RNS Number:2190R
AstraZeneca PLC
23 October 2003
AstraZeneca PLC
Third Quarter and Nine Months Results 2003
"Strong quarter contributes to a 2 percent increase in nine months sales; Key
growth products up 56 percent; Full year earnings expected at or just above top
of forecast range."
Financial Highlights
Group 3rd Quarter 3rd Quarter Actual CER 9 Months 9 Months Actual CER
2003 2002 % % 2003 2002 % %
$m $m $m $m
Sales 4,803 4,282 +12 +5 13,974 12,940 +8 +2
Operating Profit 1,101 921 +20 +6 3,262 3,282 -1 -7
Profit before Tax 1,119 923 +21 +7 3,333 3,306 +1 -6
Earnings per Share $0.47 $0.39 +20 +6 $1.40 $1.39 +1 -6
All narrative in this section refers to growth rates at constant exchange rates
(CER)
* Sales for the first nine months increased by 2 percent despite the
loss of $1.9 billion in US sales of PrilosecTM, ZestrilTM and NolvadexTM.
* Operating profit for the nine months declined by 7 percent.
* Sales for key growth and launch products increased by 56 percent to
$6.0 billion in the first nine months.
* Third quarter sales were up 5 percent with double digit growth in
Japan, Germany, Italy and Canada.
* Operating profit in the third quarter was up 6 percent.
* CrestorTM sales were $88 million for the nine months, including $56
million in the US in the third quarter following FDA approval on 12 August. In
the week ending 10 October, CrestorTM share of new prescriptions in the US
statin market reached 1.9 percent.
* Sales of IressaTM were $136 million for the nine months, including $54
million in the US since its launch in mid-May.
* NexiumTM sales reached $2.5 billion for the nine months, up 86
percent. Third quarter sales in the US (up 114 percent) included some
wholesaler stock building.
* SeroquelTM sales were $1.1 billion for the nine months, up 31 percent.
Sir Tom McKillop, Chief Executive, said: "A 56 percent increase in sales of key
growth and launch products in the first nine months of 2003 and the promising
early results from the US launches of IressaTM and CrestorTM have more than
offset sales lost to generic competition and provide the platform to deliver
top-tier financial performance in the future."
London, 23 October 2003
Media Enquiries: Steve Brown/Edel McCaffrey (London) (020) 7304 5033/5034
Staffan Ternby (Sodertalje) (8) 553 26107
Rachel Bloom (Wilmington) (302) 886 7858
Analyst/Investor Enquiries: Mina Blair-Robinson (London) (020) 7304 5084
Jonathan Hunt (London) (020) 7304 5087
Staffan Ternby (Sodertalje) (8) 553 26107
Ed Seage/Jorgen Winroth (US) (302) 886 4065/(212) 581 8720
Business Highlights All narrative in this section refers to growth rates at
constant exchange rates (CER) unless otherwise indicated
Nine Months
For the nine months, sales increased by 8 percent on a reported basis, as the
weaker US dollar added 6 percentage points of sales growth to the CER growth
rate of 2 percent. Global sales of growth and recently launched products
increased by 56 percent to $5,989 million. Combined R&D and SG&A costs
increased by an underlying 5 percent, but were up 12 percent on a reported basis
including currency effects. Operating profit was down 7 percent at CER, with
exchange movements adding 6 percentage points of improvement to the reported
rate, which declined by 1 percent. Earnings per share for the nine months were
$1.40 versus $1.39 in 2002.
Sales for the nine months in the US were down just 1 percent, despite the loss
of $1.9 billion in US sales of PrilosecTM, ZestrilTM and NolvadexTM. Momentum
in the rest of the portfolio remains strong, with US sales excluding these three
products up by 47 percent (or by an estimated 36 percent net of wholesaler stock
movements). Sales for the first nine months were up 5 percent in markets
outside the US, including a strong performance in Asia Pacific markets (up 18
percent). Sales were unchanged in Europe, as volume growth was offset by
continued pricing pressure.
NexiumTM sales increased by 86 percent for the nine months. Sales outside the
US were up 75 percent. US sales increased by 88 percent, boosted somewhat by
wholesaler stocking in the third quarter. NexiumTM prescriptions in the US
through September were up 52 percent. Market share of total prescriptions in the
US PPI market was 23.2 percent in September, surpassing total prescriptions for
all omeprazole products.
Sales for IressaTM reached $136 million for the first nine months. Sales in the
US since launch in May total $54 million. Through the end of September more
than 22,000 retail prescriptions have been dispensed for IressaTM in the US.
CrestorTM sales for the nine months reached $88 million, which includes $56
million in the US market following FDA approval on 12 August. In the week
ending 10 October, CrestorTM share of new prescriptions in the US statin market
was 1.9 percent. CrestorTM has now been approved in 30 countries and launched
in 13 to date.
Sales highlights for other important products shaping the successful portfolio
transformation include SymbicortTM, where sales were up 69 percent to $377
million. The oncology products CasodexTM (up 30 percent) and ArimidexTM (up 46
percent) also enjoyed strong sales growth. SeroquelTM sales to date increased
by 31 percent to $1.1 billion. On 13 October the company announced the
successful completion of the EU Mutual Recognition Procedure to extend the use
of SeroquelTM in the treatment of mania associated with bipolar disorder.
Third Quarter
Reported actual sales growth in the third quarter was 12 percent, lifted by the
weaker US dollar. Sales in the quarter were up 5 percent at CER. Operating
profit was up 6 percent on a CER basis, with reported operating profit up 20
percent as a result of the weaker dollar and hedging gains. Combined R&D and SG
&A costs increased by 7 percent at CER (15 percent as reported), chiefly on SG&A
in support of product launches. Earnings per share in the third quarter
increased by 6 percent at constant exchange rates to $0.47.
Sales in the US increased by 4 percent, partly as a result of a weak third
quarter in 2002 (on destocking of SeroquelTM and Toprol-XLTM) and wholesaler
stocking of NexiumTM in this quarter, ahead of a September price increase.
Generic erosion resulted in continued declines in PrilosecTM (down 74 percent),
ZestrilTM (down 73 percent) and NolvadexTM (down 92 percent). US sales
excluding these three products increased by 59 percent on a reported basis (or
by an estimated 39 percent on an underlying demand basis, adjusted for net stock
movements in both the current and year ago quarter).
Sales outside the US increased by 7 percent in the quarter, on strong sales
growth from NexiumTM, SymbicortTM, CasodexTM and SeroquelTM. Good sales growth
was achieved in Japan (up 14 percent), France (up 8 percent), Germany (up 12
percent), Italy (up 12 percent) and Canada (up 12 percent).
Future Prospects All narrative in this section refers to growth rates at
constant exchange rates (CER) unless otherwise indicated
Assuming current exchange rates hold for the remainder of the year, the company
believes that earnings for the full year will be at or just above the top of the
range of $1.65 to $1.75 per share.
Disclosure Notice: The preceding forward looking statements relating to
expectations for earnings and business prospects for AstraZeneca PLC are subject
to risks and uncertainties, which may cause results to differ materially from
those set forth in the forward looking statements. These include, but are not
limited to: the rate of growth in sales of generic omeprazole in the USA, the
successful registration and launch of new products (in particular CrestorTM,
IressaTM and ExantaTM), continued growth of currently marketed products, the
growth in costs and expenses, interest rate movements, exchange rate
fluctuations and the tax rate. For further details on these and other risks and
uncertainties, see AstraZeneca PLC's Securities and Exchange Commission filings,
including the 2002 Annual Report on Form 20-F.
Sales
All narrative in this section refers to growth rates at constant exchange rates
(CER) unless otherwise indicated
Gastrointestinal
Third Quarter CER % Nine Months CER %
2003 2002 2003 2002
LosecTM/PrilosecTM 631 1,200 -52 2,037 3,508 -46
NexiumTM 1,000 481 +102 2,466 1,292 +86
Total 1,649 1,696 -8 4,556 4,845 -10
* Sales of NexiumTM for the nine months grew by 75 percent in markets
outside the US, with good growth in Europe (up 68 percent), Canada (up 100
percent), and a strong launch in Australia.
* US sales for NexiumTM for the nine months were $1,892 million, an
increase of 88 percent. Total prescriptions in the US PPI market grew by 13.5
percent through September; NexiumTM prescriptions grew by 52 percent. NexiumTM
market share of total prescriptions for PPI products in the US was 23.2 percent
in September, surpassing total prescriptions for all omeprazole products
combined.
* US sales for NexiumTM in the third quarter were up 114 percent, as
wholesalers increased inventories ahead of a price increase, which went into
effect on 15 September. The company estimates that around $100 million in
inventory above normal levels remains with distributors at the end of the third
quarter.
* The intravenous formulation of NexiumTM received its first approval
from the Swedish Medical Products Agency in August. Sweden will act as the
reference member state as the company seeks approval in the EU under the Mutual
Recognition Procedure. An NDA for this formulation was submitted to the US FDA
in September.
* US sales of PrilosecTM were down 74 percent in the third quarter and
by 64 percent for the nine months. Total prescriptions in the US were down
66 percent through September. PrilosecTM share of total omeprazole
prescriptions was 31 percent in September.
* Sales of LosecTM in markets outside the US declined by 18 percent for
the nine months, although sales in Japan continue to grow strongly, up 42
percent through September.
Cardiovascular
Third Quarter CER % Nine Months CER %
2003 2002 2003 2002
SelokenTM / Toprol-XLTM 286 201 +37 1,034 638 +58
AtacandTM 185 131 +29 543 409 +23
PlendilTM 144 147 -7 383 350 +4
ZestrilTM 116 187 -44 342 733 -58
CrestorTM 76 - n/m 88 - n/m
Total 984 840 +9 2,920 2,675 +2
* The steady gains in market share of total beta blocker prescriptions
for Toprol-XLTM in the US market continues, reaching 25.6 percent in September.
Total prescriptions in the US increased by 27 percent through September. US
sales for the nine months were up 76 percent, still above the underlying demand
despite some modest destocking in the third quarter.
* Sales of SelokenTMoutside the US increased by 34 percent in the third
quarter and by 19 percent for the nine months.
* Total prescriptions for AtacandTM products in the US were up 11
percent through September, and sales for the nine months were up 30 percent. US
sales were up 62 percent in the third quarter, chiefly on destocking in the
third quarter of 2002.
* Sales of AtacandTM outside the US increased by 16 percent in the
quarter and by 18 percent for the nine months.
* In August, data presented at the annual meeting of the European
Society of Cardiology from the CHARM programme (Candesartan in Heart failure-
Assessment of Reduction in Mortality and morbidity) demonstrated AtacandTM
reduces both cardiovascular death as well as hospital admissions for heart
failure across a broad spectrum of patients with chronic heart failure. Atacand
TM is the only Angiotensin Receptor Blocker to increase survival in chronic
heart failure patients with left ventricular dysfunction, whether or not they
are taking an ACE-inhibitor.
* Sales of CrestorTM totalled $88 million in the first nine months.
This includes $56 million in US sales following FDA approval on 12 August. A
comprehensive programme of product sampling-the Reach for CrestorTM programme-
preceded the formal launch on 15 September. In the week ending 10 October,
CrestorTM market share of new prescriptions in the US statin market was 1.9
percent.
* In the early launch markets, the excellent penetration achieved to
date for CrestorTM in the dynamic sector of the statin market (ie new and switch
patients) is now leading to a measurable impact on market share for total
prescriptions in the class. According to the latest weekly tracking data
available, CrestorTM has achieved a 7.1 percent share of total prescriptions in
Canada (private payor market segment). In the Netherlands, CrestorTM has a 6.5
percent share of total statin prescriptions, whilst in the UK, share of total
prescriptions increased to 1.9 percent.
* The company estimates that over 200,000 patients have been treated
with CrestorTM to date; post-marketing surveillance in these markets confirms
the excellent safety profile, which is comparable to the other marketed
products.
Respiratory
Third Quarter CER % Nine Months CER %
2003 2002 2003 2002
SymbicortTM 128 72 +54 377 194 +69
PulmicortTM 184 149 +14 674 575 +10
RhinocortTM 86 79 +6 272 223 +19
AccolateTM 20 27 -30 76 92 -19
OxisTM 31 30 -10 91 91 -12
Total 485 391 +14 1,600 1,281 +16
* SymbicortTM sales increased by 69 percent to $377 million for the nine
months, as the product continues to make inroads into the rapidly growing market
for fixed combinations of steroids and beta agonists. In February, SymbicortTM
became the first product in its class to receive EU approval for the treatment
of chronic obstructive pulmonary disease. Later this year, capitalising on the
unique pharmacological properties of its budesonide and formoterol components,
the company will submit an MAA in Europe for SymbicortTM as a Single Inhaler
Treatment for asthma.
* Total prescriptions in the US for PulmicortTM RespulesTM grew by 34
percent through September. This growth, coupled with increases in the average
prescription size and price changes, fuelled the 44 percent increase in
PulmicortTM sales in the US for the nine months. Sales growth in the US in the
third quarter for PulmicortTM (up 71 percent) is a function of a destocking of
PulmicortTM RespulesTM and PulmicortTM TurbuhalerTM in the third quarter 2002.
* RhinocortTM sales in the US were up 29 percent for the nine months, as
growth in RhinocortTM Aqua continues to more than offset the sales lost from the
discontinuation of the RhinocortTM Nasal Inhaler formulation. Total
prescriptions for RhinocortTM Aqua are up 31 percent in the US market through
September.
Oncology
Third Quarter CER % Nine Months CER %
2003 2002 2003 2002
CasodexTM 230 189 +12 647 460 +30
ZoladexTM 224 206 - 630 588 -1
ArimidexTM 136 95 +32 372 239 +46
IressaTM 70 26 +165 136 26 n/m
FaslodexTM 19 11 +73 56 19 +195
NolvadexTM 38 85 -59 138 342 -62
Total 722 615 +9 1,993 1,688 +10
* CasodexTM sales outside the US increased by 26 percent for the nine
months on good growth in Europe (up 25 percent) and Japan (up 27 percent). The
growth outside the US in the third quarter was 32 percent.
* Underlying demand for CasodexTM in the US is broadly unchanged,
reflecting the maturity of the antiandrogen market in the treatment of advanced
prostate cancer. CasodexTM share of total prescriptions in this market was 82.9
percent in September. Reported sales growth rates in the US market are largely
a function of fluctuations in wholesaler stock movements. Third quarter sales
were down 23 percent versus the stock building that occurred in the third
quarter last year. Year to date sales (up 40 percent) indicate that wholesaler
inventories remain elevated at the end of September.
* ArimidexTM sales increased by 46 percent for the nine months as the
product continues to gain acceptance as the initial hormonal treatment of early
breast cancer in postmenopausal women. ArimidexTM is the only drug to show
improvement over tamoxifen treatment in this setting.
* In the third quarter there was some building of wholesaler inventories
in the US for ArimidexTM. Sales were up 27 percent versus a strong third
quarter 2002. Sales for the nine months in the US were up 50 percent broadly in
line with the 52 percent increase in total prescriptions through September.
* Sales of IressaTM reached $136 million in the first nine months and
$70 million in the third quarter. Third quarter sales in Japan were $27
million, the highest quarter so far this year.
* IressaTM sales in the US since launch in May total $54 million,
including $36 million in the third quarter. In September alone more than 6,100
retail prescriptions were dispensed, bringing the total since launch to over
22,000.
* FaslodexTM sales reflect a steady increase in usage for the treatment
of advanced breast cancer in the US market.
CNS
Third Quarter CER % Nine Months CER %
2003 2002 2003 2002
SeroquelTM 345 196 +71 1,059 788 +31
ZomigTM 83 68 +12 245 234 -2
Total 433 272 +52 1,324 1,045 +23
* In the third quarter SeroquelTM sales in the US increased by 79
percent versus the third quarter 2002 when high wholesaler inventories were
being unwound. Sales for the nine months were up 25 percent, still somewhat
below the growth in prescriptions, which increased by 35 percent through
September. Market share of total prescriptions in the US reached a new high at
20.6 percent of the antipsychotic market.
* Sales of SeroquelTM in markets outside the US increased by 54 percent
for the nine months, with good growth in Japan (up 118 percent) and in Europe
(up 42 percent). Sales outside the US grew by 50 percent in the third quarter.
* On 13 October the company announced successful completion of the EU
Mutual Recognition Procedure involving 14 European countries to extend the use
of SeroquelTM in the treatment of mania associated with bipolar disorder. The
US NDA for this use is currently undergoing regulatory review.
* Sales of ZomigTM outside the US increased by 8 percent for the nine
months and by 13 percent in the third quarter, fuelled by the growth in ZomigTM
RapimeltTM and launches of ZomigTM Nasal spray in 8 markets to date.
* ZomigTM sales in the US were down 12 percent for the nine months and
up 10 percent in the third quarter on variations in wholesaler stock movements.
* ZomigTM Nasal Spray received FDA approval on 30 September. Also in
September, AstraZeneca entered into a marketing and distribution agreement with
Medpointe Inc, a specialty pharmaceutical company, to promote and sell the Zomig
TM family of prescription products in the US beginning 1 January 2004, including
ZomigTM Nasal Spray.
Pain, Infection and Other Pharma
Third Quarter CER % Nine Months CER %
2003 2002 2003 2002
MerremTM 88 75 +9 242 216 +8
DiprivanTM 105 104 -5 339 326 -1
XylocaineTM 47 43 +2 135 128 +1
MarcaineTM 23 19 +16 65 54 +14
Total 414 344 +12 1,188 1,043 +8
* Sales of DiprivanTM for the nine months were up 8 percent in the US on
growth in the propofol market, and were down 9 percent outside the US.
Geographic Sales
Third Quarter CER % Nine Months CER %
2003 2002 2003 2002
USA 2,271 2,190 +4 6,703 6,787 -1
Europe 1,662 1,379 +3 4,863 4,167 -
Japan 297 251 +14 833 663 +18
RoW 573 462 +16 1,575 1,323 +17
* US sales were down just 1 percent for the nine months. Excluding the
three products experiencing generic competition, underlying demand for the rest
of the portfolio is estimated at a robust 36 percent (adjusted for wholesaler
stock movements).
* Sales in Europe were unchanged for the nine months, as strong sales
growth in NexiumTM, SymbicortTM, SeroquelTM and the oncology products was offset
by declines in LosecTM, ZestrilTM and the disposal of Marlow Foods at the end of
May.
* Sales growth in Japan for the nine months was fuelled by Losec (up 42
percent) and the oncology product range (up 21 percent), in particular CasodexTM
and IressaTM.
Operating Review
All narrative in this section refers to growth rates at constant exchange rates
(CER) unless otherwise indicated
Nine Months
Reported sales grew by 8 percent and operating profits declined by 1 percent. At
constant exchange rates, sales grew by 2 percent and operating profit declined
by 7 percent. The full benefit of the weakening dollar fell through to operating
profit as a result of the Euro strengthening (which benefits sales) more than
the Swedish krona and sterling (which increases costs) together with realised
gains on currency hedges.
Operating margin at 23.3 percent was 2.1 percentage points lower than last year.
Overall, currency was neutral on margins. Gross margin improved by 0.8
percentage points to 75.6 percent including a benefit from lower proportional
payments to Merck offset by an increase in underlying cost of sales. R&D and SG&
A growth continues to be tightly managed (5 percent growth in CER terms), with R
&D and SG&A costs as a percentage of sales increasing by 0.4 and 1.6 percentage
points respectively. Other operating income remains significantly lower than
last year and accounts for 0.8 percentage points of the margin decline.
Third Quarter
Reported sales grew by 12 percent and operating profits by 20 percent. At
constant exchange rates, sales grew by 5 percent and operating profit by 6
percent. The greater benefit of currency on profits over sales is a result of
the weaker dollar producing a smaller impact on costs than sales combined with
an increase in gains on currency hedges.
Operating margin at 22.9 percent was 1.4 percentage points higher than last
year. Gross margin improved by 1.5 percentage points to 75.5 percent, almost all
of which was attributable to currency. The benefits from lower proportional
payments to Merck were largely offset by a provision for disposal of a surplus
manufacturing facility. R&D and SG&A increased by 7 percent at CER,
predominantly through higher SG&A, which as a percentage of sales increased by 2
percentage points. Other income added 1.1 percentage points to the margin.
Wholesaler Stocking
Wholesaler stocking continues to have an effect on our reported sales. As we
reported last quarter, speculative wholesaler purchases made ahead of
anticipated price increases in the first quarter had unwound to some extent. We
estimated that wholesaler inventories had fallen to around $200 million above
normal. This quarter we estimate that there has been some further wholesaler
stocking and that wholesaler inventories now stand at approximately $300 million
above normal, NexiumTM and Toprol-XLTM accounting for most of this amount.
Interest
Interest income was $18 million in the third quarter ($2 million for 2002) and
$71 million for the nine months ($24 million for 2002).
Taxation
The effective tax rate was 27.5 percent for both the third quarter and the nine
months 2003. The comparable rates for 2002 were 26.3 percent and 26.8 percent
respectively.
Cash Flow
Cash generated from operating activities before exceptional cash outflows in the
nine months fell to $3,532 million from $4,135 million in the comparative
period. This decline was caused by an increase in working capital, due to the
settlement of several significant creditor balances, and higher debtors, partly
due to a larger proportion of sales occurring towards the end of the period.
Cash expenditure on exceptional items was $387 million compared to $74 million
in 2002, following the payment of $355 million in settlement of the Zoladex
investigation disclosed in the half year press statement. Tax paid was $1,007
million, $329 million higher than the same period in 2002 due to earlier payment
of US taxes. Net capital expenditure totalled $1,002 million for the nine months
to date, which is broadly comparable with the comparative period in 2002. The
cash inflow in respect of acquisitions and disposals of $80 million relates to
the disposal of Marlow Foods in the second quarter.
After accounting for dividends paid of $770 million and net share repurchases of
$501 million there is a $59 million increase in net cash funds. The net cash
funds at 30 September 2003 were $3,903 million.
Share Repurchase Programme
During the quarter 6.9 million ordinary shares were repurchased for cancellation
at a total cost of $296 million, bringing the total for the year to 15.5 million
shares at a total cost of $607 million.
The total number of shares repurchased for cancellation since the beginning of
the programme now stands at 81.1 million at an aggregate cost of $3,412 million.
The total number of shares in issue at 30 September 2003 is 1,706 million.
Upcoming Milestones and Key Events
29 January 2004 Announcement of 2003 Full Year results
Sir Tom McKillop
Chief Executive
This information is provided by RNS
The company news service from the London Stock Exchange
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