AstraZeneca AZN 2.04 % PLC posted a loss in the second quarter as it furiously invested in its next-generation drugs while battling falling sales of its aging blockbuster Crestor, and took a restructuring charge relating to a cost-reduction program.
Cambridge, England-based AstraZeneca posted a net loss of $ 3 million in the three months to June 30, compared with a net profit of $ 697 million in the same period a year earlier. Revenue slipped 11% to $ 5.6 billion. Analysts had forecast net profit of $ 403 million and revenue of $ 5.6 billion.
The net loss reflects a $ 308 million restructuring charge relating to a recently launched program to slim down the company’s sales force by 2018. The program is expected to cost $ 1.5 billion and yield $ 1.1 billion in net savings from 2018 onward. AstraZeneca’s newer drugs target more specialized disease areas that require fewer sales representatives.
Core operating profit, a measure that strips out one-time gains and losses, fell 22% to $ 1.4 billion, beating market expectations of $ 1.3 billion.
The strength of the dollar dented Astra’s results. Stripping out currency effects, revenue fell 10% and core operating profit declined 21%.
Astra’s downbeat results reflected a steep decline in sales of the company’s cholesterol-lowering drug Crestor after a cheap copycat version launched in early May.
Sales of the drug, Astra’s biggest seller, declined 29% in the quarter to $ 926 million, dragging overall product sales down 5% at constant exchange rates to $ 5.5 billion. Falling sales of another old blockbuster, Nexium for heartburn, also weighed on total sales.
The launch of generic Crestor marks the end of a succession of patent expirations for Astra’s old blockbusters that have dented revenue and earnings for several years.
AstraZeneca is relying on a string of new medicines to return the company to growth and fulfill Chief Executive Pascal Soriot’s pledge to increase sales to $ 45 billion by 2023, compared with $ 26 billion in 2015. That goal was a key plank in his defense against an unwelcome and ultimately unsuccessful takeover bid by Pfizer Inc. PFE 0.05 % in 2014.
Some of those are already generating sales growth. AstraZeneca said revenue from its so-called growth platforms increased 8% to $ 3.7 billion in the quarter. That includes revenue from recently-launched respiratory, diabetes and cancer drugs, its new heart medicine Brilinta and sales in the emerging markets and Japan.
AstraZeneca also generated $ 134 million in the quarter by unloading de-prioritized research programs to other companies in exchange for upfront payments and royalties.
The company backed earlier guidance to say it expects a low to mid-single digit decline for both revenue and core earnings per share.
Write to Denise Roland at [email protected]