* Product sales down 13 pct in Q1, EPS boosted by one-offs
* Impact of blockbuster patent losses set to recede in H2
* Focus on pivotal lung cancer trial results due mid-year (Adds further CEO comment cancer drugs, more reaction, details)
By Ben Hirschler
LONDON, April 27 (Reuters) - AstraZeneca, struggling with loss of patents on blockbusters like cholesterol pill Crestor, reported another quarter of falling drug sales on Thursday as it awaits pivotal clinical trial data that may revive its fortunes.
Chief Executive Pascal Soriot believes 2017 will mark the trough for the British group, as it starts to put generic losses behind it and builds up sales of recently launched and experimental cancer medicines.
"The pipeline continued to deliver in what we expect will be a pivotal year," he said. "The total revenue performance reflected the transitional impact of recent patent expiries, which is expected to recede in the second half of the year."
Despite income from disposals and external deals, first-quarter revenue fell 12 percent to $5.4 billion, although core earnings per share (EPS) rose 4 percent in dollar terms to 99 cents - helped by a $161 million one-off gain on the sale of short-term investments.
Industry analysts, on average, had forecast revenue of $5.4 billion and earnings of 82 cents, according to Thomson Reuters data.
So-called "externalisation" revenue, which some analysts argue unduly flatters AstraZeneca's results, rose 2 percent to $562 million, while product sales fell 13 percent to $4.8 billion.
"Earnings quality concerns persist," said Bernstein analyst Tim Anderson, who rates the stock 'market-perform'.
Shares in the company were down 0.5 percent by midday, with analysts noting that several key new drugs had missed consensus sales forecasts, including heart drug Brilinta, Lynparza for ovarian cancer and diabetes treatment Farxiga.
AstraZeneca reiterated its expectation that full-year revenue would decline at a low to mid single-digit percentage rate, with core EPS dropping by a low to mid-teens percentage.
For investors, owning AstraZeneca shares represents a major bet on the company's oncology portfolio. It is already doing well with new lung cancer pill Tagrisso, but the really big opportunity lies in cancer immunotherapy.
Results from its closely watched MYSTIC immuno-oncology (I-O) trial in previously untreated lung cancer patients are expected mid-year.
Merck & Co, Bristol-Myers Squibb and Roche already have similar drugs approved for lung cancer but AstraZeneca hopes to carve out a market by proving the value of combining two I-O drugs, durvalumab and tremelimumab.
"If combination works in a large range of patients, then certainly our market share should be expected to be pretty high," Soriot told reporters.
It is a big 'if' for shareholders, who are waiting to see evidence that AstraZeneca can thrive as an independent company after spurning a takeover bid from Pfizer in 2014.
"For long-term investors, the jury remains out on the CEO, who rebuffed the 70 billion pounds ($90 billion) offer made by Pfizer," said EdenTree Investment Management fund manager Ketan Patel.
Analysts at Jefferies see a $20 billion opportunity for I-O drugs in first-line, non-small cell lung cancer, with sales split between I-O monotherapy (administering one such medicine on its own); I-O plus conventional chemotherapy; and combinations of two I-O drugs, as in AstraZeneca's approach.
Outside cancer, AstraZeneca dropped development of an experimental respiratory treatment licensed from Synairgen , lopping 47 percent off the value of the small British biotech firm. ($1 = 0.7752 pounds)
Reporting by Ben Hirschler; editing by Jason Neely