AstraZeneca says it has agreed to buy Actavis' branded respiratory drug business in the United States and Canada for an initial $600 million as it reported weak fourth-quarter earnings. Sonia Legg asks if the drug maker is wise to seek external deals to ensure growth.
AstraZeneca's been shopping again - it's buying Actavis - a respiratory drug business in the U.S. and Canada for an initial $600million. Britain's second biggest drugmaker hoped the deal would mask weak fourth-quarter results. They say it will return them to growth by 2017 and achieve an annual sales jump of 75% by 2023. But short term it's not looking so good. 2015 sales revenue is expected to fall by around five percent with core earnings even lower. The results come just months after AstraZeneca fought off a $118 bln bid from U.S. rival Pfizer. ETX Capital's David Papier says investors still see some vulnerability. (SOUNDBITE) (English) DAVID PAPIER, MARKET COMMENTATOR, EXT CAPITAL, SAYING: "We saw a huge amount of M&A activity within the pharmaceutical sector last year with AbbVie and Shire and Pfizer and AstraZeneca. Is this hampered growth over the next couple of years going to affect that bid? I am not so sure. With the projected revenue and profits for up to 2023 we may see the vultures circling again." AstraZeneca has won over many investors with its line-up of new cancer drugs. But it also faces pressure on profits from cheap generic copies of older drugs, (SOUNDBITE) (English) DAVID PAPIER, MARKET COMMENTATOR, EXT CAPITAL, SAYING: "It all comes down to the patents that AstraZeneca have with the Activist deal - with other patents that they have. It depends how aggressively Pfizer want these patents. If they do then we may see another bid come in for AstraZeneca." But there was some comfort for shareholders - core earnings for 2014 are expected to rise. And Pfizer has been shopping too - buying Hospira for $15 billion. It was the U.S. giant's biggest deal since it failed to secure AstraZeneca.