Interim Results - Part 1
AstraZeneca PLC
25 July 2002
PART 1
AstraZeneca PLC
Second Quarter and Half Year Results 2002
'New products drive good first half performance. EPS up 18 percent.'
Financial Highlights (before Exceptional Items)
Group 2nd Quarter 2nd Quarter Constant Half Year Half Year Constant
(Continuing operations) 2002 2001* Currency 2002 2001* Currency
$m $m % $m $m %
Sales 4,382 4,099 +8 8,803 8,090 +10
Operating Profit 1,064 996 +10 2,361 2,051 +17
Profit before Tax 1,065 1,019 +8 2,383 2,129 +14
Earnings per Share
Group $0.45 $0.41 +13 $1.00 $0.86 +18
Group (Statutory FRS3) $0.45 $0.39 $1.00 $0.83
* Restated to be on a consistent basis under FRS19. See note 1 on page 13 for
further information.
All narrative in this section refers to growth rates at constant exchange rates
(CER).
• NexiumTM achieved sales of $830 million for the half year; sales in the
last twelve months reached $1.3 billion.
• SymbicortTM sales were $122 million in the half year. Mutual
Recognition Procedure in European Union for the use of SymbicortTM as a
maintenance treatment for asthma in children (age 6-11 years) was successfully
completed on 5 July.
• First market approval secured for IressaTM in non-small cell lung cancer
in Japan.
• CrestorTM NDA filed in Japan on 23 April. AstraZeneca and Shionogi
announced an agreement to co-market in Japan on 16 May. Meetings with the FDA
following receipt of approvable letter are about to begin.
• FaslodexTM has been launched in the US following its approval on 25
April, offering a new treatment option for advanced breast cancer.
• First regulatory submission for ExantaTM in Europe for the prevention of
blood clots following orthopaedic surgery was made on 24 July.
Tom McKillop, Chief Executive, said: 'A strong performance from the launch
rollouts of NexiumTM and SymbicortTM, together with continued growth from
SeroquelTM, AtacandTM, and our range of cancer medicines has delivered a good
set of results in the first half. The business remains on track to meet its
financial targets for the full year. In the last few weeks two important
milestones were reached in our portfolio transformation - the first market
approval for IressaTM in Japan, and the first regulatory filing for ExantaTM in
Europe.'
London, 25 July 2002
Media Enquiries: Steve Brown/Emily Denney (London) (020) 7304 5033/5034
Staffan Ternby (Sodertalje) (8) 553 26107
Steve Lampert (Wilmington) (302) 886 7862
Analyst/Investor Enquiries: Mina Blair-Robinson (London) (020) 7304 5084
Jonathan Hunt (London) (020) 7304 5087
Staffan Ternby (Sodertalje) (8) 553 26107
Ed Seage (Wilmington) (302) 886 4065
Jorgen Winroth (New York) (212) 581 8720
Business Highlights All narrative in this section refers to growth rates at
constant exchange rates (CER) unless otherwise indicated.
For the half year sales increased by 10 percent, and operating profits by 17
percent. Exchange rate movements against the US dollar reduced reported sales
growth by 1 percent, and operating profits by 2 percent. Earnings per share
(before exceptional items) rose by 18 percent to $1.00. The Board has
recommended an unchanged first interim dividend of $0.23 (14.7 pence, SEK2.21)
to be paid on 7 October.
In the second quarter sales increased by 8 percent and operating profits by 10
percent. Exchange rates reduced reported sales and operating profits growth by 1
percent and 3 percent respectively. Earnings per share (before exceptional
items) increased by 13 percent to $0.45.
The sales growth in the first half was led by an 11 percent increase in the US
and continued strong growth in Japan (up 17 percent). Sales growth in the
quarter (up 8 percent) reflected anticipated destocking effects in the US market
for the cardiovascular product range, as well as for NolvadexTM, CasodexTM, and
ZomigTM.
GI franchise sales were up by 8 percent in the half year, as the continued
performance of NexiumTM more than offset declines in LosecTM/PrilosecTM. Nexium
TM sales in the first half reached $653 million in the US, as market share
continues to increase in a growing PPI market. Nexium share of new
prescriptions for PPI products in the US was 20.2 percent in the week ending 12
July. Outside the US, NexiumTM achieved sales of $177 million in the first
half, including good performances from recent launches in France and Italy.
Sales for LosecTM/PrilosecTM in the first half were down by 17 percent, chiefly
as a result of the 24 percent decline in the US. To date there have been no
generic omeprazole products introduced in the US market.
Court proceedings in the PrilosecTM patent infringement cases against four
generic firms have been concluded in the US District Court in New York. The
parties await the judge's rulings.
Sales outside the GI franchise grew by 12 percent in the first half, with strong
growth reported in the CNS (up 54 percent), Respiratory (up 14 percent), and
Oncology (up 14 percent) product ranges.
On 5 July a major milestone was achieved in the Oncology portfolio, as Japan
became the first market to approve IressaTM. IressaTM is the first in a new
class of anti-cancer drugs, known as Epidermal Growth Factor Receptor (EGFR)
inhibitors, to become commercially available. It is indicated in Japan for the
treatment of inoperable or recurrent non-small cell lung cancer. AstraZeneca
anticipates full reimbursement for IressaTM by the end of the third quarter in
Japan. In the US, the company expects to complete the rolling regulatory
submission next month and continues to plan for launch in the second half of
this year.
Recent presentations of clinical data on CrestorTM at the World Congress of
Cardiology (May) and the European Atherosclerosis Society Congress (July)
underscore the strength of the product profile. In the US, the company
announced receipt of an approvable letter from the FDA on 5 June. Meetings with
the FDA following receipt of the approvable letter are about to begin, and
further guidance on the timing of the US launch will be given when these
discussions are completed. As to other markets, in Europe the company continues
to expect to secure approval in the Reference Member State during the second
half of this year. In Japan, the NDA for CrestorTM was submitted 23 April,
followed in May by the announcement that AstraZeneca and Shionogi will co-market
CrestorTM in this important market.
Progress continues on the development of ExantaTM, and on 24 July AstraZeneca
made its first regulatory submission for this important new anti-coagulant.
Approval is being sought in Europe, in this first filing, for the prevention of
venous thromboembolism in hip and knee replacement surgery. Filings in the US
for this indication as well as filings for the prevention of stroke in patients
with atrial fibrillation remain on track for 2003.
An update of the development portfolio is being published today and is available
on AstraZeneca's website (www.astrazeneca.com).
Future Prospects All narrative in this section refers to growth rates at
constant exchange rates (CER) unless otherwise indicated.
With the first quarter results announcement the company said that it expected
earnings per share around the top of the $1.51 to $1.66 per share range of
market expectations, based on our view at the time for the key variables
expected to affect this year's financial performance - in particular the timings
of product approvals and subsequent launches and the entry of generic
competition for PrilosecTM and other mature products. This remains the
company's view today.
Disclosure Notice: The preceding forward looking statements relating to
expectations for earnings and business prospects for AstraZeneca PLC are subject
to risks and uncertainties, which may cause results to differ materially from
those set forth. These include, but are not limited to: the timing of the
launch of generic omeprazole in the US, the successful registration and launch
of new products (in particular CrestorTM and ExantaTM), continued growth of
currently marketed products, the growth in costs and expenses, interest rate
movements, exchange rate fluctuations, and further improvements in the tax rate.
For further details on these and other risks and uncertainties, see
AstraZeneca PLC's Securities and Exchange Commission filings, including the 2001
annual report on Form 20-F.
Sales
All narrative in this section refers to growth rates at constant exchange rates
(CER).
Gastrointestinal
Second Quarter CER % Half Year CER %
2002 2001 2002 2001
LosecTM/PrilosecTM 1,137 1,371 -17 2,355 2,866 -17
NexiumTM 474 46 n/m 830 127 n/m
Total 1,628 1,426 +14 3,215 3,014 +8
• NexiumTM sales continued their strong growth. Sales in the US reached
$653 million in the half year. NexiumTM share of new prescriptions in the US
PPI market increased to 19.4 percent in June.
• NexiumTM achieved sales outside the US of $177 million in the first
half, with good growth in previously launched markets augmented by successful
recent launches in France and Italy.
• In the US, sales of PrilosecTM were down 22 percent in the quarter and
by 24 percent in the half year, broadly in line with the trend in prescriptions.
Total prescriptions for AstraZeneca's PPI franchise are well ahead of last
year (up 15 percent through June).
• Sales of LosecTM outside the US were down 7 percent in the quarter and
by 4 percent in the half year, although good growth in Japan and Australia was
reported.
• Trial proceedings in the PrilosecTM patent infringement cases against
four generic companies have concluded in the US District Court in New York, and
the parties await the judge's rulings.
Cardiovascular
Second Quarter CER % Half Year CER %
2002 2001 2002 2001
ZestrilTM 276 350 -20 559 644 -12
AtacandTM 130 113 +16 281 196 +45
SelokenTM / Toprol-XLTM 210 199 +6 446 350 +28
PlendilTM 98 106 -7 206 212 -2
Total 902 1,000 -9 1,863 1,835 +3
• Demand for AtacandTM and for AtacandTM Plus/AtacandTM HCT continues to
grow in all major markets. Outside the US, reported sales were up 36 percent in
the quarter and by 40 percent in the first half. In the US, reported sales were
up 54 percent in the first half, whilst the decline in the second quarter (down
10 percent) related to stocking patterns at the wholesalers. Prescription
growth for AtacandTM products in the US was 34 percent through June.
• The growth in Toprol-XLTM prescriptions in the US is responsible for the
sales performance of SelokenTM/Toprol-XLTM. Total prescriptions for Toprol-XLTM
were up 39 percent in the first half. Reported sales in the first half in the US
were up 46 percent, whereas the 11 percent growth in the quarter reflects
wholesaler purchase patterns around annual price changes.
• ZestrilTM sales were affected by the reported 27 percent decline in the
US in the second quarter, the result of an unfavourable comparison against the
stockbuilding experienced in the second quarter of last year. With some dozen
generic lisinopril products approved in the US following the expiration of
marketing exclusivity in June, the company expects significant sales erosion
over the remainder of the year.
Respiratory
Second Quarter CER % Half Year CER %
2002 2001 2002 2001
PulmicortTM 201 209 -4 430 409 +6
AccolateTM 34 46 -26 67 95 -28
RhinocortTM 82 74 +12 146 130 +13
OxisTM 30 33 -6 61 65 -4
SymbicortTM 68 11 n/m 122 14 n/m
Total 452 413 +10 898 794 +14
• Sales growth of SymbicortTM in the asthma market has been driven by
continued penetration of the combination segment across Europe. Market share in
the sixteen launch markets of Europe is around 20 percent. The Mutual
Recognition Procedure in the European Union for the use of SymbicortTM as a
maintenance treatment for asthma in children (age 6-11 years) was successfully
completed on 5 July.
• Sales of PulmicortTM RespulesTM advance steadily in the US in the first
half (up 96 percent), which led the total brand (including PulmicortTM
TurbuhalerTM) to overall growth of 37 percent in this market. Outside the US,
sales of PulmicortTM were down 11 percent at the half year.
• Prescriptions for RhinocortTM Aqua in the US were up 41 percent through
June, driving the global increase in RhinocortTM sales. Market share for new
prescriptions in the aqueous intranasal steroid segment of the rhinitis market
now reached 14.1 percent in June, up 2 points over last year.
Oncology
Second Quarter CER % Half Year CER %
2002 2001 2002 2001
CasodexTM 150 129 +19 274 244 +16
ArimidexTM 80 49 +65 146 92 +61
NolvadexTM 119 147 -18 262 286 -6
ZoladexTM 197 184 +10 387 344 +16
FaslodexTM 8 - n/m 8 - n/m
Total 560 517 +10 1,088 981 +14
• The results of the landmark ATAC trial demonstrating the benefits of
ArimidexTM in the adjuvant treatment of early breast cancer were published in
the 23 June edition of Lancet. ArimidexTM has been approved in Japan for
adjuvant use since March, and regulatory submissions have now been made in all
major markets.
• Sales of ArimidexTM in the first half increased by 97 percent in the US,
and by 41 percent elsewhere. ArimidexTM continues to be the global market
leader in the aromatase inhibitor segment.
• CasodexTM sales outside the US increased by 48 percent in the second
quarter and the first half. Good growth in Japan and increasing usage of the 150
mg tablet in monotherapy in advanced disease and in the new indication for early
prostate cancer are important factors in this performance. The early prostate
cancer indication is now approved in 20 countries. The US FDA has issued a
non-approvable letter for this application, and the company is reviewing its
options with the FDA to find the best way forward.
• Prescription demand for CasodexTM in the US is up around 7 percent
through June. High wholesaler inventories have affected reported sales in the
first half (down 33 percent), but trade inventories appear to have returned to
normal levels by the end of the quarter.
• FaslodexTM was launched in the US in May and recorded sales of $8
million in the second quarter. FaslodexTM offers an important new treatment
option for patients with advanced breast cancer whose disease has progressed
following antiestrogen therapy (eg tamoxifen).
CNS
Second Quarter CER % Half Year CER %
2002 2001 2002 2001
SeroquelTM 268 168 +61 604 357 +70
ZomigTM 75 88 -14 168 154 +10
Total 351 257 +38 787 514 +54
• SeroquelTM sales in the first half grew by 68 percent in the US and by
78 percent in the rest of the world. Market share in Japan is just under 20
percent after only one year on the market. Prescriptions in the US increased by
48 percent through June, and the share of new prescriptions in the market grew
to 17.6 percent. Excellent sales growth was reported in the quarter, with the
US up 55 percent and other markets 83 percent higher.
• ZomigTM sales outside the US increased by 36 percent in the quarter and
by 34 percent in the first half, driven by continued growth of ZomigTM Rapimelt
TM and good performance in Japan since launch last summer. In February, Sweden
became the first market to launch ZomigTM Nasal Spray. With an onset of action
within 15 minutes, ZomigTM Nasal Spray will become an important addition to the
ZomigTM product range. It should be available in ten other EU member states
from the fourth quarter onwards, following the acceptance through the EU MRP
announced earlier this month.
• In the US, prescriptions for ZomigTM continue to grow at double digit
rates - with nearly 90 percent of the growth coming from the recently introduced
ZomigTM ZMT formulation. Wholesaler destocking in the second quarter of this
year was matched against stockbuilding in the second quarter of last year, which
is responsible for the 37 percent decline in reported sales for the quarter.
Pain, Infection and Other Pharma
Second Quarter CER % Half Year CER %
2002 2001 2002 2001
MerremTM 75 57 +32 142 106 +35
DiprivanTM 113 108 +6 226 215 +7
Local anaesthetics 60 92 -34 156 196 -17
Other Pharma products 118 121 -3 189 225 -15
Total 366 378 -3 713 742 -2
• Market growth and a stable market share in the US have contributed to
the small increase reported for DiprivanTM sales in the first half.
• MerremTM sales in the first half benefited from growth across all major
markets. Sales in the US were up by 50 percent, and sales growth in markets
outside the US was 31 percent in the first half.
Geographic Sales
Second Quarter CER % Half Year CER %
2002 2001 2002 2001
USA 2,271 2,120 +7 4,719 4,259 +11
Europe 1,410 1,358 +5 2,805 2,649 +8
Japan 240 211 +23 412 389 +17
RoW 461 410 +13 867 793 +12
• Sales growth of 11 percent in the US in the first half was fuelled by
strong performances in NexiumTM, SeroquelTM, and Toprol-XLTM.
• In Europe, sales growth of 8 percent in the first half was chiefly on
the back of NexiumTM and SymbicortTM, coupled with strength in the Oncology
product range. France, Italy, and Spain continue to be the fastest growing of
the major markets.
• The strong performance of the Oncology products, as well as good growth
in LosecTM and SeroquelTM, drove the 17 percent increase in Japan in the first
half.
Operating Review
Operating profit before exceptional items grew by 10 percent to $1,064 million
for the second quarter and by 17 percent to $2,361 million for the half year.
Reported results in the second quarter were lower due to a substantial reversal
of the $200 million wholesaler stocking seen in Quarter 1. Year-on-year
comparisons were also lower as a result of a net buy-in in Quarter 2 2001.
Currency had a small adverse effect on profit in the second quarter and half
year of around $30 million. Towards the end of the second quarter the dollar
weakened against all major currencies and if spot rates remain constant for the
rest of the year, reported revenue in the third and fourth quarter will be
favourably impacted as a result of the stronger Euro. However this will be
offset by higher costs from our Sterling and Krona cost-bases, implying a
broadly neutral effect on 2002 earnings in comparison to 2001.
Operating margin for the quarter was 24.3 percent, level with the second quarter
2001. For the half-year, operating margin was 26.8 percent of sales, 1.4
percentage points ahead of 2001.
For the six months, cost of sales as a percentage of sales were 26.1 percent,
0.9 percentage points lower in 2002 than 2001, predominantly due to a lower
proportion of product sales with Merck contingent payments. Research and
development costs at 16.1 percent of sales were 0.5 percentage points lower than
the prior year. A small favourable exchange benefit restricted growth to 6
percent in dollar terms. In the second half activity levels are expected to
increase which, together with stronger Sterling and Krona, will increase the
proportion of R&D to sales. Selling, general and administrative costs at 32.6
percent were 0.3 percentage points lower than 2001. Growth in selling costs is
geared towards the new product launch programme. Other income in the second
quarter of $55 million was substantially comprised of royalty income, a major
component of which has now expired. For the half year, other income included a
gain from the disposal of SularTM in the US. The guidance on 2002 financial
performance contained in the section on future prospects is based on the
assumptions of key variables, including the timing of product approvals and
generic competition. Implicit in this guidance is a reduction in second half
margins given the strong first half performance.
Interest
Interest income at $1 million for the quarter was depressed by exchange losses
arising on net monetary assets in subsidiaries operating in hyper-inflationary
countries. At 30 June 2002, net cash funds were $3.4 billion which are
currently generating returns of approximately 2 percent.
Taxation
Excluding exceptional items, the effective tax rate for the second quarter and
half year 2002 was 27 percent compared with the restated rate of 28.4 percent
for the comparative periods 2001. The 2001 tax rate has been restated under
FRS19. See note 1 on page 13 for more detail.
Cash Flow
Cash generated from operating activities amounted to $3.1 billion for the half
year with lower working capital contributing $0.3 billion. This was applied to
capital expenditures of $0.6 billion, taxation paid of $0.4 billion, dividends
of $0.8 billion and share repurchases of $0.7 billion to give an increase in net
cash funds of $0.6 billion.
Dividends
A first interim dividend of $0.23 (14.7 pence, SEK2.21) will be paid on 7
October 2002 to all shareholders on the register on 23 August 2002.
Share Repurchase Programme
During the quarter 13.2 million shares (nominal value $0.25 each) were
re-purchased for cancellation at a total cost of $608 million, bringing the
total for the year to 16.0 million at a cost of $748 million.
The total number of shares re-purchased for cancellation since the beginning of
the programme now stands at 53.2 million at an aggregate cost of $2,362 million.
The total number of shares in issue as at 30 June 2002 is 1,730 million.
Under the extended share repurchase programme announced with the 2001 year end
results, $1,638 million remains, which it is anticipated will be completed by
the end of 2003.
Upcoming Milestones and Key Events
24 October Third Quarter and Nine Months results
7 November Annual Business Review
Fourth Quarter IressaTM filing for combination therapy in NSCLC
Tom McKillop
Chief Executive
This information is provided by RNS
The company news service from the London Stock Exchange
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