As profits fall, new AstraZeneca CEO hints at more changes

AstraZeneca CEO Pascal Soriot.
AstraZeneca CEO Pascal Soriot.
Posted: February 02, 2013

Pascal Soriot started as chief executive officer of AstraZeneca on Oct. 1. He has already made top-level management changes and his early observations might foreshadow more shifting in how the British-based drugmaker operates.

"We have become a little bit complicated," Soriot said during a conference call with reporters Thursday morning as the company released 2012 fourth-quarter and full-year financial results. Soriot ran a division of Roche before joining AstraZeneca, so he is used to a big company. "We have many management layers . . . so many committees, and we're a bit slow."

AstraZeneca has one of three regional headquarters in Wilmington and another facility in Newark, Del.

To cut through the layers and speed development of diabetes drugs through AstraZeneca's partnership with Bristol-Myers Squibb, the two companies formed what is called the AZ-BMS Diabetes Alliance Team. The team will operate from an as yet undetermined location near Philadelphia, which is roughly halfway between Wilmington and Plainsboro-Princeton, where Manhattan-based BMS has facilities.

AstraZeneca needs the help because Thursday's numbers showed that revenue and profit declined for 2012, and the company said it expected both to do so again in 2013. The full-year revenue declined from $33.59 billion in 2011 to $27.97 billion in 2012, with net profit falling from $10.02 billion to $6.30 billion in the same period.

When patents expire on brand-name drugs, patients often switch to cheaper generic versions, so revenue declines. AstraZeneca figures patent expiration for four drugs - Seroquel IR (antipsychotic), Atacand (cardiovascular), Nexium (heartburn), and Merrem (antibiotic) - accounted for 85 percent of the revenue decline. Sales of the two versions of Seroquel, which lost patent protection in March, were a combined $3 billion less in 2012 than 2011. The company said in a statement that it expected the percentage decline in sales revenue this year to be in the "mid-to-high single digits."With operating costs expected to be slightly higher, the earnings per share will likely decline by more than that.


Contact David Sell

at dsell@phillynews.com or 215-854-4506. Read his blog at www.philly.com/ phillypharma and on Twitter @phillypharma.

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