Growth strengthens AZ against Pfizer
AstraZeneca (AZ) CEO Pascal Soriot’s push towards ambitious revenue targets seems to be paying off, with the company reporting a third quarter of consecutive growth.
Soriot is working to strengthen the company’s pipeline and independence to fend off any further attempted takeover by Pfizer and reinforce to shareholders that it can stand alone.
Pfizer made a hostile bid in May which was rebuffed, but under UK tax rules it would be allowed to make a further approach later this month. However, at the end of September the US Treasury changed its regulations to quash the trend for such ‘tax inversion’ deals, whereby US companies try to reduce their exposure to the hefty 35 per cent corporate tax rate.
Warning against such deals, Soriot stated that the US Treasury had “almost entirely removed the tax benefits” of them and pointed out the damage done to AbbVie and Shire when AbbVie pulled out of a similar deal and had to pay Shire an exit fee of over $1.6 billion.
However, he said the board would consider any fresh offer and act in the best interests of shareholders. Pfizer CEO Ian Read said last month that although circumstances were more difficult now, nothing was ruled out and the company was “aggressively” considering its acquisition options.
On a more positive note, speaking about the Q3 results, Soriot highlighted that AZ’s three core franchises, of Brilinta for acute coronary syndrome, respiratory and diabetes, increased sales by 38 per cent.
“We have made important progress towards achieving scientific leadership across all core therapeutic areas, including a positive opinion by the CHMP for Lynparza (olaparib), the FDA approval for Movantik, the launch of the Bydureon Pen in the US, and the progress of our immuno-oncology pipeline presented at ESMO. This momentum is further evidenced by the successful completion of our strategic business combination with Almirall, strengthening our respiratory franchise,” he expanded.
AZ has now increased its revenue and core earnings guidance for the year, expecting full-year revenues to increase in the low single digits, representing the first annual growth for five years. Core earnings per share were likely to decline about 10 per cent over the year, reflecting increased R&D spending.
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