Last year, AstraZeneca's stock outperformed every other company on the FTSE 100. "We had a very good year, especially when you make sense of the market conditions we were operating in," CEO David Brennan (photo) told the Telegraph.
But the future may not be so rosy--or so analysts are saying. ING brokers sent out an investor note last week warning of an intellectual property "meltdown" and a long-term earnings decline beginning at the end of this year. Analyst Craig Maxwell told shareholders to sell.
Fair? Predictably, Brennan doesn't agree. A 2007 cost-cutting plan--which included 7,600 layoffs over two years--coupled with an additional 1,400 job cuts announced in November, is evidence that AstraZeneca is "more dedicated" to making its business more profitable, he says. And he expects that outsourcing some "non-core" activities and boosting R&D spending over the next three years will pay off.
Indeed, the company's results, due to be announced Thursday, are expected to show that R&D leapt from $4.5 billion to $5 billion in 2008, up from $3.4 billion in 2006. "What people want is blockbuster products," Brennan told the Telegraph, "and one or two of [the new treatments coming up in the pipeline] have the potential to be that. They are in areas where there is patient need, and we are making advances."
Among the options for future growth is not a merger with GlaxoSmithKline, Brennan emphasizes. "Where would be the value creation in that?"