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Pipeline setbacks hurt AstraZeneca

Date December 20, 2011

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).

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