AstraZeneca returns to product sales growth

AstraZeneca's product sales returned to growth in the third quarter as new cancer drugs especially began to make a noticeable impact on the top line, though poorer profits persisted.

Product sales increased 8% in the quarter to $5.27bn to lift revenue in the year to date to $15.28bn, down 4% on last year or 2% lower if currency swings are ignored.

However, due to an 81% decline in the 'external' sales of non-core, licensed-out drugs to $392m, total sales were down 6% to $15.67bn so far in 2018.

Full year guidance for sales and earnings per share remained unchanged, with a "significant sum" of externalisation revenue and other operating income & expenses anticipated in the final quarter of the year.

But with new medicines generating additional sales of $1.8bn at constant exchange rates so far this year, chief executive Pascal Soriot said "new medicines are now firmly established as the drivers of growth, supporting our continued success in Emerging Markets".

"Today marks an important day for the future of AstraZeneca, with the performance in the quarter and year to date showing what we expect will be the start of a period of sustained growth for years to come."

In particular he highlighted cancer treatments Tagrisso, Imfinzi and Lynparza, Farxiga in diabetes and Fasenra in severe asthma, with further drugs in the pipeline.

Profits are another matter, however, though the decline in the reported and core gross margin eased to two percentage points to 78% and 80% respectively, having been down three percentage points in the first half of the year.

With lower sales and margins, core operating profit fell 29% to $1.32bn in the quarter and 31% to $3.48bn for the year to date. Reported earnings per share are down 34% $0.88 in the year to date and core EPS by 37% to $1.88.