AstraZeneca PLC Fourth Quarter and Full Year Results 2008
AstraZeneca has delivered a robust performance in an increasingly challenging market environment. Good headway is being made in further improving the efficiency of the organization, and the expansion in the scope of our restructuring efforts is another important step towards sustaining long-term competitiveness.
Sales in the fourth quarter increased by 4 percent at CER, but were unchanged on an as reported basis as a result of the negative impact of exchange rate movements. Sales in the US were up 3 percent, as the adverse impact from generic competition for Toprol-XL is now annualised. Sales in the Rest of World were up 5 percent. Sales in Established Markets were up 3 percent. Sales growth in Emerging Markets remained strong, with sales up 13 percent in the quarter to $1,023 million.
There were a number of intangible asset impairment charges taken in the fourth quarter, some of which affected Core operating profit, others which are excluded from Core profit and only affect reported operating profit. Included within Core operating profit are intangible asset impairments charges totalling $184 million, the largest of which is a $115 million charge for impairment of intangible assets relating to Pulmicort Respules following the at risk generic launch by Teva and the subsequent settlement of patent litigation. There were a total of $150 million of intangible asset impairments charged to reported operating profit which are excluded from operating profit on a Core basis. These intangible assets, arising from the acquisition of MedImmune, relate to revised forecasts for future royalties related to HPV vaccines ($90 million) and other items ($60 million) principally related to the return of rights to the heat shock protein 90 (Hsp90) drug candidates IPI-504 (MEDI-561) and IPI-493 to Infinity Pharmaceuticals.
Core operating profit in the fourth quarter was up 5 percent to $2,685 million, chiefly as a result of sales growth and higher other income, partially offset by the impairment relating to Pulmicort Respules and other provisions within cost of goods sold. Reported operating profit decreased by 9 percent to $1,892 million as a result of higher restructuring costs and intangible asset impairments taken in this quarter compared to the fourth quarter 2007.
Core earnings per share in the fourth quarter were $1.25 compared with $1.10 in the fourth quarter 2007, a 6 percent increase at CER. It is estimated that there was 7 cents of currency benefit to Core EPS in the fourth quarter. Core earnings per share benefited from lower net interest expense, the result of a fair value gain relating to certain long-term bonds in issue, and a lower number of shares outstanding. Reported earnings per share in the fourth quarter were $0.86, a 9 percent decrease, as a result of higher restructuring and intangible asset impairment charges.
Sales for the full year increased by 3 percent at CER, or 7 percent on an as reported basis. Sales in the US were up 1 percent, as the inclusion of a full year of MedImmune sales and modest growth in the rest of the US business more than offset the sales of Toprol-XL lost to generic competition. Sales in the Rest of World were up 5 percent. Sales in Established Markets were up 2 percent, including a 1 percent increase in sales in Western Europe. Sales in Emerging Markets were up 16 percent.
Core operating profit increased by 9 percent to $10,958 million as increased sales, improvements in gross margin and R&D efficiencies more than offset a modest increase in SG&A expense. Reported operating profit increased by 4 percent to $9,144 million.
Core earnings per share for the full year were $5.10, an increase of 8 percent. The increase in reported earnings per share was 2 percent, to $4.20, with the lower growth rate versus Core EPS largely attributable to intangible asset impairment charges and a full year of MedImmune amortisation, which are excluded from Core EPS.
A comprehensive update of the AstraZeneca R&D pipeline is presented in conjunction with this Full Year 2008 results announcement, and is available on the Company's website, www.astrazeneca.com, under information for investors.