UK-based drug maker AstraZeneca PLC (AZN,AZN.L) Thursday reported higher profit for the fourth quarter, as sales increased partly due to demand for H1N1 vaccine. On a per share basis, core profit missed Wall Street view. Giving forecast for 2010, the company cautioned that revenue would be affected in the year due to loss of market exclusivity for certain products. Further, the drug maker announced additional restructuring plans that would lead to the loss of thousands of jobs.
Core net profit for the quarter increased to $2.063 billion or $1.42 per share from $1.813 billion or $1.25 per share in the prior year. Reported net profit for the quarter was $1.553 billion or $1.07 per share.
On average, 4 analysts polled by Thomson Reuters expected the company to report profit of $1.52 per share for the quarter. Analysts' estimates typically exclude special items.
Core operating profit for the quarter increased to $3.044 billion from $2.685 billion in the prior year. On a reported basis, operating profit in the latest quarter was $2.325 billion. Core operating margin improved to 34.0% from 32.8%.
In the third quarter, the company's core net profit was $2.44 billion or $1.68 per share.
Fourth-quarter core pre-tax profit rose to $2.883 billion from last year's $2.609 billion. Reported pre-tax profit for the just concluded quarter totaled $2.164 billion.
Core gross margin grew to 81.9% from 77.6% in the previous year. According to the company, lower payments to Merck, lower intangible asset impairments and provisions and efficiency gains and mix factors were partially offset by higher royalty payments.
Revenue for the quarter grew to $8.945 billion from $8.193 billion in the year-ago period. Analysts expected revenue of $8.85 billion for the quarter. In the third quarter, revenue had increased 5% to $8.20 billion.
The increase in fourth-quarter revenues stemmed mainly from the strong growth of the Toprol-XL franchise in the U.S. due to the market withdrawal by two generic competitors and US government orders for H1N1 vaccine.
On constant exchange rates, revenue from gastrointestinal products dropped 8%, while the Cardiovascular segment saw a 17% growth in quarterly revenues. In Respiratory and Inflammation segment, revenue grew 7%, while Oncology revenues dropped 8% from the previous year. In Neuroscience and Infection and Other segments, revenue increased 5% and 17%, respectively.
U.S. revenue was up 4% and revenue in the Rest of World rose 4%. Revenue in Established Markets advanced 2% and Emerging Markets revenue growth was 10%.
For the full year, core net profit improved to $9.159 billion or $6.32 per share from $7.410 billion or $5.10 per share reported last year. Revenues increased to $32.804 billion from last year's $31.601 billion. David Brennan, Chief Executive Officer of the company, said: "In 2009 we delivered a strong financial performance, exceeding the targets we set at the beginning of the year. In addition, good progress was made on the pipeline; we now have five products awaiting regulatory approval, and have added four significant late stage development projects through our externalisation efforts. Our plans for the next five years confirm our commitment to research-based, innovative biopharmaceuticals.''
Further, the company said it would undertake additional restructuring within the R&D function, including a reduction in the number of disease area targets within the core therapeutic areas, a continued focus on externalisation, some consolidation of activities onto a smaller R&D site footprint, and other efficiency measures.
By 2014, the company intends to realize annual savings of $1 billion from these measures, of which one-half is estimated to be cost savings and the other half cost avoidance. Based on preliminary estimates, the drug maker expects about 3,500 positions to be affected by this program. After accounting for positions that will be retained whilst being relocated to another site, the investment in new skills and capabilities and further expansion of Biologics activities, the net reduction may be around 1,800 positions, the company said.
AstraZeneca said next phase of restructuring will result in the realization of a further $1.9 billion in estimated annual benefits by the end of 2014. When fully implemented, these programs are planned to impact an additional 10,400 positions and additional restructuring charges of $2.0 billion are anticipated between 2010 and 2013. Approximately 60% of the charges will be taken in 2010, and most of the remainder by 2011.
The company believes that revenue will be in the range of $28 billion to $34 billion per annum over the next five years and that core operating margin, before investment in research and development will be in the range of 48%-54% of revenue.
The company's Board recommended a 14% increase in the second interim dividend to $1.71, which would be paid on March 15. This brings the full year dividend to $2.30, an increase of 12%. Further, the Board adopted a progressive dividend policy, intending to maintain or grow the dividend each year.
Further, AstraZeneca said it would repurchase up to $1 billion in shares during 2010. There were no share repurchases during 2009.
Looking ahead to 2010, the company's target for core earnings per share is in the range of $5.75-$6.15. Analysts look for earnings of $5.65-$6.19.
The drug maker said revenue in 2010 would be affected by the expected loss of market exclusivity for Arimidex and for Pulmicort Respules in the U.S. The company expects up to a mid single-digit year-over-year decline in revenue in 2010 on a constant currency basis. Wall Street looks for 2010 revenues of $32.25 billion.
AZN.L is currently trading on the LSE at 2,947.50 pence, down 97.50 pence or 3.20%, on 7.24 million shares.
AZN closed Wednesday's regular trade on the NYSE at $49.64, down from the previous close of $50.07, on 1.28 million shares.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.