AstraZeneca, Sanofi close disappointing quarter

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“Less bad” sums up Thursday's second-quarter earnings results for AstraZeneca and Sanofi, as both drug makers continued to run up against generic competition, and, in Sanofi's case, poor inventory management that put a dent in its financial outlook.

AstraZeneca's second quarter sales slid to $6.2 billion, down 6.2% compared to the same period last year. US sales fell by 4%, largely due to generic Seroquel IR sales, which were $99 million, compared to $277 million for the same period last year. The anti-psychotic went generic in March 2012. Seroquel XR sales fell by 8%, to $339 million, compared to $370 million. Additional soft spots included Crestor, sales for which fell by 6% to $1.45 billion, from $1.58 billion. In the US, Crestor sales fell by 3%, and total prescriptions fell by 8%.

Yet some of the company's brands did post growth—sales of anti-clotting drug Brilinta hit $65 million during the quarter, compared to $18 million for the same period last year. Nexium also had a boost, with sales hitting $1 billion, a 7.7% rise compared to the same period last year, even though the volume of dispensed tablets fell 9%. US sales of the GERD drug fell 1% during the quarter, compared to last year.

AstraZeneca's CEO Pascal Soriot told investors the numbers have an upside because the impact of generics has “moderated from levels experienced in different quarters.” At the same time, the company is looking to shore up its generics-threatened pipeline through acquisitions, including the May and June purchases of Omthera and Pearl, and collaborations, such as the one announced with FibroGen yesterday. 

Bernstein analyst Tim Anderson wrote in a Thursday research note that the M&A moves are not yet enough. Anderson said buying Omthera and Pearl “fill strategic gaps in AZN's existing therapeutic areas, but they are far from representing ‘high science.'” Anderson also notes that the company's “thin late-stage pipeline,” is one of a company that has “no great R&D track record.”

Meanwhile, Sanofi CEO Christopher Viehbacher summed up his firm's second quarter, in which sales fell by 9.7% to $10.6 billion compared to $11.7 billion for the same period last year. “I would call this a frustrating quarter,” he told investors, as the company tangled with sales-eroding generics as well as a stocking issue in Brazil that added a further drag to the quarter's results. Generics drag continued to reflect the impact of patent losses including Plavix and Avapro, as well as the end of Enbrel royalties. The good-news bad-news part of the day's numbers was that quarters comparing patent-protected and post-patent sales are nearing an end.  “At  least we can finally be done with the comparison to the prior year on key genericised products,” Viehbacher said.

The CEO described the Brazil situation as “somewhat of a mess.” The company notes in the earnings release that Brazil's generics inventories “were significantly and inappropriately in excess of volumes needed,” and the company had to make a financial adjustment that further lowered revenues.

Sanofi's pharmaceuticals sales fell by 7.1%, while certain categories gained ground. Sanofi's diabetes business grew, with Lantus sales reaching almost $1.9 billion. US Lantus sales grew just over 20%, with Lantus SoloStar making up 56.4% of US Lantus sales, compared to 51.9% during Q2 2012.
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