About 5 years ago AstraZeneca's ($AZN) now ex-CEO David Brennan pulled the trigger on a $15.6 billion purchase of the biotech MedImmune, a move that would help define his tumultuous tenure as chief executive. Now industry watchers have taken another look at exactly what the London-based drug giant stands to gain from the major purchase, with The Washington Post reporting Sunday that many of the fruits of MedImmune's biologics pipeline are years away from ripening.
AstraZeneca spent a hefty sum to acquire MedImmune back in 2007, betting heavily on a lineup of experimental drugs that has failed to meet expectations. With Brennan's unceremonious departure earlier this year and facing generics competition to anti-psychotic drug Seroquel, AstraZeneca last month revealed cutbacks in MedImmune's California vaccine operations that will add 200 layoffs to the thousands of jobs the drugmaker has axed in recent years.
AstraZeneca made MedImmune the focal point of the pharma group's push into the biologics business, picking up the biotech's FluMist flu vaccine and the big-seller Synagis in the buyout. As the Post reports, AstraZeneca has invested heavily in the biotech unit since the purchase with the addition of more some 2,300 workers globally and in Maryland. And the blueprint for the biologics division called for churning out a newly approved drug annually.
That hasn't happened. Though the company has notched some regulatory victories for its flu vaccines since the purchase, in 2010 AZ killed development of MedImmune's motavizumab and wrote off $445 million from the program after the FDA raised doubts about the RSV drug. MedImmune lacks a late-stage compound in a pipeline of 30 clinical-stage candidates, the Post reported, making unlikely that those contenders will be much help in beefing up AZ's product portfolio anytime soon.
"If they do come to the market and become major blockbusters, you can kind of see the price justified," Damien Conover, director of pharmaceutical research at Morningstar, told the newspaper. "But it's probably pretty accurate at this point to say it was an overpayment."
Very few people in the industry would argue that AZ paid the proper price for MedImmune. Rather than dwell on a bad deal, AZ's R&D chief Martin Mackay and the company's top brass are looking ahead to an active deal-making strategy to bring in hot assets from outside the company to sure up holes in its own pipeline. AstraZeneca, for instance, recently expanded its alliance with Bristol-Myers Squibb ($BMY) to gain rights to diabetes drugs. More deals are in the offing.
- get more in the Post's article
AstraZeneca wins Fluenz contract in U.K.
MedImmune to cut 200 jobs, layoffs hit vax R&D
Brennan's ouster at AstraZeneca sets stage for big changes in R&D
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