Despite 18.4 percent profit decline, AstraZeneca CEO tells Inquirer no new layoffs are planned in Delaware

Despite an 18.4 percent drop in quarterly profit, AstraZeneca Chief Executive Officer Pascal Soriot said Thursday in response to a question from the Inquirer that there are no plans for more layoffs at the company's facilities in Delaware.

AstraZeneca is based in London and has facilities in Wilmington and Newark.

In March, the company cut 2,300 jobs from its worldwide workforce, including 1200 from its Delaware facility. Some of the positions were moved to AstraZeneca's facility in Gaithersburg, Md., but not all. And reports at the time suggested AstraZeneca considered closing its Wilmington facility entirely. Though most of the research jobs are gone, some U.S. commercial operations remain in Wilmington.

Several other large pharmaceutical companies have recently announced more layoffs after doing so in previous months to counter continuing pressure from investors who are used to big profits.

"What we see now is completely in line with our plans," Soriot said in response to the Inquirer question during a conference call with reporters. "We're building our pipeline and doing better than expected at the beginning of the year, but the financials are in line with our expectations, and in line with the guidance we gave the markets this year. I see no reason to change our plans.

"We announced at the beginning of the year a series of changes and a restructuring program that is impacting, unfortunately, a number of our colleagues around the world at various sites, but there is nothing new. We don't plan any new program. What we're doing now is implementing what we announced earlier in the year."

Soriot and other AstraZeneca leaders said the predicted declines in revenue and profit were partially a product of generic competition for medicine that lost patent protection. A link to the press release with the numbers is here.

One worrisome aspect is that AstraZeneca relies heavily on the revenue from the cholesterol medicine Crestor, and worldwide sales declined 9 percent in the first nine months of 2013. The drop was partially attributable to the start of generic competition in Canada and Australia. Still, Crestor had $4.159 billion in sales in the first nine months and the second-best selling drug was Atacand at $477 million.

AstraZeneca's revenue declined from $6.682 billion in the third quarter of the 2012 to $6.25 billion in the same period of 2013, a drop of 6 percent. The quarterly profit fell from $1.519 billion in 2012 to $1.24 billion in 2013.

Meanwhile, AstraZeneca announced that Marc Dunoyer was appointed chief financial officer and will join the company board as an executive director, starting Friday. Dunoyer, who previously worked at GlaxoSmithKline, succeeds Simon Lowth. Lowth had served as interim CEO before Soriot was hired, but he was expected to leave after Soriot was chosen. Lowth is headed for BG Group Plc, which is a UK-based natural gas company.

Despite cutbacks, AstraZeneca said it spent a bit more in the third quarter this year than in 2012, which might prompt further decline in profit, noted Bernstein Research analyst Tim Anderson.

In a note to clients after the earnings report was released, Anderson wrote that AstraZeneca (AZN), "is clearly the lowest expectation name in our coverage universe of 9 U.S. and European stocks and its valuation reflects this. This is consensus, and is the result of two issues: multiple large patent expirations over the next several years; and a thin late-stage pipeline in a company that has no great R&D track record. The stock seems to be at or near the bottom, but as the dust settles, investors have slowly been coming back to evaluate whether there are any hidden fundamental positives that could turn the stock around. At present, it remains difficult to point to any single source of unappreciated fundamentals, but at least the hiring of Pascal Soriot presumably rules out AZN doing any really bad, low-quality M&A deals. Some of the recent small deals AZN has done fill strategic gaps in AZN’s existing therapeutic areas, but they are far from representing 'high science.' "