Astrazeneca bids the past farewell

Anyone who still doubts Pascal Soriot’s determination to make sweeping changes at Astrazeneca, the company he has captained since 2012, needs to look at the deal the group struck today with Grünenthal. For $700m the private German company has bought European rights to Astra’s anti-ulcer drug Nexium. Nothing strange about that, you might think: the product clearly falls outside Astra’s stated therapy areas of interest – cancer, cardio-metabolic and respiratory – and $700m, plus $90m of possible milestones, looks like a more than fair price based on sellside consensus. But the blockbuster anti-ulcer franchise, comprising Nexium and its predecessor, Losec, underscored Astrazeneca’s launch as a 21st-century big pharma company, following Zeneca’s split from ICI and merger with Sweden’s Astra AB. Decades later this might simply be a line in the accounts, but today’s deal is hugely symbolic. In washing his hands of much of the Nexium business Mr Soriot has swept away the past, and asked investors to trust his vision of Astrazeneca competing on the global immuno-oncology stage.

Astrazeneca's Nexium franchise
  2018e 2022e 2026e 2030e 2034e 2038e
Global Nexium sales ($m) 1,704 1,214 1,011 873 787 754
Nexium Europe sales ($m) 211 154 131 113 102 98
Nexium Europe cash flow ($m) 74 54 46 40 36 34
NPV of EU rights ($m)* 559
Paid by Grünenthal up front ($m) 700
Source: EvaluatePharma sellside consensus forecasts. *WACC=6.5%.

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