More than £4 billion was wiped off the value of AstraZeneca yesterday amid fears that annual sales of one established drug would fall by £600 million and after news that a promising new drug had disappointed.

The drug maker's share price fell by almost 11 per cent, or 304p, to £25.01, after the double blow.

Teva, the Israeli generics company, has won approval for a generic version of Pulmicort Respules, AstraZeneca's asthma drug for children, which had sales close to £600 million last year.

The next stage in the battle between Teva and AstraZeneca over Pulmicort Respules patents will come to court in January. AstraZeneca has signed a deal with Par Pharmaceutical for an authorised generic in an effort to combat Teva's version, but said that its full-year earnings per share would now be at the lower end of its expected range.

The company also said that, in late-stage trials, Zactima, its new lung cancer treatment, had met its goals in combination with one leading chemotherapy treatment - Sanofi-Aventis's Taxotere - but not with another - Alimta, made by EliLilly. On top of this, Zactima failed to outperform Tarceva, another similar medicine already on the market, in trials.

Simon Mather, an analyst for WestLB, said that the drug might be useful in 40 per cent of an estimated 50,000 patients with advanced small-cell lung cancer - a smaller market than many analysts thought.

Analysts at Deutsche Bank said that the drug had “largely missed its commercial opportunity in lung cancer”.

John Patterson, the director of development at AstraZeneca, said: “Vandetanib [Zactima] can offer clinical benefit by extending the time a patient can live with their cancer under control, while managing symptoms and maintaining quality of life better than chemotherapy alone.”

Meanwhile, it emerged that the NHS intends to cut up to £550 million a year from its £10.6 billion drugs bill through reforms to medicine pricing, which opponents fear could threaten Britain's pharmaceutical industry.

The deal, which will last for five years, will lead to a 3.9 per cent cut in the medicines bill in February, with a further 1.9 per cent cut in January 2010. This will save £350 million in 2009 and £550 million in 2010.

The reforms could also mean that additional new treatments are available more quickly and cheaply on the NHS, as companies will be allowed to make new drugs available at a lower price and then raise it if the drug proves effective. The Times revealed last month that ministers were in talks with the drugs industry to speed up the approval process for treatments.

Reforms had been due to start in January, but were moved to February to allow the drugs companies more time to reprice their products. Some price cuts have been further delayed until 2010. The cuts are less severe than originally suggested. Alan Johnson, the Health Secretary, said last year that he hoped that the bill would go down by 10 per cent. Spending on medicines accounted for 12.7 per cent of NHS spending in 2006-07.

When the review of pricing began, it was feared that radical change could hinder the drugs industry in Britain, which includes two of the world's largest pharmaceutical companies, GlaxoSmithKline and AstraZeneca. Britain accounts for 9 per cent of global research and development in new drugs, but less than 4 per cent of the world market. However, the industry was cheered by the clauses in the review stating that prices of medicines might be raised if they benefited patients.

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