AstraZeneca high on Seroquel

13 April 2012

DRUGS giant AstraZeneca has posted a bigger-than-expected 28% rise in second-quarter earnings, helped by a 75% jump in sales of schizophrenia drug Seroquel and an easy year-ago comparison.

The Anglo-Swedish group is the third big European drug firm to report forecast-beating results, following buoyant quarterly numbers from Swiss rivals Novartis and Roche earlier this week.

Pre-tax profits in the quarter rose 24% to $1.139bn (£647m), equivalent to earnings per share of 50 cents (28p). The average forecast of 18 analysts polled by Reuters had been for earnings of 48 cents (27p).

Europe's second-biggest maker of prescription medicines said it still expected full-year earnings per share to reach $2.00-2.15 (£1.14-1.22) from $1.78 (£1.01) in 2003.

Chief Executive Tom McKillop told Reuters sales of key medicines were growing strongly and the company was over the hump in terms of funding the roll-out of new drugs, but the overall market for pharmaceuticals was challenging.

'The cost growth has now more or less plateaued and we are nicely set up to deliver very strong earnings growth. Exactly how much will come out is now probably as dependent on the overall vibrancy of the total market as our individual performance,' he said.

Sales totalled $5.29bn (£3.01bn) in the quarter, above analysts' average forecast of $5.13bn (£2.91), and helped by the better-than-expected jump in sales of Seroquel to $488m (£277m).

AstraZeneca shares were 13p higher at 2407p at 1pm - one of a handful of gainers in a depressed Footsie - having been down 47p before the results announcement.

Industry analysts noted the figures were flattered to some extent by the fact that US wholesalers were holding additional inventory at the end of the quarter, but said the results were still impressive. AstraZeneca said the level of US stocks at the end of June was around $75m above its target level.

'These are better figures than people expected, even if you strip out what they reckon is a bit of extra stocking in the US,' said Paul Diggle of Code Securities, who has the stock on a neutral rating.

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