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Generics and legal costs affect AZ profits

Generic competition, the lack of a flu vaccine requirement and costs relating to legal action have led to a decline in Q3 revenue for AstraZeneca

AstraZeneca (AZ) has reported a 2 per cent decline in revenue for Q3 to $7.90bn. Generic competition and the lack of an H1N1 vaccine requirement, as well as costs relating to legal action have contributed to this decline.

The core products affected by generic competition are Toprol-XL (metoprolol succinate) – a high blood pressure medication, asthma treatment Pulmicort Respules (budesonide inhalation suspension) and the company's breast cancer drug Arimidex (anastrozole).

The global lack of requirement for a pandemic flu vaccine this year also meant AZ's results for Q3 2010 were lower than in the same period last year.

Ongoing legal action in the US in relation to AZ's antipsychotic drug Seroquel (quetiapine fumarate) accounted for a cost of $473m in the third quarter of the year. The company also reported costs in relation to restructuring.

Although Q3 revenue was down, revenue for the first nine months of the year was $24,652m – an increase of 2 per cent (CER) compared with the same period last year.

The company reported double-digit sales growth for cholesterol drug Crestor (rosuvastatin calcium), for which AZ has filed a law suit against Watson Pharmaceuticals in an effort to block the company from launching a generic version of the blockbuster medication before its patent protection expires in 2016.

Asthma treatment Symbicort (budesonide and formoterol) and the controversial anti-psychotic Seroquel XR also produced double-digit growth for AZ during this financial period.

AZ also reported a 14 per cent revenue increase in emerging markets and a 7 per cent increase in markets outside the US.

Commenting on the latest financial results, AZ CEO David Brennan 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 US."

28th October 2010

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