AstraZeneca reported first-quarter results last week that slightly exceeded our expectations. However, we are not changing our fair value estimate based on the minor outperformance. Excluding the impact of foreign currency changes, total sales increased 7% year-over-year based on strong growth from cholesterol drug Crestor. Additionally, lower operating costs led to 20% earnings-per-share growth versus the prior-year period.
Crestor continues to surprise us with strong growth, as sales of the drug increased 35% year over year, excluding the impact of currency changes. We believe Crestor's strong efficacy and wide label are enabling the drug to expand its market share at the expense of other established competitors, particularly Pfizer's Lipitor. Crestor's robust growth is even more impressive given managed care's strong emphasis on promoting the use of generic Zocor. Based on Crestor's strong first quarter, we will likely increase our projections for the drug.
On the cost side, Astra made solid strides in the quarter. Selling and administrative expenses as a percentage of sales fell 150 basis points versus the prior-year period. We expect continued improvement in selling expenses throughout the year as Astra focuses on improving efficiency. Also, research-and-development costs as a percentage of sales fell by 270 basis points year over year, largely based productivity improvements.
During the next few months, we believe the approval and subsequent launch of diabetes drug Onglyza will be the most import factor for Astra. We believe there is a very high probability that the US Food and Drug Administration will approve the drug in late July. Based on strong uptake by a very similar drug, Onglyza should quickly develop into a blockbuster.
Damien Conover, CFA is a senior stock analyst for Morningstar.
