Profits have dropped at pharmaceutical giant AstraZeneca as the company ramped up its spending on research and development to counter upcoming expiring patents.
Net profit at AstraZeneca dropped by 12 per cent to $1.2bn in the three months to the end of March, bringing earnings per share in at $0.95, slightly below expectations of $0.96.
Revenues grew by one per cent to $6.1bn, but a boost in spending on research and development - which grew by 12 per cent to $1.4bn - saw underling earnings fall.
Sales in the United States grew by four per cent to $2.2bn - buoyed by strong performance for its drugs, diabetes pills Farxiga and Onglyza along with heart drug Brilinta.
"Price erosion" however saw sales in Europe drop by four per cent to $1.2bn
Why it's interesting
AstraZeneca became a near-household name back in 2014 when it fought off an attempt by American rival Pfizer to snap it up for more than $100bn.
Pfizer's final offer was £55 a share, but after intense pressure from MPs who feared the erosion of the UK's science base and a pushback from AstraZeneca executives, it was rejected.
Shares are now trading at below £40 a piece - today's results will probably not do much to bring them any closer to the amount Pfizer was prepared to pay.
In terms of the fundamentals, revenues at Astra Zeneca held up over the period, it was the extra $150m it poured into research and development that hit the bottom line.
What AstraZeneca said
Pascal Soriot, chief executive officer of AstraZeneca, said:
We delivered a first quarter performance in line with expectations. I was particularly pleased with the results in China, where we continued to deliver double-digit sales growth, and with the progress of our new oncology launches.
As we continue to make encouraging progress with our priorities and our pipeline grows faster than anticipated, we are further sharpening our strategic focus on our main therapy areas, intensifying our efforts in oncology and accelerating collaborations in opportunistic areas.