NEW YORK (Reuters) - AstraZeneca Plc (AZN.L: Quote, Profile, Research, Stock Buzz) prefers drug licensing deals to outright acquisitions of biotech firms, despite a clutch of cut-price assets being offered for sale at present, its chief executive said on Tuesday.
David Brennan, whose company last month suspended share buybacks for the rest of 2008 to give it investment flexibility, is wary of acquisition opportunities thrown up by a worsening credit crisis that has left many biotech firms starved of funds.
"There is certainly a lot more activity going on with the biotech companies because their economics have changed," he told the Reuters Health Summit in New York.
"The head of our strategy and business development group was getting one call a day before. Now he is getting three or four from bankers or VCs (venture capitalists) saying, 'Are you interested?'"
Most of the biotech companies on the block, however, have been pored over before by large pharmaceutical groups and rejected as uninteresting or too expensive.
That could change as valuations come down, but Brennan isn't expecting to embark on a buying spree.
"Everybody is looking very closely to see if there are opportunities that might have different economics to them today," he said.
"But, quite frankly, my bias when we are looking at compounds is to license them because then we share the risk and share the reward."
Brennan said the Anglo-Swedish drug maker would decide on its longer-term buyback strategy in January.
COST CUTTING
He also pledged to continue with an efficiency drive that has seen Britain's second-biggest pharmaceuticals group slash thousands of jobs in the past two years.
"I think we've done a nice job at pushing our organization so far, but I do believe there is more to go at," he said.
The company's U.S. sales force has already been reduced by the elimination of contract sales representatives as key products face a tougher environment, notably its top-selling heartburn and ulcer treatment Nexium, which has suffered from intense price competition.
Brennan said the future shape of the U.S. sales force was a balancing act, given the potential launch of two major primary care products in the next two years.
AstraZeneca and its partner Bristol-Myers Squibb Co (BMY.N: Quote, Profile, Research, Stock Buzz) hope to win approval for their new diabetes drug Onglyza or saxagliptin in 2009, while an experimental blood-thinning drug known as AZD6140 is a potential candidate for launch in 2010. Continued...
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