AstraZeneca CEO talks dual supply chain strategy

AstraZeneca (AZN) reported a second-quarter earnings beat, raising its full-year guidance. However, with the upcoming US election potentially impacting operations in regions like China, AstraZeneca CEO Pascal Soriot joins Yahoo Finance reporter Anjalee Khemlani on Catalysts to discuss the company's strategy for navigating these challenges.

Soriot outlines AstraZeneca's approach to global expansion, particularly regarding supply chains. He explains that the company is developing two distinct supply chains: one serving Western countries and another "targeted at supplying China and some emerging markets." Importantly, he emphasizes that these two supply chains — the US vs China — will operate "relatively independent from each other."

Addressing concerns about the US election's potential impact on operations in China, Soriot notes the company's strategic separation of research and development from manufacturing. This approach allows the company to "source innovation from one part of the world or the other." He acknowledges the diverse policies and rules across different regions, stating that the company adapts its operations accordingly.

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Angel Smith

Video transcript

Really good to see you again.

I know that in part of the cancer and ongoing oncology growth, you're looking at those antibody drug conjugates, and that's part of the story of looking towards the future.

But at the same time, you're also focusing on manufacturing, which we've seen as an area broadly across the sector that has been running into some issues.

You've been looking at expanding as well in China.

I know that's one of the growth areas for you.

Can you talk to me about how you're doing that and what your thoughts are, despite some of the pressure you're seeing from the US government and you know the concerns that they have with that economy and with that country?

Yes, it's a great question and J, but I think there are two questions in your question.

One is the new technologies and you're absolutely right.

We are investing in new technologies antibody drug conjugates, new types of bis specific antibodies, radio conjugates.

We are investing in cell therapy and our vision for cancer is really to attack, if you will.

The tumour in the case of a metastatic cancer to attack the tumour with the combination of antibody drug conjugates and new by specific antibodies, break down the tumour, shrink it, bring it to a lower level of intensity and then bring in cell therapy.

And with this, we believe there is a possibility to bring cure to some cancer, some patients very exciting, and it's going to take another few years to deliver, but very exciting.

As a result, we are investing in manufacturing, manufacturing these antibody drug conjugates, which is a combination of an antibody and a toxin.

We are also investing in the manufacturing of radio congregates and the manufacturing of cell therapy.

We are we have invested in the building of a cell therapy manufacturing plant in Maryland.

So all of this is driving a lot of investment.

Of course, as it relates to your second question, China and the US Essentially, what we are doing is making sure that we have two supply chains, if you will, one taking care of the waste if you want to define these Western countries, and one that is more specifically targeted at supplying China and some emerging markets.

So you know, we are really trying to have two supply chains that are relatively independent from each other and you bring up China.

I want to follow on that.

Obviously, we are in the middle of a presidential election cycle here in the US.

How are you thinking about the potential impact of either candidate taking office?

Both have so far, and at least pulling from a previous remarks from the Biden campaign.

At least both have talked about increased tariffs that could impact US China tensions and potentially escalate the trade war.

Moving forward.

To what extent do you think that could be a head when for AstraZeneca, First of all, thank you for the question, but I am not a political commentator.

So the only thing I can say is we operate in almost every country in the world.

And as you can imagine, every country has a different political system and political environment, and essentially we adapt to every environment we are in, and our focus is really delivering medicine.

Two patients in terms of this China US question.

Again, we are focusing on making sure we have two separate supply chains and we separate the research and development part from the manufacturing part so that we can source innovation from one part of the world or the other.

But when we have sourced this innovation, whether it's our own innovation or in licenced innovation, we then develop it globally and we isolate insulate if you want the supply chain so we can supply various countries separately.

You know, the US is the number one source of innovation in the world.

In our industry, China is a second one growing rapidly, and I think we need to source innovation, continue sourcing innovation from China because it will benefit the entire world.

And then, of course, make sure we can supply separately.

And we also have 1.4 billion people in China who are getting richer and and older and have diseases, of course.

And then they need our medicines.

They can afford our medicines.

We need to take care of them.

So we really try to stay true to our mission and manage the job balances if you want.

Through the mechanisms I have described