« Return of the Rhodanome |
| By Any Other Name »
June 1, 2012
AstraZeneca "Braced For Change"
Well, that's because things can't go on the way that they have been, as this Reuters piece makes clear:
For several years, AstraZeneca kept investors happy with a strategy of hefty dividend payments and share buybacks, but more recently key shareholders have grown restive about its failure to develop promising new medicines.
The group has suffered repeated drug development setbacks, stoking fears about its long-term prospects given a complete reliance on prescription medicines at a time when rivals have diversified.
I'm not so sure about how well their rivals have done with that diversification, if it even exists in many cases. AstraZeneca has discovered too few new drugs and spent far too much money doing so, and no amount of share buyback programs can help that. There are apparently two contradictory sets of recommendations: that AZ should aggressively buy someone, perhaps several companies, in an effort to make up for its own failures. But the other camp says that the company should shrink down to something viable, and thus make itself an attractive target for someone else to buy.
Both of those are, needless to say, business recommendations from Wall Street analysts. As such, they're answering the question "If I owned a lot of AstraZeneca stock, what would I want to the company to do to keep me from losing even more money?" (Never mind that the answer, in some of these cases, is "Don't own that stock; cut and run"). Another question, asked from a different perspective, is "What should use should be made of AstraZeneca's vast drug discovery and development resources? How can we make something different happen than what's been happening for the last ten years?" In other words, "How can this company discover more drugs?"
Those two viewpoints intersect if you believe that discovering more drugs would lead to a more profitable company. And that would follow, except for the nasty lead time of ten or twelve years. If someone at AZ waved a magic wand this afternoon and caused a host of future clinical successes to be made in the labs, and also magically caused their future development to go as smoothly as possible, then the company's bottom line would show the effects in. . .what, 2022 or so? Given that, the shorter-term Wall Street solutions will have a free hand. There isn't time for science to rescue this situation.
+ TrackBacks (0) | Category: Business and Markets
POST A COMMENT
- RELATED ENTRIES
- A Last Summer Day Off
- The Early FDA
- Drug Repurposing
- The Smallest Drugs
- Life Is Too Short For Some Journal Feeds
- A New Look at Phenotypic Screening
- Small Molecules - Really, Really Small
- InterMune Bought