Pharmaceutical company AstraZeneca on Thursday reported a 27 percent drop in third-quarter profit as it set aside nearly half a billion dollars to settle claims that its anti-psychotic drug Seroquel has harmful side-effects.
Net profit was $1.55 billion compared with $2.12 billion a year earlier, the company said. Revenue was down 3.7 percent to $7.9 billion.
AstraZeneca PLC said third-quarter results included a charge of $473 million for current and future settlements of product liability claims involving Seroquel, its second-biggest-selling drug.
The company faces claims that the drug caused diabetes and other harmful effects to some patients.
David Brennan, the company's chief executive officer, said AstraZeneca remained "firmly on track" to meet full-year financial targets.
AstraZeneca shares were down 1.4 percent at 3,199.5 pence in morning trading on the London Stock Exchange.
Although the company faces difficult comparatives related to last year's surge in flu vaccine sales, Panmure Gordon analyst Tom Kemp said AstraZeneca remained his top pick in the pharmaceutical sector.
"We expect the company to continue to 'beat' on earnings and quite possibly also increase the scope of its long-term guidance as early as January 2011," Kemp said.
Third quarter revenue was up in all regions except the United States, AstraZeneca's biggest market, where revenue fell 13 percent due to generic competition and the absence of pandemic flu sales, Brennan said.
The provision for Seroquel included $203 million for agreements in principle to resolve more than 18,250 claims, and $270 million as a reserve to cover settlement of unresolved claims.
Despite legal issues, sales of Seroquel were up 7 percent in the third quarter to $1.30 billion.
Sales of the cholesterol-fighting drug Crestor rose 20 percent to $1.37 billion.
For the nine months to Sept. 30, overall net profit was down 1.6 percent to $6.19 billion while revenue was up 1 percent to 24.65 billion.