comes true.
"As expected, our financial performance for 2013 reflects the ongoing impact from the loss of exclusivity for several key brands," CEO Pascal Soriot said in a statement. "In the near term, these headwinds will remain challenging; however, I am confident that we can return to growth faster than anticipated."
Like several of its peers, AstraZeneca has identified its deliverers: Brilinta, the underperforming blood thinner that, Soriot figures, is ripe for a turnaround (but is now subject of a federal probe into disputed data). Diabetes, one of the fastest-spreading chronic diseases in the world. Its respiratory franchise. Emerging markets, a hotbed of Big Pharma activity because of their growth stats. Japan, newly attractive because of healthcare reforms there and weakness in Europe.
AstraZeneca says those players brought in an extra $1.2 billion in revenue for 2013. The company has certainly been working for it. It's pushing a dedicated Brilinta sales force, and socking cash into a DTC ad campaign. It bought out Bristol-Myers Squibb's ($BMY) share of their diabetes partnership, which boasts a range of drugs, including the newly approved Farxiga/Forxiga and Xigduo. It's mounting an offensive against GlaxoSmithKline's ($GSK) respiratory drug, by offering better discounts and rebates on its own Symbicort. And it's working to pump up emerging markets and Japan.
Still, generics countered that $1.2 billion with a $2.2 billion bite out of sales. Total revenue for the full year was $25.7 billion, down 6% at constant exchange rates, 8% as reported. Core profits for the year amounted to $8.4 billion, a 25% decline. As reported, profits amounted to just $3.7 billion, less than half the total in 2012--partly because of a $1.76 billion writedown on Bydureon, one of the diabetes drugs the BMS/AZ partnership picked up when it bought Amylin Pharmaceuticals in 2012. That charge took Q4 earnings into negative territory--$591 million, or $0.42 per share.
The fourth-quarter sales decline, however, isn't so bad--4% at CER, 6% reported. Profits dropped more--29%, likely because of the increased spending on its growth platforms and on restructuring costs. Layoffs are expensive, and the company is in the middle of cutting 5,600 jobs. Plus, R&D spending ticked up by 2%
- read the release from AZ
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