European Pharma Looks Forward with Cautious Optimism
Despite a dismal sales forecast for 2013, AstraZeneca’s CEO remains upbeat about the future of the firm, contrasting sharply with the reserved mindset of industry competitor Roche, whose substantial core earnings growth in 2012 did nothing to alleviate a cautious temperament.
The humble figures of AstraZeneca’s latest financial report, looming expiration dates on patents and prolonged uncertain economic conditions has forced the European firm to issue a revenue warning for the company over the next twelve months as a huge drop in sales is predicted. In the last year alone, core operating profit and revenues dropped 15% to $2.53 billion and $28 billion respectively, while huge declines in the turnover of drugs such as the antibiotic Seroquel IR (down 92%) and the hypertension drug Atacand (down 41%) saw sales for the pharma company drop by 16% to $7.3 billion.
A success story in comparison, perhaps with a little help from the unpredictable flu virus (Tamiflu turnover was up), Roche’s sales actually increased by an impressive 10% in 2012, eclipsing the flat or negative revenue figures of other industry players. A noticeable and expected decline in profits showed across the European landscape yet large returns on products such as anti-inflammatory MabThera/Rituxan helped Roche excel amongst its peers. However, the Swiss firm’s financial and treasury team are unlikely to become complacent, according to recent conservative growth figures predicted by the company’s executives for 2013. CEO Severin Schwan told the Financial Times: “The fundamental issues in Europe – public and household deficits – are not resolved, so the pressure on healthcare costs will remain.”
Nonetheless, stats such as a humble 4% for the thriving pharmaceutical have some analysts scoffing at the firm’s rather measured outlook – particularly with the launch of its highly anticipated breast cancer treatment, T-DM1. But optimism is not something that is in shortage over in the AstraZeneca camp. Celebrating their relatively few successes – respiratory infection drug Synagis (up 22%), the breast cancer drug Faslodex (up 20%) and the bloodthinner Brilique (sales of $38 million) – the new CEO Pascal Soriot has also embarked on a new initiative with the intention of returning the company to profit and regaining its status amongst its peers.
“It is my firm belief that we have the brands, science, pipeline and people to create distinctive, long-term value for patients and shareholders,” he said.
In a drastic cost-saving measure, 7,300 jobs have already been cut across the AstraZeneca franchise globally with an aim to generate annual savings of $1.6 billion by 2014. Will Soriot's strategy and dogged positivity for the firm restore its revenues – and its reputation?