Woodford top holding AstraZeneca sees sales drop 21%

26 July 2012 | By Gary Jackson

Pharmaceutical giant AstraZeneca – a firm favourite with income managers – saw sales drop by more than 20 per cent in the second quarter after being hit by generic competition.

The company is the top holding of Neil Woodford’s £11.7bn Invesco Perpetual High Income and is owned by managers such as Jupiter’s Anthony Nutt and Artemis’ Adrian Frost.

AstraZeneca’s latest financial results show revenues dropped 21 per cent to $6.7bn during the second quarter of 2012. Over the first half of the year, revenues were down 16 per cent $14bn.

Core profit before tax, which excludes certain items, were down 33 per cent to $2.2bn while earnings per share fell 12 per cent to $1.53.

Interim chief executive officer Simon Lowth says: “As we expected, the loss of exclusivity on some key brands and tough market conditions have resulted in a decline in revenue and earnings in the second quarter.”

AstraZeneca accounts for 8.14 per cent* of Woodford’s Invesco Perpetual High Income fund, making it the portfolio’s largest individual holding. It is also the second largest position in the manager’s £9bn Invesco Perpetual Income fund with a 8.13 per cent* allocation.

The stock is also owned by Frost and Adrian Gosden’s £4.2bn Artemis Income fund*, Tineke Frikkee’s £2.2bn Newton Higher Income fund** and Nutt and Philip Matthew’s £2bn Jupiter Income Trust*.

AstraZeneca lost exclusivity on several key brands during the second quarter, including its bestselling antipsychotic drug Seroquel. Competition from generic medications accounted for 15 percentage points of the quarter’s revenue fall.

The so-called patent cliff is a key issue facing the pharmaceutical sector, placing pressure of the industry to change it business model to reduce reliance on blockbuster drugs.

^{* as of June 29}

^{** as of May 31}

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