Sir Alfred Shepperd

Wellcome Foundation chairman who oversaw the development of the controversial Aids drug AZT

Alfred Joseph Shepperd, industrialist: born London 19 June 1925; staff, Rank Organisation 1949-63; staff, Selincourt & Sons Ltd 1963-65; staff, Chamberlain Group 1965-67; managing director, Keyser Ullmann Industries 1967-72; finance director, Wellcome Foundation Ltd 1972-77, chairman 1977-90; chairman, Burroughs Wellcome Company 1986-90; chairman and chief executive, Wellcome plc 1986-90; Kt 1989; married 1950 Gabrielle Bouloux (two daughters); died Guildford 15 October 2007.

Alfred Shepperd transformed the Wellcome Foundation into a profitable pharmaceutical company. The massive profits made from its sale to Glaxo five years after his departure from the chair ensured that its former owner, the Wellcome Trust, is now by far the biggest medical charity in Britain and one of the richest in the world, with assets valued at around £13bn. But his success during his 13 years as chairman was overshadowed by the controversy over AZT, the pioneering Aids drug it developed. Although Shepperd undoubtedly behaved perfectly properly, the bitter battles involved proved an enormous strain for someone without any medical training.

After studying at Archbishop Tenison's School in Kennington, south London, Shepperd served in the Fleet Air Arm and then acquired an economics degree at University College London – he was a good enough economist to be a trustee of the National Institute for Economic and Social Research for 10 years after his retirement. In 1949 he joined the Rank Organisation, and worked on the finance side for 14 years – far longer than most of the hapless executives who suffered under Rank's autocratic chairman, Sir John Davis. He left to work for the textile firm Selincourt in 1963, joined the Chamberlain Group in 1965; and then served as managing director of Keyser Ullmann Industries Ltd from 1967.

When Shepperd was hired as finance director of the Wellcome Foundation in 1972 it was wholly owned by the Wellcome Trust, named after the firm's founder, the American-born Sir Henry Wellcome. Together with his partner, Silas Burroughs, Wellcome pioneered the sale of drugs in tablet form and of selling them directly to doctors. The trust was established after Wellcome's death in 1936 with the income dedicated purely to medical research.

As a result the informal motto of the foundation remained "Research is our only shareholder". Partly because of this dedication, it established an extraordinary reputation for research – its researchers were awarded no fewer than four Nobel prizes. But sales were largely concentrated in Burroughs Wellcome, its American subsidiary, which enjoyed a troubled relationship with its owner.

In the 13 years after 1977, when Shepperd was appointed chairman, the foundation underwent a total transformation. He brought the two concerns together and his aggressive commercialism increased sales tenfold and widened the group's portfolio of drugs. Far more important was the fundamental change of Wellcome's whole culture. As one senior executive put it: "Ten years ago you could make a good career in Wellcome from being uniquely a good chemist or a good engineer. Five years ago that wasn't enough – you had to be a good manager as well. Now comes stage three – being not just a good manager but a businessman."

Shepperd was not the easiest of bosses. Sir William Castell, the present chairman of the trust, who worked under Shepperd, remembers that he had "a sharp intellect and strong personal intuition . . . he could have a detailed discussion, often to people's annoyance, in all areas of the business". But the change went further. Cleverly, Shepperd reduced the dividend the foundation paid to the trust, thus persuading the trustees to convert the foundation into a normal public company and to offer a quarter of the shares on the stockmarket in 1986. But he was adamant that Wellcome's fundamental approach had not changed. "Someone recently asked me," he said at the time, "whether we would have to change our ways as a listed company. My answer was 'why lower our standards?' "

His biggest crisis came at the same time as the launch. In 1981 Aids had been identified as a separate, and untreatable disease, and three years later its cause was identified as HIV (Human Immunodeficiency Virus). The only drug which offered any hope was AZT, an anti-viral compound which had been developed by Wellcome in the United States but tested only in laboratory conditions. But such was the level of pressure that even the Federal Drugs Administration (FDA), the normally ultra-cautious body which certified drugs for use in the United States, allowed its sale after only limited tests, using a "fast-track" approach, one it was to allow later with other drugs. The result was that, while most drugs take from eight to 10 years to pass through the FDA's checks, AZT was pushed through in a mere 20 months.

The tests showed that AZT had severe problems, above all with limited effectiveness and severe side-effects. Although no one claimed that it was a cure for the disease, in the prevailing conditions of despair, AZT seemed to be offering the best chance, however slim, for Aids sufferers. So Wellcome marketed it under the name of "Retrovir", after Shepperd had consulted a wide range of scientific and medical opinion.

Perhaps inevitably, the sheer uncertainties involved led to sustained and sometimes vicious attacks on Wellcome and on Shepperd personally. The first argument was over price. Shepperd estimated that Wellcome had invested around £400m in the drug. By now Wellcome was a public company and Shepperd reckoned that he should make some return on the money. He reduced the cost of the drug twice, although, as Shepperd pointed out at the time, in countries outside the United States the price was fixed by governments. He also felt that the attack was an emotional one: "If we wrapped the drug in a £10 note and gave it away, people would still say that it cost too much."

But he obviously felt the strain. "Try not to fall into the trap I see everywhere," he said, "all the world asking questions based on long-term experience in the pharmaceutical industry, aimed at an unbelievably short track record on this drug and this disease."

The opposition reached its climax at Wellcome's AGM in January 1990 which the pickets described as "a gathering of Aids profiteers". But in 1989 Shepperd's opinions had been bolstered when he was knighted for his work on AZT and today Retrovir is one of the three components of a much more effective cocktail of drugs which halves the death rate of Aids patients.

Shepperd was notoriously a workaholic and his jobs after retirement in 1990 included involvement in a successful campaign by a group of directors of London Zoo, headed by Michael Heseltine, to raise £40m.

Nicholas Faith