Astra Zeneca CEO leaves amid profit slump

Anglo-Swedish pharmaceuticals giant AstraZeneca said Thursday that its chief executive David Brennan had quit, as the group also unveiled a 44-percent slump in first-quarter net profits.

Profit after tax hit $1.64 billion (1.24 billion euros) in the three months to March compared with $2.91 billion a year earlier, with the company hit by generic drugs competition, according to a statement.

Group revenues sank 11 percent to $7.34 billion in the reporting period at AstraZeneca, which is in the process of cutting thousands of jobs.

“Delivery on the group’s restructuring plans and continued discipline on operating costs, together with the benefits from a lower tax rate, will only partially mitigate the revenue pressures,” noted Jonathan Jackson, head of equities at brokerage Killik & Co.

AstraZeneca shares tumbled on Thursday to show losses of 5.83 percent to 2,675.30 pence in midday trade on London’s benchmark FTSE 100 index, which was up 0.07 percent at 5,722.88 points.

AstraZeneca said Thursday that Brennan, an American heading the company since 2006, would step down in June, to be replaced by chief financial officer Simon Lowth on an interim basis until a permanent successor was found.

“I just thought it was about time to pass the reins on to a new leader,” Brennan told reporters on a conference call following publication of theresults.

“It was entirely my decision,” he added.

The group had already warned in February that earnings would fall this year as patents on key drugs expired, sparking increased competition from generic drugmakers.

“The anticipated impact from the loss of exclusivity on several brands, together with challenging market conditions, has made for a difficult start to the year in revenue terms,” Brennan said in the earnings release.

“Delivery on our restructuring plans and continued discipline on operating costs, together with the benefits from a lower tax rate, will only partially mitigate the revenue pressures.”

Earlier this year, Brennan announced plans to cut 7,300 jobs by 2014 in a new cost-cutting drive to improve profitability. It axed 12,600 positions between 2007 2009 and removed 9,000 more by the end of last year.

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Ericsson to slash 2,200 jobs across Sweden

UPDATED: Swedish telecom giant Ericsson is set to cut 2,200 jobs in Sweden, the company has announced in a press release.

Ericsson to slash 2,200 jobs across Sweden
Ericsson CEO Hans Vestberg. Photo: Jonas Ekströmer/TT

Workers will be laid off at the company's offices in Stockholm, Katrineholm, Borås, Kumla, Göteborg, Linköping and Karlskrona.

Sweden's capital Stockholm will be hit the worst, with 1,125 staff being let go. 200 jobs will go in Borås, 140 in Gothenburg, 130 in Kumla, 120 in Linköping and 85 in Karlskrona. The facility in Katrineholm will shut down completely.

According to the company, negotiations with unions are underway and workers affected by the layoffs will receive notice in June.

"This hits incredibly hard at all those who work at Ericsson and have loyally worked for the company's development. It also hits all the towns affected and especially Katrineholm," the chairman of Swedish union IF Metall, Anders Ferbe, said in a statement.

"We have seen factory upon factory being dismantled in the telecom and pharmaceutical industries – which used to be the pride of Sweden. There is a risk that research and development will go down the same path if we don't act," he added.

The layoffs are part of a money saving bid to save almost 9 billion kronor ($1bn) worldwide by 2017, said the Ericsson press release.

And telecom analyst Daniel Djurberg at Swedish bank Handelsbanken told news wire TT that the decision did not come as a surprise.

"If a company has to save nine billion, you can predict that employees and consultants will have to go," he said.

The move comes amid a week of turmoil for the Swedish telecom industry, after an announcement by Sony Mobile on Monday to cut 1,000 jobs at its facility in Lund.

Chief economist Jesper Ahlgren at liberal thinktank Timbro was among those warning that the wave of layoffs may pose challenges for Sweden to compete on the world market.

"It is a concern, particularly when it involves the research intensive companies. In Sweden it's mainly a few large private companies, like Ericsson and Astra Zeneca, who put a lot of effort into research. It is difficult to see how we would be able to maintain our competitive power if they downsize," he told The Local on Wednesday morning.

"This puts a lot of pressure on the government to act. Sweden needs to get its act together. We are very dependent on big companies for research and we need to look not only at how we support them, but also at how we encourage new companies to also take up the mantle," he added.

Ericsson CEO Hans Vestberg said the decision was inevitable and added more cutbacks are to be expected around the world.

"The view people ought to take of Ericsson is that we consolidate our position as world leaders in all the areas we work in. Unfortunately that also means a constant streamlining process," he told news wire TT.

Sweden's Enterprise Minister Mikael Damberg was told of the layoffs on Tuesday evening.

"I have appointed a group of secretaries of state from five ministries to co-ordinate the government offices' work on this issue, to stay in touch with local and regional actors and to ensure that the government offices are ready to act," he told TT.