|AZ CEO Pascal Soriot|
AstraZeneca ($AZN) CEO Pascal Soriot has spoken. He unveiled that long-awaited strategy this morning, and despite the changes he's already announced, Soriot had plenty more to say. In addition to a full round of R&D moves reported by FierceBiotech, the company will be cutting thousands more jobs, buying in products, beefing up in emerging markets, and focusing on diabetes and respiratory meds. It's also betting it can jump-start Brilinta, the blood thinner that's never performed up to expectations. "Brilinta has to succeed," Soriot said during his presentation.
Here are the highlights:
More layoffs. Sales and administrative functions will take a 2,300-job hit. Combined with the 1,600 cuts announced in R&D earlier this week--and sundry others, the total number of jobs shed this go-around will be 5,050. Most of the sales and administrative cuts will come in Europe, Soriot said during the conference, with the rest around the globe. He also cited patent losses as a guiding factor in the cutbacks.
Other companies suffering from generic competition have slashed the sales staffs supporting their former blockbusters, including Pfizer ($PFE) with its Lipitor sales force. It's unclear now whether Soriot will home in on its Seroquel marketing people, but we'll keep an eye out for that.
More deals. AstraZeneca will combine the cash it has on hand with a good chunk of future cash flow to bankroll M&A. Besides the R&D-focused dealmaking Soriot plans, he's looking at partnerships and bolt-on deals to beef up the on-market portfolio and grow immediate sales.
More Brilinta. Earlier this year, Soriot said the blood thinner was due for a jump start. Sales have lagged far behind the company's expectations so far, but he figures Brilinta still has "multi-billion dollar potential." Consensus estimates for 2018 sales stand at $1.3 billion; Soriot figures AstraZeneca can beat that.
How the company turns that potential into sales is the question; he's mentioned hospital penetration before, among other things. During today's presentation, AstraZeneca's new commercial chief outlined a push in acute coronary syndrome in the near term, with additional clinical trials planned to broaden Brilinta's use and give it an edge over clot-busting competitors. Sales and marketing will hit the streets to promote Brilinta to key professional organizations and academic groups, to primary care and ER doctors, and to nurses and pharmacists.
More international. While AstraZeneca works to pump up its R&D, it will be looking toward emerging markets and Japan for more sales. Soriot says the company will target "single-digit revenue growth" for emerging markets. Though the company has a solid base in many key countries--$1.5 billion in sales in China, for instance, and $500 million in Brazil--it's been hampered by management issues in China, supply problems in India and price cuts in Latin America.
Mark Mallon, EVP and AZ's international chief, said those problems are either fixed or in the process. He cited drugs such as Symbicort (asthma), Crestor (cholesterol) and Brilinta (cardiovascular) as pieces of the growth puzzle, and said the company will be expanding its sales reach, working on affordability and market access, and accelerate its investment in the top 15 emerging countries.
In Japan, the company will aim to "capture the potential" of its drugs already on the market, and launch new ones. The diabetes drugs Forxiga and Bydureon are at the top of the launch list, with a Brilinta filing coming next quarter.
More diabetes and more respiratory drugs. The former via its partnership with Bristol-Myers Squibb ($BMY), and the latter by "maximizing the potential" of AstraZeneca's existing portfolio and acclerating its respiratory pipeline.
You'll notice that Soriot is fond of the word "potential." That's the word you use to describe something that's troubled, faltering, frustrating--but somehow promising and auspicious as well. Potential is abstract, ephemeral. Whether Soriot's AstraZeneca can turn it into actual, concrete results remains to be seen.
- see the AstraZeneca press release
- find links to more from the investor day