Coronavirus outbreak curbs AstraZeneca's 2020 prospects

Some analysts label anything short of double-digit sales growth a disappointment

British drugmaker AstraZeneca forecast revenue growth for this year of around 10% on Friday, as it factored in a hit from the coronavirus outbreak in China and fell short of analysts' expectations for fourth-quarter results.

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Shares of the company, moving into a third year of growth after changes driven by Chief Executive Officer Pascal Soriot, sank 5% on Britain's blue-chip index as it warned that the hit from the outbreak could last "a few months."

China was again a central driver for the company in the final quarter of 2019, with sales in the country growing 28% to $1.19 billion, making up 19% of total product sales in the period.

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Sales from the company's top-selling cancer drug Tagrisso, however, missed estimates as it faced inventory issues in its biggest market in the United States.

The 2020 forecast was broadly in line with expectations, although some analysts have said anything less than double-digit sales growth would be a disappointment this year.

"Management guidance will disappoint (although) we would flag that AstraZeneca has attempted to quantify the impact of COVID-19 in its guidance, with other large pharma -- e.g., GlaxoSmithKline -- excluding this impact," Shore Capital analysts said.

Last week, GlaxoSmithKline said it had not faced much disruption in the short term to its supply chain, but was monitoring the situation.

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AZNASTRAZENECA PLC
$50.17
+1.23 (+2.51%)
GSKGLAXOSMITHKLINE PLC
$43.08
+0.32 (+0.75%)
PFEPFIZER INC.
$35.72
-0.13 (-0.36%)

AstraZeneca said it expects total revenue to grow by a high single-digit to a low double-digit percentage in the year, depending on the impact of the epidemic, and core earnings per share to rise by a mid- to high-teens percentage.

The company had already warned sales growth from China would slow down due to changes in government policy and growing competition.

The coronavirus, which has killed over 1,300 people, has continued to spread this week, with Chinese health authorities on Friday reporting more than 5,000 new cases.

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Credit Suisse, in a note ahead of the results, said it expected a sales growth forecast in the high-single-digits before factoring in any coronavirus impact.

Quarterly product sales of $6.25 billion missed analysts' expectation of $6.31 billion, according to a company-provided consensus of 20 analysts.