AZ: Radical Re-think?

David Brennan's certainly made his mark just over a year into his tenure as CEO of AstraZeneca. The company has embraced externalization with fervour, completing a dozen or so significant alliances or acquisitions in the last 12 months, bolting on biologics capabilities by snapping up compatriot CAT, and joined in the cost-cutting, efficiency drives and re-focusing that are fast becoming Big Pharma's hallmark.

But is that enough? Brennan doesn't seem to think so. When asked in an IN VIVO interview last month whether he's contemplating more revolutionary change to set AZ apart, the answer's an assertive "Yes". But he's not going to talk about how. So what might be afoot within the Mayfair HQ?

It's not going to be a merger--that's an old trick, after all, and one that hasn't been shown to work very well. Nor did he sound that excited by the notion of acquiring a new, ready-built franchise by buying a specialty pharma firm such as Shire (not that he'd want to now, anyway, after that firm's large lunch of Vyvanse promotion partner New River Pharmaceuticals.

Doing a Novartis doesn't seem to be on the agenda either--"we think about [buying] generics, vaccines or diagnostics, etc. during each annual review," admits Brennan. "But the whole point of the Astra-Zeneca merger was to focus us solely on innovative pharmaceuticals. Anything else would detract from that."

So what's left? Splitting up? As Brennan points out, AZ is already organized into small-ish units, research units, since recently including CAT and Arrow--and plans to remain that way, GSK-style--"better than putting everyone in one unit and saying, now we're all going to do things this way."

Perhaps that means more, smallish, bolt-on acquisitions--what most of the punters are predicting. But as these entrepreneurial cells are increasingly left to their own devices (unless you're Pfizer), it raises the prospect of Big Pharma as portfolio managers, assessing and managing a series of external partners rather than, not as well as, their in-house R&D.

"The hurdles for in-licensing are lower," Brennan says. "The way we look at it now is, we’ve got risk in our portfolio, there will be risk in what we’re licensing in, so let’s make sure we’re looking at the best technology, project, or product that we think we can get at the time, and we’ll deal with it accordingly." Sound a bit like a portfolio manager to you?

Big Pharma used to bask in relatively easy-won double digit growth--the safe havens of the stock market. That has changed. Today, "being successful is not a certainty—you have to make it happen," notes Brennan.

Watch this space.