AstraZeneca is the subject of a damning analyst report which claims that the Anglo-Swedish drugmaker is in a very sorry state of affairs indeed and is doomed to be the worst performing stock in the sector for some years.

Dresdner Kleinwort, which has initiated coverage of AstraZeneca with a ‘reduce’ rating and a target price of £20, has issued a report saying that despite the acquisition of “a very innovative biotechnology company” (MedImmune), the pipeline offers little support to the top line over the next eight years. The analysts add that up to 2015, sales will only increase 1% at best and in a worst-case scenario will fall 3%.

DK adds that eight products, including the antiulcerant Nexium (esomeprazole), the schizophrenia treatment Seroquel (quetiapine) and the cholesterol drug Crestor (rosuvastatin calcium) will become exposed to patent expiry up to 2015, representing 60% of current sales, and there is very little coming up behind. In particular, the analysts fear that the diabetesdipeptidyl peptidase-4 inhibitor saxagliptin, being developed with Bristol-Myers Squibb, may not be approved for diabetes. The reason for their negativity is that saxagliptin, which could be launched in 2009, is similar to Novartis’ DPP-4 inhibitor Galvus (vildagliptin) which is having difficulty impressing US regulators because of fears over liver risks.

The analysts conclude by saying that any M&A activity “would require any potential acquirer to consider the huge generic risks to the pipeline”. Consequently, the company still looks expensive above £20 “and we do not see it as a take-out target, even at these levels”, they add, noting that “whereas other pharmaceutical players will experience generic losses, none will be as deep or for as prolonged as they are for AstraZeneca”.