News of Angus Russell’s departure comes as Britain’s second-largest drugmaker reports a 19% slide in third-quarter sales
The boss of Shire Pharmaceuticals, Angus Russell, is stepping down next April after five years at the helm and will be replaced by a senior Bayer executive.
Russell, 56, will leave at the annual meeting after 13 years with the drugs manufacturer, during which he turned the company from a small specialist firm into a FTSE 100 company, focused on attention deficit hyperactivity disorder medicines, a lucrative market in the US. Having spent 32 years in the pharmaceutical industry, including at AstraZeneca and ICI, he said he now wanted to spend more time with his family, as well as pursue his charitable interests and non-executive directorships. He got married for the second time last year, leaving him with responsibility for four young children.
Russell will be replaced by Flemming Ornskov, chief marketing officer of Bayer’s speciality pharmaceuticals business with sales of more than €10bn in Europe, China and the US. “He has impressed investors in this role, where he was responsible for the rollout of [blood-thinning pill] Xarelto,” said analysts at JP Morgan Cazenove. Ornskov previously worked for Merck and Novartis, as well as biotech firms.
Analysts at Cowen were surprised by Russell’s departure, noting: “The explanation given is the business is expanding further and more aggressively into international markets in which Ornskov has significant experience. This appears to be sound rationale.”
The news came as Shire’s third-quarter sales growth disappointed due to a cut-price version of one of its top-selling ADHD drugs coming onto the market. Missing analysts’ expectations, sales at Shire grew by 4% to $1.1bn. Sales of Adderall XR dropped 32% to $102m, which partially offset the 24% rise in sales of Shire’s new lead product Vyvanse to $247m. The drug will be called Elvanse when it is launched in Europe.
Mick Cooper, analyst at Edison Investment Research, said: “Shire’s growth has slowed because of generic competition to Adderall XR showing that it does face some of the issues facing big pharma. However the underlying growth remains strong and Angus Russell will be leaving Shire in a very strong position.”
Patent expiry on best-selling medicines also continues to haunt AstraZeneca, Britain’s second-largest drugmaker, which reported a 19% slide in third-quarter sales.
The company said it was hurt by the loss of exclusivity for Seroquel IR, its blockbuster antipsychotic treatment, as well as high blood pressure drug Atacand, antibiotic Merrem, cholesterol drug Crestor in Canada and heartburn pill Nexium in Europe. Revenues fell to $6.7bn (£4.15bn) in the third quarter from $8.2bn a year ago.
New chief executive Pascal Soriot, who joined from Roche and suspended share buybacks on his first day in the job, said buying in new treatments would be an important way of rebuilding the pipeline. He added that the recently launched heart drug Brilinta had the potential to do “far better”, admitting that AstraZeneca had failed to make the most of it.
The Frenchman replaced David Brennan, who was ousted by shareholders in the spring amid growing concern about AstraZeneca’s thin pipeline of new drugs. Soriot said his priority was to “restore the company to growth and scientific leadership” and promised to unveil the results of a strategy review to investors at the end of January.
The decision to halt share buybacks is seen as a sign that AstraZeneca is on the prowl for mid-sized to larger acquisitions, with speculation circling around UK group Shire and US firm Forest Laboratories.
“AstraZeneca’s key issue remains its shrinking sales line … impacted heavily by generic losses and with little offset from new products,” said Mark Clark at Deutsche Bank.
“The results, in our view, appear to put the company on track only to meet the bottom end of its guidance for a low-to-mid teens sales decline for the year and to deliver core earnings per share in the lower half of its $6-6.30 guidance range. This is of little consequence, however, given the overriding importance of the strategy review which is expected to be unveiled in early 2013.