AstraZeneca’s new boss faced a double-headache today as pre-tax profit tumbled by more than a third to $1.3 billion (£840 million) in the first quarter and a pay revolt loomed at his first AGM.
Pascal Soriot, who joined from Roche last October, had little good news for investors who met at the Lancaster Gate hotel today, just hours after AstraZeneca admitted that sales were down 13% to $6.4 billion in the first three months of this year. Pre-tax profit slumped 36%. The figures were worse than the City’s low expectations and because certain medicines — including antipsychotic drug Seroquel — had fallen out of patent, facing generic competition without any new big-sellers replacing them. Soriot last month outlined a new strategy which includes axing nearly 4000 jobs — including hundreds in the UK — and streamlining research and development to focus on a few areas, such as cancer.
But the AGM was his first time facing investors and it was set to be uncomfortable, as a significant group of investors have been advised to reject his pay plans.
Soriot is due to receive £6.5 million for just three months’ work, including a £991,000 “golden hello” to compensate him for his forfeited bonus from his previous employer, and £2 million in restricted shares and in ordinary shares, subject to performance.
Former boss David Brennan, who quit after pressure from angry shareholders, was also awarded £4.9 million for six months’ work. But the Local Authority Pension Fund Forum, the biggest group of public-sector pension funds which runs £115 billion of assets, has recommended its members oppose Astra’s remuneration report.
Investors are concerned at the big payout at a time when drugs that account for more than 40% of sales at Britain’s second-biggest drugmaker expire by the end of next year.
First-quarter sales of Brilinta — a heart drug which AstraZeneca had hoped to become a blockbuster — rose only modestly in the quarter, bringing in $51 million rather than $38 million in the last quarter of 2012.
Soriot told investors: “We remain focused on our strategic priorities of returning to growth and achieving scientific leadership.” But he admitted this year sales are expected to fall by a “mid- to high-single-digit percentage”.