Collaboration can be an effective way to move forward in the pharmaceutical industry, and AstraZeneca Group plc (AZN) has recently been doing quite well with this. Based on the recent news stories for the company, I expect AstraZeneca's stock to be improving in the near future. This may also help the stock do well in the long term, but I cannot be as certain about this.
AstraZeneca and Rigel Pharmaceuticals (RIGL) have agreed to work together on a chronic asthma drug. The drug in question is R256, which is Rigel's "inhaled JAK inhibitor that has been shown to inhibit IL-13 and IL-4 signaling". This may be the answer that pharmaceutical companies have been looking for to deal with chronic asthma, so this is an important breakthrough. If the two companies do indeed collaborate on this, they will both be marked as leaders in the industry.
The drug is meant to result in "reduced inflammation of the airway and improved lung function in preclinical studies," and tests look promising at the moment. These tests have not been conducted on humans, however, and as we know from years of experience, a promising drug can turn out to be a big disappointment when it reaches the human stages of testing. Some drugs are even promising for the first few phases and only disappoint right near the end.
AstraZeneca is already a leader in terms of respiratory diseases, but this new drug will be an important addition to its arsenal. According to the terms of the agreement, AstraZeneca will have the responsibility to test and develop R256. It will also have the right to commercialize the drug at a global level and thereby rake in the profits, provided that the drug is effective and receives approval. Rigel, the drug's maker, will receive adequate monetary compensation upfront, and it will also receive royalties along the way, depending on the success of the drug. Rigel could earn as much as $100 million, so this is a great deal for both companies.
One cannot foresee the effectiveness and safety of this experimental drug at this point in time. This may turn out to be a big win for AstraZeneca, but it may also turn out to be a waste of time if the tests go poorly. Investors should not get too excited, but they should watch the situation closely and do their best to keep ahead of developments in order to make the best decisions regarding the stock. At this stage, the drug has not been tested on humans, but AstraZeneca should be starting these tests soon.
This is not the only way AstraZeneca is collaborating to improve available asthma treatments. The company also has a partnership with Amgen (AMGN), researching antibodies that could be useful in treating asthma. This recent deal with Rigel, therefore, only adds to the work that AstraZeneca is already doing. This shows a consistency in its strategy, and if the upcoming tests go well, AstraZeneca should have a strong position in the industry.
Competitor Eli Lilly (LLY) knows how to keep its shareholders happy, even when times get a little tough. This company recently announced its plan to continue a share buyback scheme it began and stopped a while ago. Eli Lilly plans to buy back the remaining shares, worth a total of $420 million. This will hopefully boost investor returns, which took a hit when the company's profits dropped after the loss of the Zyprexa patent a short while ago. Eli Lilly is a company genuinely dedicated to the best interests of its shareholders, and I expect this announcement to have a slightly positive impact on the stock.
Merck (MRK) and Geisinger Health System recently announced that they will collaborate with each other, although this is an "unusual pairing of medical and insurance providers." This should increase the chances that patients will actually take their prescribed medication. A large portion of patients do not do this, which can result in serious consequences that have a huge impact on their health and their lives. If Merck is successful in its plans, it could stand out as a company that really cares. It could potentially generate further investor support as well, which would benefit the stock. I think this will only have a small effect, but it will certainly be positive.
We finally have some positive news to report on Johnson & Johnson (JNJ) as well. The company recently completed its acquisition of Synthes, and it now has a firmer hold on the orthopedic industry. We have heard a lot about the recalls and other problems that Johnson & Johnson has had to face over and over again. An acquisition like this one could significantly boost the company's profits and turn its fortunes around for the better. This is what the stockholders are hoping for, and I do think the stock should be doing relatively well at the moment.
One pharmaceutical company that has recently experienced a big win is GlaxoSmithKline (GSK). The Supreme Court ruled in favor of GlaxoSmithKline, agreeing that it did not have to pay overtime to its former sales reps. This is a bit of a relief for stockholders. If the decision had gone the other way, the financial implications for the company would have been substantial. GlaxoSmithKline is probably not the only pharmaceutical company that would have suffered either, as sales representatives from other companies would have had the same idea. Therefore, many should be pleased with the outcome of this case. It might have a slightly positive impact on GlaxoSmithKline stock, but at the very least, it should help it maintain a consistent price.
Some competitors are doing well, but I still think AstraZeneca has the right idea and is a good stock. It is making an effort to maintain its position as a leader in respiratory illnesses, and the new drug may bring something to the asthma arena that we have not yet seen. A collaboration with a company like Rigel shows that AstraZeneca is willing to work together with other companies for the best interests of its patients and its stockholders. At the moment, I feel that AstraZeneca is easily one of the best stocks in the pharmaceutical industry.