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AZN, holding onto the untouchable intangible

Accendo Markets
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AstraZeneca plc (NYSE:AZN) , headquartered in London, UK, is one of the largest biopharmaceutical companies in the world. The company’s key products include Crestor (cholesterol management: $5.6 billion sales in 2013) Nexium (acid reflux management: $3.9 billion sales in 2013) Symbicort (asthma: $3.5 billion sales in 2013) Seroquel (schizophrenia and bipolar mania: $1.7 billion sales in 2013) Zoladex (prostate and breast cancer: $996 million sales in 2013) and Atacand (hypertension and symptomatic heart failure: $611 million sales in 2013). However, several of these key products are facing generic competition.

2015 outlook

Being Britain’s second largest pharmaceutical company following GSK, AstraZeneca is being paid off for their obsession with innovation. Among these pharma giants, there is divided opinion with some favouring consolidation such as Pfizer, the others a bigger fan for R&D. Which is the ultimate way forward remains to be seen. However, despite patent cliffs, shrinking research investments or the plain fact that science does need a bit of luck, research is where all the drug makers started, and innovation, although is untouchable intangible, holds the power even stronger.

A flat 2013

In 2013, U.S. sales declined 9%, primarily hurt by the loss of exclusivity of several key products including Seroquel. Strong performance by Symbicort, Faslodex, and Onglyza partially offset the decline in revenues. 2013 sales in Europe were down 9% due to generic competition (Nexium, Arimidex, Seroquel IR and Merrem). Established ROW sales were down 10% to approximately $4.0 billion. Sales in emerging markets climbed 8% to $5.4 billion.

Pipelines, sparkle on

AstraZeneca, the U.K.’s second-biggest drug maker, now has 15 drugs in late-stage trials or under regulatory review, almost double the number from a year ago. At least three candidates are worth mentioning. (1) The rosy oncology pipeline. Among the most significant are MEDI4736, which uses the body’s own immune system to fight tumors, and AZD9291, a lung cancer treatment. (2) AZ1419 –Partnered with Dynavax ($ DVAX), a read-out of a phase 1 study in asthma expected in 2014. (3) Brilinta – a new blood thinner. AstraZeneca had predicted the drug could ultimately bring in $3.5 million a year, but its pickup has been slow: Sales totaled just $216 million in the first half of 2014. But with a clearance of investigation in Aug, it’s hoping for a quick turnaround in the product’s sales.

Earlier the year, AstraZeneca defended itself from a takeover by Pfizer, who was offering a rough $117 billion. AstraZeneca said it expects revenues of $45 billion by 2023, a 75 percent increase over 2013. 2014 revenue forecasted to be at 2013 level. Pipelines looking good certainly gives the Brits more ammunition to continue to fend off the Yankees.

“Annie Zeng is a final year PhD candidate in Pharmacology at the University of Cambridge, UK. She joined Accendo Market’s team covering Life Science sector as an analyst from October 2014″

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