Recently, AstraZeneca’s flirted with small-scale agreements and acquisitions. The company purchased small biotech Ardea Biosciences or $1.3 billion early last year, with the acquisition giving AstraZeneca the potential hyperuricemia therapy lesinurad. The company’s planning to file for lesinurad’s regulatory approval in Europe and the U.S. in 2014, and more small- to mid-size acquisitions could relieve the pressure on AstraZeneca’s pipeline.
So just who exactly should this company be in the hunt to acquire?
Who should AstraZeneca buy?
Let’s mention the obvious candidate first: Shire PLC (ADR) (NASDAQ:SHPG). The company wouldn’t exactly fit a “small- to mid-size acquisition” with a market cap of more than $17 billion, but rumors flew in January that AstraZeneca could be in the running to snap up this surging company. Shire’s sales of more than $4 billion would make significant progress toward clearing Credit Suisse’s proclamation of $6 billion in necessary sales, while the firm’s strong foothold in the gastrointestinal market would mesh well with AstraZeneca’s own GI experience. Gastrointestinal sales made up more than 17% of AstraZeneca’s sales in 2012.
Sticking with the gastrointestinal synergies, if AstraZeneca is looking for a small, up-and-coming biotech with a bright future, it should look no further than NPS Pharmaceuticals, Inc. (NASDAQ:NPSP). NPS recently scored a victory with the FDA approval of Gattex, its short bowel syndrome orphan drug with projected peak sales of $350 million. NPS has another promising orphan drug, Natpara, in the pipeline, and with a market cap of under $700 million, it would be a relatively cheap buy for AstraZeneca. NPS wouldn’t cure all of the company’s ills, but paired with another acquisition — such as Shire — it’d brighten AstraZeneca’s future considerably.
Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX) is a smaller acquisition that wouldn’t cost the farm and would give AstraZeneca the benefit of already-marketed products with some serious momentum. AstraZeneca boasts significant sales in cancer therapies — the market that Onyx specializes in — and while the synergies aren’t a perfect fit, the Onyx’s Nexavar has rolled along nicely with respectable sales growth, while its new multiple myeloma drug Kyprolis has begun its post-FDA approval life strongly. Onyx would cost AstraZeneca a pretty penny with a $5.3 billion market cap, but with drugs already on the market and doing well, AstraZeneca might be able to overlook that in exchange for the sales boost it needs.
Time to make a move
AstraZeneca might be playing things cautious as far as major acquisitions go, but this company needs to do something. Whether it’s a big splash such as Shire or a bit-by-bit pickup like NPS, AstraZeneca’s future needs a lift. The company’s pipeline isn’t enough to stave off the hits of the patent cliff, and with sales and profit already falling, it’s long past time AstraZeneca pull the trigger on a move to safeguard its future. Its investors should demand nothing less.
The article It’s Time for This Big Pharma to Save Its Future originally appeared on Fool.com and is written by Dan Carroll.
Fool contributor Dan Carroll has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
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