Pipeline setbacks hurt AstraZeneca

AstraZeneca’s Christmas of 2011 is shaping up to be just as disappointing as its festive season last year. Two significant pipeline setbacks announced today, TC-5214 in depression and olaparib for ovarian cancer, mimic the double-blow Astra suffered a year ago when heart drug Certriad and RSV treatment motavizumab were scrapped in quick succession.

A $382m impairment charge related to TC-5214 and olaparib, which will hurt full-year earnings, knocked 3% off Astra’s share price today to £28.55 and brought fresh calls from analysts for the UK pharma giant to re-think its relatively narrow strategic focus on innovation. After all, Astra’s track record in bringing new products to market is far from enviable. Despite spending $23bn on R&D in the last five years, cumulative sales from new products over the ten year period between 2007-2016 is just $11.5bn – a somewhat meagre 49% return rate which ranks Astra as the worst performer on this measure among its big pharma peers (see table below).