Company Analysis - AstraZeneca
Troubling Times?
The last two years have been somewhat difficult for AstraZeneca, with a number of late-stage, high-profile compounds having to be dropped from its pipeline. In February 2006, the antithrombotic Exanta (ximelagatran) had to be shelved following results from a Phase III trial which showed potential risk of severe liver injury. Just three months after this, the antidiabetic Galida (tesaglitazar) also had to be terminated at Phase III after the overall benefit/risk profile was deemed unlikely to offer patients significant advantage over currently available therapy. More recently, in March of this year, AtheroGenics’ hypolipaemic AGI-1067, to which AstraZeneca had co-development rights, failed to reach its efficacy endpoint in a 6,000-patient trial, showing no advantage over placebo. Analysts had reported doubts over the future of the drug for some time, and in April, AstraZeneca finally announced that it was to be dropped. A further setback came in August when another collaboration, this time with Renovis, went awry as the statistically-significant reduction in stroke-related disability in a pivotal Phase III trial.
These late-stage trial failures are cause for concern for AstraZeneca...These late-stage trial failures are cause for concern for AstraZeneca, as although its finances are healthy, buoyed by sales of key products such as Nexium, Crestor, Serouquel, Symbicort and Arimidex, the failures have resulted in a dramatically depleted late-stage clinical pipeline. A pharmaceutical company lives or dies by bringing new products to market, with patent protection only offering market exclusivity for a specified time period, thus making the development of new compounds essential for revenue growth and stability. Nexium and Seroquel are both due to come off-patent towards the end of 2008, and in the face of stiff generic competition, AstraZeneca will need to consider how it will replace the revenue loss from these compounds. The effects of these concerns and the pipeline setbacks can already be seen - in July this year, AstraZeneca had to announce 7,600 job cuts across the whole of Europe, in an attempt to restructure its business and maximize profits, although it is by no means the only company to have to resort to lay-offs in the face of the generic threat to profits.
