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Is Parting Such Sweet Soriot For AstraZeneca?

Jul. 13, 2017 3:22 PM ETAstraZeneca PLC (AZN)TEVA8 Comments
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Rumors of Pascal Soriot's departure from Astrazeneca (NASDAQ:AZN) to Teva (TEVA) remain unconfirmed at this time but the news, if true, would surely count as the most surprising C-suite shenanigans to emerge in the pharma sector. Why an industry veteran who has prided himself on driving innovation at research-led majors would want to jump ship to lead a troubled generics giant with a history of short-lived chief executives is only one of the burning questions to be answered.

Another is what it means for Astrazeneca's prospects. Perhaps it confirms that the Mystic lung cancer trial, upon which huge significance has been placed, is not equipped to change the company's fortunes in immuno-oncology. A realisation that the growth he has promised cannot be delivered might have persuaded Mr. Soriot to jump ship (see analysis below).

A look at his track record since he took the helm in October 2012 is decidedly mixed. On share price appreciation and improving investors' perception of the company's R&D pipeline he has done well. On protecting earnings and the top line through a tough period of patent expiries he has been less successful; the promised revival of Brilinta, for example, is still yet to emerge.

A look at where analysts were expecting the company to be in 2018 when he arrived, compared to how they see it now, shows a deteriorating view. Consensus for earnings per share has almost halved, while the view of the top line has also come down.

There are caveats to this analysis - definitions of "core" earnings can change, for example, and the sell-side tends to adopt an optimistic stance with long-term forecasts. But it still reflects certain criticisms of the executive - despite attempts to flatter Astrazeneca's profit and loss account with "externalisation" revenues he has failed to generate the growth many wanted to see.

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EP Vantage is a forward-looking comment and analysis service tailored to the needs of pharma and finance professionals, focusing on the events that will define the future of companies, products and therapy areas. Written by experienced journalists, EP Vantage provides timely financial analysis of regulatory and patent decisions, marketing approvals, licensing deals, and M&A, giving fresh angles and insight to both current and future industry triggers. EP Vantage is powered by EvaluatePharma, the industry leader in consensus forecasts.

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