AstraZeneca spends to save

In fact, management expect a total $2.1bn (£1.3bn) restructuring-related charge - high compared with the $1.6bn of annual savings this process will generate by 2014. Moreover, the likely savings are themselves taking longer to emerge as the easier gains available from cutting marketing and administration posts in the developed world have probably already been exhausted. For instance, a $2.5bn charge taken between 2007-2009 yielded annual savings of $2.4bn by end-2010. Accordingly, the next phase of the restructuring will be tough and will involve investing more in developing markets, while outsourcing much of its R&D functions and keeping only a small cadre of scientists in-house to run clinical trials and evaluate products.

Clearly, management is aiming for growth markets, despite the cost, and these results again demonstrate how developing economies are becoming increasingly important to drugs companies. AstraZeneca's developing world sales were 10 per cent higher in the period at $5.76bn, while its traditional US and European markets remain in varying degrees of decline. US sales fell 2 per cent to $13.4bn, while government action in Europe to stem rising drug costs was partly behind an 11 per cent revenue fall to $8.5bn - although $1bn in sales was also lost to generic competition.

Management stuck to its forecast that sales for 2010-2014 will be between $28bn and $34bn a year, with the expectation of a drift towards the lower end of that scale. Its target for core 2012 EPS, meanwhile, is between 600¢ and 630¢ - prior to these figures, Charles Stanley was forecasting core 2011 pre-tax profit of $11.23bn, giving core EPS of 582.9¢.