AstraZeneca details a bleak financial report

Pascal Soriot , AstraZeneca chief. His compensation is an issue to some. AP
Pascal Soriot , AstraZeneca chief. His compensation is an issue to some. AP
Posted: April 27, 2013

Drugmaker AstraZeneca said in March that it would lay off or move 1,200 people from its Wilmington facility, and some of the company's financial challenges encased in that announcement were reflected in Thursday's first-quarter financial report, which included a 26.8 percent decline in net profit compared with the same period in 2012.

AstraZeneca said it was shifting research and development from Wilmington and other facilities to one of three R&D centers, in Gaithersburg, Md.; the United Kingdom; and Sweden.

The reduction of the 1,200 from Wilmington will happen over three years, the company said, and leave about 2,000 employees there.

Asked Thursday about reports that it considered abandoning Wilmington, chief financial officer Simon Lowth said the company considered several options.

"In the case of Wilmington, we have a very strong organization that has demonstrated success in commercial activity," Lowth said from London in a conference call with reporters.

Chief executive officer Pascal Soriot, who was hired in October, presided over AstraZeneca's annual shareholder meeting. In part because of the U.S. and U.K. job cuts and the grim financial numbers, shareholder groups were planning to protest compensation plans for Soriot and board members.

Soriot's initial pay package gave him $16.9 million for 2012.

Meanwhile, the company disclosed that on March 28 it received a subpoena from the U.S. Attorney's Office in Boston, seeking documents and records related to manufacturing quality and practices at its Macclesfield facility in the United Kingdom. AstraZeneca said it intends to cooperate with the inquiry. AstraZeneca has a plant in Newark, Del., but there was no indication of suspected problems in that facility.

AstraZeneca had $6.39 billion in revenue in the first quarter of 2013, compared with $7.35 billion in 2012, a decline of 13.1 percent. The net profit for the period, according to the company's consolidated income statement, was $1.75 billion in the first quarter of 2013, compared with $2.4 billion in 2012.

Patent expiration of blockbuster drugs and resulting generic competition has lowered prices and meant less revenue for many drug companies producing branded medicines. Some are beyond their worst stages, but AstraZeneca is not. For example, its antipsychotic drug Seroquel IR had $127 million in revenue in the first quarter, after generating $754 million in 2012. The U.S. patent expired in March 2012.

Bernstein Research analyst Tim Anderson said in a note to clients after the results were released Thursday that the pain for AstraZeneca could continue "primarily because of the company's uninspiring five-year financial outlook."


Contact David Sell at 215-854-4506, dsell@ phillynews.com, or follow on Twitter @phillypharma. Read his blog at www.philly.com/phillypharma.

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