AstraZeneca PLC Third Quarter & Nine Months Results 2009
Revenue in the third quarter increased by 10 percent at CER, but was up 5 percent on an actual basis as a result of the negative impact of exchange rate movements. Revenue benefited from strong growth of the Toprol-XL franchise in the US as a result of the market withdrawal by two generic competitors and from revenues from US government orders for vaccine for Novel Influenza A (H1N1); adjusting for these factors, global revenue increased by 5 percent. US revenue was up 14 percent (3 percent excluding Toprol-XL and H1N1 vaccine sales). Revenue in the Rest of World was also up 7 percent. Revenue in Established Markets was up 4 percent. Emerging Markets revenue growth was 15 percent. Double-digit revenue growth in Emerging Markets is anticipated for the full year.
Core operating profit in the third quarter was up 29 percent to $3,609 million. The increase was chiefly the result of higher revenue; the added contribution from gross margin and lower R&D expenditures was partially offset by higher SG&A expense and slightly lower other income. Reported operating profit increased by 25 percent to $3,204 million; this growth rate was slightly below the growth in Core operating profit, reflecting provisions totalling $108 million with respect to various federal and state investigations and civil litigation matters relating to drug marketing and pricing practices taken in the third quarter 2009 and impairment charges relating to revised estimates of the potential value of licenses for the proprietary reverse genetics vaccine technology acquired with MedImmune.
Core earnings per share in the third quarter were $1.68 compared with $1.32 in the third quarter 2008, a 27 percent increase at CER, broadly in line with the growth in Core operating profit in the quarter. Reported earnings per share in the third quarter were up 22 percent to $1.46, after charging the legal provisions as well as the intangible impairment.
Revenue for the nine months increased by 8 percent at CER, but was up 2 percent on an actual basis as a result of the negative impact of exchange rate movements. Global revenue growth was 5 percent excluding US Toprol-XL and H1N1 vaccine sales. Revenue in the US was up 11 percent (4 percent excluding Toprol-XL and H1N1 vaccine sales). Revenue in the Rest of World was up 6 percent. Revenue in Established Markets was up 4 percent. Revenue in Emerging Markets increased by 13 percent.
Core operating profit increased by 29 percent to $10,577 million as a result of revenue growth, operating efficiencies and higher other income compared with the nine months of 2008. Reported operating profit was $9,218 million, an increase of 27 percent, broadly comparable to the growth in Core operating profit, as the negative impact of $538 million in legal provisions taken in the second and third quarters of 2009 was somewhat offset by the Ethyol impairment that was charged in the first quarter 2008.
Core earnings per share for the nine months were $4.90, an increase of 28 percent, in line with the growth in Core operating profit. Reported EPS increased by 23 percent to $4.12, reflecting the effects of the legal provisions and the Ethyol impairment noted above. The other adjustments from Core to Reported EPS (restructuring costs and MedImmune and Merck amortisation) were broadly similar for both periods.
David Brennan, Chief Executive Officer, said: "Our strong business performance is driven by good operating execution bolstered by revenue upsides from Toprol-XL and H1N1 vaccine sales. All these factors are reflected in our results for the first nine months and our increased Core EPS target for the full year. Since the half year we have made progress on the pipeline with the approval of ONGLYZATM, the European submission for Brilinta and new external collaborations, tempered by the disappointing news on Zactima."
A comprehensive update of the AstraZeneca R&D pipeline was presented in conjunction with the Half Year 2009 results announcement on 30 July, and the pipeline table remains available on the Company's website, www.astrazeneca.com, under information for investors.