AstraZeneca appoints Roche's Pascal Soriot as new CEO

AstraZeneca announced Tuesday the appointment of Pascal Soriot, the current chief operating officer of Roche's pharmaceuticals division, as the company's new CEO, effective October 1. The drugmaker noted that interim chief executive Simon Lowth, who took over after David Brennan retired from the position on June 1, will remain in the role until Soriot joins, after which he will resume his responsibilities as chief financial officer. "No one is blind to the challenges that confront the pharmaceutical sector and this company, but the underlying strengths of AstraZeneca in delivering on its strategy are clear," stated Soriot, adding that the drugmaker "will continue to make a positive difference to patients over the longer term and I'm looking forward to playing my part in shaping that future."

Leif Johansson, AstraZeneca's chairman, noted that the "key appointment" comes at an "important time" for the company. Products that account for 44 percent of the drugmaker's sales lose patent protection from this year through the end of 2014. Seroquel, which had sales last year of $5.8 billion, lost US patent protection in March, while the patent on Nexium, which generated revenue of $4.4 billion in 2011, expires in the country in 2014. "We are certain that Pascal's leadership qualities combined with his strategic thinking and relevant experience make him the right person to drive the company to success over the coming years," Johansson remarked.

He added that the appointment will allow Soriot to participate in an upcoming strategy review, which will be completed by the middle or end of the fourth quarter. Johansson also specified that Soriot will receive a compensation package similar in size and structure to that of his predecessor.

Cenkos Securities analyst Navid Malik said Soriot's arrival could signal a move toward greater involvement in biotechnology drugs, adding the executive "will be looking to make significant changes, including reviewing the pipeline and doing more deals." However, Malik suggested Soriot will "have to work fast because there's an uphill struggle now to grow sales in the face of major patent losses." Meanwhile, Panmure Gordon analyst Savvas Neophytou said it would be interesting to know if Lowth was interviewed for the position, and if he remains at the company under Soriot. "Simon has been a very strong CFO for AstraZeneca at a time of significant turmoil," the analyst noted. Johansson indicated that Lowth is "genuinely and fully committed" to staying on at AstraZeneca.

Soriot, who held a series of positions at Roche, including CEO of its Genentech unit, was named head of the Swiss company's pharmaceuticals division in 2010. Vontobel analyst Andrew Weiss said "AstraZeneca picked an adept pharmaceutical executive who has experience in restructuring and integration of big [acquisitions]. He is hands on and can spot a problem." The analyst indicated that it is a "tough call" to know in which direction Soriot will steer AstraZeneca, suggesting the company does not have enough cash for a large purchase.

Some analysts have speculated that AstraZeneca's new CEO may undertake larger acquisitions to boost sales. Brennan had shunned major purchases, saying the company would not consider a deal on the scale of AstraZeneca's buy of MedImmune in 2007, while Lowth said earlier this year that the drugmaker would stick to smaller acquisitions until the board reviews its strategy. Neophytou noted that the strategy will probably stay the same following Soriot's appointment, with bolt-on acquisitions and nothing over $10 billion.

Meanwhile, Roche CEO Severin Schwan described Soriot as having "made a significant contribution to the successful integration of Genentech and has successfully led its pharmaceuticals division in an increasingly challenging market environment." Daniel O'Day, currently chief operating officer of Roche Diagnostics, will replace Soriot as of September 1, and his role will be taken over by Roland Diggelmann, who currently heads the Asia-Pacific region within the company's diagnostics unit.

For further analysis, read ViewPoints: What awaits the new CEO at AstraZeneca?

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