China, not M&A, is AZ's promised land

You all know what AstraZeneca CEO David Brennan said last week about big mergers: Not for us; we don't need it. So what does it need to do to overcome the litany of challenges that face every drugmaker these days? In an interview with The Economist, Brennan says AstraZeneca will cut costs--he doesn't need a merger to make the company more efficient--plus increase sales in emerging markets. And then there's the good old "boost innovation" goal (isn't that on everyone's list?)

AstraZeneca is in the middle of a big-time cost-cutting plan, and the company announced more layoffs last week to bring the total number of axed jobs to 15,000 over five years. In another move to shrink expenses, AstraZeneca is moving manufacturing to developing countries. China, for instance, which serves Brennan's cost-cutting push and his emerging-market sales goals. It just expanded a factory outside Shanghai, for instance, which will supply drugs throughout Asia now, and aims to export to Europe by 2012 or 2013. In 10 years, one-quarter of AstraZeneca meds may come from China.

The drugmaker, you'll recall, made a big move into China years ago, and it's been building on that presence ever since. It uses tried-and-true pharma sales techniques on Chinese doctors, and it's working; sales there are growing at a faster-than-average clip. In a market where cronyism and kickbacks used to rule, pharma detailing and sales conferences seem like out-of-this-world professionalism, the magazine notes.

We'll let you check the article for Brennan's innovation plans. Hint: They include selective biotech buyouts.

- read the Economist story

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