By Sten Stovall
LONDON—AstraZeneca /zigman2/quotes/200304487/composite AZN -0.84% PLC posted a 23% rise in second-quarter net profit—helped by a strong performance in emerging markets and sales of key drugs such as cholesterol product Crestor—but warned that the year's second half will be more difficult.
Net profit increased 23% to $2.11 billion from $1.71 billion a year earlier, well ahead of analyst expectations of $1.94 billion. Revenue rose 2.8% to $8.18 billion from $7.96 billion.
"Our second quarter performance reflects continued strong growth in our Emerging Markets and good performance for key brands Crestor, Seroquel and Symbicort," Chief Executive David Brennan said in a statement. "While revenue and core [earnings per share] comparisons become more challenging in the second half of the year, we have increased our full year financial targets."
The company got a significant boost on Wednesday when a Food and Drug Administration panel backed the use of Brilinta, a proposed anticlotting drug developed by AstraZeneca, despite concerns the product might not work in U.S. patients.
Data from a study considered by the panel compared Brilinta with Sanofi-Aventis /zigman2/quotes/206928357/delayed FR:SAN -1.30% ' Plavix and showed U.S. patients had "worse results" with Brilinta. But the FDA said part of the reason could have been that the aspirin dose was "generally higher" in the U.S. portion of the study, which included 1,413 patients, or possibly because of differences in the overall level of care.
U.S. revenue declined by 4%, reflecting the impact of generic competition for blood pressure treatment Toprol-XL, children's asthma medication Pulmicort Respules and cancer treatment Casodex.
Revenue in the rest of the world was up 5%, largely due to a 16% increase in emerging markets, which accounted for approximately 75% of the revenue growth outside the U.S.
The company warned that its second-half results later this year will probably be less robust due to generic drug competition and reduced sales of its H1N1 pandemic flu vaccine. The company now expects a low single-digit decline in revenue in 2010 in constant currency terms.
AstraZeneca, the U.K.'s second-biggest drug maker behind GlaxoSmithKline /zigman2/quotes/209463850/composite GSK -0.55% PLC, increased its full-year core earnings-per-share target for the second time this year, to the range of $6.35 to $6.65.
In late April, it lifted the forecasts to a range of $6.05 to $6.35 after settling a 15-year dispute with U.K. tax authorities that led to a lower tax rate. Core earnings per share for the second quarter increased 16% to $1.79 after a 23% first-quarter jump to $2.03.
The company also increased its target for net share repurchases for 2010 to $2 billion from its initial target of $1 billion, after completing net share repurchases of $516 million.
"The share buyback increase is a way of inducing investors to hold the stock in the short-term while the pipeline news develops, so the Brilinta vote overshadowed today's results," Evolution Securities analyst Dominic Vlader said.
AstraZeneca shares are up 19% from last year. It announced a dividend of $0.70 for the quarter.
Write to Sten Stovall at email@example.com