AstraZeneca bosses to leave after boardroom 'coup'

 
astrazeneca sign

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 Article written by Robert Peston Robert Peston Economics editor

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  • rate this
    0

    Comment number 30.

    Difficult eh?

    Not sure I'd agree with "Some diseases have barely been looked at - R&D isn't necessarily onorous for those." - feel free to expand

    Remember that brightest talents often get poached into developing new perfumes / skin creams, or even totally out of science, rather than nurtured. One thing you could say about the USSR was that their best rocket scientists were doing just that!

  • rate this
    +1

    Comment number 29.

    28.me

    There are other (market) benefits to (2). Universities have been closing "unproductive" science departments for a few years and this will certainly lead to lost skills over time. If AZ and other companies can ever get back up and running, they'll need skilled scientists.

    Many that talk of British growth also talk of a shift to high-skill industries like Pharmaceuticals. Think about it.

  • rate this
    0

    Comment number 28.

    27.bs44

    1) Reinvent! The current system is anachronistic. Drug companies have relied heavily on low-volume, high-value drugs for the rich West. Time to switch to mass market (with patent assurances)? Some diseases have barely been looked at - R&D isn't necessarily onorous for those.

    2) Government sponsored drug research! Some may not like "nationalising" but the market is collapsing.

  • rate this
    0

    Comment number 27.

    17 CO
    You'll understand the drug industry structure - to encourage costly (and often fruitless R&D) enabling new drugs to be brought to market. Patents allow the return on costly R&D. Generics and off-patent drugs are great news for the 3rd world, but do not fund R&D. Alternatives??

    "sources tell me they were encouraged to go"...Nice payoff?

    PS - Brief appearance by the great one yesterday

  • rate this
    0

    Comment number 26.

    25.Science_PhD

    That makes sense if they were expecting share prices to drop. Their current situation supports that, but them being replaced might be more likely to cause share price increases.

  • rate this
    0

    Comment number 25.

    Brennan and Lowth must have known this was coming as they dumped a lot of stock in March (Lowth £800K in a few days!!). What are they going to spend it on??? Problems, problems, problems....

  • rate this
    -4

    Comment number 24.

    I find it difficult to have any sympathy with any company that tests on animals at the level AstraZeneca do.

    Contrary to the rest of these comments, I hope they crash and burn and this is the beginning of the end.

  • rate this
    -1

    Comment number 23.

    This is a superb company, in that respect just like Tesco.

    I am sure that the retirees deserve every hard earned penny of their retirement benefits so willingly provided by the excellent shareholders.

    Well done Robert for commenting on a good business matter. Look forward to your next brilliant post on the important matters of the day.

  • rate this
    +3

    Comment number 22.

    Perhaps now AZ wish they still had a nice cash generating Ag Chem business instead they gave it away just because the Astra shareholders didn't like the smell. Perhaps they would like to debate now the ethics of overpriced cancer drugs for the rich v feeding the world

  • rate this
    +2

    Comment number 21.

    Run by accountants for accountants - like many other UK businesses it has lost sight of what it is there for - how many scientists on the Board?

  • 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.

  • 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
    +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
    +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
    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 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
    +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
    +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
    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
    +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

 

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