Will the truth set AstraZeneca ($AZN) free? It might keep new CEO Pascal Soriot clear of big expectations for another year or so. Perhaps that's why the company laid out its shortcomings with its 2012 earnings announcement. Sales are falling, earnings are falling--and both will continue on that path, with profits declining even more than revenues.
The company even resisted expectations for A New Plan from Soriot. Too early to talk strategy yet, the ex-Roche ($RHHBY) executive said. For that, investors will have to wait till late March. No wonder the company's stock immediately dropped.
"The very conservative outlook indicates that AstraZeneca has not quite turned the corner in terms of patent expiries," Elmar Kraus, an analyst with DZ Bank AG, told Bloomberg. "This and the delay in presenting the new strategy will put pressure on the shares."
And yet there was a subtext to the presentation. Yes, sales are down 15% this year. But next year, revenues will only drop in the mid-to-high single digits. Yes, Seroquel and other key brands lost hundreds of millions in sales. And newer drugs aren't raking it in, either. But look at the green shoots, in growing script numbers here, increasing hospital penetration there. And wow, look at that 17% growth in China.
Our blood thinner Brilinta/Brilique has been a poor performer--but it's getting better. Our cholesterol-fighter Crestor has to contend with generic Lipitor, but it's weathering the fight well. And yes, we've cut 15,200 jobs since 2006. But we only have about 1,000 more to go by the end of next year.
All these "Yes, buts" amount to apologies to restive shareholders, who complained loudly enough last year to push then-CEO David Brennan out the door. Brennan's departure is AstraZeneca's saving grace right now. With Soriot still a cipher in spit-shined shoes, the company can spotlight the "buts," suggesting that next year, investors will hear fewer apologies, and more affirmations. Even the delayed word on strategy seemed like a promise of better things to come.
Soriot did offer a few straws for investors to grasp. AstraZeneca has 5 growth platforms: Brilinta, diabetes drugs, respiratory meds, emerging markets and Japan. He mentioned the company's complex structure, blaming it for slow decision-making, hinting that his new org chart and executive team can speed things up. And he promised some M&A, which got people talking about a big merger -- or at least a series of pipeline-boosting small deals.
Now, all eyes will be looking toward March 21, when that promised new strategy will be unveiled and Soriot-as-CEO becomes a fully-fleshed character. If he makes a deal or two in the meantime, so much the better.
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