'Culture change' required at AstraZeneca after key drug fails

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Astrazeneca Admitted yesterday to an over-optimistic culture within its drug development division as it revealed its recently launched lung cancer pill did not improve patients' life expectancy.

Astrazeneca Admitted yesterday to an over-optimistic culture within its drug development division as it revealed its recently launched lung cancer pill did not improve patients' life expectancy.

Sir Tom McKillop, the chief executive, promised a product-by-product review of the company's pipeline of new drugs in an effort to allay fears the pharmaceuticals giant may be wasting money on other products that will either not reach the market or fail to generate significant sales.

Trials of the lung cancer pill Iressa, which is already on the market in the US and the Far East, showed that users lived no longer than patients taking a placebo, sending the company's shares down 8per cent to their lowest since March 2003. It is the second disaster to hit a major drug within three months, following a decision by the US regulator that AstraZeneca's new blood-thinner, Exanta, is too dangerous to allow on to the market.

Asked to pinpoint the blame for the misjudgments, Sir Tom said: "It is the culture of the company. AstraZeneca has a very long and very successful scientific tradition, and it has placed an enormous emphasis on creativity and innovation. To have that, you have to allow people the space to breathe and to try things, but you can take on too much risk."

The company hopes that Iressa can stay on the market in some countries, since the latest study did show significant survival benefits among patients of Oriental origin. Japan accounted for about one-third of the drug's $309m (£159m) sales in the first nine months of this year.

However, in the US, which accounts for half of Iressa sales, AstraZeneca has already begun advising patients to switch to a rival product, Tarceva, made by Roche of Switzerland.

Both Iressa and Exanta were expected to be "blockbuster" drugs, with annual sales in excess of $1bn (£515m). The original estimates for peak annual sales of Iressa were once even higher, but a 2002 trial showed it failed to help newly diagnosed lung cancer sufferers who also started chemotherapy. Regulators later allowed the drug on the market for use by patients who had failed to respond to other therapies.

Exanta was blocked by the US regulator, the Food and Drug Administration, in September after officials criticised the way AstraZeneca had designed its clinical trials, prompting Sir Tom to complain that regulators around the world are taking too cautious an approach to new licensing.

The latest setback will increase the pressure on Sir Tom, who has a reputation among shareholders for making over-optimistic predictions for products. Last year, the board asked him to stay beyond his scheduled retirement date of March 2005, but shareholders expect a new chairman, Louis Schweitzer, to accelerate the search for a successor. M. Schweitzer, chairman of the car maker Renault, will replace Percy Barnevik as chairman on 1 January, it was announced yesterday.

Jon Symonds, the finance director, is keen to step up to the top job, but the post - one of the top 10 in the global pharmaceuticals industry - is likely to attract strong interest from external candidates.

John Patterson, previously the head of marketing and drug licensing, has been appointed as development director to review how AstraZeneca conducts clinical trials, decides which drug development projects to continue, and how it deals with regulators. "I don't know that we have been getting the kind of dialogue that I would like to see us have," he said.

He will also examine the case for continuing work on all drugs in the pipeline, including Cerevive for stroke and Galida for diabetes, which have attracted sceptical comments from some analysts.

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