Drug giant in £394m deal with Actavis

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AstraZeneca said yesterday it would buy Actavis’ branded respiratory drug business in the United States and Canada for an initial $600m (£394m) as it reported disappointing fourth-quarter earnings.

AstraZeneca, which is seeking such deals to drive growth, will also pay another $100m after Actavis agreed to changes in ongoing collaborations between the two firms.

Britain’s second-biggest drugmaker said 2015 sales would decline by a mid single-digit per cent at constant exchange rates.

But adjusted or ‘core’ earnings per share (EPS) are forecast to increase by a low single-digit per cent this year, due to lower spending and plans to find partners on certain projects.

“We’ll behave as a biotech company would when it comes to products that are not core,” chief executive Pascal Soriot said, citing a recent Alzheimer’s deal with Eli Lilly as a model for future cost-sharing.

Citi analyst Andrew Baum said AstraZeneca appeared to have “kitchen-sinked” the quarter, or taken a deliberate hit to earnings by bringing forward some drug development costs. Deutsche’s Mark Clark said this should help secure 2015 profits.

The group, which fended off a $118bn bid by Pfizer last year, saw sales in the fourth quarter fall 2 per cent to $6.68bn, generating core earnings down 38 per cent at 76 cents a share.