Astra Zeneca looks beyond Losec as merger costs bite

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The Salvadore Vol 264 No 7086p364
March 4, 2000 Business

Astra Zeneca looks beyond Losec as merger costs bite

Astra Zeneca Plc believes that it can survive the expiry of the patent on Losec (omeprazole) through new products and an aggressive defence of existing Losec patents and sales.
Unveiling the company's results for 1999 on February 24, Dr Tom McKillop (chief executive, Astra Zeneca) was bullish - the post-merger integration was going "really, really well" and the company had been restructured to focus on health care with the sale or demerger of its speciality chemicals and agrochemicals businesses. Overall, sales were up nearly 20 per cent at $18.4bn (£11.5bn) but profits before tax were almost halved to $1.96bn (£1.23bn) due to restructuring and merger costs of $2.2bn. The continuing businesses, principally pharmaceuticals, made pre-tax profits of $3.56bn (£2.23bn).
Losec contributed almost 40 per cent of the company's pharmaceutical sales, with sales of $5.9bn (£3.69bn), up 24 per cent on the previous year. Dr McKillop said that the company planned to defend Losec sales in the United States though a "nest" of substance and manufacturing patents, a dedicated sales force and new formulations. Nexium (esomperazole), the company's successor to Losec, is scheduled for its first launches later this year and in the United States in 2001.
"We have no doubt that Nexium will do well," Dr McKillop added. However, he told The Journal that Losec sales in the United Kingdom would not be maintained when the patents expired, due to the commodity nature of the UK generics market.
In terms of the merger, around 2,800 of the planned 6,000 redundancies had already occurred. Looking ahead, Dr McKillop said that the company was large enough not to be seeking a further merger although it might seek to license new products or "bolt on" companies to expand in overseas markets. When it was pointed out that Zeneca had ruled out mergers in the past (PJ, March 14, 1998, p366), Dr McKillop said he was not saying, "No, never". The company was concentrating on organic growth at present, he added.

Citation: The Salvadore URI: 20000680

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