In AstraZeneca’s (NYSE: AZN) statement outlining additional changes the drug maker will make to its global business to achieve scientific leadership this week, it underscored the magnitude with a few words. “Focus” was mentioned 11 times — a few times in bold. “Accelerate” was used eight times and “transform” got a few mentions too. But as analysts and some reporters were skeptical on whether it would be enough to turn the big pharma company’s fortunes around.
Among the changes are:
- Cutting another 2,300 staff this time from its sales and administrative divisions. Combined with cuts from its R&D division announced earlier this week and reductions in February last year, it adds up to a total of 5,050 layoffs by 2016.
- Focusing on three core areas: respiratory, inflammation, autoimmunity, cardiovascular and metabolic disease and oncology. Although it will still pursue drugs for infection and vaccines and in neuroscience, it said its investments will be more opportunity-driven.
- Collaborating with Cambridge, Massachusetts biotechnology company Moderna on therapeutics to treat cardiometaboloic diseases and cancer in a deal valued at $240 million.
- Work with Swedish medical university Karolinska Institutet to create a translational research center for cardiovascular and metabolic disease and regenerative medicine. It will assess new drug targets for AstraZeneca’s two biotech units, AstraZeneca Innovative Medicines and Early Development and MedImmune
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Matthew Herper of Forbes pointed out that it could all come down to one drug: Brillanta. Designed to compete against Plavix to prevent blood clots and in so doing prevent heart attacks and strokes in people with acute coronary syndrome, Brillanta has not been the blockbuster drug its makers had hoped for with only $89 million in sales last year. In its statement, AstraZeneca said it believes the drug has multibillion dollar potential. If the company can prove it can help people with other conditions and do more, like prevent strokes, it could expand the patient population.
Fabian Wenner, an analyst with Kepler Capital Markets SA in Zurich was not impressed by the changes. In an interview with Bloomberg, he said: “I’m disappointed because Pascal didn’t see a need for a quick fix,” such as an acquisition. “They’re confident in their existing pipeline assets and see no need for diversification. All the others are going for diversification because it takes the pressure off the R&D engine, which at AstraZeneca is broken.”
Some analysts said the changes reflect what will be a long slow road to the scientific leadership it seeks. Bernstein Research Analyst Tim Anderson wrote:
“Many of the proposed solutions appear reasonable (and in-line with expectations) yet some of them will probably be viewed by investors with a measure of caution and skepticism.”
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Jessica Hodgson of The Wall Street Journal said the company faces a double bind: “While some investors say it needs to take rapid action to shore up its drug pipeline through M&A, its historical track record with acquisitions is considered underwhelming. In 2007 the company spent $15.6 billion to acquire MedImmune Inc., in part to boost its footprint in biological drugs. But analysts say the deal didn’t strengthen the pipeline significantly.”
