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AstraZeneca shares slump on tumbling profits, weak outlook

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(Globalpost/GlobalPost)

Shares in AstraZeneca slumped nearly 5.0 percent on Thursday after the Anglo-Swedish drugsmaker said its annual net profits had tumbled on patent expiries and warned that sales would dive further this year.

Earnings after tax tanked 37 percent to $6.297 billion (4.645 billion euros) in 2012, compared with $9.983 billion in the previous year, the pharmaceuticals giant announced in a results statement.

The blue-chip company added that turnover tumbled 15 percent to $27.973 billion in 2012.

Revenues also dived by 15 percent in the fourth quarter or three months to December, compared with the same period of 2011. That was the fourth consecutive quarter of decline.

The outlook darkened further after AstraZeneca warned that revenues would suffer a "mid-to-high single digit percentage decline" in 2013.

The bleak news sent the group's shares sliding 4.49 percent to 3,011 pence, topping the fallers board on London's FTSE 100 index of leading companies, which was 0.61-percent lower at 6,248.97 points in early afternoon deals.

"Our performance in 2012 reflects a period of significant patent expiry and tough market conditions globally," said new chief executive Pascal Soriot, who took the helm at the group late last year.

"Despite the challenges we face, I am excited about AstraZeneca's fundamental strengths which will be key in returning the company to growth and achieving scientific leadership while maintaining our reputation for strong financial discipline."

Earnings were also hit by the sale of dental division Astra Tech in 2011 and US unit Aptium Oncology in 2012.

The London-listed company faces crucial patent expiries up until 2015 on drugs such as schizophrenia treatment Seroquel and heartburn and ulcer drug Nexium.

It will also suffer the loss of patent protection in the United States for its key anti-cholesterol drug, Crestor, in 2016.

Frenchman Soriot was previously a senior executive at Swiss drugsmaker Roche took up his role at the start of October after the resignation of American David Brennan.

Brennan had already announced plans to cut 7,300 jobs by 2014 in a bid to improve profitability at the firm, which has come under heavy pressure in recent years from generic drugs competition.

"2012 will be remembered for significant drug patent losses, whilst guidance for 2013 provides little comfort," said equity analyst Keith Bowman at Hargreaves Lansdown Stockbrokers.

"Unlike rivals, Astra does not enjoy the cushion of alternative revenue streams such as consumer healthcare, with the group currently providing a major play on scientific development and innovation.

"Austerity and government efforts to curb health spending are not helping, whilst the general lack of optimism surrounding its developmental (drugs) pipeline and already reduced cost structure potentially dampen its attractiveness as a takeover target," he added.

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http://www.globalpost.com/dispatch/news/afp/130131/astrazeneca-shares-slump-tumbling-profits-weak-outlook