AstraZeneca wants to breathe new life into the Big Pharma business model. This is good news, as AstraZeneca epitomises virtually everything that is wrong with the model as it stands.

The group may still enjoy eyewatering cashflows from its blockbuster medicines, but sales of many of the top-sellers, such as the stomach acid treatment Nexium and the schizophrenia drug Seroquel, are set to plunge amid growing competition from manufacturers of generic drugs.

The company looks set to lose nearly 40 per cent of its revenues over the next four years as key patents expire. To compound its problems, it has suffered the loss of a string of experimental drugs in late-stage development.

Against this background, it is no surprise that David Brennan, the chief executive, has been willing to experiment with new ideas. Last year he announced an aggressive cost-cutting plan, began to outsource much of the group’s manufacturing operation and stumped up more than $15 billion to acquire Medimmune, an American biotechnology company.

Now it has emerged that AstraZeneca is considering spinning off part of its research operation to venture capital firms – a rare departure for a big pharmaceuticals company.

While AstraZeneca’s gastrointestinal research unit is only a small part of its R&D operation, in the past drug companies have viewed their research divisions as their most prized assets. Mr Brennan appears to be willing to consider a different model, where increasingly the company buys in technology and taps its own knowhow to launch drugs and exploit their commercial potential.

Mr Brennan’s bold approach is welcome. The industry desperately needs fresh thinking over the next few years if it is to survive the generic onslaught.

antonia.senior@thetimes.co.uk

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