AstraZeneca's (>> AstraZeneca) drug sales fell again in the third quarter, hit by generic competition to former blockbusters like cholesterol pill Crestor, although the pace of decline slowed as it looks to new cancer treatments to revive its fortunes.
Product sales were down 3 percent compared with an 11 percent fall during the first half of the year. Emerging markets proved a bright spot, with Chinese sales up 12 percent, the company said on Thursday.
Chief Executive Pascal Soriot believes the drugmaker has reached a turning-point as its pipeline of new medicines starts to deliver and the impact of patent losses recedes. Consensus forecasts also point to a recovery in sales and profits from next year.
Still, the speed of AstraZeneca's turnaround remains uncertain as the No.2 British drugmaker goes head to head with industry giants like Roche (>> Roche Holding Ltd.), Bristol-Myers Squibb (>> Bristol-Myers Squibb Company) and Merck & Co (>> Merck and Company) in the fast-growing but fiercely competitive cancer drug market.
Total revenue rose 9 percent to $6.23 billion (£4.7 billion) in the quarter, helped by a $997 million payment from Merck, which struck a cancer drug partnership deal with the British group in July. Sales of Crestor, while down 16 percent, were also higher than expected.
That was not enough to stop a fall in core earnings per share (EPS), which exclude some items, of 15 percent to $1.12. But the overall results were better than expected and the shares had risen around 1 percent by 1130 GMT.
Industry analysts, on average, had forecast quarterly earnings of $1.04 and revenue of $5.95 billion, according to Thomson Reuters data.
For the full year, AstraZeneca said it expected 2017 core EPS to be "towards the favourable end of the guidance range of a low to mid teens percentage decline".
Soriot said he remained confident AstraZeneca could achieve annual revenue of more than $40 billion in 2023, despite scepticism among analysts like Trinity Delta's Mick Cooper who said it was "difficult" to see how this would be done.
Soriot first gave a bullish long-term forecast of 2023 revenue hitting $45 billion back in 2014, as he fended off a takeover attempt by Pfizer (>> Pfizer). Since then, a stronger dollar has shifted the target slightly but Soriot said the expectation in constant exchange rates had not changed.
"Our long-range plan so far reconfirms that we can get to the $40-41 billion dollars at today's currency rates that we communicated back in 2014," he said.
Results from drug trials remain critical.
AstraZeneca suffered the biggest ever daily fall in its shares three months ago, following the initial failure of a key lung cancer trial dubbed Mystic.
But it has since rebuilt investor expectations, helped by impressive data from two other lung cancer trials, involving the drugs Tagrisso and Imfinzi, that were presented at a medical congress in Madrid in September.
And just last week it won early U.S. approval for Calquence, marking its first entry into the blood cancer market.
However, results from another immunotherapy lung cancer trial called Arctic have been delayed again and are now not expected until the first half of 2018.
AstraZeneca is also refilling its drug pipeline in other areas, such as respiratory medicine. A new drug for severe asthma is awaiting U.S. approval by the end of this year and could get an approval recommendation in Europe as early as Friday.
(Reporting by Ben Hirschler; Editing by Keith Weir and Mark Potter)
By Ben Hirschler