AstraZeneca’s New Strategy

Pharmaceutical manufacturer AstraZeneca (NYSE:AZN) announced Monday that it would suspend share buybacks as the board and new Chief Executive Officer Pascal Soriot review the company’s strategy.

AstraZeneca has repurchased $2.3 billion of stock this year, said the London-based company in a statement, compared to the original proposal of $4.5 billion.

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The company’s decision to suspend its share buyback program is evidence of changes within management. After several expensive drug-development failures drew the concern of shareholders, former CEO David Brennan retired abruptly in April.

Under Brennan, AstraZeneca, the United Kingdom’s second-largest pharmaceutical company after GlaxoSmithKline (NYSE:GSK), focused on small acquisitions, paying dividends, and buying back shares to provide a return for investors while the company waited for experimental drugs to reach the market. But failures in drug development undermined his approach and contributed to his departure.

Soriot, Brennan’s replacement, took office on Monday and began the company’s annual strategy update, the results of which will be available in January.

Analyst Brian Bourdot of Barclays Plc’s told Bloomberg that the decision to stop repurchasing shares will give AstraZeneca more flexibility to undertake a big acquisition.

“It’s a bit of a surprise that they changed course mid-year, but a new chief executive likes to take control and see what the options are,” Bourdot told Bloomberg.

However, Soriot will face more difficulties than drug-development failures, as several drugs, which account for 44 percent of AstraZeneca’s sales, will lose patent protection in the next three years.

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