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AZ net profit of $2.8bn for Q1

AstraZeneca has reported a growth in net profit of 29 per cent for the first quarter of 2010, increasing to $2.8bn

AstraZeneca (AZ) has reported a growth in net profit of 29 per cent for the first quarter of 2010, increasing to $2.8bn from $2.1bn over the same period in 2009.

The level of growth was above the expectations the Anglo-Swedish drugmakers held for 2010, with a 10 per cent increase in core operating profit following cost discipline measures helping the rise in final profits.

A tax rate decrease from 28.6 per cent in Q1 2009 to 21.0 per cent in Q1 2010 also contributed to this growth. This was due to the company reaching a settlement with HM Revenue & Customs (HMRC) in the UK over a long-running transfer pricing issue, as well as developments in other transfer pricing matters. AZ said it still anticipates the full year tax rate for 2010 to be around 27 per cent.

With this increase in profits, core earnings per share (EPS) saw significant growth, rising 23 per cent to $2.03.

As well as cost-cutting measures and favourable tax rates, company revenue saw growth, rising 11 per cent from $7.7bn to $8.6bn. In constant exchange rates (CER) this was an increase of 7 per cent.

A 27 per cent increase in sales of cholesterol drug, Crestor (rosuvastatin calcium), following additional approvals from the US Food and Drug Administration (FDA) for the drug in February 2010 was one of the key contributors to revenue growth. There were also significantly improved sales of schizophrenia drug, Seroquel (quetiapine) - increasing 13 per cent - and asthma treatment, Symbicort (budesonide and formoterol) - increasing 29 per cent.

Emerging market growth was strong for the company, with an increase of 19 per cent in CER to sales of $1.3bn. Increased revenue in China was particularly favourable, growing by 36 per cent.

David Brennan, CEO of AZ, gave his take on the rest of 2010: "Looking forward, revenue comparisons will become more challenging in the second half of the year as a result of the uplift from Toprol-XL (metoprolol succinate) and H1N1 vaccine sales in 2009 and the expiration of the Arimidex (anastrozole) patent later this year. Based on the first quarter performance and the outlook for the remainder of the year we have increased our core EPS target. Our pipeline has been further strengthened during the quarter by the addition of a new late-stage development project in rheumatoid arthritis from Rigel Pharmaceuticals."

29th April 2010

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