Drugmaker AstraZeneca has reported third quarter sales in line with the market's expectations but has echoed rivals in highlighting pressures from governments' moves to cut drug prices and from generic drugs.
Britain's second biggest pharmaceutical firm said sales were $8.21bn in the third quarter of the year, slightly ahead of $8.16bn forecast in a Reuters poll. The numbers were flattered by currency movements so that in reported terms sales were up 4% on a year ago but down 2% at constant exchange rates.
The company's chief executive David Brennan said:
We have delivered a third quarter revenue and core earnings performance in line with our expectations, against the backdrop of anticipated generic competition and government price interventions. Our disciplined execution continues to generate strong cash returns, with dividends and net share repurchases well ahead of last year. We have also increased our core EPS target for the full year.
The shares are up 21.5p, or 0.7%, at £30.63, underperforming a wider FTSE 100 up 2% at 5664.7.
Analyst Mike Mitchell at Seymour Pierce comments on the results and contrasts AstraZeneca with rival GlaxoSmithKline :
The story on revenues is one of flat growth in the US, rest-of-world down 3%, while Western Europe was down 15% - the industry as a whole is having to deal with pricing pressure, but AstraZeneca is also feeling the impact of volume declines driven by generic competition in the region. Revenue in Emerging Markets (+7%) reflects delays in government tender orders in the Middle East, and loss of exclusivity for Crestor and Seroquel IR in Brazil. The contrast with GlaxoSmithKline's emerging markets strategy - which saw 3Q11 EM pharma growth of 11%, and benefits both pharma and consumer franchises - is an important differentiator.
In our opinion, the likelihood of delivering the more sustainable business model, both in terms of consumer and pharma asset development, remains firmly with Glaxo (BUY).
GalxoSmithKline reported third quarter sales yesterday showing it returned to growth and was benefiting from a push into emerging markets. Its shares are up just 0.1% at £13.94. Shire, which is expected to report tomorrow, is up 0.8% at £20.21.
