AstraZeneca has pleased the market with a strong set of full-year figures but 2003 is likely to hold less cheer due to competition from generic versions of some of its popular drugs.
Sir Tom McKillop, chief executive, said last year was 'a year of significant achievements mixed with a couple of disappointments.'
AstraZeneca (AZN) announced full year sales up 9% at $17.8 billion (£10.8 billion), a 3% increase in pre-tax profits to $4.4 billion (£2.7 billion) and a 7% rise in earnings per share before exceptional items to $1.84 (112p), which was at the top end of analysts' expectations.
The heavily-weighted shares rose 112p, or 5.8%, to £20.34, supporting the FTSE 100 at 3,556, up 72 points.
The company reported strong sales growth of its growth products Nexium, Seroquel and Iressa.
It is hoped that the continued performance of these products coupled with the launch of cholesterol drug Crestor and heart drug Exanta later this year will put the company on track to report strong growth in 2004.
However, progress made in growth areas this year is not expected to offset competition from generic versions of its ulcer drug Prilosec, which is known as Losec outside the US. Sales of the drug were down 18% in the full year and 21% in the US.
When sales of Prolosec are excluded from the group's performance the underlying sales growth rate was 23% and 33% in the US.
McKillop said: 'Maintaining this momentum should allow us to absorb most of the sales impact of generic competition in 2003.'
Generic competition for Prolosec and two other products, Nolvadex and Zestril I is expected to cause a low single digit decline in sales next year and earnings per share are expected to come in somewhere between $1.50 and $1.65, assuming constant exchange rates.
The company has made a $350 million provision against the expected cost of a previously announced US Department of Justice investigation into its sales and marketing of Zoladex, a cancer drug.
Share repurchases cost the company a total of $1.2 billion during the year during which 28.4 million shares were bought back. About $1.2 billion remains available for future repurchases.
AstraZeneca's outlook for 2003 has not been helped by the regulatory setbacks to the launch of new products Crestor and cancer treatment Iressa but the recent performance of its growth drugs is encouraging.