AstraZeneca nudged up its forecast for 2008 earnings on Thursday, but sales of key products in the first quarter were weaker than hoped for, knocking its shares.
"The sales trends of most of the leading products were below what most people expected," said Nomura Code analyst Paul Diggle.
The stock had fallen 3.8 percent to 20.52 pounds in a weak London stock market by 10:30 a.m. London time.
Increases of 10 percent in revenues and 19 percent in "core" earnings per share (EPS) were helped by a weak dollar and came despite slowing demand for ulcer pill Nexium, which left the overall sales figure short of expectations.
Schizophrenia drug Seroquel and cholesterol fighter Crestor showed double-digit percentage growth, but Nexium sales fell worldwide and tumbled 15 percent in the key U.S. market, due to growing competition from cheaper rival products.
For the full year, global Nexium sales are expected to show a mid-single digit percentage sales decline. Nonetheless, the Anglo-Swedish group said currency factors meant it now expected core EPS of between $4.45 and $4.75, against $4.40-4.70 anticipated previously.
Reported operating profit in the quarter rose 4 percent to $2.26 billion on sales of $7.68 billion, equivalent to core EPS of $1.28.
Analysts' median forecasts were for sales of $7.83 billion and core earnings of $1.22 in a Reuters poll.
"Core" earnings exclude restructuring costs and charges related to last year's acquisition of MedImmune. Global drugmakers have reported mixed results, reflecting rising generic competition, pricing pressure and product setbacks.
AstraZeneca itself has had a torrid time in the past two years following the failure of key experimental medicines in late-stage development and the poorly received acquisition of MedImmune last year. But its fortunes have recently improved, with a settlement of a U.S. patent dispute over Nexium with Ranbaxy Laboratories last week and recent surprisingly good clinical trial results for Crestor.
The Ranbaxy deal removes the immediate threat of generic Nexium, though ongoing litigation with other companies means cheap copies of the drug might still enter the U.S. market before the 2014 date agreed with the Indian group.
AstraZeneca also faces a continuing legal fight over its patents on Seroquel.
Its shares have fallen nearly 40 percent since October 2006 but have rallied 19 percent since hitting a 10-year low in mid-March.
The stock trades on around 9.2 times forecast 2009 earnings, a discount to British rival GlaxoSmithKline on 10.8 times, according to Reuters data.