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AstraZeneca sales hit hard by generic competition

LONDON (Reuters) - AstraZeneca's sales tumbled 21 percent in the second quarter, punished by generic competition to its best-selling antipsychotic medicine Seroquel and pressure on health spending in Europe.
/ Source: Reuters

LONDON (Reuters) - AstraZeneca's sales tumbled 21 percent in the second quarter, punished by generic competition to its best-selling antipsychotic medicine Seroquel and pressure on health spending in Europe.

With patent losses rapidly eroding revenue and few new drugs to replace them, Britain's second-biggest drugmaker is throwing itself into deal-making to bolster the pipeline, following the early exit of its chief executive at the end of May.

Last month it struck by a deal with Bristol-Myers Squibb to share the cost of buying U.S. diabetes specialist Amylin Pharmaceuticals for $7 billion, the largest of a number of recent bolt-on acquisitions.

Sales in the quarter were $6.66 billion, generating "core" earnings, which exclude certain items, down 12 percent at $1.53 a share, AstraZeneca said on Thursday.

Analysts, on average, had forecast sales of $6.95 billion and earnings of $1.39 a share, according to Thomson Reuters I/B/E/S. The beat on earnings was helped by the release of a tax provision in the second quarter, which boosted core earnings by 19 cents a share.

AstraZeneca reiterated its forecast for a fall in full-year core earnings to between $5.85 and $6.15 a share, against $7.28 in 2011, with revenues set to decline by a low- to mid-teen percentage rate this year in constant currencies.

Like other big drugmakers, the Anglo-Swedish group has been hit by falling drug prices in Europe, where the euro crisis has prompted governments to take exceptional measures to curb spiraling healthcare costs.

Revenues were reduced by an estimated $300 million in the second quarter as a result of government cost cutting in Europe and some other markets, it said.

Its larger rival GlaxoSmithKline was forced on Wednesday to revise down its 2012 sales outlook - predicting a flat year, rather than the hoped-for return to growth - largely as a result of the worsening European situation.

AstraZeneca's U.S. sales slumped 29 percent in the quarter in constant currency terms, with the loss of Seroquel accounting for 80 percent of the hit, while European revenues were off 20 percent and emerging markets - the supposed savior of Big Pharma - grew just 1 percent.

Sales of heart drug Brilinta, one of the company's few new products, were a meager $18m in the quarter, as launches of the new antiplatelet medicine continued, and revenue from top-selling cholesterol fighter Crestor fell 5 percent to $1.59 billion.

(Reporting by Ben Hirschler; editing by Chris Wickham)