* Forecasts $45 billion sales by 2023 as new drugs deliver
* EPS growth expected to exceed revenue growth over 2017-23
* Biggest pipeline hopes hinge on new cancer drugs
(Adds further comment from CEO, 2016 and 2017 consensus
forecasts, more on politics)
By Ben Hirschler
LONDON, May 6 AstraZeneca Plc laid out
its defence against Pfizer Inc's $106-billion takeover
approach on Tuesday by predicting its sales would rise by three
quarters over the next decade, although only after a short-term
With promising new medicines expected to lift annual revenue
above $45 billion by 2023, up from $25.7 billion in 2013,
selling out to the U.S. group now would deprive investors of
huge gains, it argued.
"The increasingly visible success of our independent
strategy highlights the future prospects for our shareholders,"
said Chairman Leif Johansson. "These are benefits that should
fully accrue to AstraZeneca's shareholders."
Chief Executive Pascal Soriot said plunging AstraZeneca into
a disruptive merger would also jeopardise its ability to deliver
on the new drug pipeline, which is expected to account for 30
percent of the 2023 sales total.
Investors and analysts agree Britain's second-biggest
drugmaker has an improving experimental portfolio in areas
ranging from cancer to asthma, but they remain nervous about the
uncertain commercial future of many products.
AstraZeneca has rebuffed three approaches from Pfizer, which
wants to create the world's biggest pharmaceuticals company -
and cut its tax bill - by buying the group. It said on Friday
that the U.S. firm's latest offer of 50 pounds a share
"substantially" undervalued the company.
The group has not ruled out a deal altogether, however, and
people familiar with the matter said it was willing to talk if
there were a compelling offer. Several large shareholders have
told Reuters they would be open to a deal at a higher level.
Shares in AstraZeneca were down 2.7 percent at 46.80 pounds
at 1510 GMT.
Sales are set to fall over the next three years as older
medicines lose patent protection, slipping to $24.5 billion by
2016 and $23.6 billion in 2017, according to Thomson Reuters
consensus analyst forecasts.
AstraZeneca has previously said it disagrees with analysts
and sees sales back up at last year's level by 2017. Now it is
forecasting "strong and consistent" growth from 2017 to 2023,
driven by new treatments for cancer, diabetes, heart disease and
It also flagged up a possible therapy for Alzheimer's
disease, a notoriously high-risk area for drug development.
Growth in core earnings per share, which excludes certain
items, is expected to exceed revenue growth during this period,
Jefferies analysts said the forecasts appeared "overly
optimistic" but the detailed product breakdown might help raise
the price and cash mix in any deal. In addition to a higher bid,
AstraZeneca also insists there should be more cash than the 32
percent suggested by Pfizer, with the balance paid in shares.
AstraZeneca launched its 10-year sales forecast defence
salvo a day after Pfizer CEO Ian Read renewed his call for the
British company's board to enter talks.
Read insisted his offer was "compelling" and signalled he
was now weighing all options, including a possible hostile bid
or looking at other targets, though he stressed that buying
AstraZeneca remained "Plan A".
Pfizer's pursuit of AstraZeneca has created a political stir
in Britain, with critics of the U.S. group's approach fearing
that a takeover will lead to big cuts in drug research, despite
assurances given by Pfizer to the government.
Officials have said a deal would be a commercial matter for
the two companies but business minister Vince Cable said Britain
could use its powers to assess if a takeover was in the public
interest, while lawmakers called on Pfizer's bosses to appear
Most investor interest centres on AstraZeneca's experimental
cancer medicines designed to boost the immune system. Such drugs
promise to revolutionise treatment of many tumour types and
would also complement Pfizer's line-up of oncology medicines.
But AstraZeneca is lagging rivals such as Bristol-Myers
Squibb Co, Merck & Co and Roche Holding AG
in this field.
"This is a company that has made significant progress in
moving its pipeline forward over the last 18 months," said
Alistair Campbell, an analyst at Berenberg Bank. "Is it enough
on a fundamental basis to justify the current share price?
Personally, I don't think so - at least not without the
certainty you need in terms of knowing clinical trial outcomes."
Among individual products, AstraZeneca said heart drug
Brilinta had the potential to deliver annual sales of around
$3.5 billion by 2023, with diabetes and respiratory medicines
both adding about $8 billion apiece.
In cancer it forecast potential peak sales of $6.5 billion
for its experimental immunotherapy drug MEDI4736 - the product
that has excited most interest from investors and analysts.
AstraZeneca said last month it planned to push ahead with
late-stage Phase III testing of MEDI4736, following evaluation
of positive Phase I data that will be presented at an American
Society of Clinical Oncology (ASCO) conference on May 30-June 3.
The detailed presentations on this and other experimental
cancer medicines will be important for AstraZeneca and rivals,
and could move its shares - but may be just too late for the
Pfizer bid battle.
Pfizer has a deadline of May 26 to make a firm offer or walk
away under British "put up or shut up" takeover rules.
"They've got drug candidates in what look to be really
exciting areas," said Dan Mahony, a fund manager at Polar
Capital, who raised his stake in AstraZeneca last year. "But it
is not clear to us yet who, across the industry, has the best
(Additional reporting by Anjuli Davies; Editing by David Stamp
and Will Waterman)