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Astra warns on sales
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October 25, 2000: 9:00 a.m. ET
Drug maker's shares slide as it lowers revenue growth target for 2000
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LONDON (CNNfn) - Anglo-Swedish drug company AstraZeneca PLC warned Wednesday that slowing U.S. sales of its best-selling drug, ulcer medicine Prilosec, meant it would miss its target of double-digit sales growth this year.
AstraZeneca (AZN: Research, Estimates) shares fell 158 pence, or 4.9 percent, to 3,092 in London, while the stock dropped more than 5 percent in Stockholm to 454 Swedish crowns. ADRs slipped $1.81 to $46.38 in New York. The London-based company, which reports profit in U.S. dollars, also said the weak euro would undermine its earnings in dollar terms.
 The company issued the warning along with its third-quarter earnings results. AstraZeneca earned $986 million on a pre-tax basis, 4.8 percent above profit of $941 million in the 1999 period.
Earnings per share rose to 39 cents, from 37 cents last year, falling a bit short of the 40-cent average forecast by analysts.
Sales rose 3 percent to $4.3 billion, minimal growth in an industry that often sees double-digit sales gains from year to year. The results were pulled down by flat sales of ulcer treatment Prilosec, the world's top-selling prescription drug. Sales of Prilosec, known as Losec outside of the United States, totaled $1.56 billion for the quarter, from $1.54 billion in the 1999 third quarter.
Prilosec prescriptions rose 4.4 percent in the United States, but price pressures cut into revenue growth. AstraZeneca lowered the price of the treatment to try to thwart competition from rival drugs, which are trying to capture market share ahead of the expiration of Prilosec's patent protection next year.
The company lowered its forecast for this year's sales growth to 8 percent, saying it is unlikely to achieve its goal of double-digit growth in constant-currency terms because of Prilosec's slow growth.
AstraZeneca, however, was upbeat about the prospects for Nexium, an improved version of Prilosec that recently was launched in Europe. Nexium sales totaled about $4 million in Britain and Sweden in the third quarter. The drug also has gone on the market in Ireland, Norway, Denmark and Germany. Nexium is awaiting Food and Drug Administration approval before it can go on the market in the United States.
"While it is still very early into the launch phase, the first four weeks of prescription data suggests that this could be the fastest ever uptake of a new product in the U.K.," said AstraZeneca Chief Executive Officer Tom McKillop.
Currency fluctuations, mainly the decline of the euro against the dollar, sliced 3 percent off third-quarter sales and 4 percent off operating profit, AstraZeneca said. The company warned currency movements could reduce its full-year operating profit by around $100 million.
McKillop also said the company is on track to complete the spin-off of its agrochemicals division in mid-November. AstraZeneca and Novartis AG have both agreed to spin off their chemicals divisions and merge them, creating a new company called Syngenta.
AstraZeneca's profit report kicks off the third-quarter earnings season for U.K. drug firms. Investors are also awaiting results from Glaxo Wellcome PLC and SmithKline Beecham PLC, who are set to merge in a deal that would create the world's largest drug maker. 
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AstraZeneca
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