Investors ramp up pressure on AZ chief
pharmafile | April 10, 2012 | News story | Sales and Marketing | AstraZeneca, David Brennan
AstraZeneca’s chief executive David Brennan is coming under increasing pressure from investors, and his future at the firm could be under threat.
A report in the Financial Times said big investors in the company wanted “a radical shake-up of the board and executive team,” in a bid to find a new business strategy.
The newspaper says some of AstraZeneca’s top 20 investors “have become unusually and increasingly vocal in recent weeks”.
The article quotes one of these saying Brennan, who earned £9.3 million last year, is under ‘intense pressure’.
Some interested parties have been lobbying to replace him with finance director Simon Lowth, the report adds.
AstraZeneca declined to comment on suggestions that powerful shareholders are lobbying to replace its chief executive, and told Pharmafocus that: “we don’t comment on that sort of speculation”.
Whatever perceived mistakes investors may fault the company for, cost-cutting is unlikely to be one of them: in February it announced it was to get rid of 7,300 sales and R&D jobs by 2014.
The Anglo-Swedish firm runs a relatively lean operation, axeing 12,600 jobs between 2007 and 2009 and, in an earlier redundancy exercise begun in 2010, planning to cut yet another 9,000 staff by 2014.
Despite this close eye on the wage bill, the company is facing external challenges which some observers say it will find increasingly difficult.
Last year its revenue dropped by 2% to $33.6 billion – in part because of $2 billion from generic competition and $1 billion from government price cuts across developed markets.
But 2012 does not look particularly rosy either. The company is fighting legal battles on several fronts to extend the patent for its second-biggest selling drug, the antipsychotic Seroquel, which has lost exclusivity in the US and has started to lose it across Europe.
The company’s pipeline is also a worry, after it scrapped an ovarian cancer drug in December, and saw poor results for an investigational antidepressant.
To help redress this it has just signed a deal with Amgen, buying its way into the US firm’s inflammation portfolio with a $50 million upfront payment to co-develop and commercialise five monoclonal antibodies.
Even so, AstraZeneca expects recently launched products and the pipeline to contribute just $2 – 4 billion to sales by 2014, down from $3 – 5 billion estimated a year ago.
To cap it all, it forecasts that core earnings for this year will be between $6.00 and $6.30 a share – down from $7.28 in 2011.
AstraZeneca is not the only company trying to negotiate the problems caused by a patent cliff and a thin pipeline, but the Financial Times points out that the company trades on the lowest price/earnings multiple in the pharma sector.
Adam Hill
Related Content
NICE recommends Benralizumab for Rare Form of Vasculitis
The National Institute for Health and Care Excellence (NICE) has recommended AstraZeneca’s benralizumab (Fasenra) as …
NICE approves AstraZeneca’s dual immunotherapy for advanced liver cancer
AstraZeneca has received a positive recommendation from the National Institute for Health and Care Excellence …
Purpose and people: the enduring power of brand and the evolution of employer identity
Two decades ago, terms like purpose and people were rarely at the forefront of branding …
