AstraZeneca looks for revenue boost via Actavis buy
pharmafile | February 6, 2015 | News story | Sales and Marketing | Actavis, AstraZeneca, Brilinta, Forxiga, diabetes, fourth quarter, q4
AstraZeneca recorded a dip in revenue in the last quarter of 2014 and is looking to ramp up its respiratory portfolio – with a $600 million purchase of British firm Actavis to boost its balance sheet.
The company’s fourth-quarter 2014 financial report shows revenue fell by 2% to $6.7 billion compared to the same period the year before – the fourth consecutive quarter of growth.
The UK’s second-largest pharma firm is under pressure to demonstrate its growth credentials following its rebuffed Pfizer takeover approach last year.
But the company warned investors to expect a ‘mid-single-digit per cent’ dip in sales revenue at constant exchange rates in 2015. This is due largely to the appreciating US dollar and patent expirations, including Teva’s “imminent launch of a Nexium (esomeprazole) generic in the US market”.
To offset the losses AZ is planning to “continue to seek externalisation revenue from partnerships and licensing select products and technologies”.
This started with the $4.3 billion acquisition of Bristol-Myers Squibb’s share of a diabetes alliance at the start of 2014, and continued with the $875 million purchase of Spanish firm Almirall’s respiratory products in November.
And the company’s respiratory land grab looks set to continue, as it enters into an agreement to acquire the rights to Actavis’ branded respiratory business in the US and Canada for $600 million.
The deal includes the development and commercial rights in the US and Canada to COPD drugs Tudorza Pressair (aclidinium bromide inhalation powder), and Daliresp (roflumilast).
The two products had combined annual sales in the US of approximately $230 million in 2014. AstraZeneca will also own development rights in the US and Canada for LAS40464, another COPD drug, which is approved in the EU under the brand name Duaklir Genuair (formoterol fumarate dihydrate/aclidinium bromide).
Brent Saunders who is the chief executive and president of Actavis, says: “This divestiture will permit Actavis to sharpen our strategic focus and sales and marketing activities on our larger, core therapeutic categories… which will be added to our global brand portfolio following the completion of the Allergan acquisition later this year.
“It will also enhance our options in the near term to invest in further expansion through business development or accelerate debt repayment.”
AstraZeneca chief executive Pascal Soriot adds 2014 was a ‘remarkable’ year for the company, as full year revenue grew by 3% (at CER) compared with 2013 to $26.1 billion, and remained upbeat about any 2015 performance.
“Our guidance for 2015 reflects our focus on creating value by investing in our new brands and exciting pipeline while we continue improving productivity to protect our profitability in the face of patent expiries.
“With the depth of our science and the momentum we have built across our organisation, we are on track to return to growth by 2017.”
But investors viewed the results cautiously. Helal Miah, investment analyst researcher at The Share Centre, says: “The company is in a transition phase investing heavily into R&D to boost its drugs pipeline with the hope of mitigating falling sales caused by generic competition.
“While the increase is promising, this does not guarantee that sales will eventually turnaround and we believe that more evidence of progress is needed. Investors should be aware that even if there is development, it will still be some years before there is a material impact on sales growth.”
AstraZeneca’s 2014 performance
- Brilinta: +70%
- Diabetes: +139%, integration of BMS assets, Farxiga/Forxiga launch
- Respiratory: +10%, with emerging markets growth of 27% and decelerating US growth of 15%
- Emerging markets: +12%, with China growth of 22%, making China AstraZeneca’s second largest national market
- Japan: -3%, due to mandated price cuts, increased use of generics and Nexium recall in the fourth quarter.
Lilian Anekwe
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