) fourth-quarter 2012 core earnings of $1.56 per American
Depositary Share (ADS) beat the Zacks Consensus Estimate of
$1.38. Earnings were up 1% (at constant exchange rates [CER])
year over year.
AstraZeneca's quarterly revenues fell 15% (at CER) year over
year to $7.3 billion, primarily due to intense generic
competition coupled with the disposal of Astra Tech and Aptium
revenues. Revenues were above the Zacks Consensus Estimate of
Revenue for 2012 was $27.9 million, down 15 % (at CER) from a
year ago. Earnings per share came in at $6.41, down 9% from $7.28
posted in 2011.
AstraZeneca's business in 2012 was negatively impacted by the
patent expiry in markets and tough market conditions on a global
basis. Tough market conditions coupled with generic competition
to the company's key drugs hurt 2012 results.
All growth rates mentioned below are on a year-on-year basis
and at CER.
The Quarter in Detail
U.S. revenues were down 23% in the fourth quarter of 2012 to
$2.8 billion, primarily due to generic competition for Seroquel
IR. The US healthcare reform negatively impacted fourth-quarter
revenues and costs by $250 million.
Excluding Seroquel IR, revenue increased by 3.7%, including
$84 million of revenues from the company's share of the Amylin
Revenues declined 9% in the Rest of the World (RoW) to $4.5
billion. The decline was attributed to weakness in the Western
European markets, which was down 16% due to loss of exclusivity
on four products - Seroquel IR, Atacand, Nexium and
Established ROW was down 14% primarily. Results were hurt by
an 84% decline in Crestor sales in Canada as a result of generic
competition. Revenues in Emerging Markets witnessed 6% growth in
the reported quarter fuelled by growth in China, Saudi Arabia and
The drugs facing generic competition include Seroquel IR (down
92% to $94 million), Nexium (down 1% to $1.0 in billion),
Arimidex (down 25% to $122 million), Casodex (down 19% to $112
million), Atacand (down 41% to $202 million) and Merrem (down 5%
to $106 million).
However, drugs such as Iressa (up 10% to $160 million),
Seloken (up 10% to $256 million) Onglyza (up 24% to $88 million),
Symbicort (up 8% to $891 million) and Faslodex (up 20% to $175
million) performed well during the quarter.
Brilinta sales were $38 million in the fourth quarter of 2012
compared with $24 million in the third quarter of 2012.
AstraZeneca's core gross margin remained flat at 81.6% in the
fourth quarter of 2012 due to an unfavorable product mix and the
absence of Aptium.
Core selling, general and administrative (SG&A) expenses
went down 10% to $2.3 billion primarily due to lower selling and
marketing costs (mainly in the developed markets).
During the quarter, core research and development (R&D)
expenses amounted to $1.2 billion, reflecting a decrease of 28%.
Core operating margin was 34.7% of revenue, up 90 basis
We note that in Oct 2012, AstraZeneca suspended its share
repurchase program. The company has repurchased 57.8 million
shares worth $2.6 billion during 2012. The company will not
repurchase any shares in 2013 also.
2013 will be a challenging year for AstraZeneca. The company
expects mid-to-high single digit decline in revenue in 2013
primarily due to Seroquel IR and Crestor (in Canada) along with
the adverse impact from continued government interventions in
AstraZeneca carries a Zacks Rank #3 (Hold). However, other
large cap pharma stocks, such as
Eli Lilly and Company
) currently look more attractive with a Zacks Rank #2 (Buy).
ASTRAZENECA PLC (AZN): Free Stock Analysis
BAYER A G -ADR (BAYRY): Free Stock Analysis
LILLY ELI & CO (LLY): Free Stock Analysis
NOVO-NORDISK AS (NVO): Free Stock Analysis
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