26 December 2004Jason Nisse
Sir Tom McKillop, chief executive of AstraZeneca, could be forced to quit before the end of next month, investors have warned.
The boss of the embattled drugs group held a series of meetings and conference calls with investors last week, following the publication of a patient study indicating that its lung cancer treatment, Iressa, had no significant life-prolonging effects. This came after two other pieces of bad news in recent weeks, with the anti-stroke drug Exanta being blocked by US regulators and a senior US official questioning the safety of the anti-cholesterol treatment Crestor.
These setbacks prompted a 30 per cent fall in the group's share price, which closed at 1,870p on Friday.
To try to soften the bad publicity, AstraZeneca promoted the respected drug developer John Patterson to its board. Its chairman, Percy Barnevik, retires on Friday to be replaced by Renault boss Louis Schweitzer.
However, these appointments may not be enough, and investors who spoke to The Independent on Sunday last week warned that they could be pressing for further senior changes at AstraZeneca.
"We were very concerned, and Sir Tom did not provide much reassurance," said one of the group's large institutional shareholders.
"He'll survive the latest disappointment," said another big investor. "The changes may buy him a bit of time, but one more slip and that'll be it."
"We don't want any more hiccups," said a third substantial shareholder.
In a media conference call shortly after the Iressa news, Sir Tom said: "My interest is really serving the company, doing the best for its shareholders and for patients. If that was better served by someone else being chief executive of AstraZeneca, that would happen in a moment.
"It's just, you know that question has not been raised and I will continue to serve the company for as long as it wants me to serve in that role. But I will never be in the way if it is better for the company to move forward with someone else."
Sir Tom's future will be determined by AstraZeneca's full-year results announcement on 27 January, when investors will want to see if he can avoid any more problems.
Shareholders will initially want to know how much the group is going to have to write off because of the Iressa and Exanta setbacks. Sir Tom has said the figure will not be material, but investors will be concerned if it seems to be larger than they have been led to believe.
They will also keep a close watch on what is happening with Crestor. The fear is that it may be withdrawn from sale in the States. The US Food and Drug Administration has already warned AstraZeneca over adverts it took out repudiating the view expressed by a senior FDA official, David Graham, that the drug might not be safe. In Japan the drug's introduction into the market is likely to be delayed. This is because regulators want AstraZeneca to draw up a study plan to show the effects of the treatment, once it has gone on sale, which may take some months to design.
Worldwide, prescriptions of the drug have fallen and investors will be seeking more information on how badly Crestor has been harmed by negative publicity.
Finally, investors will want convincing that no more of AstraZeneca's most promising drugs will fail to get to market. Being scrutinised under the microscope will be the diabetes drug Galida and stroke treatment Cerovive, which are both in phase-III testing on humans.
http://news.independent.co.uk/low_res/story.jsp?story=596043&host=3&dir=94
