AstraZeneca's share price falls after revenue warning as it teeters on edge of patent cliff

Billy Bambrough
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AstraZeneca's patent on cholesterol drug Crestor is due to expire in the US in May (Source: Getty)

The so-called patent cliff is fast approaching for drug maker AstraZeneca as its warns that revenue and earnings could fall as rivals begin production on it’s money spinning cholesterol drug Crestor.

The London listed company is pinning its hopes on its pipeline of experimental drugs that are are not expected to begin generating revenue in 2018.

AstraZeneca said in a statement it’s forecasting a low to mid single-digit percentage decline in revenue and core earnings per share this year.

AstraZeneca will lose its exclusivity on Crestor in the US from May of this year.

Chief executive Pascal Soriot said AstraZeneca faced a "transitional period". He told reporters: "Clearly, 2016 will be a challenging year due to the loss of exclusivity for Crestor in the United States. It is a very, very big product."

Soriot said the company would continue to invest in drug research, with research and development spending this year expected to stay around 2015 levels.

Shares in the firm closed down just over six per cent on the news, at 4,143p.

Mick Cooper of equity research house Trinity Delta, told City A.M.: “There’s going to be tension on delivery. Now is time for execution.”

The drugmaker batted away a takeover attempt by Pfizer in 2014, though analysts don’t expect to see another bid from the company.

Cooper added: “Takeover talks have been put to bed. Pfizer has stepped off while it pulls off the Allergan deal. The turndown of Pfizer could come back to haunt him.”

“Soriot does have the backing of most people still, but if the numbers don’t come off he’ll be in trouble. I’m surprised the share price has fallen as heavily as it has. If they continue to slide then there will be questions.”

Despite the drawn out period on return, Soriot is being given the chance to make it work.

Analyst at Shore Capital, Tara Raveendran, told City A.M.: “The pipeline looks good, and people are willing to give Soriot the benefit of the doubt. At GSK people are demanding results sooner rather than later. AstraZeneca’s got some breathing room.”

4 February 2016 @ 2:00pmAstraZeneca (AZN)

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