AstraZeneca prepares for upheaval

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The new chairman of AstraZeneca says his top priority is finding a permanent chief executive for the troubled Anglo-Swedish pharmaceutical groups, stressing his support for senior management as they prepare “to navigate a period of significant change.”

Leif Johansson takes up his role on Friday, working alongside Simon Lowth, the chief financial officer named interim head of the company last month following the abrupt departure of David Brennan.

Mr Johansson said in a statement: “The company has a strong executive team in place who, under Simon Lowth’s leadership, will provide clear direction for the business while
the board completes the search for a new CEO, which is my immediate priority.”

His arrival comes in the build-up to AstraZeneca’s annual strategic review this summer, with investors sharply divided over whether the company should further cut costs and boost dividends and buybacks, diversify, or step up acquisitions.

For now, Mr Lowth has focused on increased efficiency to return more cash to shareholders. Martin Mackay, head of research and development, has stressed recent efforts to boost innovation while “wringing” more revenues from existing drugs through expansion in emerging markets and maintaining sales even after their patents expire.

Mr Johansson’s nomination marks a reassertion of the group’s Swedish roots in Astra before its merger with Zeneca of the UK. He also has very close links to the Wallenberg industrial empire, which holds 4 per cent of AstraZeneca.

He is the son of a senior Wallenberg executive, and ran Electrolux, the appliance maker, as well as more recently chairing Ericsson, the mobile phone operator. Through its vehicle Investor AB, the Wallenberg family holds a significant stake in both these companies.

However, AstraZeneca shareholders and employees alike will be seeking signs of his style and strategy from two other jobs he has held in companies without Investor AB – as the longstanding chief executive of Volvo, and a non-executive director of Bristol-Myers Squibb, the American pharmaceutical group.

Bert-Olof Svanholm, Volvo’s late chairman, once described Mr Johansson as “a tank covered with pillows”. Despite criticism in the Swedish media, he pursued vigorous cost-cutting at Volvo. He also sold off the company’s carmaking arm, which has languished while the remaining business, focused on trucks, grew.

One Volvo employee who knows him well says that despite his upbringing in a paternalistic style of capitalism characteristic
of Sweden, and his popularity with staff, Mr Johansson is “not sentimental; emotions will not get in the way”.

It did so using the
so-called “string of pearls” of niche new prescription drugs, with some developed in house and others licensed in from other biotech groups.

Many hope that Mr Johansson can do the same for AstraZeneca, which
has suffered a series of
late-stage pipeline failures, adding pressure to upcoming patent expiries. But one leading fund manager describes the
Anglo-Swedish company as “a train wreck” and stresses significant differences with BMS.

He says BMS was today reaping the benefits of 15 years of research projects coming to fruition. It had also cut its sales force to focus on niche products sold to a smaller number of specialist doctors, relying on partnerships with rivals with large sales forces – including AstraZeneca – to sell products to primary care prescribers.

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