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Neil Woodford: AstraZeneca has an attractive independent future

As speculation continues over whether a takeover bid will be agreed between pharma giants Pfizer and AstraZeneca, star manager Neil Woodford says he is confident UK-based AstraZeneca has a ‘viable and attractive independent future’.

Woodford has also warned of the potential for poor integration on the back of any deal which could “interrupt or derail” important late stage developments of a number of drugs. 

AstraZeneca rejected the latest takeover bid from Pfizer on Friday despite the US company raising its offer to the equivalent of £50 per share. Under takeover rules Pfizer has until May 26 to agree a deal, launch a hostile bid or walk away. 

A statement issued by Astra last week said the offer “substantially” undervalues AstraZeneca and is “not a basis on which to engage with Pfizer”.

Woodford currently holds AstraZeneca as his top portfolio position within the St James’s Place UK Equity and UK High Income funds and the firm is the top holding of the two giant Invesco Perpetual income funds he previously ran. 

Speaking to Money Marketing as Woodford Investment Management prepares for launch, the fund manager said he was not surprised by Pfizer’s interest in AstraZeneca.

However, reiterating his long-held support for the pharmaceutical company, Woodford argued AstraZeneca has bright prospects as a standalone firm. 

“It doesn’t surprise me that Pfizer wants to buy Astra because I believe its pipeline is significantly superior,” he said.

“I have been a large shareholder in Astra for some years and built the position about the time when the stock was significantly out of favour because I believed in the pipeline, the science and the ability of the business to deliver value. It wasn’t the broken business that everybody believed it to be. There is a very, very, viable and attractive independent future for AstraZeneca and I believe chief executive Pascal Soriot and his team are absolutely the right people to deliver that.”

Any disruption to the progress made by AstraZeneca as a result of a takeover bid could potentially prove “incredibly value destructive” for the company, Woodford added.

He said: “This is a very sensitive time for AstraZeneca because its pipeline is maturing rapidly. It has got a lot of really important, potentially very profitable, and very beneficial drugs in late stage development.

“It would be incredibly value destructive if the pipeline progress was interrupted or derailed by some of the integration issues in a bid situation. There are lots of execution risks.”

Woodford cautioned that AstraZeneca shareholders must consider if they want to be an investor in Pfizer, pointing out that he himself has never held the US-firm despite his long-held bias towards the pharma sector.

“In any sort of deal two-thirds of my exposure to Astra will be translated to a holding in Pfizer, and Pfizer is a very different beast from Astra.

“You have got to think about whether you would want to be, and whether you should be, a Pfizer shareholder. I wasn’t a Pfizer shareholder before and I was a shareholder in Novartis, Roche, Sanofi and Glaxo,” he said.

For the full interview with Neil Woodford, see this week’s Money Marketing


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