Three of Europe's top drugmakers reported falls in third-quarter earnings on Thursday, hurt by patent losses, but the common story hides different trajectories at the rival groups.
While AstraZeneca faces years of continuing sales declines, due to a lack of new drugs to replace those losing protection, Sanofi and Novartis are turning the corner.
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Revenues at the British group are expected to tumble 25 percent between 2011 and 2016, while Sanofi of France will grow 21 percent and Swiss-based Novartis 9 percent over the same period, according to Thomson Reuters consensus forecasts.
"In Europe, AstraZeneca will be the only company with declining sales in the coming years," said Britta Holt of Fitch Ratings.
"Novartis is in an excellent position, with a full pipeline and strong diversification, and Sanofi is also on the right track."
All three companies are going through a widely anticipated "cliff" of patent expiries that has opened the door to cheaper generics, and the quarter to end-September was one of the heaviest for such losses.
That problem is being compounded by austerity measures in major Western markets, notably the European Union, which is forcing companies to think up creative new ways to sell their products.
AstraZeneca's sales slumped by a bigger-than-expected 19 percent to $6.68 billion in the third quarter, hit particularly by loss of exclusivity on antipsychotic Seroquel, as "core" earnings per share, which exclude some items, slid 12 percent.
The decline underscores the challenges confronting the drugmaker's new chief executive, Pascal Soriot, a one-time vet who joined AstraZeneca three weeks ago from highly-rated Swiss rival Roche.
Soriot acknowledged a key priority was "to restore the company to growth", something industry analysts believe will require both a stepped-up pace of acquisitions and a re-focusing of some marketing operations.
"One of the critical things we need to do in the mid-term is to bolster our pipeline and that will rely on business development activities, there is no question about it," Soriot said during a conference call with reporters.
Rivals Sanofi and Novartis, by contrast, are in a better place, despite also having been through a difficult third quarters.
"Sanofi very simply doesn't have much further sales losses to go," said Fabian Wenner, head of European healthcare at Kepler Capital Markets. "We are back to a sustainable basis to really grow from here."
Sanofi lifted revenue by 3.3 percent to 9.04 billion euros ($11.7 billion) in the quarter, although underlying earnings per share were down 6.1 percent.
The group now expects 2012 earnings to fall 12 percent in 2012, compared with its previous guidance for a decline of up to 15 percent, helped by demand for diabetes and rare disease drugs.
"We are seeing the light at the end of the tunnel," said chief executive Chris Viehbacher.
Novartis third-quarter sales fell 7 percent to $13.81 billion, which was short of analyst forecasts, due to weak performances by consumer health, vaccines and the Sandoz generics business. Core earnings per share were down 8 percent.
The Swiss company's pharmaceuticals division put in a robust performance, thanks to strong showings from relatively new medicines that are the key to future growth, including eye drug Lucentis, Gilenya for multiple sclerosis, and cancer treatments Tasigna and Afinitor.
($1 = 0.7711 euros)
(Additional reporting by Caroline Copley and Elena Berton; Editing by David Cowell)