CHALLENGE: AstraZeneca is the UK's third largest pharmaceuticals company. The rationale for the merger of the two main companies in the spring was to reduce costs and improve the drug pipeline by combining the two research and development budgets. Mr McKillop has identified several challenges facing the company. These are to complete the integration process so the corporate focus can return to running the business; maintaining sales growth while the integration takes place; growing the US business; and securing a flow of new pharmaceutical products, and building the capability and talent base of the company.
Last week, the market reacted coolly to the announcement that AstraZeneca and Novartis were merging their agricultural chemicals businesses; the new joint venture may be spun-off or perhaps sold, but faces various regulatory hurdles.
Monday this week, the company gave its long-awaited research and development symposium, with attention focused on fresh data on esomeprazole, its successor to Losec, the group's market leading antiulcerant which comes off patent in the US in 2001. Analysts were not convinced, and the shares slid 8 per cent amid a general decline for the sector.
Mr McKillop says he is "very confident" the research and development, (R&D) pipeline will demonstrate "the fine strength of our portfolio".
The US accounts for almost half the group's business. The US market "really welcomes innovative new products and is growing faster than almost any other market". In AstraZeneca, four businesses have to be merged in the US which Mr McKillop says is "a huge challenge", because he does not want any loss of momentum in business during the integration. Mr McKillop says "the lifeblood of the company" is the flow of new products in a highly competitive market. AstraZeneca has to provide the environment for "efficient, creative scientists".
CORPORATE BACKGROUND: Mr McKillop started work in ICI's Corporate Research laboratory in 1968. He become chief executive of Zeneca Pharmaceuticals in 1994. Zeneca was created from a demerger with ICI in 1993. Following the merger with the Swedish pharmaceutical company Astra earlier this year, Mr McKillop became chief executive of the combined group. Mr McKillop is also a non-executive director of Lloyds TSB and Nycomed Amersham.
STRATEGY: The company has to be very focused and value-driven, says Mr McKillop. "It's not the short term that we are after," he adds. The priority in the pharmaceutical division is to be the market leader in key areas such as pain relief, cardiovascular, and gastrointestinal by 2010. In the cardiovascular field, it hopes to do this through the introduction of new blood-thinning agents. The group is also confident of achieving a leading position in all cancer therapies, not just the hormone-related forms of breast and prostate cancer.
Mr McKillop is excited by the opportunities that arise from greater understanding of how the brain works. He expects this to lead to improved treatment of psychiatric and degenerative nerve diseases such as Parkinson's. Organic growth is expected to be the main driver of growth in the pharmaceutical division, but Mr McKillop says that "tactical licensing is very important and can add value'. Better protection of intellectual property rights via the WTO world trade agreement, together with improving health infrastructure is expected to lead to increased business in emerging markets in South America, some East European countries such as Hungary and Poland and parts of the Asia/Pacific region.
MANAGEMENT: Mr McKillop likes to think people see him "as demanding but fair", adding: "I do not apply standards to others I am not prepared to apply to myself." Mr McKillop says he tries to listen to advice. "But you have to go with your instincts," he says. "I like to be as open and direct with people as I possibly can be." This was reflected in the extensive staff communication effort after the Zeneca merger. This included a survey of 3,000 staff for their opinions on the integration process. "We decided we would overcommunicate with our staff," says Mr McKillop. "The commitment of the staff has been fantastic."
MOST ADMIRES IN BUSINESS: Entrepreneurs, who have created something from nothing, like Bill Gates of Microsoft. "One has to have huge admiration," says Mr McKillop, for someone who has built something of enormous value socially and economically. But Mr McKillop is reluctant to single out individual heads of organisations. He says that generally when you look at huge complex organisations: "It's teams of people who make things happen, not just the leader. Leadership doesn't necessarily come from the guy sitting in the big chair."
CITY VERDICT: AstraZeneca's share price has been volatile this year. The initial jump after the merger in the spring was replaced by a steep fall in the in the summer. This reflected a combination of factors including uncertainty about the outlook for the group's pharmaceutical business and the collapse in commodity prices such as wheat and soya which has adversely affected demand for AstraZeneca's agrochemicals.
Since the summer there had been a recovery in stock market sentiment and in the company's share price. But over the past week, the stock suffered a renewed sell-off, following the Novartis agrichemicals announcement.Reuse content