Astra could still spend "billions" on pipeline

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By Ben Hirschler, European Pharmaceuticals Correspondent

LONDON (Reuters) - AstraZeneca could still spend billions of dollars buying in products to boost its drug pipeline, even after paying $15.6 billion (7.8 billion pounds) for MedImmune, its chief executive said on Monday.

David Brennan told Reuters he remained on the look-out for promising pipeline opportunities, adding the Anglo-Swedish company could be a more attractive potential partner for some biotech firms following the addition of MedImmune.

The agreed purchase of the U.S. biotech firm, announced a week ago, was criticised by many analysts as expensive and doing little to address AstraZeneca’s problem of not having enough experimental drugs in final Phase III clinical development.

Brennan said he recognised the group would not "discover its way out" of its problems and therefore needed to bring in products from third parties.

"We feel like we have the potential to keep our credit rating in the ’A’ category and still have in the billions of dollars to spend if we choose to spend it," he said in an interview.

"I wouldn’t envision that we would be doing a deal like MedImmune at all but I think we have the capacity to do more if the opportunity is right. It would have to be a strategic fit with our existing therapeutic categories."

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MedImmune is a long-term bet by AstraZeneca, taking it deeper into biologic drugs -- protein-based medicines made in cultures of living cells -- as well as giving it a foothold in vaccines.

It is designed to place it in a strong position in the 2010-2015 timeframe, when key existing blockbusters like Seroquel for schizophrenia, Nexium for stomach acid and Arimidex for breast cancer face patent expiry.

But Brennan said it also offered some shorter term upside.

Although MediImmune revenues were only $1.3 billion last year -- just 5 percent of AstraZeneca’s sales -- Brennan said there was scope to boost this by adding sales force muscle.

He also plans to look at MedImmune’s marketing relationship with Abbott Laboratories Inc. in international markets to see if there is scope for renegotiation.

"We would look to see if there are any opportunities," he said, adding: "We have a good relationship with Abbott."

MedImmune is best known as the maker of the nasal spray flu vaccine FluMist but its biggest seller is Synagis, an antibody to prevent respiratory infection in infants.

AstraZeneca expects the MedImmune acquisition to close in June 2007 but only to boost its cash earnings per share, excluding amortisation, in 2009.

The long payback has left many shareholders unimpressed and the stock has fallen 7 percent in the past week.

Brennan, however, said investors needed to focus on the long-term capability the deal gave AstraZeneca to target diseases in a range of different ways.

RELYING ON CURRENT DRUGS

In the meantime, he is banking on current drugs to keep the business growing in line with the overall market in the next few years and is confident challenges to U.S. patents on Seroquel and Nexium, which may come to court next year, will be seen off.

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