AstraZeneca sees 3rd-qtr 2010 earnings slump 27%, hit by charges and generic competition; sues Watson

Generic competition, as well as restructuring and legal costs have taken a hefty toll on AstraZeneca’s (LSE: AZN) third quarter 2010 results, as the Anglo-Swedish drug major posted a 27% slump in net profit at $1.55 billion and revenue was down 3.7 % to $7.9 billion. The company’s shares slipped 2.9% to £31.50 by 11.00 am this morning.

Pretax profits fell 26% to $2.26 billion versus consensus projections of $2.5 billion. Earnings per share plunged 26% to $1.08 and core EPS dropped 11% to $1.50, coming in well below consensus forecasts of $1.47. Forecasts for sales were on the spot at $7.9 billion. Reported operating profit was down 24% at constant exchange rate to $2.41 billion. Reported EPS declined largely because of legal provisions totalling $473 million in the third quarter 2010 which are related to ongoing product liability litigation for the antipsychotic drug Seroquel (quetiapine fumarate), the company noted. AstraZeneca’s core EPS target range for the full year has narrowed to $6.50 to $6.65 (from $6.35 to $6.65).

Commenting on the results, David Brennan, chief executive, said: “We remain firmly on track to achieve our full year financial targets. The third quarter performance featured double-digit revenue growth in Emerging Markets. Revenue also increased in Western Europe and Established Rest of World. As expected, the impact of generic competition on several products and the absence of pandemic flu vaccine revenue led to a challenging quarter in the USA.”