To ensure a gathering flood of revenue in the future a business needs a developmental pipeline clogged with great new well-differentiated products in well spaced out stages of development. AstraZeneca Plc was struggling to develop new medicines and reported the failure of its fourth experimental drug in the last year.
So what did it do?
1) It agreed to buy U.S. biotechnology company MedImmune Inc. for $15.2 billion in cash to gain flu vaccines and an antiviral treatment for babies at $58 a share, about 11 times sales or 21 percent more than MedImmune's April 20 closing price of $48.01 (considered by some to be a huge premium under the circumstances). It will be helped by MedImmune's FluMist for influenza and Synagis for infant lung infections and 45 products in development. MedImmune also gets royalties from cervical cancer vaccines sold by Merck & Co. and GlaxoSmithKline Plc.
2) AstraZeneca will merge MedImmune with Cambridge Antibody Technology Group Plc, a biotech company it bought in May.
3) The company is taking on debt for the first time.
4) The company has spent $1.4 billion on in-licensing and other deals to bulk up its offering of early-stage drugs to 120 from 106 a year ago.
5) MedImmune employees will get a one-time retention grant to retain as many people in the organization as it can.
6) It will buy closely held Arrow Therapeutics Ltd. for $150 million in cash to boost research into compounds that fight bacteria and viruses.
Drugmakers in recent months have been purchasing companies to add medicines as patents expire and the number of products in development shrinks.
What is the secret of a pipeline full of great new products - a focus on the bottom line or a focus on the fulfilling of hunman needs?
[Click here for full story at: BLOOMBERG.COM]
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