LONDON—AstraZeneca PLC Chief Executive David Brennan said Thursday he will step down from the beleaguered U.K. drug maker in June amid rising investor disquiet over the company's continued poor performance, underscored by a further drop in quarterly earnings.
Brennan's abrupt move came ahead of the company's annual shareholders meeting Thursday when management was set to be grilled about the company's near-term fortunes and coincided with results which showed a 44% drop in net profit in the first quarter and an 11% fall in revenue.
First-quarter net profit slid to $1.64 billion from $2.91 billion, missing analysts' expectations of $2 billion. Revenue fell to $7.35 billion from $8.29 billion a year earlier, below the $7.98 billion expected by analysts.
That situation contrasts markedly from 10 years ago when the U.K.'s second-biggest drug maker was the top-ranked stock in European pharmaceuticals. Poor R&D results have left the company's pipeline of future medicines running low, though Brennan insisted that we wasn't being pushed.
"I just thought it was about time to pass the reins on to a new leader," he said. "It was entirely my decision."
The 58-year old American, who has been CEO since January 2006, will be replaced on an interim basis by Chief Financial Officer Simon Lowth while a permanent successor from inside or outside the company is found.
The absence of a designated successor continues to cloud the company's prospects at a critical time. AstraZeneca faces crucial patent expiries between now and 2015 on products such as anti psychotic Seroquel and ulcer medicine Nexium, and the loss of patent protection in the U.S. in 2016 for its best-selling drug, heart drug Crestor.
Coupled with a thinner late-stage pipeline and a mixed longer-term research and development track record, the U.K.'s second-largest drug maker by sales has taken an aggressive approach to costs, shrinking operations and cutting thousands of jobs, while keeping cash flowing to shareholders.
"Investors have long been dissatisfied with AstraZeneca's efforts to cope with these challenges, despite its efforts to keep them onside," said Ana Nicholls, an analyst at Economist Intelligence Unit.
"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," Brennan said. "Delivery on our restructuring plans and continued discipline on operating costs, together with the benefits from a lower tax rate, will only partially mitigate the revenue pressures."
In February, AstraZeneca said it was cutting around 7,300 jobs as a third phase of the company's cost-savings program. The first phase in 2007 was aimed at improving long-term competitiveness and productivity while the second phase, announced in January 2010, envisioned the loss of more than 10,000 jobs by 2014.
This story first appeared on WSJ.com
Write to Sten Stovall at sten.stovall@dowjones.com
