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AstraZeneca to Sell Cheshire Research Site

Zacks Equity Research

AstraZeneca (AZN) agreed to sell its Alderley Park, Cheshire, UK center to Manchester Science Parks – a public-private partnership – as the company aims to shift its research and development (R&D) activities to a new site in Cambridge. The transaction, whose details were not revealed, will close shortly.

AstraZeneca said that it will remain a key tenant on the site whose handover to the new owners will occur over a three year period in a phased manner. Even after the completion of the sale, 700 AstraZeneca employees will continue performing non-R&D roles at the site.

We note that the company had announced its intention to discontinue R&D activities at its Alderley Park site in March last year as part of its plans to revamp its R&D structure.  The company had also announced at that time that it will close its current headquarters in London and relocate the same to Cambridge in 2016. The agreement to sell the 400 acre Alderley Park site is a move in that direction. Due to the impending sale, AstraZeneca will incur $275 million charges in the first quarter of 2014.

In Mar 2013, AstraZeneca had also announced that its R&D activities will be centered in three facilities including UK (Cambridge), U.S. (Gaithersburg) and Sweden (Mölndal) by 2016.

We believe that the restructuring initiative at AstraZeneca reflects the company’s efforts to cut down on cost while maintaining its focus on R&D. AstraZeneca through these initiatives is looking to combat the generic threat looming over it. Generic competition has adversely impacted AstraZeneca’s revenues over the past few quarters. This has put significant pressure on the company.

AstraZeneca, one of the largest biopharmaceutical companies in the world carries a Zacks Rank #4 (Sell). Better-ranked stocks in the biopharma space include Alexion Pharmaceuticals, Inc. (ALXN), Alkermes (ALKS) and Gilead Sciences, Inc. (GILD). All 3 stocks carry a Zacks Rank #1 (Strong Buy).

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