AstraZeneca PLC (AZN) Fails to Rule Out Job Cuts as Profits Plunge
1/31/2013 7:13:32 AM
AstraZeneca's (AZN.L) new boss warned on Thursday the drugmaker faced a tough year in 2013, with sales expected to fall by a mid-to-high single digit percentage rate as patent expiries continue to erode business. Earnings will decline "significantly more than revenue" this year as operating costs rise, Britain's second biggest drugmaker said. Chief Executive Pascal Soriot hopes eventually to turn the group around by investing in existing growth areas like emerging markets, diabetes care and the new heart drug Brilinta. He is also weighing the case for acquisitions. Soriot, who joined from Roche (ROG.VX) in October, will set out his strategy in detail during a keenly awaited investor day on March 21. In a bid to clear the decks and give himself a free hand to set future direction, Soriot said he had withdrawn mid-term planning assumptions for revenue and profit margin set by previous management. Sales in the fourth quarter of 2012 fell 16 percent to $7.28 billion, generating "core" earnings, which exclude certain items, down 3 percent at $1.56 a share. The slower decline in earnings reflected lower costs in the quarter and a favorable tax adjustment. Industry analysts, on average, had forecast sales in the quarter of $7.20 billion and earnings of $1.35 a share, according to Thomson Reuters I/B/E/S. Faced with loss of exclusivity on once best-selling medicines and a thin pipeline of new drugs, Soriot needs to consider some bold moves to get AstraZeneca back on its feet. But he has to tread carefully on new investment if he is to avoid disappointing investors who own the stock as an income play, given its near 6 percent dividend yield. His decision to suspend share buybacks on his first day in the job four months ago immediately prompted speculation that he might embark on sizeable acquisitions.