Courtesy AstraZeneca
AstraZeneca President Ruud Dobber
- UK-based pharma giant AstraZeneca has lost $12 billion in revenue in the past few years.
- That's been in large part because of generic competition that's gone up against AstraZeneca's blockbuster drugs like Crestor and Nexium.
- US president Ruud Dobber laid out how the company plans to get back to a point of growth, and why there's no pressure to do a big deal.
AstraZeneca has been feeling the financial effects of its biggest blockbuster drugs facing competition from generic rivals.
Losing exclusivity on drugs like cholesterol medication Crestor and heartburn treatment Nexium has reduced revenue by about $12 billion over the past several years, Ruud Dobber, US president of AstraZeneca, told Business Insider.
Crestor went generic in 2016, while Nexium went generic in 2015. Other big names like antipsychotic Seroquel and breast cancer drug Arimidex went generic back in 2012, taking a big chunk of AstraZeneca's revenue with them.
In 2011, at its peak, AstraZeneca was making $33.6 billion in revenue. In 2017, that was down to $22.5 billion. For the first half of 2018, AstraZeneca brought in $10.3 billion. The decline in revenue hasn't made a big hit to the company's stock performance however - the company's stock is up 50% over the last five years, in line with the pharmaceutical industry as a whole.
Even so, AstraZeneca has to get back to growth.
As of the first half of 2018, its best-selling drugs still included brands like Crestor, Nexium and Symbicort. But at the same time, new medication - particularly cancer drugs Targrisso, Lynparza, and Imfimzi - made a combined $1 billion in sales for AstraZeneca in the first half of 2018.
Dobber credits AstraZeneca CEO Pascal Soriot, who joined the company in 2012, with the turnaround that's in action today. Back then, the company's future looked bleak, with few therapies going through testing for a potential approval.
"The company was in a challenging period, the pipeline was empty, and there is always the natural tendency in order to hold back, to be cautious, because you don't have a lot of money to spend," Dobber said. "But he was brave enough in order to double down on our innovation, to make big bets not only on internal pipeline but also to acquire other companies' products."
That isn't to say that AstraZeneca won't be on the hunt for more deals.
"We will always look for every opportunity," Dobber said. "We're a large company, it would be dumb, stupid not to explore every time. But it's also fair to say that we have a lot on our plate. Let's make sure that what is on our plate, that we develop those products well, that we also commercialize those products in a good way."
Dobber said that when it comes to acquisitions, there are two elements to keep in mind.
- Understanding what you are buying.
- Does that company fit into your overall strategy?
"The valuations are still high, very expensive, you need to have a good strategic rationale in order to acquire those companies," Dobber said.
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