LONDON -- Like some other big pharma companies, AstraZeneca has tumbled over the "patent cliff" in the past few years, having lost patent protection and exclusivity on a significant number of its best-selling medicines.
The most recent effect of this was seen in AstraZeneca's poor trading figures at the end of January, when it announced that annual sales had slipped 17%, blaming 85% of the drop in revenue on patent expiration in various parts of the world of just four treatments -- Seroquel IR, Atacand, Nexium, and Merrem. It also said that it expected a mid-to-high single-digit percentage drop in revenue for 2013, as it slides further down the cliff. Worse still, its pipeline of things that could become its new blockbuster treatments is looking perilously bare.
All shook up
Something obviously needs to change, and new Chief Executive Officer Pascal Soriot intends to be the person to make that change happen. Back in January, he shook things up by reorganizing the company's senior management, in a bid to improve the group's decision-making. Out went the president of research and development, and the global commercial executive vice president. In came three key members of AstraZeneca's R&D staff to be responsible for treatment discovery and the full range of product development, two new commercial co-heads to look after sales and marketing, and a then-unfilled "global portfolio and strategy" position to link R&D with commercial operations.
Today, Soriot will follow those changes up by unveiling a strategy that's intended to enable the company to "return to growth" and "achieve scientific leadership." Ahead of announcing the details, which will be revealed at AstraZeneca's Investor Day event today, Soriot said:
AstraZeneca is committed to delivering great medicines to patients through innovative science and excellence in development and commercialisation. Our vision is clear - to be a global biopharmaceutical company with a focused portfolio in core therapy areas, underpinned by distinctive science and a growing late-stage pipeline, with sound financials offering attractive returns for investors. We see no case for diversification.
In setting out our strategy today, we are making an unambiguous commitment to concentrate our efforts and resources on our priority growth platforms and our priority pipeline projects. As we focus, accelerate and transform our business we know that our success will ultimately be measured by the quality of execution. I'm confident that we have set out on the right path to return to growth and achieve scientific leadership, and I'm equally confident that our people possess the talent, determination and focus to deliver for patients as well as our shareholders.
Delivering on the new strategy will obviously take time -- one target is to "significantly exceed" the current market consensus of $21.5 billion for revenue in 2018. But if Soriot can do it, shares in AstraZeneca, which are currently on a forward P/E of 8.4, could turn out to be something of a bargain. And while you wait for the growth to happen, there's the comfort of a 6% dividend.
AstraZeneca's substantial dividend may be one reason that, even through its recent troubles, the company has remained a firm favorite of investment guru Neil Woodford, who has a remarkable track record of picking winners.
This article was originally published as AstraZeneca Unveils New Strategy for Return to Growthon Fool.com
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