McKillop: We have shared the pain with shareholders

AstraZeneca's chief executive, Sir Tom McKillop, promised shareholders he would rebuild the pharmaceuticals company's battered credibility after the string of setbacks last year that sent its shares down by almost a third.

AstraZeneca's chief executive, Sir Tom McKillop, promised shareholders he would rebuild the pharmaceuticals company's battered credibility after the string of setbacks last year that sent its shares down by almost a third.

And he tried to defuse controversy over a big rise in his pay last year by saying he and other board members owned tens of thousands of shares in the company.

Sir Tom set out more details yesterday of a review of its drug development business and of potential cost savings across the group, alongside bullish predictions for earnings growth next year and beyond.

Although he side-stepped questions on whether he would waive a 2004 bonus estimated at more than £1m, as some investors have demanded, he said: "There have been some very curious comments made about this, about how I and other executives ought to share shareholders' pain. Of course we share their pain. We saw our shares and options decline by 30 per cent last year. That is a very serious decline, very much more than the value of our bonus in some cases."

Sir Tom's shareholding in AstraZeneca fell in value from £2.09m to £1.47m in 2004, while more than 100,000 share options became worthless.

Two of AstraZeneca's brightest new drug hopes last year turned out to be either ineffective or too risky to be allowed on the market, while a third, the cholesterol-lowering drug Crestor, has proved a sales disappointment. Yet Sir Tom's pay is believed to have increased substantially from £1.8m in 2003, thanks to an earnings-related bonus, and investors are being asked to sanction a big increase in potential future rewards in a new five-year incentive scheme.

Sir Tom said the matter was being pursued by the remuneration committee because the existing scheme, launched in 2000, had run its course. "I have never been motivated by money. I have never asked for a salary increase in my life, and I am not asking for one now."

AstraZeneca made a profit of $4.87bn last year, up from $4.20bn in 2003 and higher than the market was expecting. The shares jumped 78p to 1,980p yesterday, the best rise in the FTSE 100. The company said fast-growing drugs such as Seroquel for mental illness and Arimidex for breast cancer, plus cost savings in manufacturing, clinical trials and the giant US salesforce would generate earnings growth of about 17 per cent this year.

But analysts pointed to a delay for another product for which approval is being sought in the US. The regulator, the Food & Drug Administration, has raised questions over an asthma drug, and AstraZeneca said it may have to redesign the inhaler to meet the FDA's concerns.