AstraZeneca jumps 10% on drug patent victory

Shares in pharmaceutical giant AstraZeneca surged 10% in morning trading after a US court found in its favour over a patent  for cholesterol drug Crestor.

The Crestor patent -  in this case known as the 314 patent - had been due to expire in 2016, but had been challenged early by nine generic drug manufacturers who claimed it to be invalid or inappropriately filed.

The US courts upheld the 2016 patent however, despite some experts expecting it to be overturned.

At 10:30am, the shares were trading up 9.62% or 283.5p at £32.31p before falling back slightly.

The high-yielding mega cap stock is one of the most widely held by income managers in the UK market and has become even more important to equity income investors since BP was forced to suspend its dividend.

The Astra board agreed to shift to a progressive dividend policy at the start of 2010 committing it to maintain or grow the dividend, essentially underpinning the dividend at the 2009 rate.

In its full year results it pledged to target an average dividend cover of 2 times based on reported earnings before restructuring costs.

The news was welcomed by Liontrust's Anthony Cross.

Astra represents 4.8% of the Liontrust First Growth fund and 3.2% of the Liontrust First Opportunities fund. It is also the second largest holding in the firm's Liontrust First Income fund run by Gary West and James Inglis-Jones.

Cross invests across three key investment themes; firms with strong intellectual property, those with a strong distribution network and/or  high recurring income.