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AZ predicts 'challenging' times ahead

Announcing a 12 per cent rise in sales (to USD29.56bn) for the year 2007, coupled with a 3 per cent drop in earnings per share (to USD3.74), AstraZeneca (AZ) warned that 'pricing demands from payers and competition from generics in major therapeutic categories' would continue to make life tough for the industry in 2008.

Announcing a 12 per cent rise in sales (to USD29.56bn) for the year 2007, coupled with a 3 per cent drop in earnings per share (to USD3.74), AstraZeneca (AZ) warned that "pricing demands from payers and competition from generics in major therapeutic categories" would continue to make life tough for the industry in 2008. 

The pharma group, whose 2007 purchase of MedImmune not only boosted overall sales by 3 per cent but enhanced its biotechnology capabilities, has moved to bolster its development pipeline. Investment in R&D increased for the full year to more than USD5bn, while the firm also made efforts to not only select a greater number of compounds for development (36 in 2007 versus 22 in 2006), but to increase the likelihood of finding successful candidates. During the year, double the number (24) of molecules entered early human trials compared with 2006.

Changes to original timetables for product development and subsequent marketing submissions were also announced by the company on Thursday 31 January. Median product development time has been slashed by 18 months in an attempt to match AZ's delivery speed with that of the fastest 25 per cent in the industry by 2010.

In 2008, the firm plans to file up to three first licence applications for new chemical entities and expects "a record number" of projects to reach proof-of-concept 'decision stage' by the end of the year. Altogether, AZ describes as "achievable" its target to bring "on average two new medicines to the market on an annual basis" from 2010 onwards.

CEO David Brennan said: "Our pipeline is significantly stronger, with the acquisition of MedImmune creating a leading position in biologics: I am confident that we are taking the right steps."

Future challenges

Brennan said the underlying results for the year 2007 were strong, with the company forecasting another increase in sales for 2008 which could be low-to-mid single percentage digits. 

Several key products performed robustly over the year, though sales of Nexium, the firm's top-seller, fell by 2 per cent (to USD5.22bn), suffering an 18 per cent drop in US sales during Q4 07. While Nexium's share of the market increased, any gains were diminished by lower prices achieved and the continued growth of generic omeprazole.

Sales of Seroquel increased by 15 per cent (to USD4.03bn), while the Seroquel XR's launch rollout is underway with European marketing submissions - for acute bipolar mania and bipolar depression - expected in Q1 08.

31st January 2008

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