AstraZeneca
(
AZN
) recently announced that Pascal Soriot has been recruited as the
new Chief Executive Officer (CEO) of the company. He will take on
his new position from September 1, 2012.
Until then, Simon Lowth will continue to act as the CEO. Mr.
Lowth was appointed the interim CEO after David Brennan, the
company's erstwhile CEO, stepped down on June 1, 2012, after 36
years of service at AstraZeneca.
Mr. Soriot brings vast experience and knowledge of the pharma
industry. He joined the industry in 1986 and has undertaken senior
management roles across the globe. He will join AstraZeneca from
Roche Holdings Ltd.
(
RHHBY
), where he served as the pharmaceuticals division's Chief
Operating Officer. Before joining Roche, he headed Genentech as the
CEO, which was acquired by Roche in 2009.
Mr. Soriot played an integral part in pulling off the $47 billion
Genentech - Roche deal. He steered Roche's pharmaceutical division
during challenging times and has the experience of bringing a
number of products into the market.
Our Take
We are positive on the upcoming change in AstraZeneca's leadership.
The new CEO will have his work cut out with the company facing
several issues.
The generic competition that AstraZeneca is currently facing or
expects to face for its various drugs has put significant pressure
on the company. Some of the key products like Arimidex and Seroquel
are already facing generic competition in the US, while Nexium and
Crestor generics are expected to enter the US market in 2014 and
2016, respectively.
Additionally, there is increasing uncertainty regarding Crestor due
to the entry of generic versions of
Pfizer's
(
PFE
) Lipitor in November 2011. The company's much hyped drug,
Brilinta's performance has remained lukewarm. In 2011, AstraZeneca
lost revenues worth approximately $2 billion due to generic
competition and $1 billion due to government price interventions.
AstraZeneca has faced its share of pipeline setback as well with
the development of several candidates (zibotentan, olaparib and
TC-5214) being discontinued in 2011.
The company is looking to drive the bottom line through
cost-cutting initiatives and share buybacks. The company is working
on expanding its pipeline and portfolio through mergers and
acquisitions.
The Ardea acquisition, the
Amgen
(
AMGN
) collaboration and the expansion of the diabetes alliance with
Bristol-Myers Squibb
(
BMY
), all represent the company's efforts in this direction. We expect
more such deals in the near term. We believe that Mr. Soriot's
relevant experience in this regard will benefit the company.
We currently have a Neutral recommendation on AstraZeneca. The
stock carries a Zacks #3 Rank (Hold rating) in the short run.
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