AstraZeneca Plc projected a slowdown in U.S. sales of diabetes treatments, echoing comments by competitors and putting the onus on its cancer drugs to help meet its long- term sales target.
The U.K.’s second-biggest drugmaker submitted a new long- term plan to the board this week which shows that the diabetes sales will be less than previously forecast, Chief Executive Officer Pascal Soriot said in a call with analysts Thursday. He pledged that higher revenue from cancer drugs will pick up the slack, which will allow the London-based company to meet its goal of reaching $45 billion in sales by 2023.
“The 2023 goals are achievable,” Soriot said. “Having said that, in every plan you have ups and downs.”
His comments on the U.S. diabetes drug sales follow those made last month by market leaders Sanofi and Eli Lilly & Co., who warned of a broad slowdown in demand for insulin. It’s also the first time AstraZeneca has provided an update to its long- term growth plan since Pfizer Inc. in May 2014 abandoned its plans to take over the company.
Cancer Sales
When it comes to oncology, AstraZeneca executives said they’re optimistic about Lynparza, approved in December for ovarian cancer, and about the growing body of clinical data on AZD9291. Analysts expect Lynparza sales to reach $685 million by 2020, while AZD9291, filed to U.S. regulators in June, may reach $1 billion by that year.
AstraZeneca raised its profit and sales forecast for this year, fueled by demand for its heart medicine Brilinta and the aging antacid Nexium, which withstood competition from generics in the U.S. better than expected.
Core earnings per share, a measure used by the company that excludes some costs, will increase by a mid- to high single- digit percentage at constant exchange rates from a year earlier, the London-based company said in a statement as it reported third-quarter profit that beat estimates. That’s up from an earlier forecast of a low single-digit increase. Revenue will show little change this year, it said.
Promising Drug
The U.K.’s second-largest drugmaker was buoyed by Brilinta after U.S. regulators approved the long-term use of the drug at the start of September. Before that, doctors could only prescribe the pill for the first year after a heart attack, limiting the medicine’s sales potential. Brilinta is one of the few young drugs with blockbuster potential AstraZeneca has on pharmacy shelves. As former stars like Nexium and Crestor reach the end of their patent-protected life, investors are looking to the company’s pipeline of cancer medicines to fuel growth.
“The key investing debate around AstraZeneca today is focused not on the near-term earnings profile, but rather on the outlook for the pipeline and the resultant growth,” Keyur Parekh, an analyst at Goldman Sachs Group Inc., wrote in a note to clients.
The company expects a decision by U.S. regulators on its gout drug lesinurad and will release data from a trial on its lung cancer drug durvalumab this quarter, it said today. Given competitors’ earlier approvals in lung cancer, AstraZeneca may shelve a plan for seeking accelerated approval for durvalumab, Soriot said.
Shares Jump
AstraZeneca rose 3.1 percent to 4,254 pence as of 3:16 p.m. in London. The stock has dropped 6.2 percent so far this year, making it one of the worst performers in the Bloomberg index that tracks European pharmaceutical companies.
Core earnings fell 2 percent to $1.03 a share last quarter. Analysts had predicted $1.01 a share, according to the average of 15 estimates compiled by Bloomberg. Sales dropped 10 percent to $5.95 billion, meeting analysts’ estimates. Brilinta sales surged 34 percent to $170 million. The gain was 48 percent at constant exchange rates. It beat analysts’ estimates, as did sales of Crestor and Nexium.
Astra faced a setback last month as it failed to win U.S. approval for a new diabetes treatment that combines two of its existing drugs -- saxagliptin and dapagliflozin -- after regulators asked for additional data that may require new clinical trials. That followed news that it was temporarily halting two trials combining cancer drugs due to reports of lung disease.
--With assistance from Gaurav Panchal in London.
To contact the reporter on this story: Makiko Kitamura in London at mkitamura1@bloomberg.net To contact the editors responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net Marthe Fourcade
