AstraZeneca Cuts More Jobs

Earnings are better than Wall Street had anticipated.
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AstraZeneca

(AZN) - Get Report

says it will dismiss more than twice as many employees as originally planned, cutting its payroll by 7,600, or 11% of its work force, within three years.

In February, AstraZeneca outlined a corporate restructuring that would have eliminated 3,000 jobs, but the drug giant said it decided to expand its job cuts in European marketing and sales activities, R&D staffing and administrative units. AstraZeneca added that it will "continue to look for further initiatives to improve the long-term efficiency."

The announcement accompanied the release of second-quarter results, in which earnings per share of $1.19, excluding one-time items, beat Wall Street estimates by 16 cents. Revenue of $7.27 billion exceeded the consensus forecast of $7.06 billion by analysts polled by Thomson First Call.

When items are included, AstraZeneca earned $1.44 billion, or 95 cents a share for the three months ended June 30. For the same period last year, the company earned $1.6 billion, or $1.01 a share, on revenue of $6.63 billion. The just-completed quarter was affected by 18 cents a share in restructuring charges and 6 cents in charges related to

MedImmune

, whose acquisition was completed in June.

David Brennan, the chief executive, told investors and analysts that the "solid" second-quarter performance should enable AstraZeneca to meet full-year earnings and sales goals.

Jon Symonds, the chief financial officer, said sales growth for the year should be in the high-single digits. He narrowed the earnings per share guidance, excluding items and MedImmune, to a range of $3.90 to $4.05. The previous range had been $3.80 to $4.05.

When charges for MedImmune are factored in, the year-end range will be $3.60 to $3.75 a share.

Among major products, Nexium, the company's best seller, is being affected in the U.S. by generic copies of other heartburn treatments. U.S. sales fell 1% while foreign sales rose 2%. Total sales were $1.3 billion.

Sales for the antipsychotic Seroquel rose 11% to $963 million, as the U.S. market gained 9% and foreign sales climbed 17%. The cholesterol-fighter Crestor enjoyed a 38% gain to $678 million in worldwide sales.

Although U.S. sales were up 30% to $353 million, Brennan said sales growth is coming under greater pressure from generic copies of

Merck's

(MRK) - Get Report

Zocor. Crestor's U.S. market share was 8.6% in June, which was the same as in December 2006. Given the rise of generic Zocor, AstraZeneca said Crestor's market share is "resilient."

Worldwide sales of the asthma drug Symbicort rose 25% to $414 million with only a small portion attributed to the U.S., where the drug was launched in late June. Another asthma drug, Pulmicort, gained 4% to $320 million.

Because MedImmune was acquired so late in the second quarter, the initial sales impact won't be felt until the fourth quarter of 2007 and the first quarter of 2008. That's when MedImmune produces much of its sales through Synagis, which prevents respiratory syncytial virus, a lung disease in infants and young children.

AstraZeneca's MedImmune unit continues to talk to the Food and Drug Administration to resolve the agency's warning about manufacturing

problems at a FluMist plant in the U.K. FluMist is the nasal spray flu vaccine.

Until the FDA approves changes at the plant, AstraZeneca can't sell FluMist. "The company continues to believe that it will be able to resolve the warning letter with the FDA" so FluMist can be shipped before the U.S. flu season starts.

David Mott, the MedImmune CEO who has joined AstraZeneca, told analysts he expects shipments to start in September, assuming resolution of the FDA's concerns. Although MedImmune originally had predicted shipping 7 million doses for the upcoming U.S. flu season, Mott said it now appears 4 million to 5 million doses will be available.