In late March, AstraZeneca CEO Pascal Soriot outlined the company’s plan to revitalize growth and a series of strategic priorities. The moves come as the company deals with declining revenues in part due to increased generic-drug incursion. These priorities include:
• Driving its on-market growth platforms to return to growth as the company moves through a period of patent expiries and revenue declines
• Progressing its Phase II pipeline, which the company says has the potential to double Phase III asset volume by 2016, and to deliver growth from its biologics portfolio
• Launching specialty care products
• Rebuildinh its R& supported by co-location of R&D teams and better access to globally recognized science clusters
• “Dramatically” simplifying the business, improving productivity, and building a culture that supports long-term success
• Leveraging business development and acquisitions to execute the company’s base plan and to strengthen the pipeline further.
Soriot said that the company will focus on three core therapy areas: respiratory, inflammation and autoimmunity; cardiovascular and metabolic disease; and oncology. “We will continue to be active in infection and vaccines and in neuroscience, though our investments will be more opportunity-driven,” he said. “Within our chosen therapy areas, we will tighten our disease focus. This approach is designed to improve our likelihood of success while allowing us to meet our goal of funding our growing portfolio of late stage assets on a broadly flat R&D spend to 2016.”
By accelerating development of several new molecular entities (NMEs), Soriot said the company has the potential to double its Phase III pipeline by 2016. “Acceleration of these key assets, combined with our ongoing efforts to progress a strong Phase II biologics pipeline into late-stage development, will create a portfolio more weighted toward specialty care, balancing our traditional strengths in primary care. We are also increasing our investment in lifecycle management to support key on-market and late-stage pipeline products such as Brilinta, Forixga, Bydureon, and lesinuard.”
On the R&D side, AstraZeneca will increase its proximity to bioscience clusters and centralizes its R&D at three strategic locations: Cambridge, Massachusetts’ Gaithersburg, Maryland; and Möindal, Sweden. “These proposals will make it easier for our researchers to collaborate with external partners and with each other. The creation of autonomous biologics and small- molecules biotech units is designed to improve innovation and accelerate decision-making,” said Soriot. “Additionally, we will increase our emphasis on novel biology and personalized healthcare, and we will continue to partner with leading academic institutions to increase our understanding of disease biology.”
To that end, AstraZeneca announced collaborations with the Swedish medical university Karolinska Institutet and an agreement with the biopharmaceutical company Moderna Therapeutics. In late March, AstraZeneca and the Swedish and the Karolinska Institutet announced their intention to create an Integrated Translational Research Center for cardiovascular and metabolic disease and regenerative medicine located at Karolinska Institutet’s site in Stockholm, Sweden. The centre will be set up to conduct preclinical and clinical studies aimed at advancing the understanding of cardiovascular and metabolic disease pathophysiology and assessing new drug targets for AstraZeneca’s two biotech units, AstraZeneca Innovative Medicines and Early Development (iMed) and MedImmune. The center will initially run for a period of five years and will be made up of between 20 and 30 scientists, including a number of AstraZeneca scientists. In addition, AstraZeneca will contribute up to $20 million per annum, and Karolinska Institutet will contribute expertise and facilities. The center is expected to be operational by mid-2013.
In March 2013, Moderna Therapeutics signed a five-year strategic agreement with AstraZeneca to discover and develop messenger RNA Therapeutics. Under the agreement, AstraZeneca has exclusive access to Moderna’s mRNA therapeutic platform in the area of cardiometabolic diseases as well as selected oncology targets. Moderna will be responsible for designing and manufacturing the messenger RNA against selected targets, and AstraZeneca will lead the preclinical development, clinical development, and commercialization of messenger RNA Therapeutics resulting from the collaboration.
These moves come as AstraZeneca navigates revenue decline due to generic-drug incursion. In terms of organic growth, the company is focused on its oral antiplatelet medication Brilinta (ticagrelor), working with its partner Bristol-Myers Squibb in the noninsulin diabetes market, investing in emerging markets, particularly in China, maximize the potential of its respiratory portfolio, and also increase growth from established products and in certain established markets, such as Japan.
The company projects that it would reach revenues of $21.5 billion by 2018. Key contributors to that revenue target are Brilinta (projected 2018 revenue of $1.3 billion), its diabetes franchise (2018 revenue estimate of $2.3 billion), emerging markets (2018 revenue estimate of $7.6 billion), its respiratory franchise (2018 revenue estimate of $3.7 billion), Japan (2018 revenue estimate of $2.3 billion), and pipeline contributions (2018 revenue estimate of $1.1 billion estimate). AstraZeneca also says it is intensifying product development in biologics. Approximately 50% of its Phase I–III development pipeline is in biologics. The company says it is on track to deliver one new biologic license application per year beginning in 2016.
Concurrent with its growth initiatives, AstraZenneca is further restructuring that will lead to a global headcount reduction of 2300. This efforts are combined with two previously announced restructuring efforts: a headcount reduction of 1600 related to the proposed R&D footprint changes announced on Mar. 18, 2013, and the balance of the Phase 3 restructuring program announced in February 2012, which amounts to 1150 roles. The total combined Phase 4 program entails an estimated global headcount reduction of about 5050 over the 2013-2016 period. The combined program of changes is estimated to incur $2.3 billion in one-time restructuring charges, of which $1.7 billion are expected to be cash costs. Benefits of approximately $800 million per annum are expected by 2016.