AstraZeneca has been under the gun recently for paying some hefty prices on a string of business deals for new products. But after reporting another dismal set of quarterly earnings--with sales plunging 21% on a combination of generic competition and European-style economizing--the pharma giant ($AZN) is signaling that the deal-making has just begun.
Echoing a theme that has dominated AstraZeneca for months now, interim CEO Simon Lowth today vowed to continue to "invest hard," with everything from licensing deals to buyouts on the table.
"We're always actively looking outside for high-quality science, high-quality projects and high-quality product portfolios to bring into AstraZeneca," Lowth told analysts, according to Reuters. Analysts, though, remain skeptical that Lowth--who's been named as a possible successor to David Brennan--can deliver a snappy turnaround.
"The absence of a diversified strategy such as GlaxoSmithKline's means AstraZeneca remains significantly more exposed to industry-wide headwinds and … we are yet to be convinced by AstraZeneca's ability to deliver consistent successes with its M&A-heavy pipeline strategy," Seymour Pierce analyst Mike Mitchell notes, according to The Guardian.
A diabetes alliance and new studies of Brilinta won't be enough to save AstraZeneca from the analysts. "For the time being, the focus is still on cost-cutting and restructuring, and the benefits of this haven't yet fed through to profits," says Ana Nicholls, a healthcare analyst from the Economist Intelligence Unit. "So far the departure of boss David Brennan in June seems to have made little difference to the gloom surrounding the company."
Dig down into AstraZeneca's release today and you'll see why things are so dire. Its R&D update notes that in the first half, 22 programs advanced to the next stage of development, while 10 were dumped.There are nine new chemical entities in late-stage development, and one of them was acquired when AstraZeneca bought out Ardea. Those are not impressive figures for a company of this size.
At the end of Brennan's rocky tenure as CEO of AstraZeneca, the Big Pharma company had earned a reputation for a steady string of late-stage failures, a stubborn resistance to ambitious deal-making and one of the worst Phase III efforts of all the multinational drug developers. And despite a flurry of deals, including its diabetes pact with Bristol-Myers Squibb built around the Amylin portfolio, that's still the rep it has with analysts today, even as it undergoes a wrenching R&D reorganization that involves the loss of thousands of jobs.
There's very little that any Big Pharma company can do about ongoing development efforts. It takes years to develop a new drug. But AstraZeneca can execute a turnaround on the deal front in quick order. And in a business where patience is a chief virtue in deal-making, it's likely going to continue to pay a premium for the rapid-fire deal strategy it has adopted.
- here's the Reuters story
- read the report from The Guardian
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