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| AstraZeneca CEO Pascal Soriot |
AstraZeneca ($AZN) CEO Pascal Soriot has said he wants to dominate in the respiratory field. Actavis ($ACT) CEO Brent Saunders has no such ambitions. Now, the two have struck a deal.
The British drugmaker will pay $600 million up front for Actavis' respiratory meds, plus royalties, the companies said Thursday--a deal ISI Evercore analyst Umer Raffat called "great for both parties."
Tudorza Pressair and Daliresp, which Actavis acquired along with Forest Laboratories last year, haven't been strong performers so far. They've brought about $230 million in sales and generated thin profits. Plus, promoting the fairly new drugs was sucking up a "significant dedicated SG&A spend" at Actavis, Raffat points out.
That means room to grow for AstraZeneca. The deal adds scale to its respiratory efforts, and the company can put Tudorza and Daliresp on its current sales force in the field. "Our agreement with Actavis ... brings long-term value to one of our key growth platforms," Paul Hudson, AstraZeneca's U.S. president, said in a statement. "With the addition of Tudorza and Daliresp, we will benefit from an immediate boost to revenue in our biggest market, further strengthening our growing respiratory franchise."
The Actavis buy follows last year's similar deal with Spain's Almirall. AstraZeneca agreed to fork over up to $2.2 billion for that company's respiratory meds. The lineup--which included rights to Tudorza in Europe, where it's known as Eklira--wasn't exactly hauling in the cash for Almirall, either, accounting for 2013 sales of €211 million.
Piece by piece, AstraZeneca is climbing toward the top in respiratory meds, even as its blockbuster Symbicort begins to face generic competition. In addition to its recent buys, AstraZeneca has managed to steal share in the U.S. from GlaxoSmithKline's ($GSK) behemoth Advair. AZ took its market share fight to pharmacy benefits managers, where Symbicort has been jockeying with Advair for favored position on key U.S. formularies.
The company will need its lung drugs to come through if it hopes to hit the $45 billion sales target Soriot laid out for 2023. That's a 75% jump. After using those numbers to dodge a buyout by Pfizer ($PFE) last year, Soriot now says the company is "on track to return to growth by 2017" and "well-positioned" to deliver its long-term goals. Even if things don't look quite so bright in the near term.
For the fourth quarter, AstraZeneca reported a 2% sales drop to $6.68 billion, which fell short of the $6.79 billion analysts expected, Reuters reports. And AZ figures that sales slide will continue into this year as it finally faces generic competition for its blockbuster Nexium. The company forecasts a mid-single-digit drop in sales for 2015.
- read AstraZeneca's release
- get more from Reuters
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