AstraZeneca needs new strategy after boardroom shake up – EP Vantage investigates

As AstraZeneca PLC Chief Executive David Brennan steps down, EvaluatePharma Ltd.’s EP Vantage award-winning team of journalists investigates the challenges and strategic options facing by the company.

Whoever becomes the new chief executive of AstraZeneca faces a difficult task – choosing a path to pursue to resuscitate the ailing Anglo-Swedish drug maker’s growth prospects. Options include a transformative acquisition, an outright sale of the company, or continuation of its current strategy of investing in R&D and smaller bolt-ons and hoping for a better success rate. None of them will provide an easy fix.

It has become crystal clear that AZ needs a new strategic direction, or the very least invigoration. Too many of its big hopes have been dry holes. With a market cap of $55.76bn, investors now value the company at less than the net present value of its marketed products, worth $75.6bn according to EvaluatePharma’s NPV Analyzer. That figure implies little confidence in the group delivering on existing products, let alone its pipeline (Pipeline setbacks hurt AstraZeneca, December 20, 2011).

It would perhaps be an exaggeration to call AZ a shadow of its former self in 2018, but based on current forecasts the company’s prescription sales are projected to shrink at an annual rate above 5% a year through 2018, $10bn being erased through patent expiries (see below, and Novartis on track to become world’s biggest drug maker, April 25, 2012 – http://bit.ly/IjPkWa).

These are signs of a company in need of a fix and in agitating for change at the top investors hope to find it.