AstraZeneca Plc’s (AZN) long-term senior unsecured debt rating was cut by Moody’s Investors Service (MCO:US) to A2 from A1 on concern that earnings and sales will be hurt as it loses patent protection on some of its best-selling medicines.
Moody’s left the short-term rating unchanged at Prime-1 with a stable outlook. AstraZeneca has maintained a “very strong liquidity profile” with cash and equivalents of $7.7 billion at the end of 2012 and long-term committed bank facilities of $3 billion, it said in a statement. The company has 5.9 billion pounds of debt outstanding, according to data compiled by Bloomberg.
AstraZeneca, the U.K.’s second-biggest drugmaker, will soon lose patent protection on blockbusters such as the cholesterol treatment Crestor, which had sales of $6.3 billion last year. Chief Executive Officer Pascal Soriot has said he wants to focus on product licensing and the company’s own drug-development efforts to return to growth.
Any improvement in AstraZeneca’s “currently modest pipeline will take time to materialize” and sales from recently launched drugs won’t be able to offset the revenue decline, Marie Fischer-Sabatie, senior credit officer and lead analyst for AstraZeneca at Moody’s, said in the statement today.
Standard & Poor’s revised its outlook on the company’s debt on April 8 to negative from stable, citing a “strong revenue decline” that could ultimately lead to a downgrade.
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