AstraZeneca bosses to leave after boardroom 'coup'

 
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In a very unusual move, the chief executive of AstraZeneca, David Brennan, and the chairman, Louis Schweitzer, are both retiring earlier than expected.

Sources tell me they were encouraged to go by the other non-executives, against the background of concerns from shareholders that the performance of the huge drug company has been disappointing.

"The board took the view we needed change, because of the urgency of implementing a new strategy; any hiatus would not have been right or acceptable," said a source close to the company. "It was difficult and painful. Forcing through this kind of thing is not easy."

It is the departure of Mr Brennan, who has held the reins for more than six years, which is more significant. The finance director, Simon Lowth, will replace him on an interim basis.

Mr Schweitzer is standing down three months before he was due to go, so that a new chairman - Leif Johansson - can begin the search for a permanent chief executive.

First quarter profits, also announced today, have fallen 38% to £1.3bn - and the group warned that profits in the year as a whole will be worse than expected.

"People will doubtless connect their departures with the first-quarter figures," said a source. "That's wrong. The board has been concerned for some time that we needed a new chief executive. We haven't reacted to one poor set of results".

The priority, I am told, is to improve the productivity of research and development, possibly by doing deals with other drug companies.

Leif Johansson, former chief executive of Volvo, will succeed Mr Schweitzer on 1 June. That will also be Mr Brennan's departure date.

 
Robert Peston, economics editor Article written by Robert Peston Robert Peston Economics editor

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  • rate this
    0

    Comment number 1.

    Well will we find out what reward for failure or poor performance these two characters will receive and will we ever know if the company carried out any performance capability procedure leading up to 'departure'. I doubt if we will see them listed for a future ET or queuing for their much deserved JSA entitlement.

  • rate this
    +3

    Comment number 2.

    Better late than never. It is a shame that it is too late to save the British sites closed in an effort to prop up the share price. I hope there is a brighter future for AZ now.

  • rate this
    0

    Comment number 3.

    So much for needing to pay lots of money to attract talent then.

  • rate this
    +1

    Comment number 4.

    Robert, you suggest these early departures are due to poor performance. The company says they were not motivated by poor results. It's days like this one realizes there IS a 5th dimension and it's where those elusive truths regarding human affairs reside.

  • rate this
    -1

    Comment number 5.

    Now now, Robert. Don't get distracted from the Murdochs by something as mundane as a business story.

  • rate this
    +7

    Comment number 6.

    "The priority, I am told, is to improve the productivity of research and development, possibly by doing deals with other drug companies."

    It'll have to be. They can't do it themselves:

    http://www.bbc.co.uk/news/uk-england-leicestershire-15982950

    1200 highly skilled staff. Gone.

  • rate this
    -1

    Comment number 7.

    "The priority, I am told, is to improve the productivity of research and development"

    .A euphemism for cracking the whip and placing everyone involved with research on notice that the research deadlines will be shortened and tests on new products not carried out to the same exacting standards.
    Look out for future recalls of products having undesirable side effects and litigation in the courts

  • rate this
    0

    Comment number 8.

    "We haven't reacted to one poor set of results"

    There have been a number of poor results whilst the industry has been growing, that is why they had to go.

    AZ has just been collecting the rent on their existing patents which are starting to expire, spending large on promotion and advertising at the expense of sufficient spend on R&D.

    I imagine their parachutes are heavily gilded though.

  • rate this
    0

    Comment number 9.

    Profits down 38% we are having a spot of trouble world wide with finance
    and countries nearly broke am I right ? so whats the problem ? very quick to forget the good years of massive profits and a share price to look at in wonder!! You can't have it all - all of the time .
    Was it J F K who said 'One thing is certain nothing is certain' ?
    More news about it please Robert when you can.

  • rate this
    +4

    Comment number 10.

    This story has made me think about the laws of incentives. Currently it is sticks for the poor and carrots for the rich. Let's reverse this and pay a generous bonus to those on JSA who find themselves a job and keep it for six months but deduct payments from directors who do not meet performance targets but who will be strongly 'incentivised' to succeed.

  • rate this
    +4

    Comment number 11.

    This is part of a wider re-structuring within BigPharma as important patents for some big money spinning drugs are expiring. Cheaper generic drugs are becoming more available so profits dip. Big Pharma focuses on drugs which make profits - IE you dont actually get better you stay on the drug long term. There's little profit in meds that actually "cure" people so research & development reflect this

  • rate this
    0

    Comment number 12.

    8.BR

    "AZ has just been collecting the rent on their existing patents which are starting to expire"

    Too right. They have majorly failed to bring much to market for too long. This is clearly the result of over-regulation, with the pesky government insisting on tests and trials and assurances about health and safety.

    Oh right. The regulation protects people. Where's fTP?

  • rate this
    +2

    Comment number 13.

    You have to wonder about the future of science in the UK. When I left uni in the '90's there were about 15 large chemical companies that recruited graduates at BSc level - now there are only about 5 and you don't have a hope of getting a job with them unless you have a masters or PhD. Perhaps the government could do more to help by giving tax breaks to help keep the wolves from the door.

  • rate this
    +6

    Comment number 14.

    The priority is to improve R&D productivity?? You can't do that by sacking 1000's of scientists and shutting R&D sites down. Those who are left are looking over their shoulder and dealing with the ensuing re-orgs where middle managers spend all their time fighting for their empires. No-one is actually spending much effort on finding new medicines!!!

  • rate this
    +1

    Comment number 15.

    Part of the decline in profits must be due to the probablity that health providers all ove rhte world are not prepared to pay the inflated prices for drugs. £50000 for a drug that prolongs life for less than 6 months is always going to be problematic. In addition the chances of finding a drug which can be used by millions offering a significant improvement is increasingly remote.

  • rate this
    0

    Comment number 16.

    'Retiring Early' is mumbo jumbo for failing whilst keeping all of their benefits when they leave.

    Is failure being rewarded AGAIN?

  • rate this
    +1

    Comment number 17.

    15.Boilerbill

    " the chances of finding a drug which can be used by millions offering a significant improvement is increasingly remote."

    In terms of heart disease, cancer and other ich nation helth issues, of course. In terms an assortment of horrors in the poorer parts of the world, dead wrong.

    Of course, poor people don't pay as well...

  • rate this
    +3

    Comment number 18.

    Once more we see the results of the modern style of corporate management, where CEOs go for short term share boosting measures (like closing research sites in the UK) while sacrificing the long term (their research pipeline is bare).

    Knowledge intensive companies like AZ are the first feeling the long term side-effects of boost-my-bonus-options-management, but not the last.

  • rate this
    +4

    Comment number 19.

    If improving R&D productivity is the aim, why did they hire Mackay as head of R&D?? In his 10 years as head of Pfizer R&D he found nothing and destroyed $BB in shareholder value. He is the last person you would hire - but they did. Apparently he has 'experience at the top level of Pharma R&D'. Some ability to discover new drugs would have been nice but not on the AZ job spec! AZ is doomed...

  • rate this
    0

    Comment number 20.

    Is this another example of austerity measures not working?

    Perhaps there's a job opportunity here for James Murdoch having 'stood down' at GlaxoSmithKline recently, he could bring the vast experience he gained in his 3 year tenure there to the board.

 

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