Another Blow To AstraZeneca: S&P Lowers Its Outlook

Three weeks ago, Pascal Soirot unveiled a months-long effort to rebuild AstraZeneca, which he joined last fall as ceo amid a disheartening lack of new drugs and increased generic competition. His plan revolves around consolidating R&D and global marketing operations over the next two years, a move that will eventually eliminate 1,600 jobs by 2016 and save some $900 million annually. Earlier this year, Soirot also booted the former head of global commercial activities and created a new position to bridge R&D and sales (read more here). Initially, the response to his plan was enthusiastic, at least among investors. Since the mid-March pronouncement, AstraZeneca stock has climbed roughly 20 percent. But not everyone is enamored with the planned changes. Standard & Poor's has revised its outlook for the drugmaker to negative from stable. Why? "We believe... the strategy will not halt the downward trend in revenue declines following blockbuster patent expirations," which is otherwise known as the patent cliff. Specifically, S&P cites the well-known patent expirations looming for the Seroquel IR antipsychotic, the Nexium acid reflux pill and the Crestor cholesterol med, all of which face generic competition between 2014 and 2016. Meanwhile, the credit rating agency foresees a 9 percent decline in revenue this year. In the 'silver lining' category, S&P affirmed AstraZeneca's credit, thanks to an "above average" metric of earnings before interest, taxes, deprec...
Source: Pharmalot - Category: Pharma Commentators Authors: Source Type: blogs