AstraZeneca PLC Tuesday raised its profit guidance following a deal to sell the over-the-counter global marketing rights for its popular heartburn drug Nexium to U.S. giant Pfizer Inc. PFE -0.92% .
Pfizer is paying $250 million up front as well as milestone and royalty payments. AstraZeneca said the initial sum would be booked this year and would increase its adjusted earnings per share by approximately 16 cents, thereby lifting the group’s full-year target to between $6 and $6.30.
Nexium is the brand name for esomeprazole magnesium, which was launched by AstraZeneca in Europe and the U.S. more than a decade ago. AstraZeneca will continue to make and market the prescription version of the drug.
AstraZeneca, the U.K.’s second-largest drug producer, has been struggling to cut costs and shrink operations ahead of patent expiries on some of its best-selling drugs, including Nexium.
An application was recently filed with European regulators to market an over-the-counter version of the drug, and a U.S. regulatory application is targeted for the first half of 2013.
If approved, Pfizer plans to begin selling the drug in the U.S. beginning in 2014, followed by other markets.
As a result of the deal, Pfizer is lowering its full-year earnings estimate by two cents per share, now seeing adjusted earnings of $2.12 to $2.22.
It is also raising its expected full-year research-and-development expenses, now seeing costs between $6.75 billion to $7.25 billion, from its previous guidance of $6.5 billion to $7 billion.
The two companies are also considering similar agreements for other drugs, and agreed to give Pfizer right of first refusal on OTC rights for Rhinocort Aqua, an anti-inflammatory delivered through a pump spray.
AstraZeneca shares closed Monday at 2,954 pence, valuing the company at GBP37.39 billion.
Marketwatch
