AstraZeneca is already considering offloading MedImmune’s vaccines business, just days after it paid $15.2bn (£7.6bn, E11.2bn) for the US biotech.
The City has voiced concerns about the amount AstraZeneca is spending on MedImmune, particularly as it will wipe out the FTSE 100 giant’s cash pile. The pipeline of new drugs, and its move into the $2.2bn vaccines market, were welcomed, however.
A senior source within Astra-Zeneca told The Business that the company was planning “one final push” on marketing FluMist, MedImmune’s influenza vaccine. They added that if the hoped-for sales boost failed, AstraZeneca would look to offload the business, risking an investor backlash.
AstraZeneca said it could not comment on speculation.
The FluMist nasal spray has never been approved for children under five or adults over 50, the two most lucrative markets for ’flu vaccines. However, the US Food and Drug Administration is expected to decide if it could be used on infants in the next few months.
A cheaper formulation of the spray, which would also be easier to store, is expected to be ready for the 2007/08 ’flu season. MedImmune’s other vaccines are in early clinical or pre-clinical stage trials.
A number of big pharma companies, which are suffering from a lack of new drugs and generic competition, are attempting to bolster pipelines and break new markets by snapping up biotechs. MedImmune is AstraZeneca’s second such purchase in as many years, after it paid $702m for Cambridge Antibody Technology in 2006.
But these sorts of deals also eat into cash piles. AstraZeneca shareholders will benefit from a $4bn share buyback this year, thanks to strong sales, but they are unlikely to be rewarded with any large-scale share buybacks in 2008 or 2009, according to JPMorgan.
This is another reason why investors are likely to be angry if the group fails to make MedImmune’s vaccine business a success.
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