|AZ CEO Pascal Soriot|
AstraZeneca ($AZN) CEO Pascal Soriot talked to analysts and reporters for hours Thursday, touting his company's unexpectedly strong second-quarter results. And they were worth touting. But make no mistake: Soriot's remarks were meant for a different audience.
In two words, shareholders and Pfizer ($PFE). The numbers and R&D progress and dealmaking that Soriot and his team stressed? They are all building blocks in AstraZeneca's ongoing defense. The company needs shareholders to believe it made the right choice in spurning Pfizer's $100 billion-plus offer, made earlier this year. And it wants Pfizer to know that the walls are going up.
Hence the investor day Soriot also announced. It's Nov. 18--conveniently enough, about a week before Pfizer could legally come back with another takeover bid.
So, here are a few of those building blocks:
"Strong" numbers, including $6.5 billion in sales, a 4% increase in constant currencies. Brilinta, the clot-fighter Soriot wants to propel out of the doldrums, saw an 84% increase to $117 million--and that includes a big leap in the U.S., where Brilinta has been particularly weak.
An "excellent" launch of the diabetes drug Farxiga, which it calls the most successful in the oral, non-insulin diabetes treatments market since Merck's ($MRK) blockbuster Januvia. U.S. share of new-to-brand scripts among SGLT-2 drugs: 40%, AZ says.
A big leap in Symbicort sales--partly because of U.S. formulary changes--just as the company announces a $2.1 billion respiratory deal with the Spanish drugmaker Almirall. U.S. Symbicort sales grew by 25%.
Big growth in emerging markets--11%--partly because of a 22% leap in China sales. AstraZeneca is stealing market share in that country after doubling the size of its sales force last year, not to mention GlaxoSmithKline's ($GSK) ongoing woes there.
A new forecast, with full-year revenue to come in about the same as in 2013. Previously, the company had predicted a sales decline in the low-to-mid-single digits. The earnings forecast hasn't changed much--a low-double-digit drop--as the company continues to plow money into R&D and marketing.
Dealmaking, including potential collaborations for some of AstraZeneca's underperforming neuroscience and anti-infectives drugs, commercial partnerships on its promising cancer drugs, and pipeline-boosting buyouts and other deals.
A few things to keep in mind: AstraZeneca has to thank some one-time things for its second-quarter boost, too. Ironically enough, $200 million of that came from Pfizer, with the sale of over-the-counter rights to AZ's stomach drug Nexium, which went off patent in May. Nexium sales also got some support from fumbling at Ranbaxy Laboratories, which has exclusive rights to the Nexium generics market, but hasn't yet launched its pill; AstraZeneca now expects that rival in October.
Also, those promising cancer drugs step into the spotlight at an oncology conference in Europe this fall, so more info is at hand to either confirm AZ's hopes or dampen them. Either way, as Kepler Cheuvreux analyst Fabian Wenner told Bloomberg, the company's pipeline products won't really kick in on the sales side for several years--and in the meantime, AZ has to weather the onset of Nexium generics and Crestor copycats, which are set to hit in May 2016 in the U.S.
How well is Soriot doing at making his latest case? The Guardian has been watching Twitter to find out. And as the paper reports, the answer is well, but not surprisingly well. U.K. analyst Louise Cooper tweeted: "AstraZeneca results strong but should be expected. After Pfizer deal collapsed, this set of figures had to be good." As for the success of that case come November, when the U.S. giant might come back? We'll wait four months to find out.
Special Reports: Top 10 pharma companies by 2013 revenue - AstraZeneca - Pfizer