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David Brennan steps down as CEO of AstraZeneca while Q1 profits fall

Company chair Louis Schweitzer also brings forward departure

David Brennan - AstraZeneca CEO

AstraZeneca's CEO David Brennan has announced his decision to retire the same day the pharma company reported a drop in first quarter net profit of 26 per cent.

Brennan will leave on June 1, 2012, following more than six years in charge of the Anglo-Swedish firm, with AZ's chair, Louis Schweitzer, also stepping down on the same date – three months earlier than had previously been announced.

AZ's current chief financial officer Simon Lowth will act as interim CEO, with AZ launching a search to find a permanent successor. This will be led by Schweitzer's replacement as chair, Leif Johansson, formerly of Volvo.

The departing CEO has been under fire from shareholders for failing to address AZ's decline in market performance, fuelled mainly by patent expiries of key drugs such as Seroquel and a series of stalled drug development efforts for ovarian cancer, depression and respiratory syncytial virus.

The company also announced 7,300 job losses in February, 2012, as part of planned cost-cutting measures.

However, in a statement, Brennan said the decision was his own: “After more than six years as chief executive officer of this great company I have decided that now is the right time to step down and allow a new leader to take the reins.”

Profits and sales down for first quarter of 2012
The new CEO will have a challenge on their hands, with AZ recording a year-on-year drop in sales of 11 per cent to $7.35bn for the first three months of 2012 as generic competition had its effect on products facing patent expiries.

Sales of Nexium (esomeprazole) were down 18 per cent, falling to $953m, while Seroquel (quetiapine) revenues fell 25 per cent to $754m.

This decline helped company core net profit for the period drop 26 per cent to $2.32bn.

This figure excludes certain items, however, such as charges related to the company's job cuts, as well as amortisation and impairment charges related to the company's acquisition of MedImmune.

Including these figures, AZ's reported net income for the first three months of 2012 was $1.64bn.

Confidence in the company's performance for the rest of the year wasn't high either, with AZ expecting further losses for Seroquel in addition to further costs related to the disposal of Astra Tech and the ongoing disposal of the Aptium.

As a result, AZ said it was lowering its core earnings per share target to between $5.85 to $6.15, while the decline of its revenues for the full year will be in the low to mid-teens in constant currencies.

26th April 2012

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