The chief executive of AstraZeneca, David Brennan, shocked the markets by announcing his resignation yesterday in an apparent boardroom coup just hours before the pharmaceuticals giant's shareholder meeting kicked off.
Mr Brennan's departure appeared to be a victory for investors who had called for change at the top of the FTSE 100 drugs giant, which is suffering from dramatically falling revenues as key drugs face generic competition, as well as a weak pipeline of new drugs.
Yesterday the drug maker added a profits warning to its other woes. Its first-quarter pre-tax profit plunged 40 per cent to $2.05bn (£1.26bn) – well below City expectations – but it admitted the full-year profit would also be worse.
One investor at the AGM at a London hotel shouted "shame on you" to Astra's board for "sniping" at Mr Brennan in newspaper stories, complaining about his lack of leadership as revenues began drying up. Another said the drug maker's performance targets should be "more demanding" as "too much money" was thrown at executives.
Mr Brennan, an American who started his career selling blood-pressure pills to doctors in Jersey City, pocketed a £9.1m salary last year.
Britain's second-biggest drug maker said Mr Brennan had told the board of his departure only yesterday. Instead of serving out his 12-month notice, he will retire on 1 June and be replaced, temporarily, by the finance director, Simon Lowth.
In addition, Leif Johansson, the former Volvo boss who is to succeed Louis Schweitzer as chairman, will take over three months earlier than planned, also on 1 June.
Although Mr Johansson only joined the board this week, some people close to Astra said he was closely involved in the decision that Mr Brennan should go sooner rather than later. "Having someone in a lame-duck position wasn't consider helpful," a source close to the board told Reuters.
Astra said Mr Brennan's departure terms had not yet been decided but he could pocket £1m – a year's basic salary – as part of a pay-off package.
Mr Brennan said yesterday: "I have decided that now is the right time to step down and allow a new leader to take the reins."
The 58-year-old replaced Sir Tom McKillop in AstraZeneca's top job in 2006. The company was already well aware of the creeping patent expiries that would wipe billions off its annual revenues. Mr Brennan reacted by slashing jobs – it is set to get rid of 12 per cent of its 60,000 workforce by 2014 – and going on a shopping spree.
But the M&A strategy, including the troublesome $15.6bn deal to buy MedImmune in 2007, failed as the acquired firms' new drugs faltered at trials. In recent months three drugs earmarked for their potential have all failed and then been dumped after drugs trials.
Meanwhile, the patent problems remain. Seroquel, Astra's antipsychotic drug that accounted for sales of $5.3bn last year, came out of patent in the key US market last month. The cholesterol-buster Crestor, AstraZeneca's best-selling drug, faces generic rivals from 2016.
Shares in AstraZeneca fell more than 6 per cent or 174.5p to 2,666.5p.