Astellas Changing Its Approach, But Investors Are Skeptical

Astellas (OTCPK:ALPMY) still has quite a bit of work to do. While Astellas is still among the largest of the Japanese drug companies (behind Takeda (OTCPK:TKPYY)) and one of the most profitable (in terms of CROCI), the company has a well-earned reputation for a weak internal R&D effort and a heavy reliance upon partnerships and M&A to drive its pipelines. Making matters worse, the company has had a number of setbacks, including stopping the development of Xtandi in breast cancer and halting its once-promising EGFR inhibitor for lung cancer.

Even with that sour backdrop, Astellas shares could be worth a look. There are credible reasons to believe that Xtandi sales growth could re-accelerate and late-stage pipeline assets like roxadustat, gilteritinib, and claudiximab should help offset the loss of patent coverage for Vesicare (a major sales contributor). Moreover, Astellas seems to have accepted that its internal R&D efforts are not up to snuff, and instead of throwing good money after bad, has chosen to refocus around partnering and external development. It's a risky move, but it arguably does play to Astellas's relative strength as a marketing operation (versus an R&D innovator). With the shares potentially undervalued by more than 10%, Astellas is worth consideration from investors looking to add some OUS pharmaceutical exposure.

Click here for more:
Astellas Changing Its Approach, But Investors Are Skeptical