#4 AstraZeneca
15 Stanhope Gate
London W1K 1LN
United Kingdom
Tel: (44) 00 7304 5000
Fax: (44) 020 7304 5151
www.astrazeneca.com
| Headcount | 64,900 | |
| Year Established | 1999 | |
| Pharma Revenues | $23,950 |
12% |
| Total Revenues | $24,143 |
12% |
| Net Income | $4,724 |
28% |
| R&D Budget | $3,379 |
-3% |
| Drugs Approved |
|
| Drug |
Indication |
| merrem | skin and soft tissue infections |
| seloken/toprol-XL | HCTZ combination |
| nexium | NSAID GI side effects – symptom resolution, ulcer healing |
| atacand | heart failure |
| Drugs Pending |
|
| Drug | Indication |
| nexium sachet formulation | GERD |
| seroquel | bipolar depression |
| symbicort pMDI | COPD, asthma |
| Drugs in Phase IIB and Beyond | |
| Drug |
Indication |
| azd0837 | thrombosis |
| azd6140 | arterial thrombosis |
| crestor | CHF, renal, artherosclerosis |
| atacand | diabetic retinopathy |
| agi-1067 | artherosclerosis |
| aazd9056 | inflammatory bowel disease |
| nexium | extra-esophageal reflux disease |
| cytofab | severe sepsis |
| azd3480 | cognitive disorders |
| seroquel | bipolar maintenance, schizophrenia, generalized anxiety disorder, major depressive disorder |
| nxy-059 | stroke |
| azd2171 | NSCLC and colorectal cancer |
| iressa | breast cancer, head and neck cancer |
| zd4054 | prostate cancer |
| faslodex | 2nd line after aromatase inhibitor failure |
| patrin | solid tumors |
| zactima | NSCLC, medullary thyroid cancer |
| faslodex | 1st line advanced breast cancer |
| azd9056 | COPD |
| azd8955 | osteoarthritis |
| azd9056 | rheumatoid arthritis |
| azd3778 | rhinitis |
| zactima | 2nd and 3rd line NSCLC, thyroid cancer |
| Early Research Projects | |
| Drug |
Indication |
| azd8309 |
rheumatoid arthritis |
| azd8309 | COPD |
| azd1981 | asthma |
| azd4769 | solid tumors |
| ku59436 | breast cancer |
| azd6244 | solid tumors |
| azd0530 | solid tumors, hematological malignancies |
| aq4n | solid tumors |
| azd9272 | neuropathic pain |
| azd9343 | GERD |
| azd2479 | dyslipidemia |
| azd8677 | dyslipidemia/diabetes |
| azd4121 | cholesterol absorption inhibitor |
| azd9684 | pulmonary embolism |
| Drugs Coming Off Patent |
|
| Drug | Indication |
| losec |
peptic ulcer, acid reflux |
| nolvadex | breast cancer |
| plendil | hypertension |
| zestril | CV diseases, hypertension |
| Top Selling Drugs |
|||
| Drug |
Indication |
Sales |
(+/- %) |
| nexium | peptic ulcer, acid reflux | $4,633 |
19% |
| seroquel | anti-psychotic | $2,761 |
36% |
| seloken | hypertension | $1,735 |
25% |
| losec/prilosec | peptic ulcer, acid reflux | $1,652 |
-15% |
| crestor | cholesterol | $1,268 |
40% |
| arimidex | oncology | $1,181 |
46% |
| pulmicort | asthma | $1,162 |
11% |
| casodex | prostate cancer | $1,123 |
11% |
| symbicort | asthma | $1,006 |
26% |
| zoladex | oncology | $1,004 |
9% |
| atacand | hypertension | $974 |
11% |
Account for 77% of total pharma sales, up from 73% in 2004
PROFILE
AstraZeneca jumped from #6 to #4 in 2005, on the strength of a 12% uptick in drug revenues. That's the best rate of growth among the all but one of the Top 10, and it's more impressive given the pipeline disappointments AZ has suffered. The company has 10 drugs in the billion-dollar category, and another that fell $26 million short of that mark. Losec/Prilosec will fall out of those ranks soon, but Atacand looks ready to replace it.
Still, those pipeline problems haunt AZ's long-term prospects, and may make the company ripe for a takeover. The company's experimental diabetes treatment Galida was cut in May 2006 after Phase III trials showed elevations in serum creatinine and an associated decrease in Glomerular Filtration Rate (GFR). Galida joined Iressa (lung cancer) and Exanta (blood thinner) in the AZ graveyard.
| THE LOWE DOWN AstraZeneca is in decent shape, thanks to all that ulcer medication, but a few years ago they probably figured that they'd be higher in the standings by now. The failures of the antitumor agent Iressa and their anticoagulant Exanta, though, have left them a few billion dollars short in sales. It's also left their late-stage pipeline looking leaner than it had planned on (although they do seem to have a lot going on in the earlier phases). This imbalance has led to talk from their management about how they're going to improve the productivity of their in-house research efforts. Well, that's always nice to hear. But since (as far as I can tell) no one's figured out a reliable way to do that yet, the company also seems to be ready to buy some help—witness its purchase of Cambridge Antibody. This will give them entry into an area that people have realized is quite a bit more lucrative than it used to be. Another thing that's probably been irritating the company over the last few years is Crestor's inability to rise up to Lipitor-like levels. Granted, nothing else has ever scaled those heights, but AZ must be wondering what they have to do to break through. There's one category that they match Pfizer in, though: both companies have been fighting off Ranbaxy's attempts to break the patents of their best-sellers. They've arrived at last! --Derek Lowe |
For a company that has had so many disappointing results as AZ has, the recent news about Crestor must have been awfully gratifying. In March 2006 the company released results of a study showing that Crestor reversed plaque buildup in the arteries of patients with coronary artery disease. The trial involved 40mg doses of the statin, while patients usually start with a 5mg dose. Given the safety issues associated with Crestor, I'm sure there will be plenty of risk analysis in the decision to use high doses for a new indication.
Rebuilding the Pipeline
In a recent presentation on the company's pipeline, AZ's new chief executive officer David Brennan remarked, "There are three elements to our strategy to strengthen the pipeline: improve the productivity of our in-house discovery and development efforts; aggressively pursue promising products and technologies from external sources; and, beginning with our offer for Cambridge Antibody Technology, build a major international presence in the research and development of biological therapeutics to complement our small molecule capabilities."
The development news hasn't been all bad for AZ. The company has five new compounds in Phase III and 13 more in Phase II. AZ filed asthma treatment Symbicort with the FDA in September 2005; the drug is already available in Europe, and posted sales of $1.0 billion in 2005. The company predicts a U.S. launch in 2007.
Also, the NDA for NXY-059 (the stroke treatment formerly known as Cerovive) will be filed in early 2007. In addition, line extensions of current products should sustain revenue growth (especially for Nexium and Seroquel) until some of the new products reach the market. Line extensions comprise approximately 25% of AZ's R&D pipeline.
Only one other drug is on pace for approval in 2007: AGI-1067, an atherosclerosis treatment in-licensed from Athero-Genics in December 2005. AZ paid $50 million upfront for the Phase III product, with the potential for $950 million more in development and commercialization milestones. AZ will also fund AtheroGenics' development of a 125-person cardiology sales force in the U.S. to promote it and another AZ CV drug.
| ACQUISITIONS Target: Cambridge Antibody Technologies (CAT) Price: $1.3 billion Announced: May 2006 Comment: “This acquisition represents a major long-term strategic investment by AZ in novel biological therapeutics.” —CEO David Brennan Target: KuDOS Pharmaceuticals Price: $210 million Announced: December 2005 |
AZ has gone after a number of collaborations and in-licensing agreements to bolster its pipeline. The company is in a strong enough cash position (and has expertise and sales forces in enough therapeutic areas) to warrant that strategy. In addition to the AtheroGenics deal, AZ has signed the following deals in the last year:
Abraxis BioScience: Co-promote Abraxanae for injectable suspension (chemotherapy) in the U.S. AZ sold its branded anesthetics and analgesics in the U.S. to Abraxis as part of the pact. Cost: $200 million for a five-and-a-half-year term, with AZ receiving 22% commission on net sales during the term, plus 10% and 5% commissions in the two years after the term.
Astex: Discover, develop and commercialize PKB inhibitors for cancer treatment. Cost: $5 million upfront, as much as $270 million in milestones and royalties.
Avanir: Discover, develop and commercialize reverse cholesterol transport enhancing compounds to treat CV disease. Cost: $10 million upfront, as much as $330 million in milestones, plus stepped royalties capped in the low double-digits.
Protherics: In-licensing CytoFab (anti-sepsis), which is planned to enter Phase III in 2007. Cost: $30 million upfront, $13.5 million in equity, as much as $315 million in milestones, and 20% of net sales.
Schering AG: Research and licensing collaboration for Selective Glucocorticoid Receptor Agonists (SEGRAs) as anti-inflammatory treatments. Cost: undisclosed.
Targacept: In-licensing TC-1734 (Alzheimer's treatment and other cognitive disorders), which is in Phase II, plus development of other compounds that act on neuronal nicotinic receptors. Cost: $10 million upfront, as much as $300 million in milestones, and stepped double-digit royalties for commercialized products.
GSKAZ?
As I mentioned at the outset, AZ's series of high-profile failures may have left the company vulnerable to a takeover. The main suitor is rumored to be Glaxo-SmithKline, which was believed to be awaiting the result of its bid for Pfizer's consumer division before committing to a pharma acquisition.
A merger would provide GSK with some interesting synergies and entrée into classes where it's not very strong. Plus, it would be an All-England company (sort of), which would continue the "national champion" concept pushed by the Sanofi-Aventis merger. That said, the combined company would have to divest some very good products to satisfy antitrust regulators.
I don't think GSK can afford to acquire AZ (the divestitures, plus labor issues of laying off thousands of 'redundant' employees), but I do wonder how long AZ can go without making a major acquisition of its own. At present, its #4 ranking among Pharma companies marks the beginning of the "second-tier." Even if its 12% growth holds up for another year, the company will still reside $10 billion behind out of the #3 position (either Sanofi or GSK, which were separated by $37 million).
Can the company reside relatively comfortably in that position, or will pressure from below lead it to acquire a "mid-major" company? Last September, outgoing chief executive Sir Tom McKillop said AZ has no interest in a merger. "We have no strategic need to be bigger -- none at all. So there is no reason to engage in major M&A activity," he said in an Reuters interview.
We'll see if the new chief executive shares Sir Tom's sentiments. I'm inclined to think that the sheer number of new agreements and smaller acquisitions (nothing larger than its $1.2 billion acquisition of CAT) may help AZ sustain its growth, rebuild its pipeline, and remain competitive.
