'No.1 COVID-19 Vaccine' AstraZeneca, The Management Secret Behind Overcoming Crisis [Hidden Business Story]

Leading COVID-19 Vaccine Developer AstraZeneca
Formed in 1999 by Merger of UK and Sweden Pharmaceutical Firms
Facing Challenges from Drug Patent Expirations and Rising New Drug Research Costs
Chairman Johansson's Focused R&D Strategy Boosts Company Value from 78 Trillion to 180 Trillion

Multinational pharmaceutical company AstraZeneca logo. / Photo by Yonhap News

[Asia Economy Reporter Lim Juhyung] Amid the severe impact on the global economy caused by the spread of the novel coronavirus infection (COVID-19), there is a company that is gaining even greater attention. It is the British global pharmaceutical company AstraZeneca, which is regarded as being ahead in the research of COVID-19 vaccine candidates.

AstraZeneca is currently developing a COVID-19 vaccine candidate in collaboration with the University of Oxford and has entered the final clinical trial phase, Phase 3. In particular, expectations are rising as the vaccine is anticipated to receive emergency approval by the end of this year.

AstraZeneca was formed in 1999 through the merger of the Swedish pharmaceutical company Astra and the British company Zeneca. As of last year, AstraZeneca recorded annual sales of $24.4 billion (approximately 27 trillion KRW), and its market capitalization soared to ?118 billion (approximately 180 trillion KRW) this year, making it the most valuable pharmaceutical company in the UK.

The company has branches in over 100 countries worldwide and employs about 70,600 people. Its global headquarters are located in Cambridge, UK, and it operates three strategic research and development (R&D) centers in Cambridge, Sweden’s Gothenburg, and Gaithersburg, USA.

Exterior view of AstraZeneca R&D Center in M?lndal, Sweden / Photo by Asia Economy DB

◆ Leadership of Chairman Leif Johansson Shining in Crisis

AstraZeneca has not always recorded successful results. Since the merger of Astra and Zeneca in 1999, the company has faced several crises.

The biggest issue was the impending expiration of patents for 'bestseller' drugs such as Nexium and Arimidex, which had generated significant profits for AstraZeneca. Especially after the US patent for Arimidex expired, AstraZeneca’s sales in the US plummeted by as much as 86%. AstraZeneca’s revenue fell from about $33.5 billion (37 trillion KRW) in 2011 to $27.9 billion (31 trillion KRW) in 2012.

Another problem was the soaring cost of new drug research. Pharmaceutical companies’ revenues depend heavily on the success of developing so-called 'blockbuster' new drugs that can rapidly boost profits. However, new drug development requires investing trillions of won over at least 4 to 5 years, and success is far from guaranteed. For AstraZeneca, which was entering a phase of shrinking sales due to patent expirations, this was a burdensome challenge.

Chairman Leif Johansson joined AstraZeneca in 2012 when the company’s sales were sharply declining. Johansson is an experienced executive who previously served as CEO of major Swedish companies such as Electrolux and Volvo.

After joining, Johansson and the management team devised a strategy focused on R&D efficiency. To this end, they relocated the global headquarters from London to Cambridge, where the strategic research center was located, integrating functions such as marketing, sales strategy, and R&D, and reinvested the resources thus secured back into research and development.

Johansson’s management strategy faced several challenges. During the vigorous acquisition of startups with new drug research and biotech technologies, the company’s revenue continued to decline, and in 2014, AstraZeneca received three acquisition proposals from the US-based global pharmaceutical company Pfizer.

At the time of the acquisition proposals, AstraZeneca’s market capitalization was only about $70 billion (78 trillion KRW), less than half of its current value. However, Johansson rejected all merger offers, stating, "AstraZeneca’s future growth potential is by no means low."

The Jenner Institute at the University of Oxford in the UK, developing a vaccine for the novel coronavirus disease (COVID-19). / Photo by Facebook

◆ Fruits of Success Shining Amid the COVID-19 Crisis

Having endured a long and painful restructuring, AstraZeneca began to rebound last year. AstraZeneca’s sales last year reached about $24.4 billion, a 13% increase compared to the previous year.

Moreover, in the first half of this year, when many global corporations were expected to face crises due to COVID-19, sales rose by 14%. Not only that, but new cancer treatments such as Tagrisso, Imfinzi, and Lynparza demonstrated excellent clinical efficacy, bearing fruit from years of focused research and development.

In particular, the COVID-19 vaccine jointly developed with the University of Oxford is raising expectations that AstraZeneca can officially enter the vaccine market, as there is a possibility of emergency approval by the end of this year.

According to the British media 'Financial Times' on the 26th (local time), AstraZeneca’s COVID-19 vaccine clinical trials observed the formation of both antibodies and T cells in the bodies of trial participants.

Adrian Hill, director of the Jenner Institute at the University of Oxford leading the vaccine development, said in an interview with the British media 'Daily Mail' on the same day, "If emergency approval for the vaccine is granted, vaccination can begin from Christmas (December 25) focusing on those who need the vaccine most," adding, "We expect to deliver the vaccine to the entire population by early next year."

This content was produced with the assistance of AI translation services.