Wonder how Pascal feels today?
While it may seem like just yesterday it was a year ago today that the AstraZeneca (NYSE:AZN) Pfizer (NYSE:PFE) deal officially fell apart. A deal which was strongly opposed by Astra’s CEO Pascal Soriot, who when defending Astra’s independence noted that the company’s diabetes portfolio was one of the reasons. Since that time Astra’s stock has fallen almost 5% while shares of Pfizer have risen almost 16%.
Given the events that have transpired over the past year one has to wonder how Pascal feels today. Besides the many issues facing the company’s diabetes portfolio, Pascal just might feel like he missed a huge opportunity as he was the leading candidate to replace Chris Viehbacher who was beheaded by Sanofi (NYSE:SNY). Now we can’t blame Pascal for not taking the Sanofi job as this would have been like jumping from the frying pan into the fire.
Still what once looked like an opportunity has turned into nightmare for Pascal. Onglyza and Farxiga have come under attack, Bydureon is facing multiple competitors and the company lacks any insulin products. Just as we noted regarding Sanofi when it comes to diabetes the company doesn’t have a ton of options. Lilly (NYSE:LLY) and Novo Nordisk (NYSE:NVO) continue to press ahead making it even tougher for Astra to compete effectively.
Now we would say that a possible solution would be for Pascal to go out and buy Sanofi’s diabetes franchise. That by adding insulin the company might just stand a chance at being competitive with Lilly and Novo. Yet this combination of diabetes portfolio’s which once looked very attractive has lost much of its luster. Frankly at this point we’re not sure which company has more issues, Sanofi or Astra.
Keep in mind that Astra spent a considerable amount to put together their diabetes portfolio and while the portfolio lacked insulin it was about the only portfolio that could compete head on with Lilly’s. Today with Onglyza and Farxiga dead in the water and Bydureon facing stiffer competition this once promising portfolio is a mere shell of what it was. Quite frankly even if they did add insulin to the mix we’re not sure this would help all that much given the dynamics of the insulin market.
This begs the question of where does Pascal go from here. Does he attempt to go big and buy the Sanofi franchise or will he hunker down and start slashing costs. To be honest Diabetic Investor does not see a third option. The diabetes market is ultra-competitive, the company’s two main rivals appear to getting stronger and there really isn’t anyone else they could buy who would solve the issues facing the company.
While there is no way Pascal could have anticipated the issues with Onglyza or Farxiga, he must be kicking himself for not taking the Sanofi job. As screwed up as Sanofi was and quite frankly still is, he would have had a nice honeymoon period. This is the exact situation Olivier Brandicourt, the new Sanofi CEO finds himself in. Sanofi stakeholders realize that the company is screwed up and that Olivier cannot work miracles. Yes at some point this will change but for the moment Olivier has been given a hall pass. Plus he has the added benefit that while our good buddy Serge talks about accountability he has no idea what that means.
Ironically Pascal now finds himself on the hot seat as Astra stakeholders are getting restless. Looking back they too must be kicking themselves for not pressing Pascal to accept the Pfizer offer.
What a difference a year makes.