Revenues 2012: $27.97 billion
Revenues 2011: $33.59 billion
AstraZeneca's ($AZN) sales dropped by 17% last year. That's a tie for the biggest sales decline in Big Pharma, matched only Bristol-Myers Squibb ($BMY). But though AstraZeneca's patent-cliff losses tied for first place, it wins an undisputed first prize in one category: The most dramatic top-level turmoil of the year.
Here's the basic problem: The company lost exclusivity on four drugs in various parts of the world: the antipsychotic Seroquel's instant-release formula, the stomach drug Nexium, the hypertension and heart failure drug Atacand and the antibiotic Merrem. By far the biggest hit came from Seroquel, the worldwide sales of which dropped by more than $3 billion. Together, sales lost on those four products accounted for 85% of AstraZeneca's decline, the company says.
|AZ CEO Pascal Soriot|
Unfortunately for AstraZeneca, it's more specialized than, say, Sanofi ($SNY) or GlaxoSmithKline ($GSK), which lost sales to generic erosion, but backfilled some of the gap with consumer healthcare and other products. So, its long quick slide came with little cushion on landing.
Unfortunately for former CEO David Brennan, AstraZeneca investors saw that slide coming--and realized that the company was in for a hard fall. Brennan refused to make a big acquisition. His faith that cutting costs and overhauling R&D would put AstraZeneca back on course remained just that--faith. Under pressure, Brennan resigned in April, and AstraZeneca cast about for a new top executive who could set the company aright.
|AstraZeneca's Seroquel XR is one of the key drugs the company banks on.--Courtesy of AstraZeneca|
The company had already selected a new chairman, Leif Johannson, hoping to tap his expertise. Johansson helped Volvo navigate a tough automotive market in the wake of the financial collapse, and moved on to chair Ericsson's board. He led the search for a new CEO for AstraZeneca, finally selecting Roche ($RHHBY) pharma chief Pascal Soriot. The choice of an executive from a pharma-focused company--rather than a more diversified drugmaker such as GSK or Novartis ($NVS)--seemed to signal that the company would stick to its prescription-drug roots.
Soriot stepped into the job in October. just before the company announced a 19% decline in third-quarter sales. Seroquel sales for the period had dropped 83% year-over-year, to a mere $169 million from more than $1 billion. On its list of key products, there were more losers than gainers. He immediately suspended the company's stock buyback program, fueling speculation about M&A, and rolled up his sleeves to come up with a new strategy.
An AstraZeneca turnaround will take time, no question. Soriot has already warned that 2013 will be a tough year. Sales are expected to fall again this year, albeit somewhat less so than in 2012. Profits will drop even more, percentage-wise. We'll see what Soriot can do to make 2014 a better result--but, then again, Nexium loses its U.S. patent that year. Will the comeback happen in 2015?
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