AstraZeneca (AZN - Analyst Report) successfully conducted a global bond market transaction, thereby issuing notes worth $2 billion. AstraZeneca intends to utilize the proceeds from the transaction for general corporate purposes and refinancing debt . The global bond issue is registered with the Securities and Exchange Commission (SEC).
The offering includes two tranches of $1 billion each -- a 7-year fixed rate notes with a coupon of 1.95% and 30-year fixed rate notes with a coupon of 4%. AstraZeneca further stated that the notes will be issued under its existing automatic shelf registration statement on Form F-3.
The registration statement, which provides for the offer and sale of an indeterminate amount of the debt securities at AstraZeneca, was filed with the SEC on December 21, 2010. Moreover, the statement is inclusive of a detailed prospectus for the benefit of investors.
Apart from the global bond issue, AstraZeneca was also in the news recently when its global biologics division MedImmune joined forces with WuXi AppTech, a subsidiary of China-based WuXi PharmaTech Inc. to develop and commercialize MEDI5117 in China. MEDI5117 is being developed for autoimmune and inflammatory diseases such as rheumatoid arthritis.
With factors like pricing pressure in the EU and increasing generic competition affecting sales in large pharmaceutical markets, emerging markets have become an area of focus for several companies. AstraZeneca strengthened its presence in China through the acquisition of privately-held generics manufacturing company, BeiKang Pharmaceutical Company Ltd. The collaboration with WuXi further emphasizes AstraZeneca’s strategy.
We are encouraged by AstraZeneca’s focus on the high-potential emerging markets and are pleased with its effort to drive the bottom line through cost-cutting initiatives and share buybacks.
However, we remain concerned about the generic competition faced by the company’s key products. In 2011, the company lost revenues worth almost $2 billion to generic competition. The weak late-stage pipeline at AstraZeneca coupled with slow Brilinta uptake also bothers us.
We currently have a Neutral recommendation on AstraZeneca. The stock carries a Zacks #3 Rank (Hold rating) in the short run.