AstraZeneca PLC (AZN) Thursday said Chief Executive David Brennan is leaving after the troubled drug maker missed its first-quarter earnings and sales forecasts and cut its full-year profit targets yet again.
AstraZeneca, which reports in dollars, said net profit in the first three months of 2012 fell 44% to $1.64 billion from $2.91 billion a year earlier, missing analysts' expectations of $2.0 billion. Revenue was down 11% at $7.35 billion, compared with $8.29 billion a year earlier, worse than the $7.98 billion expected in a survey of 10 analysts.
Brennan, who used the update to announce his retirement, said, "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.
"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. As a result we have lowered our core EPS [earnings per share] target for the full year to the range of $5.85 to $6.15."
The company previously foresaw core EPS coming in this year at $6.00 to $6.30, after $7.28 in 2011.
Brennan, an American, has been CEO since the start of 2006. Chief Financial Officer Simon Lowth will act as interim chief executive from June until a permanent successor is in place.
AstraZeneca faces crucial patent expiries between now and 2015 on products such as antipsychotic Seroquel and ulcer medicine Nexium, and the loss of patent protection in the U.S. in 2016 for its best-selling drug, heart drug Crestor. Coupled with a thinner late-stage pipeline and a mixed longer-term research and development track record, the U.K.'s No. 2 drug maker by sales has taken an aggressive approach to costs, shrinking operations and cutting thousands of jobs, while keeping cash flowing to shareholders.
In February, AstraZeneca announced it was cutting around 7,300 jobs as part of the company's ongoing cost-savings program. The first phase, launched in 2007, was aimed at improving long-term competitiveness and productivity. The second phase, announced in January 2010, envisioned the loss of up to 10,400 jobs by 2014.
Describing its outlook for 2012, the company said in a statement that "we now expect the decline in revenue for the full year will be in the range of the low to mid-teens in constant-currency terms."
AstraZeneca, which spent $5.6 billion last year buying back its own shares, Thursday said it spent $912 million in the first quarter on net stock repurchases.
AstraZeneca shares ended Wednesday at 2841 pence, down 6% on year-earlier levels.
-By Sten Stovall, Dow Jones Newswires; +44 207 842 9292; firstname.lastname@example.org