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AstraZeneca Cautions on Coronavirus Impact, But Sees Solid 2020 Revenue Growth

AstraZeneca expects at least "a few months" of impact from the coronavirus in China, a key growth market, but forecast solid 2020 revenues after a mixed fourth quarter.

AstraZeneca plc  (AZN) - Get Free Report shares were active in early London trading Friday after the drugmaker cautioned that the coronavirus in China, where it generates nearly a fifth of its sales, would impact the group's overall results for at least "a few months".

The caution on China, which said Friday that another 5,000 people have been confirmed to have contracted the virus, taking the overall total to just under 65,000, cast a cloud over the pharma group's fourth quarter profits, which included stronger-than-expected core earnings of 89 cents per share but a modestly weaker revenue gain of 3.8% and a total of $6.664 billion.

AztraZeneca CEO Pascal Soriot, however, told investors on a conference call following the earnings release that the drugmaker hadn't seen disruption in its China operations as yet, adding the spread of the virus has had minimal impact on clinical trials in the world's second largest economy.

"Results from our new medicines and Emerging Markets accompanied positive news for patients, most recently including regulatory approvals of Enhertu in breast cancer and Calquence in leukaemia. Our collaborations also progressed at pace, including that with Daiichi Sankyo, while there were several regulatory approvals for new medicines in China at the end of the year, such as Lynparza in first-line ovarian cancer," Soriot said in a statement.   

"Driven by a strong team, 2020 is anticipated to be another year of progress for AstraZeneca," he added. "We are becoming a better-balanced business, both regionally and through our medicines. This transition is a further step towards improving operating leverage and cash generation."

AstraZeneca shares, which fell as much as 6% to a two-month low in early London trading, were last seen 0.1% higher on the FTSE 100 and changing hands at £76.29 each. The group's U.S.-listed shares, meanwhile, were indicated 1.05% higher at $49.85 each.

Looking into 2020, AstraZeneca said it expects revenue growth of around 10%, implying a total in the region of $25.72 billion, while core earnings are seen increasing by a mid to high-teens percentage, the company said.

"All guidance assumes an unfavourable impact from China lasting up to a few months as a result of the recent novel coronavirus (Covid-19) outbreak," AstraZeneca noted, adding it will "monitor closely the development of the epidemic and anticipates providing an update at the time of the Q1 2020 results", which are expected in mid May.