AstraZeneca's triple whammy of good news pleases market
Friday 30 July 2010
AstraZeneca pleased the market with a triple dose of good news yesterday as it won endorsement in the United States for its new blood-thinning drug Brilinta, reported strong results and doubled its share buyback programme.
The Anglo-Swedish group is expecting annual sales of more than $1bn (£640m) from Brilinta. Its prospects were boosted yesterday when the US Food and Drug Administration (FDA) advisory panel gave initial backing for the treatment.
It voted 7-1 in favour of approving the treatment, despite some unfavourable trial data, and Brilinta being tested on a relatively low number of patients in the US.
Details of the FDA vote came as AstraZeneca reported a better-than-expected 5 per cent increase in core profits in the second quarter, to $3.53bn. The performance was helped by generic competitors being slow to copy a number of off-patent drugs, including the blockbuster ulcer treatment, Nexium.
AstraZeneca's chief executive officer, David Brennan, said: "Our second-quarter performance reflects continued strong growth in our emerging markets and good performance for key brands Crestor, Seroquel and Symbicort."
The second-quarter results led the group to double the size of its $1bn share-buyback programme, which was announced in January to "[recognise] that some earnings fluctuations are to be expected as the company's revenue base transitions through this period of exclusivity losses and new product launches." The positive updates pushed the group's shares up by 86.5p to 3,289p.
Despite the results, and the comments from the FDA, a number of industry analysts were cautious on AstraZeneca's longer-term prospects. The results were "the last pre-key-patent-expiry set of results for AstraZeneca, with Brilinta's recommendation the last of the significant expected positive newsflow," said Collins Stewart's analyst, Emmanuel Papadakis.
The group is the UK's second-biggest drug-maker behind GlaxoSmithKline and acknowledges that it has been slow at bringing new drugs to development, a problem exacerbated by its ageing portfolio of current medicines.
"We haven't been as productive as we would have liked to have been in the last few years and for a pharmaceutical company, that's pretty significant, right?" Mr Brennan said in a recent interview with The Independent.
"I would like to see sustainable delivery on a consistent basis from our research and development organisation, and that's why they have been set a goal: from the beginning in 2010, on average, we will bring two new products to the market each year. That's our goal and that's what I want to be measured against," he added.
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