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The Monthly: June 2019

04 Jun 2019 / Corporate research

Where has all the cash gone?

Historically, AstraZeneca (AZN) was a leading global pharmaceutical company, but it has slipped down the rankings following a period of patent expiry on major drugs, notably Nexium, Losec and Seroquel. Understandably, the financial performance, particularly operational cashflow, has suffered during this period. Over the past two months, there have been two events which I did not expect to see during my time as a pharmaceuticals analyst in the City in the absence of major corporate activity. First, despite a considerable difference in the size and market share of their respective pharmaceuticals businesses, both globally and in the US, the market capitalisation of AstraZeneca (AZN) has exceeded that of GlaxoSmithKline (GSK). Secondly, AZN needed a Placing of shares to bolster its balance sheet immediately after paying its final dividend for 2018. As an experienced industry follower, these events set off ‘alarm bells’ in my mind.

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