Drugs company AstraZeneca has warned that its earnings are likely to fall this year because of increased competition from generic drugs.

But it said new drugs coming onto the market should help to drive sales and profits in the longer term.

The company reported pre-tax profits before one-off items of $4.39bn (�2.7bn)for 2002, up from $4.27bn the previous year, with sales up 10% at $17.84bn.

The earnings per share figure of $1.84 was at the top end of expectations, but AstraZeneca said earnings were set to fall to between $1.50 and $1.65 this year.

The firm is facing tougher competition from generic drug brands to its ulcer drug Prilosec - which is known as Losec outside North America.

But chief executive Sir Tom McKillip said that, excluding Prilosec, sales across the group grew 23% "showing the strength of the our portfolio of growth products".

He added that given the launch of new cholesterol and heart drugs later this year, "all the elements should be in place to drive strong sales and earnings growth from 2004".