There was a sense of "don't look now" about AstraZeneca's full-year results on Thursday. The important date for investors in the U.K. pharmaceutical group is March 21, when new chief executive officer Pascal Soriot will present his ideas for restoring the ailing company's fortunes.
In truth, the 2012 numbers were not as terrible as they might have been. But they were enough to remind everyone of how tough a task the restoration will be. A steep drop in sales and earnings per share showed the damage wrought by expiring patents, while investors were not even thrown the bones of a dividend increase or share buyback.
Instead, Mr. Soriot offered some insights into where his thoughts on turning AstraZeneca around are heading. The new strategy will be built on five foundations – emerging markets, treatments for respiratory diseases and diabetes, Japan, and the Brilinta cardiovascular drug on which a lot of hopes are pinned. The potential global market for this drug is $10-billion (U.S.), but it is in its very early stages. Global sales of Brilinta in 2012 were a mere $90-million. Contrast that with the loss in 2012 of $3-billion of sales for Seroquel, a bipolar treatment (accounting for three-fifths of the total group sales decline). Emerging markets and Japan are an obvious focus – they account for more than 15 per cent of total revenue, almost on a par with Western Europe and, unlike the latter, actually growing.
Mr. Soriot's transformation has to do two things – rebuild research and development, and prevent too much further damage from the patent cliff that the company sleepwalked off in recent years. Investors sent the shares down 5 per cent on Thursday, after an 11-per-cent rise since mid-November. But the 50-per-cent discount at which AstraZeneca trades to peers indicates that investors think that change, when it comes, will not necessarily have the patient up and about by morning.