By Denise Roland
LONDON-- AstraZeneca PLC on Thursday reported an increase in
second-quarter revenue, thanks to income from licensing deals,
though profits continued to fall as the company plowed heavy
investment into new drugs it hopes will replace its old
blockbusters.
The U.K.-based drug maker said revenue increased 2% at constant
currency to $6.31 billion in the second quarter, while core
operating profit, which strips out certain one-time items, fell 4%
at constant currency to $1.81 billion, both beating market
expectations. Analysts surveyed by The Wall Street Journal had
expected sales of $5.71 billion and core operating profit of $1.73
billion. Net profit slumped 12% to $697 million.
The strong dollar cut into the results, with revenue down 7% and
core operating profit slumping 11% in reported terms.
The company also upgraded its revenue outlook, saying full-year
sales would decline by a low-single-digit percentage, up from
earlier guidance of a mid-single-digit fall.
Shares were up 2.2% to 4,285 pence in morning London
trading.
AstraZeneca has started including what it calls "externalization
revenue, " or proceeds from partnerships and licensing deals, in
its top line as this is becoming an increasingly significant
revenue stream for the company.
Stripping out the effect of the strong dollar, product sales
fell 1% to $5.84 billion in the second quarter but externalization
revenue increased 54% to $471 million. The rise in externalization
revenue was largely driven by a $450 million upfront payment from
Celgene Corp. for the rights to develop one of Astra's
immuno-oncology medicines, MEDI4736, in certain blood cancers.
Still, product revenue beat analysts' expectations, with sales
of old blockbusters Crestor, a cholesterol drug, and Nexium, for
indigestion, declining more slowly than anticipated.
AstraZeneca's newer drugs didn't disappoint, either. Sales of
heart drug Brilinta, a product that AstraZeneca has highlighted as
a source of future growth, increased 38% at constant exchange rates
to $144 million.
The heart drug is one of the "growth platforms" key to Chief
Executive Pascal Soriot's goal of increasing annual revenue to $45
billion by 2023, nearly double the $26.1 billion made in 2014. The
others are diabetes, respiratory, emerging markets and Japan. Astra
said that in the first half of 2015, these five areas grew 11% and
made up 56% of total revenue.
Mr. Soriot has also placed strong emphasis on the company's
pipeline of cancer drugs for future growth. AstraZeneca is one of a
number of companies racing to file drugs in a new form of cancer
treatment known as immuno-oncology. It aims to file its most
advanced immunotherapy candidate, MEDI4736, for the treatment of
lung cancer, in the first half of 2016. While it has already been
beaten to first place by rivals Bristol-Myers Squibb Co. and Merck
& Co., Astra hopes that its broad pipeline will stand it in
good stead for combination therapies.
AstraZeneca said its board recommended an unchanged interim
dividend of 90 cents.
Write to Denise Roland at Denise.Roland@wsj.com
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