Sir Tom Mckillop, Astrazeneca Chief Executive: Man of science with a passionate belief in innovation

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Fear is holding us back, says Sir Tom McKillop. Fear is a block on progress. Fear is a profoundly conservative force.

"I believe we are going in the wrong direction and in that sense I feel more frustrated," the chief executive of AstraZeneca, the UK's second-largest pharmaceuticals company, says.

He is reflecting on a gruelling few weeks for his company and for the drug industry as a whole. AstraZeneca has had its most exciting new drug blocked on safety fears, while its US rival Merck has had to carry out the biggest drug withdrawal in history after its painkiller, Vioxx, was linked to increased risk of heart attacks. Investors have taken fright and drug company shares have plunged.

"There is almost nobody speaking up for the real benefit that comes from innovation and the way that can advance society, create social wellbeing and health," Sir Tom says.

It is a state of affairs that stings. This son of an Ayrshire coalminer was always on course for a career in science, choosing the private sector over academia in 1968. He still maintains his boyish enthusiasm for gadgets and can swell with pride discussing AstraZeneca's portfolio of medicines. His oft-stated desire is for everyone to "die healthy".

So now he finds himself railing against "a highly litigious society with a blame culture and very defensive regulators".

When the blood-thinner Exanta was deemed too dangerous to be launched in the US, it was the regulator who got it wrong, not AstraZeneca's scientists, he says. The pharmaceuticals industry's reputation has collapsed, but that is because the public are being misinformed. And, above all, a growing bias against science and innovation - he argues with passion - is driven by fear, is irrational and is dangerous.

Take the scare over the safety of MMR, which is made by AstraZeneca's compatriot GlaxoSmithKline and which has led to a fall in vaccination levels. Sir Tom has a very personal reason for his animation on this subject. "The doubt over MMR had been seeded by some frankly very bad science, which was refuted at the time but played up. Not at all rational, and really dangerous for your children's interests. My wife had rubella and my eldest daughter was born profoundly deaf, so I know what rubella can do. There were whole epidemics of rubella before vaccination was well adopted. I hope that doesn't happen to this generation of kids."

Sir Tom's wife, Liz, was pregnant with their daughter when he ditched plans for a life of research and teaching at the University of Glasgow in 1968 after a chance meeting in a pub with a former student who suggested he should join him at ICI. Sir Tom rose through the ranks to head up drug research and kept rising as the pharmaceuticals business was spun off as Zeneca and then merged with Sweden's Astra in 1999 - when he took over as chief executive. He is one of the few FTSE 100 bosses never to have worked at any other company.

He will go quietly when the board tells him to but you don't get the sense he is ready to retire to his workshop, where he loves "fashioning things from oak", yet. At 61, he is not winding down, either. If anything, he is limbering up for a fight.

When a panel of doctors ruled last month that Exanta was perhaps not effective enough and certainly too dangerous to allow on the US market, it was a brutal setback for AstraZeneca after 15 years of work on the revolutionary drug. The company won't say how much it has spent on the project, but the average drug costs more than $1bn (£560m) before reaching the market, according to some estimates. The doctors were concerned there would be too many patients suffering liver problems as a result of taking Exanta. The drug has been approved in some European countries, though, and Sir Tom hopes that, one day, data from real life use will persuade the US to change its mind.

In an industry that has a paranoid aversion to criticising the all-powerful regulatory agencies such as the Food and Drug Administration (FDA) in the US, Sir Tom's defiant insistence that the regulator got it wrong has been described by his rivals as reckless.

And there was astonishment at AstraZeneca's thesis, aired at its business review day for the City this week, that "clinical medicine" - what doctors want and patients need - and "regulatory medicine" - what the authorities will permit - have diverged.

Sir Tom is using very polite language for what amounts to a stinging attack on the FDA. He prefers to describe it as "calling for a public debate".

He says: "I worry about the whole regulatory mindset. If we put consumer protection constantly as the only thing the regulator needs to worry about, I think that will be a huge block to progress and to innovation. Of course I am very pro-consumer protection, but if that is all they think about and they don't think about the fact that they may be denying thousands quality of life, then that is terribly worrying."

And he adds: "If aspirin were to come to market today it would not get approved. Aspirin probably causes more deaths through bleedings than Vioxx causes."

Sir Tom has just delivered the starkest warning yet that the industry must change its business practices if it is to keep profits at their current levels. Its reputation has been tarnished, he says, after a string of health scares, marketing scandals and the attempt to assert patent rights against a developing world in dire need of cheap drugs. Because of this reputation, the industry will no longer be able to fight off the pressure for lower drug prices, particularly in the world's most lucrative pharmaceutical market, the US. Caught between the rising costs of getting a drug on the market - including the need to conduct ever larger and more expensive safety trials - and lower prices, the industry is facing a "classic margin squeeze", Sir Tom says.

In many ways, the energetic Scot makes an unlikely angel of doom. And he does insist the challenges can be overcome. "I don't believe for a moment the industry has got a threat of death over it. Companies who manage their affairs well will go on doing very well."

AstraZeneca has already launched a "root and branch" review of the way it does business, with a forensic search for cost cuts, particularly in the vast salesforces that companies must employ to ensure their drugs get prescribed instead of those of their rivals.

For many companies it will be a punishing transition. The share price reaction to Sir Tom's statement of vision suggests that the market is expecting a punishing transition for AstraZeneca, too. But those with the highest quality of innovation will win out, Sir Tom says, which is why it is important to foster a culture that supports scientific discovery. The question is whether his pleading can bring about a regulatory framework that is less risk averse - and whether AstraZeneca's science is strong enough to get drugs approved if he cannot.

Per Ardua Ad Astra

Age: 61

Pay: £1.79m in 2003 from AstraZeneca, including £885,000 basic salary. Earns £49,000 as non-executive director of Lloyds TSB.

Education: First class degree and chemistry doctorate at the University of Glasgow, followed by a year at the Centre de Mécanique Ondulatoire Appliquée in Paris during the student uprising of 1968, where he was "throwing ideas, not paving stones".

Career: Joined the ICI corporate laboratory in 1969, became head of natural products research in 1975 and then rose through a variety of management positions in the UK and France. After the demerger of Zeneca, became head of the pharmaceuticals division in 1994 and, after the merger with Astra in 1999, chief executive.

Personal: Married Liz in 1966 and has two daughters and a son. Hobbies include walking in France, golf, reading voraciously and carpentry.

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