AstraZeneca to weigh buyback in January
NEW YORK (Reuters) - AstraZeneca Plc's (AZN.L) board will consider in January whether to reintroduce share buybacks after "an unusually good" 2009, during which it slashed debt, the drugmaker's chief executive said on Tuesday.
David Brennan wants to retain strategic flexibility to do deals, but he told the Reuters Health Summit that partnerships on experimental drugs and technologies were his prime focus and a major acquisition of more than $10 billion was unlikely.
Thanks in part to one-off gains from the sale of H1N1 swine flu vaccine and the delayed entry of generic competition to heart drug Toprol XL, AstraZeneca had "got ahead of where we thought we would be from a cash perspective," he said.
That has allowed the group to pay down debt from the $15.6 billion acquisition of MedImmune in 2007 faster than expected, fueling speculation the company might soon restart share buybacks, which were halted in October 2008.
"We will decide again in January when we have a chance to look at the budget, the opportunities for the business in 2010, what will be the challenges that we face," he said in a telephone interview.
"Certainly dividends, servicing the debt and being positioned to invest in the business are the first three priorities. And then a share repurchase program follows that one."
LESS DEBT
Strong cash-flows have reduced net debt by $3.98 billion since the end of 2008 to $3.19 billion at the end of the third quarter, and some industry analysts expect it to be only a little over $1 billion by the end of the year.
"We're now getting close to getting to zero net debt ... we're way ahead of the targets we set for ourselves," Brennan said.
AstraZeneca still faces major challenges, since it has one of the largest patent expiry exposures among major drugmakers, with top medicines, including popular heartburn treatment Nexium and Seroquel for schizophrenia, set to lose exclusivity.
It also faces a patent challenge from generic drugmakers to its new blockbuster cholesterol drug Crestor, which could prematurely cut off revenues from a key driver if successful.
A summary judgment hearing in that case is due to be held in a Delaware court on November 16, though Brennan said it would likely be several weeks before a ruling was handed down.
He said the Crestor patent was "solid" and AstraZeneca would defend it "very aggressively."
Given the looming "cliff" of patent losses, investors expect AstraZeneca to ramp up its efforts to boost its pipeline of new drugs.
The Anglo-Swedish company has had more success recently in getting its new drugs to market and has also had some promising clinical results. But Brennan said he would continue to look for additional products to buy in, but on a smaller scale than MedImmune.
"My view would be we would continue to look at technologies, products that we could bring in, or potentially companies that have intellectual property that are significantly smaller," he said.
(Additional reporting by Sam Cage, editing by Tim Dobbyn)
