UPDATE 1-New CEO has work cut out as AstraZeneca sales fall

* Q3 sales fall 19 pct to $6.68 bln vs consensus $6.75 bln

Core EPS $1.51 vs consensus $1.44; full-year outlook held

* New CEO: priority restoring growth & scientific leadership

(Adds CEO comment, detail on emerging markets, M&A speculation)

By Ben Hirschler

LONDON, Oct 25 (Reuters) - AstraZeneca's sales slumped by a bigger-than-expected 19 percent in the third quarter, underscoring the challenges confronting the drugmaker's new chief executive, Pascal Soriot.

Faced with patent expiries on once best-selling medicines and a thin pipeline of new drugs, the former Roche executive, who joined on Oct. 1, needs to re-focus operations and step up the hunt for acquisitions, analysts believe.

In his first day in office, Soriot suspended the group's share buyback programme to increase financial flexibility as the group undergoes a strategy review, which is expected to be presented to investors in the first quarter of 2013.

Soriot signalled on Thursday he did not see any dramatic shift away from the current focus on pharmaceutical innovation, rather than diversification, saying his priority was to ``restore the company to growth and scientific leadership''.

That still leaves scope for increased deal-making, however, and bankers have speculated on potential acquisitions ranging from small and mid-sized biotech firms to specialty pharma companies like Forest Laboratories and Shire.

Sales in the quarter were $6.68 billion, generating ``core'' earnings, which exclude certain items, down 12 percent at $1.51 a share. The strength of the dollar against most major currencies was a drag on results.

Industry analysts, on average, had forecast sales in the quarter of $6.75 billion and earnings of $1.44 a share, according to Thomson Reuters I/B/E/S.

Britain's second-largest drugmaker reiterated its forecast for a fall in full-year core earnings to between $6.00 and $6.30 a share, against $7.28 in 2011.


AstraZeneca is a pure pharmaceuticals group, without the cushion of alternative revenue streams found at more diversified rivals, increasing its need to find new prescription drugs - something its labs have struggled to do in recent years.

Loss of exclusivity on antipsychotic medicine Seroquel has been a major blow to sales and profits this year and AstraZeneca also faces more big patent losses in future, with heartburn pill Nexium and cholesterol fighter Crestor losing U.S. protection in 2014 and 2016 respectively.

It is not alone in struggling with sales losses in Western markets. Eli Lilly, Bristol-Myers Squibb and Novartis also missed quarterly sales forecasts.

For an interactive graphic on how international drugmakers compare, see http://link.reuters.com/qyv57s

In addition to patent expiries, big drugmakers have also been hit by falling drug prices in Europe, where the euro crisis has prompted governments to take exceptional measures to curb spiralling healthcare costs.

To offset this, AstraZeneca and its rivals are focused increasingly on emerging markets. The company's sales in these developing markets grew by 6 percent in constant currency terms in the quarter, with 23 percent growth in China and in Russia.

But a weak performance in Mexico hit overall emerging markets growth by more than 2 percentage points, highlighting the volatility of drug demand in some countries.

(Editing by Chris Wickham)