AstraZeneca ($AZN) sales are still sliding, and it now says costs are on the rise. But a few high notes in its second-quarter report--notably growth in China and an increase in Brilinta sales--give some support to CEO Pascal Soriot's attempts to strike a positive tone.
For one thing, generic erosion this quarter isn't quite so bad as it has been, Soriot pointed out during a call with journalists. "The impact from brands that have recently lost exclusivity has moderated from levels experienced in recent quarters," Soriot said during the call (as quoted by Bloomberg).
Unlike its rivals Sanofi ($SNY) and Bristol-Myers Squibb ($BMY), AstraZeneca also stuck to its 2013 sales forecast. It's not a cheerful one--the company still expects a decline in the mid- to high-single-digit range--but it's not any worse than previously thought.
As for profits, however, Soriot pointed to higher-than-expected costs. The company has been laying out cash to bring in potential new products for its R&D pipeline, and it's plowing more into promoting its drugs, CFO Simon Lowth said. "We made the decision to step up sales and marketing investment in selected areas where we see good growth into the future," he said during the call.
AstraZeneca has been slashing jobs and cutting other costs as it works to rebuild on the sales side. It has also engaged in a flurry of recent buyouts and licensing deals in an attempt to shore up its pipeline of new products. Just yesterday, the company announced an $815 million licensing deal with FibroGen, saying that the company's prospective anemia drug could well become a blockbuster.
So, how did sales and marketing deliver for the quarter? Crestor slid by 4% to $1.48 billion, as generic versions of Pfizer's ($PFE) rival drug Lipitor continue to build market share. Seroquel, the antipsychotic that went off patent last year, dropped by 31% to $438 million. That's not as big a drop as in previous quarters, but then again, the drug had already begun to face generic competition during the same period in 2012.
On the positive side, Brilique, the lagging blood thinner also sold under the Brilinta brand name, isn't lagging quite so much. Sales of $65 million beat analyst estimates by more than $5 million. Not much in comparison with AstraZeneca's top sellers, but that's a major increase year-over-year; for the same period of 2012, Brilique only managed to generate $18 million. The drug is one of Soriot's hopes for future growth, and signs of a turnaround must be welcome. All together, Soriot's "growth platforms" delivered an increase of $400 million in sales, partially offsetting the hit from generics.
And then there's China. Amid a fast-growing corruption probe in the country, AstraZeneca touted a 21% increase in sales there, driving a 12% increase in overall emerging markets results. GlaxoSmithKline ($GSK) is at the center of that probe, but other drugmakers have been visited by the authorities, including AstraZeneca, though the company says the matter in question is a one-off problem. "What we know from police is that it is an individual case," he said.
- see the release from AstraZeneca
- read the Bloomberg story
Special Report: Brilinta - Top 10 Drug Launch Disasters | Pascal Soriot - 25 Most Influential People in Biopharma today - 2013