The past two or three weeks have seen the publication of companies’ fourth-quarter and annual results and the news from AstraZeneca was pretty dramatic, with the company saying it is to cut 8,000 jobs, representing about 12 per cent of its workforce, following “disappointing” fourth-quarter and annual earnings. The cuts will be made across all geographic regions and all divisions of the company. Following the news AstraZeneca’s share price plummeted, despite efforts by the company to prop it up through a $1 billion share buyback. “If you throw in the uncertainty surrounding US health care reform, it’s clear that 2010 is going to be a challenging year,” was the somewhat understated comment from the company’s CEO, David Brennan.
Facing the future
On a brighter note, however, Brennan pointed out that AstraZeneca has five products awaiting regulatory approval and that the company is planning to sustain double-digit growth in its emerging markets business with selected branded generics. The company is also looking to expand its number of external partnerships to fulfil its goals.
By way of contrast to the AstraZeneca news, Bristol-Myers Squibb was able to report “strong operational and strategic performance” in its fourth-quarter results, capping a year of “transformation” in 2009. The company’s chairman and CEO, James M. Cornelius, said key products and a continued focus on productivity were major contributors to this success, but that strategic initiatives such as the splitting off of Mead Johnson, the acquisition of Medarex, and an extended product commercialisation agreement with Otsuka Pharmaceutical had also played an important part.
Upbeat attitude
Johnson & Johnson has also released its fourth-quarter results, with sales up 9 per cent on the corresponding period in 2008 but with worldwide sales overall for 2009 decreasing by 2.9 per cent compared to the previous year. However, Chairman and CEO William C. Weldon expressed confidence in the company’s future performance: “In a year of tremendous challenge, we maintained our long-term focus while delivering solid results… We made important investments in acquisitions, strategic partnerships and launches of recently-approved innovative products while preserving our financial flexibility to continue to invest in innovation. This positions us well for continued leadership and growth in global health care as we enter 2010.”
So why is there such a difference in performance by these major pharmaceutical companies over the past year? Is it poor planning or a lack of strategic vision that has resulted in AstraZeneca having to make such a large cut in its workforce? Both BMS and Johnson & Johnson emphasised the success of their strategic partnerships and acquisitions policies – AstraZeneca’s optimism, if it can be called that, seems to be based on product performance, though the company did say external partnerships are important. It is to be hoped that the company recovers quickly from its setbacks, but it needs to be very clear about how exactly it’s going to do this. 2010 will indeed be challenging.
