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AstraZeneca’s R&D Overhaul

Pharmaceuticals: Research head Martin Mackay is out in leadership shake-up

by Lisa M. Jarvis
January 21, 2013 | A version of this story appeared in Volume 91, Issue 3

Credit: AstraZeneca
Former AstraZeneca (and Pfizer) R&D head Martin Mackay
Credit: AstraZeneca

Faced with a weak new product pipeline and crushing patent losses, AstraZeneca’s new CEO, Pascal Soriot, is shuffling his management team. The company’s R&D chief, Martin Mackay, and its head of commercial operations, Tony Zook, are both out the door in the start of a shake-up that could also include a big acquisition.

Credit: AstraZeneca
Mene Pangalos, head of innovative medicines at AstraZeneca
Credit: AstraZeneca

Mackay will not be replaced. Rather, Soriot has enlisted three existing senior executives to oversee R&D: Mene Pangalos, a neuroscientist, will lead AstraZeneca’s small-molecule drug discovery effort; Bahija Jallal, executive vice president of the firm’s MedImmune subsidiary, will lead biologic drug development; and Briggs Morrison, a former Pfizer executive, will head late-stage development for both classes of drugs.

Mackay joined the company in 2010 from Pfizer, where he was head of R&D. He took on the daunting task of fixing an R&D group that had made a series of bad bets. Between 2012 and 2016, AstraZeneca will lose patent protection on four products that once represented more than $20 billion in annual sales. At the same time, the company has experienced a string of failures in late-stage clinical trials of new products.

Under Mackay’s leadership, AstraZeneca cut its internal R&D operations to the bone, shedding 2,200 research jobs, shuttering several sites, and taking a “virtual” approach to neuroscience R&D. The company has added to its pipeline through partnerships and mergers and acquisitions (M&A), but industry watchers believe a large deal will be necessary to sustain revenues during the coming rough period. Soriot is expected to unveil his plans to investors on Jan. 31.

“Given AstraZeneca’s shallow late-stage pipeline, we expect the new CEO to be particularly aggressive on M&A,” Leerink Swann stock analyst Seamus Fernandez told investors in a research note. Large deals that immediately add to the company’s profits would make the most sense, Fernandez wrote, noting that specialty drug firms Forest Laboratories or Shire would fit that bill.

In a separate R&D move, Roche has appointed John C. Reed as head of its drug discovery operation, known internally as pharma research and early development. Reed comes to Roche from Sanford-Burnham Medical Research Institute, where he was CEO.



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