Heads roll, as the drugs company board listens to investor complaints.
Investor discontent at Britain's second largest pharmaceuticals giant, AstraZeneca (LSE: AZN), has been growing for some time. The firm's drug development pipeline, which is increasingly crucial for future profits as patents expire on current drugs and competition from generics hots up, has been slowing to a trickle.
While rivals, like GlaxoSmithKline (LSE: GSK), have been expanding their horizons in the direction of novel biotechnology, AstraZeneca has pretty much stuck to the old-fashioned search for blockbuster prescription drugs. And that business model is starting to look a bit tired these days.
Since chief executive David Brennan took over the helm six years ago, the only real attempt to rectify the growing problem has been the acquisition of biotech researcher MedImmune, now widely considered an expensive flop.
And it has all come to a head today, on first-quarter results and AGM day.
Time to go
Facing a strong challenge to his board re-election, and just a year before his 60th birthday, Mr Brennan has announced his retirement. He'll stand down on 1 June, with chief financial officer Simon Lowth stepping in as interim chief while the search for a long-term replacement, from within the company or from outside, goes ahead.
Chairman Louis Schweitzer is to step down as well, to be replaced by Leif Johansson who will head the CEO search.
But what about those Q1 figures? Well, they're not good. Pre-tax profit has fallen by 38% to $2.1bn (£1.3bn), with earnings per share (eps) sliding from $2.08 to $1.28.
And it's largely down to that long-expected, and inadequately planned-for, patent expiry, with the outgoing CEO telling us: "The anticipated impact from the loss of exclusivity on several brands [...] has made for a difficult start to the year in revenue terms."
The anti-depression drug Seroquel is the main culprit, after its patent expired last month. But we'll see protection for heartburn treatment Nexium ending in 2014, and for the big one, the anti-cholesterol statin Crestor, in 2016. That's going to hurt.
This Q1 shortfall is no short-term blip, and we have also been given what is effectively a profit warning for the full year, with eps guidance having been revised downwards from the earlier figure of $6.15 to $5.85 -- a fall of 5%.
The shares have lost 5.5% as I write, and are currently changing hands for £26.80 apiece.
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