AstraZeneca must drive R&D

IIPM PUBLICATION

Carl Icahn has done it again... Another company caught unaware, another helpless Board crumbling under shareholder pressure & biotech firm MedImmune was taken (in just 2 months of his acquiring a small 1.2% stake in the firm)! On April 23, 2007, MedImmune sold off to AstraZeneca for a whopping $15.6 billion. The valuation represents a 20.83% premium over MedImmune’s previous closing share price of $48.01 (total premium of $3.44 billion), which raises a question on the logic behind the deal.

MedImmune has been bought at twice the relative sum (valued at 5.8 times the annual sales) as Germany’s Merck KGaA had bought Europe’s largest biotech firm Serono AG in 2006. But look at the string of failures that AstraZeneca had over just the past one year, and the step makes some sense. After spending a whopping $3.9 billion in R&D during 2006, it reported failure of all four late-stage drugs – Exanta (anti-blood clot), Galida (anti-diabetic), NXY-059 (stroke) & AGI-1067 (heart). Clearly, it needs additions to its pipeline.

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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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