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AstraZeneca Q1: Seroquel Sales Up; Faces 10,000 Lawsuits; Company Thinks It Will Beat the Rap

AstraZeneca is facing nearly 10,000 lawsuits over claims that the company failed to warn people that its antipyschotic, Seroquel, could give patients diabetes. The update came on news that Seroquel sales actually went up in Q1 2009, rising to $1.1 billion from $1 billion. The company's statement was bullish on the lawsuits, suggesting it thought it was going to win enough of them to avoid the Eli Lilly scenario. (More on the Seroquel suits below.)

AZ is actually doing really well as a business, compared to some of its competitors, such as Merck.

The basics: Revenues were up incrementally to $7.7 billion; net income was up substantially to $2.1 billion from $1.5 billion.

That extra profit came from lower costs in R&D, sales and marketing, and manufacturing. The biggest cut was in sales, where AZ reduced expenses by $361 million -- mostly in layoffs. The company's $2.5 billion cost-cutting program seems to finally be working. The revenue yield on every dollar AZ invested in reps rose to $3.24, the highest it's been since 2007.

Here's the breakdown of the Seroquel legal situation:

  • In February 2009, New Mexico joined Pennsylvania, Arkansas, Montana and South Carolina suing over medicaid costs for treating diabetes brought on as a side effect of Seroquel, and for off-label promotion of the drug.
  • As of 13 April 2009, AstraZeneca was defending approximately 9,976 served or answered lawsuits involving approximately 16,198 plaintiff groups.
  • To date, approximately 2,383 additional cases have been dismissed by order or agreement and approximately 1,500 of those cases have been dismissed with prejudice.
  • On 30 January 2009 and 6 February 2009, the federal judge presiding over the Seroquel Multi-District Litigation (MDL) in the District Court for the Middle District of Florida granted AstraZeneca's motions for summary judgment in the first two Seroquel product liability cases set for trial and dismissed those cases.
  • All Florida cases are stayed pending a decision on an appeal of the summary judgment.
  • The first trial is scheduled to begin in Delaware state court on 29 June 2009. AstraZeneca expects that an additional two to four trials may be scheduled to commence in 2009.
  • AstraZeneca is also aware of approximately 59 additional cases that have been filed but not yet served
The company said:
AstraZeneca intends to litigate these cases on their individual merits and will defend against the cases vigorously.
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