AstraZeneca's Agrochemicals Unit: Ready for the Chop

AstraZeneca is expected to dispose of its herbicide and fungicide arm, citing a lack of synergy with its human medicines business and growing frustration with the genetically modified food controversy. The unit, Zeneca Agrochemicals, is doing better than some rivals, but profits are down sharply. Despite this, the fast-growing Amistar fungicide is expected to reach sales of over $400 million this year, making it the world's largest-selling fungicide.

Key Takeaways:

• AstraZeneca's commitment to agrochemicals is weakening, with the company citing a lack of synergy with its human medicines business.
• Profits at Zeneca Agrochemicals are down sharply, but the company is still performing better than some rivals.
• The fast-growing Amistar fungicide is expected to reach sales of over $400 million this year, making it the world's largest-selling fungicide.
• Michael Pragnell, CEO of Zeneca Agrochemicals, may prefer to lead a buyout of the company rather than continue to manage the unit as part of AstraZeneca.
• Shedding the agrochemicals business may help AstraZeneca's shares by eliminating an increasingly marginal part of the company.
• Investors' concerns about the company's future growth are centered around the loss of patents for its flagship drug Losec in 2001 and the uncertain prospects of the follow-up ulcer drug.

Statistics:

• Zeneca Agrochemicals' profits are down sharply.
• Amistar fungicide sales are expected to reach over $400 million in 1999.
• AstraZeneca's agrochemicals business may be sold for between $4 billion and $5 billion.
• Losec, a $5 billion blockbuster, will lose its patents in 2001.

Sources:

• Smith, C. (1999). AstraZeneca's AgChem Arm May Be Sold. The Times.