--- Updates with Medivation's rejection of Sanofi bid ---
AstraZeneca PLC (LON:AZN) is set to increase its focus on cancer drugs but stayed silent on whether it would gatecrash a rival bid for US firm Medivation.
The UK drug giant said on Friday that it planned to slash costs by US$1bn, resulting in a significant drop in spending on commercial and sales activities this year and next.
It plans to reduce manufacturing and commercial operations, but would increase spending on oncology.
AstraZeneca and Swiss group Roche have been rumored to be interested in prostate cancer specialist Medivation (NASDAQ:MDVN), which has received a US$9.3bn approach from French drug group Sanofi (SASY.PA).
AstraZeneca has been making acquisitions to bolster its medicine cabinet, including the US$2.7bn purchase of hyperkalaemia drug developer ZS Pharma in November.
In December, it made a US$4bn swoop for a 55% stake in blood cancer treatment developer Acerta Pharma.
Chief executive Pascal Soriot declined to comment specifically on whether AstraZeneca would consider trumping Sanofi's bid for Medivation.
Meanwhile, Medivation on Friday rejected the Sanofi approach, saying it undervalued the company.
Sanofi hit back, saying it remained "committed" to the deal and looked forward to "engaging directly with Medivation shareholders."
AstraZeneca's Soriot said the group planned to save US$1.1bn a year by the end of 2017 from its cost cuts, which will incur a US$1.5bn one-off restructuring charge.
He said there would be job losses in its global operations but declined to say how many.
First-quarter revenue rose 1% in dollar terms to US$6.1bn versus a market consensus of US$5.93bn, but core operating profit fell 12% to US$1.6bn.
Analysts expect AstraZeneca's earnings to decline in 2016 and 2017 as it faces the expiry of patents on older drugs and copy-cat competition.
Its flagship cholesterol drug Crestor loses patent protection in the US next week.
AstraZeneca confirmed expectations of a low to mid single-digit percentage decline in both annual revenue and core earnings per share at constant currencies in 2016.
Shore Capital described the results as broadly in-line, with revenues 2.7% ahead of consensus.
That was offset by higher costs and lower other operating income to leave adjusted earnings per share just below expectations.
"While the performance of growth platforms and the cost discipline and targeted savings in SG&A are encouraging, some uncertainty over the near-term financials is likely to be a near-term over-hang, in our view," the broker said.