AstraZeneca PLC ADRAZN

Morningstar Rating

Stock Research and Analysis

by Damien Conover, CFA

AstraZeneca's leading presence in the pharma and biotech industry is built on patent-protected drugs and a developing pipeline that all add up to a wide moat. The firm's dynamic operations and an aggressive acquisition strategy create growth opportunities Read more

Bulls Say

The company is expanding its biologic presence in both pipeline products and manufacturing capacity. The biologics tend to carry higher pricing power and may hold off generic competition longer than typical drugs.

Even in the face of generic Zocor, Crestor continues to post positive gains in the highly competitive statin market.

Concerns over the safety of COX-2 inhibitors, such as Vioxx and Celebrex, could help stimulate increased sales of proton pump inhibitors such as Nexium. PPIs are often recommended in conjunction with traditional painkillers such as aspirin and ibuprofen, which can cause stomach ulcers over time.

During the next four years, the company will likely regain full control over drugs currently marketed under a legacy joint venture with Merck. The full control should boost sales.

The negative ENHANCE trial results should propel Crestor sales as doctors look for an alternative to cholesterol-lowering drugs Vytorin and Zetia. Read more

Bears Say

AstraZeneca is developing several new pipeline products in collaboration with partners and consequently lowering the new drugs' profit potential to the company.

Multiple generics of Johnson & Johnson's JNJ antipsychotic Risperdal launched in 2008 are creating tough competitors for Seroquel.

During the next 10 years, all four of the company's growth drivers will lose patent protection, which sets up big shoes to fill.

The high price tag of $15.6 billion for MedImmune shows the intense competition by large pharmaceutical companies looking for acquisitions to augment their internal efforts, which might decrease the opportunities for value-enhancing acquisitions.

The lack of major differentiation between Nexium and its predecessor drug Prilosec increases the probability of an at-risk generic launch by Teva TEVA or Ranbaxy. Read more

Strategy

AstraZeneca focuses on the high-margin pharmaceutical business, and it has divested unrelated business lines. The company manufactures and markets drugs for major therapeutic areas such as cancer, gastrointestinal, Read more

Management

In 2006, David Brennan was appointed CEO following a long tenure in the pharmaceutical industry dating back to 1975. Brennan worked up the ranks at AstraZeneca and Merck and previously headed AstraZeneca's North American operations. With the departure Read more

Profile

AstraZeneca was formed in 1999 by merger between Astra of Sweden and Zeneca Group of the United Kingdom. The company sells branded pharmaceutical products across several Read more

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