Can the Roche Guy Turn Around AstraZeneca?
Tattered and frayed by clinical trial failures and patent expirations on big-selling drugs, AstraZeneca (AZN) has hired Pascal Soriot away from Roche as its new chief executive. The move comes nearly three months after David Brennan abrupty retired from the struggling drugmaker (read previous Pharma news on this), which has been pursuing a variety of licensing deals, partnerships and acquisitions to replenish its pipeline.
“No one is blind to the challenges that confront the pharmaceutical sector and this company, but the underlying strengths of AstraZeneca in delivering on its strategy are clear. AstraZeneca will continue to make a positive difference to patients over the longer term and I’m looking forward to playing my part in shaping that future,” Soriot, 53, says in a statement. He takes up his new position on October 1.
For the past two years, Soriot was chief operating officer of the Roche pharma unit, and was responsible for overseeing the usual array of activities that included manufacturing and sales. The pharma business generated $34 billion, which means the unit is about same size as AstraZeneca. Before working at Roche, Soirot was ceo at Genentech, the biotech that is now owned by Roche and spent 20 years at Sanofi (SNY).
Of course, the pressure will be on Soriot to quickly set a tone and demonstrate progress. “He will be looking to make significant changes, including reviewing the pipeline and doing more deals. He’ll have to work fast because there’s an uphill struggle now to grow sales in the face of major patent losses,” Navid Malik, an analyst at Cenkos Securities, tells Reuters. “He stands for successful pharma at one of the biggest players,” DZ Bank analyst Elmar Kraus tells Bloomberg News. “He has everything that AstraZeneca needs.”
A declining PE ratio at AstraZeneca shows declining investor confidence in future profits. And revenue topped out and has showed a recent decline.
In recent months, AstraZeneca has shown signs of becoming more aggressive about dealmaking. In April, the drugmaker paid $1.26 billion for Ardea BioSciences and more recently, agreed to spend $3.4 billion toward the purchase of Amylin Pharmaceuticals (AMLN) by Bristol-Myers Squibb (BMY). In doing so, AstraZeneca expanded its partnerships with Bristol-Myers to develop diabetes medications, which made Pharma news.
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