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Last updated: January 31, 2013 11:52 pm
AstraZeneca’s new chief executive expressed openness to large, “disruptive” acquisitions, while stressing his primary focus was on organic growth as he unveiled earnings down a third in 2012 and warned of a difficult year ahead.
Pascal Soriot, who took over the Anglo-Swedish pharmaceutical group late last year after the abrupt departure of David Brennan, said significant purchases of companies were “possible” as he outlined plans to conserve cash by freezing share buybacks during 2013.
Speaking ahead of a capital markets day in March when he will lay out his strategy, Mr Soriot said: “Our base plan is to execute well on our own portfolio”, stressing growth potential from its diabetes, respiratory and heart attack drugs, as well as in Japan and emerging markets.
But he told the FT: “We will complement this with licensing from a few hundred million [dollars] to low single-digit billions. More disruptive deals would be bigger than that. They are a lower probability. We are always looking at everything. It has to make strategic sense, be operationally feasible and create value for shareholders.”
His comments came as he pledged to increase dividends, while posting full-year earnings down by a third to $4.99 a share. He cautioned that revenues were likely to shrink by “a mid-to-high single-digit percentage” during the year at constant exchange rates, and core earnings could fall still further on generic competition and “tough market conditions”.
The guidance helped depress the shares more than 3 per cent during the day to £30.52 in late London trading.
Citi analysts noted: “We remain Neutral and watchfully waiting while we get greater clarity on potential M&A and the changes to corporate strategy. We acknowledge the low valuation and dividend support, but need a major catalyst to reconsider our view.”
Mr Soriot ruled out creating a separate diagnostics division, and said that with the exception of China, AstraZeneca was withdrawing from branded generics sales that it had begun to offer in several emerging markets.
He said his plan was to speed up decision-making by cutting out several layers of management and increasing accountability for drug researchers.
AstraZeneca reported a 17 per cent drop in sales to $27.9bn in the 12 months to December 31, while pre-tax profit fell from $12.4bn to $7.7bn. Diluted earnings per share fell to $4.99, down from $7.30 a year ago, while the final dividend of $1.90 kept the total payout for 2012 flat year on year, at $2.80.
The company has been hurt by a series of late-stage pipeline failures that undermined support from investors.
Mr Soriot – a former senior executive at Swiss pharmaceutical group Roche – recently replaced AstraZeneca’s head of research and development as well as another top commercial executive.
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