By Pushkala Aripaka and Ankur Banerjee
(Reuters) - AstraZeneca (L:AZN) lifted its annual drug sales forecast for the second time this year after a surge in revenue from newer cancer treatments, but warned that changing policies in China, its second-biggest market, would crimp growth next year.
The British drugmaker, which halted years of falling sales in 2018, on Thursday reported growth of up to 80% for a raft of newer medicines in its portfolio, including treatments for diabetes, heart conditions and cancer.
Its shares were nearly 4% higher by 1020 GMT.
"It is always nice when results are better than expected for a solid reason, not a lower tax charge or some one-off benefit, but genuine growth," AJ Bell investment director Russ Mould said.
Western drugmakers have profited from partnerships with local players in China, where AstraZeneca's sales have doubled since 2012, as well as a softening in the regulatory environment for pharmaceutical firms.
But China last month expanded https://www.reuters.com/article/us-china-health/china-expands-drug-bulk-buy-program-puts-pressure-on-pharma-firms-idUSKCN1VN0QS a pilot drug bulk-buying programme, which was initiated last year, to the entire country in an attempt to negotiate lower prices from drug manufacturers.
AstraZeneca, like Swiss rival Roche (S:ROG), has cautioned of slowing growth in the country.
"The implementation (of the programme) was a little bit slower than what we expected, but we can now see that it is in full swing," Chief Executive Pascal Soriot told reporters.
"We do expect substantial headwinds coming ... we think in China we will continue to grow, but certainly at a lower rate than we have been in the last three quarters," Soriot added.
Sales from China rose 40% to $1.28 billion in the third quarter, having risen 44% in the previous three months.
Graphic: Newer medicines a shot in the arm for AstraZeneca - https://fingfx.thomsonreuters.com/gfx/editorcharts/ASTRAZENECA-RESULTS/0H001QXEV92L/eikon.png
AstraZeneca beat expectations for both profit and sales in the quarter, prompting it to raise its product sales forecast for the year to a growth of a low to mid-teens percentage, compared with a previous forecast of low double-digit growth.
The company has profited from its stronghold in cancer therapy through a range of tie-ups and outright buyouts of smaller rivals. Its treatments have shown promising results in many studies, pointing to a strong pipeline for future sales.
Sales of cancer drugs leapt 48% in the three months to Sept. 30 to $2.33 billion, accounting for more than a third of total sales, with revenue from lung cancer drug Tagrisso surging 78%.
The company also reiterated its stance that it was well-prepared for Britain's looming departure from the European Union, even if it were to do so without a withdrawal deal.
(For an interactive graphic on AstraZeneca's new drug sales, click here https://tmsnrt.rs/32IoMtv)