6th May 2014 11:07
LONDON (Alliance News) - British drugs company AstraZeneca PLC Tuesday set out its defence against a GBP63 billion takeover offer from US rival Pfizer Inc, urging its investors to be patient because it is set to grow quickly once it has invested in its pipeline and transformed the company over the next three years.
The company, which Friday rejected the US company's latest informal GBP50-a-share offer, reaffirmed that its revenue in 2017 would be broadly in line with the USD25.71 billion it reported in 2013. However, it expects revenue to more than double over the following five years, reaching more than USD45 billion by 2023. It said core earnings will grow at an even faster rate over the same period as it restructures and cuts costs.
"The increasingly visible success of our independent strategy highlights the future prospects for our shareholders. These are benefits that should fully accrue to AstraZeneca's shareholders," Chairman Leif Johansson said in a statement.
AstraZeneca has been struggling in recent years as it was hit by several of its best-selling drugs coming out of patent protection. Revenue and profit slid as generic versions of the drugs came to market, and the company failed to add significant new big sellers to its pipeline. In response, the company has been restructuring, focusing on treatment areas it thinks it can grow best in, as well as growth in emerging markets.
AstraZeneca said it will accelerate the development of key developmental drugs it has in phase II and phase III trials, as it set out why it should remain independent.
Its statement Tuesday was focused on the recovery of its pipeline. It said scientific discoveries have been accelerated to extend the late stage pipeline, it has made progress on its cancer drug pipeline, had several drugs in mid-stage development showing significant promise and has 19 new molecular entity candidates set to start trials in 2014/15.
AstraZeneca Friday rejected Pfizer's latest approach because it would "dramatically dilute AstraZeneca shareholders' exposure to our unique pipeline and would create risks around its delivery".
In a clear rebuff to Pfizer's valuation of the company, it said Tuesday that the aggregate risk-adjusted pipeline peak year sales potential is around USD23 billion, while the non risk-adjusted pipeline peak year sales potential was around USD63 billion.
"AstraZeneca is completing its transformation, and now has the right size, focus and team to deliver on one of the most exciting pipelines in the pharmaceutical industry," Chief Executive Pascal Soriot said. "We are continuing to create significant value for shareholders from our independent strategy."
The company set out the long-term revenue targets for its "five key growth platforms": sales Of USD3.5billion in 2023 for coronary disease drug Brilinta as it broadens the indications it can be used for; sales of USD8 billion in 2023 for its diabetes treatments, buoyed by new launches and the quick integration of the diabetes joint venture it is buying Bristol-Myers Squibb Co out of; sales of USD8 billion in 2023 for its respiratory drugs, driven by current drugs and the emerging pipeline; mid-to-high-single-digit growth in emerging markets; and low single-digit growth in Japan.
It also said analysts are underestimating the sales potential of most of its pipeline. It gave a long list of the peak sales potentials for the drugs, including USD3 billion for potential lung cancer treatment AZD9291, compared with analysts' estimates of between USD1 billion and USD2 billion, and USD2 billion for asthma treatment Benralizumab, compared with analysts' estimates of between USD1 billion and USD2 billion.
However, it wasn't all on the upside. It also estimated peak sales for potential ovarian, breast or prostate cancer treatment Olaparib at USD2 billion, compared with analysts' estimates of between USD1.5 billion and USD3 billion.
Earlier Tuesday, the company said the US Food and Drug Administration had approved its Epanova drug as a treatment for reducing high levels of blood fat. The FDA approved the omega-3-carboxylic acids treatment as an adjunct to diet to reduce triglyceride levels in adults with severe hypertriglyceridaemia.
AstraZeneca shares were down 2.4% at 4,694.65 pence Tuesday, one of the biggest declines on the FTSE 100.
By Steve McGrath; [email protected]; @SteveMcGrath1
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