07.23.09
#5 AstraZeneca
15 Stanhope Gate, London W1K 1LN, UK
Tel: (44) 00 7304 5000 Fax: (44) 020 7304 5151
www.astrazeneca.com
Headcount | 65,000 | |
Year Established | 1999 | |
Pharma Revenues | $30,677 | +7% |
Total Revenues | $31,601 | +7% |
Net Income | $8,681 | +9% |
R&D Budget | $5,179 | flat |
2008 Top Selling Drugs | |||
Drug | Indication | Sales | (+/-%) |
Nexium | peptic ulcer, acid reflux | $5,200 | flat |
Seroquel | antipsychotic | $4,452 | +11% |
Crestor | cholesterol | $3,597 | +29% |
Symbicort | asthma | $2,004 | +27% |
Arimidex | oncology | $1,857 | +7% |
Pulmicort | asthma | $1,495 | +3% |
Atacand | hypertension | $1,471 | +14% |
Casodex | prostate cancer | $1,258 | -6% |
Synagis* | RSV | $1,230 | +99% |
Zoladex | oncology | $1,138 | +3% |
Losec/Prilosec | peptic ulcer, acid reflux | $1,055 | -8% |
Merrem | anti-infection | $897 | +16% |
Seloken/Toprol | hypertension | $807 | -55% |
Account for 86% of total pharma sales, down from 83% in 2007.
* Acquired in June 2007 in MedImmune deal
PROFILE
AstraZeneca slipped a spot in this year’s rankings through no fault of its own (see Novartis profile). Not only has the Sandoz unit helped Novartis to leapfrog ahead of AstraZeneca in this year’s rankings, but the generics unit also launched an early copycat of AZ’s top seller Nexium recently in Denmark. Kick ‘em while they’re down, whydon’tcha?
Authorization for generic Nexium has also been granted in a number of smaller EU countries, although it’s protected in most of the major EU markets until March 2010. Sandoz and AZ are also battling over some Nexium patents in the U.S. Nexium’s slow-motion expiration is just the tip of the iceberg; by 2013, AZ’s current top-three products, Nexium, Seroquel and Crestor will all have generic competition.
The Lowe Down
Someone has to lead the league every year in the Most Exposed To Patent Expirations category, and AZ is a good candidate these days. Seven of their drugs are going off to Generic Heaven over the next three or four years, led by Crestor, and a look at the company’s stock price suggests that investors aren’t too confident that the lost revenues can be made up gracefully. They might be able to pull it off, if their diabetes and cardiovascular pipelines deliver. But everything’s going to have to work perfectly, and since when does that happen? The usual brainstorm that occurs to executives at this point is to forget all that ‘gracefully’ jazz and and go out looking for a nice big acquisition, but I’m not sure that AZ has enough cash for something big enough. And that’s assuming that there’s any deal out there that makes sense. (Then again, given some of the other ones that go through, maybe I shouldn’t have such a strict cutoff). The other problem is that AZ’s last big deal (MedImmune) hasn’t come near to paying for itself, or (to be charitable about it) at least not yet. It’s not going to be an easy ride over the next few years.—Derek Lowe |
Symbicort, which in March 2009 received approval for treatment of COPD, has some generic issues in Europe, but a number of separate patents involving composition and delivery mean that it’ll stay exclusive to AZ for a while yet. This is good news, as Symbicort topped $2 billion in sales last year.
AZ saw its Toprol-XL revenues plummet because of early generics in the U.S. The company prevailed in court and now has the market to itself (along with an authorized generic). Sales of the drug in 1Q09 were up 59% to $288 million. AZ also recently triumphed over Apotex to block a generic of its Pulmicort Respules, an asthma treatment. Last November, AZ settled with Teva and authorized a generic of the same drug, which will be on the market in December 2009. Sounds like AZ’s lawyers have been pretty busy.
Down By Law
Unfortunately, they’re going to stay that way. CNS drug Seroquel is performing well and continues to grow, but it may turn out to be another example of the Balzac quote cited at the beginning of The Godfather: “Behind every great fortune, there is a crime.”
In this instance, the charges are that AZ improperly promoted Seroquel for off-label uses and that the company failed to disclose side effects like weight gain and diabetes. At last count, there were 15,000 users involved in around 9,000 lawsuits against AZ. Sound familiar? Yeah, it’s beginning to look a lot like Zyprexa.
The causation hasn’t been clear and AZ has won summary judgments against the first round of complaints, keeping each of those cases from going to trial. However, the release of internal e-mails and other documents about the early promotional efforts for Seroquel has caused the company some embarrassment. The company says it’s spent around $500 million defending itself in these Seroquel cases . . . and none of the cases have been settled out of court!
And, of course, the company is also battling a passel of generic companies over Seroquel’s patents. On the plus side (?), an FDA advisory committee recommended approving Seroquel for schizophrenia in 13-to-17-year-olds and bipolar mania in 10-to-17-year-olds.
Outsourcing News
AstraZeneca’s annual report reiterated that AZ plans to outsource all API manufacturing within 5-10 years. It’s an ambitious plan, but it’s bound to have some hiccups. For example, AZ announced plans last year to allow Ranbaxy to produce the API for Nexium starting in May 2009, and do some formulation in 2010, as part of the companies’ patent agreement for a generic Nexium in 2014. Unfortunately, Ranbaxy has run into some highly-publicized quality issues. The led to a new round of inspections by AZ, resulting in a delay in API supply, according to an Indian newspaper. |
Buying or Selling?
Due to its impending patent cliff, there’s been speculation that AZ would join the acquisition party, if only in order to keep up with Pfizer, Merck and Roche. I hesitate to make a call on this, because I got burned on the Schering-Plough — I was convinced no one would buy that company while it was still digesting Organon — but at least I can safely say that the MedImmune acquisition (and AZ’s relative lack of cash after that deal) is going to take AZ out of buying side the large-scale M&A derby.
So how has AZ done with its MedImmune acquisition? It’s been two years, which is an eternity to shareholders, but more of a blip in terms of drug development and new drug approvals. In February 2008, the company filed a BLA for Numax (Motavizumab) to treat respiratory syncytial virus (RSV) in pediatric patients, but the FDA sent a Complete Response Letter in November 2008. AZ contends that it won’t have to conduct further clinical trials, and plans to resubmit Numax this year. And it can’t be bad to own MedImmune at a time when the world is clamoring for flu vaccines.
AZ may not be looking to buy a partner, but that doesn’t mean it’s dancing alone. The company expanded its cholesterol deal with Abbott in August 2008 to give Abbott non-exclusive rights to promote Crestor in the U.S. The deal grew again in June 2009, as the companies agreed to co-promote Trilipix in the U.S. At the same time, Abbott and AZ co-submitted their NDA for Certriad, a combo-pill of Crestor and Trilipix. Last November, AZ revealed data from a new study that showed tremendous CV results for Crestor, helping boost that statin’s growth even as generic statins take hold in the market.
AZ and Merck also recently announced a collaboration that may be more of a novelty than a new direction for drug R&D. Spinning out of a chance meeting of two scientists on an airport security line, AZ and Merck plan to combine efforts to develop a pair of cancer drugs that may have a strong synergistic effect. Keep in mind that the combo in question is in preclinical phase, and that AZ’s solo trial of its drug, AZD6244, failed in a Phase II trial against advanced skin cancer. Still, if the combination shows promise in a Phase I trial, it could lead to more pacts like this, where two development-stage drugs are tested in tandem, as opposed to the usual practice of trying an experimental drug in concert with an approved treatment.
In the “old-fashioned way” of building revenues, AZ has a number of new drugs pending approval. AZ and Bristol-Myers Squibb submitted their NDA for diabetes treatment Onglyza at the end of June 2008, but the FDA has pushed off its review window till the end of July 2009. A potential Onglyza competitor from Takeda has held off submission in Europe and the U.S., pending a new two-year study to generate better data. So if AZ and BMS can get approval for Onglyza, they’ll have some time to make inroads against Merck’s Januvia.
AZ also has high hopes for Brilinta, an anticlotting drug that would compete with Plavix, which has global sales of $9.5 billion. In May, AZ announced that a head-to-head Phase III outcomes trial against Plavix was “statistically significant” in Brilinta’s favor. The trial involved nearly 19,000 patients in 43 countries and will be presented in full at the European Society of Cardiology meeting in August 2009. AZ plans to file Brilinta sometime in 4Q09.
The company is looking at an ugly patent cliff in the next few years, but it has some hopes of getting new significant new revenue streams up and running before then. Now it just has to avoid getting bought by GSK.
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