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Pharma giant AstraZeneca’s (LON:AZN) chief executive David Brennan is to step down from the company as first quarter profits plummeted.
Underlying profits slipped 19 per cent in the first quarter to US$2.9 billion, while revenue was down 11 per cent at US$7.3 billion, 8 per cent of which was due to the loss of exclusivity on key brands.
Reported pre-tax profit was even worse at just over US$2 billion, a 38 per cent drop on the previous year.
In March, the UK’s second biggest pharmaceuticals company was forced to stall the release of its anti-depressant Seroquel and also faces losing patents on heartburn pill Nexium in 2014 and heart drug Crestor in 2016.
Brennan said: “The anticipated impact from the loss of exclusivity on several brands, together with challenging market conditions, has made for a difficult start to the year in revenue terms.”
He will quit the role on 1 June after six years in charge, while chief financial officer Simon Lowth will take over until a permanent successor is found.
The company also announced Leif Johansson will succeed Louis Schweitzer as non-executive chairman on the same day, three months earlier than expected.
In an attempt to bring in more drugs from other companies, AstraZeneca has focused on collaboration and acquisitions to boost its pipeline and offset the impact of patent expiries.
But some investors have been putting pressure on Brennan lately, criticising him for not acting sooner.
Broker Seymour Pierce has a ‘reduce’ rating on the stock as is sceptical about the company’s strategy of mergers and acquisitions (M&A) going forward.
“The much-anticipated activity in M&A will have limited impact, in our opinion, in terms of significantly bolstering the near-term pipeline for the business,” it said.
City analysts said the retirement is likely to raise questions for investors about AstraZeneca’s strategy going forward and whether a change at this point poses a risk to the dividend.
The share price took a nosedive today, falling more than 6 per cent to 2,663 pence.