AstraZeneca fights back with "significant progress"

AstraZeneca chief executive Pascal Soriot gave an upbeat account of the company's "rapidly progressing" innovation pipeline as he sought to shift focus back to his turnround efforts after days of speculation about a takeover by Pfizer.

Soriot was at pains to highlight the 3% increase in first-quarter revenues as a positive manifestation of his revitalising strategies, despite another sharp drop in profits.

Indeed, revenues pleased analysts, falling at the upper end of forecasts, at $6.42 billion (£3.82 billion) in the three months to the end of March, up from $6.36 billion last year, adjusted for currency fluctuations. However, pre-tax profits were $638 million, a massive slide from $1.4 billion in last year's first quarter. Core earnings per share, which excludes various exceptional items, were $1.17, down 17% from $1.41 a year ago.

The bright spots were the Brilinta blood thinning drug and diabetes treatments arising from the Bristol Myers Squibb deal completed in February.

Soriot also made much of the potential of a new generation of drugs for cancer and respiratory diseases, where late-stage trials are planned for four drugs. The McKinsey alumnus said he aims to reverse the group's revenue decline within three years and get sales back to 2013 levels by 2017, when he hopes the innovation pipeline will have started to come through.

"I am pleased with the significant progress we are making towards achieving scientific leadership in our core therapeutic areas," he said. "We are investing in our rapidly progressing pipeline and the key platforms that are the backbone of our strategy to return to growth."

Astra faces generic competition for its heartburn pill Nexium and cholesterol treatment Crestor, which together brought in $9 billion of sales last year.

Analysts said that there is good chance that AstraZeneca will return to growth faster than many believe. Soriot's remuneration is heavily linked to long-term share-price rises, and he has set in place a poison pill strategy and will do everything in his power to ward off Pfizer's bid.

No mention was made of the approach but while talks are said to have ceased, the prospect looms in the background.

The shares rose by a further 3.6% by 10am to 4,187.5p as investors believe the company's turnround strategies are working, making a potential bid battle all the more hard fought.

However, earlier in the week Societe Generale put a 'sell' recommendation on the stock, saying that in its view, given AstraZeneca's forecast revenue and earnings profile through 2018-2019, which predicts an earnings decline until 2018, Pfizer could have "a rose-tinted view of the cost-cutting potential from such a deal and a rose-tinted view of AZN's R&D pipeline potential".