ASTRAZENECA moved to bolster its early-stage drug development programme yesterday, amid persistent criticisms that the Anglo-Swedish giant is struggling to find potential new medicines to fuel growth in the coming years.

Shares in the group edged 22p higher to £23.50 as the company signalled that it was ready to spend some of its $4 billion (£2.3 billion) cash pile to plug holes in its research effort.

The group, which is expected to report a strong set of first-half profits today, said that it had signed collaborative agreements with Schering, a German rival, to develop a new class of anti-inflammatory medicines and with Astex, a British biotechnology company, to develop a range of cancer drugs.

Paul Diggle, an analyst at Code Securities, said that both deals made sense, given a dearth of promising new treatments coming out of the company’s own research laboratories. “Clearly, AstraZeneca is going out of its way to ensure that next time it won’t get caught out with a development pipeline that is reliant on just a handful of potential blockbusters,” he said.

AZ said that it had signed a three-year deal with Schering to work on a new class of anti-inflammatory medicines. The financial terms were not disclosed, although Schering will receive an up-front payment as well as royalties on sales of any treatments that eventually make it to pharmacy shelves. AZ will develop the drug for use in patients suffering respiratory and rheumatoid diseases, by far the two biggest markets in terms of potential sales, while Schering will continue to develop the science for use in more niche areas.

AZ said that it had also entered into an alliance with Astex to develop a new range of proteins that appear to stop cancer cells from growing. AstraZeneca will initially pay £2.75 million to help to fund research as well as additional milestone payments of up to £150 million, pegged to regulatory and sales targets.

Astex, a private biotech backed by Abingworth, the specialist venture capital firm, will also receive double-digit royalties on any drugs that eventually reach the market.

Analysts will today ask AZ for news of improvements in its research and development effort. In December John Patterson was appointed to the board to overhaul strategy following a string of disappointments. He will be expected to update investors on measures to ensure that medicines in late-stage trials make it on to the market.

Last year AZ’s shares collapsed after the US Food and Drug Administration failed to give the green light to Exanta, a blood-thinning medicine. Weeks later key trials of Iressa, a treatment for lung cancer, failed to demonstrate any improvement in survival rates among patients.

ASTEX PLANS

• Astex expects to sign a collaboration deal over its three-dimensional X-ray technology with a big drug maker by September and to sign by the end of the year a bigger marketing deal for one of its development programmes
  
• Phase 1 trials for a new cancer drug start next month; tests on a growth-limiting protein to fight tumours willl start in the fourth quarter
  
• The company, which has raised £51 million through private financing, expects to float next year

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