There he sits in his Mayfair office, ramrod straight, eyes engaged, flicker of a smile never far from his lips ... but what’s that tapping? It’s the thrumming of David Brennan’s fingers on the table, under the table, on his chair leg — he never stops. The man is a pent-up ball of impatience.
How, I ask him, does he find the time to run London-based Astra Zeneca, fifth-largest pharmaceutical company in the world, and to negotiate in Washington with Barack Obama’s healthcare reform team, as head of the American body representing big pharma’s interests?
“Well, you know,” he says quickly in his East Coast drawl, “there’s a five-hour time difference, so I work from 7am until 6pm here and then I have until 11pm on American business.” And he laughs, as he taps out another tattoo.
Is he joking? It’s hard to tell with Brennan, 56, who is a consummate salesman and charmer. Tall, urbane and spryly assertive, he has the clean-cut good looks of an American sports star, plus the droll sense of humour of an experienced raconteur.
All of that underscores a ferocious work ethic that has enabled him to jet back and forth to Washington while also heading a FTSE top 10 giant, worth £40 billion by market value here. And so far it looks as if American-born Brennan, the only top five pharma boss to come up through sales, has played a canny game on both continents.
In America, rather than trying to block reforms — as big pharma did when the Clinton administration attempted similar moves in the 1990s — he has sold Obama’s team a workable package of changes that dilutes the president’s original intentions. In return, drug makers will provide $80 billion (£49 billion) in savings over 10 years, and promote healthcare reform in big advertising campaigns.
Brennan has also helped to ensure that any pain is spread around, arguing cogently that drug companies need revenues to fund research and development. Now it’s not just big pharma that is being targeted, but hospitals, doctors, device makers and insurance firms. “You want to be for something, not against it, and we are for healthcare reform in America,” says Brennan, summing up his approach. “We are just not in favour of a government-run, price-controlled healthcare system, but that’s not what’s being suggested.”
Meanwhile in Britain, where Astra Zeneca unveils its third-quarter results in a fortnight, profits have leapt despite the global downturn. There has also been constant takeover speculation as consolidation in the pharmaceutical sector continues.
For Brennan, that’s business as usual. It’s only 10 years since his company was created from the merger of the Swedish firm Astra AB with the ICI spin-off Zeneca, but already this year it has been linked as a bid target for bigger rivals, and as a buyer of others. Only Pfizer, Roche, Glaxo Smith Kline and Sanofi-Aventis rank above it in revenues. Brennan shakes his head when I mention the stories.
“There are only four or five companies that could afford to buy us, and frankly some of them are pretty distracted right now. And you know what? As chairman of the Pharmaceutical Research and Manufacturers of America [the drug companies’ lobbying group] I am on the phone to the chief executives every week.”
So they might have hinted? He grins. “It makes for great media.” But he doesn’t waste time worrying about it.
It is the same with his own acquisition opportunities. He has broadened the firm’s research capacity through alliances, but he also paid $15.6 billion for the specialist firm Medimmune in 2007. Did he pay too much? “No, it scaled us to a biologics capacity that would have taken us 20 years to build. It’s a research strategy as much as anything.”
But bankers still try to sell him businesses every day. “There’s the book from this morning,” he says, pointing to a file of bound notes on his scrupulously tidy desk. “It’s got two suggestions. There are opportunities that make sense in terms of products or intellectual property that add value — but I am not in the market to do big acquisitions.”
Nor is he a fan of mega-mergers — they take too long to bed down. He says executives at Astra Zeneca were still too keen to pass responsibility upwards when he took the top slot three years ago. “People liked to be indemnified for their decisions. I pushed that down. And I changed the strategy to access more research and development externally. Before that there was a strong belief we could do it all ourselves. I just thought you have to be realistic.”
That strategy has paid off so far. The company, whose big products include Crestor, (for cholesterol), Nexium (heartburn), Seroquel (schizophrenia) and Synagis (infection), has seen its shares yo-yo since December, but it was the best-performing stock in the FTSE 100 last year. This year it was tipped to face tougher times, as patents on some blockbuster drugs expire.
Yet despite flat revenues, Astra Zeneca’s half-year figures in July showed profits up 27%, boosted by setbacks to generic rivals and a surge in orders for its swine-flu vaccine, still awaiting approval here. City analysts now seem split between piling in and steering clear. Even Brennan says he doesn’t know how much of the recent success is a one-off.
“Will we sell 40m doses of swine flu vaccine next year? I don’t know,” he says, though he notes that swine flu is surging again in America. Anyway, he adds, so much of what happens is the result of what was decided many years previously — that’s how big pharma operates.
“People like me are paid to work three or four years in the future. Ask me what I am worried about now, and I’ll tell you: it’s 2012 and 2013.” Blockbuster products take even longer. “Nine years and $2 billion to bring a product to market,” he says.
So why worry about quarterly results? “Because investors want you to. But I am very comfortable to say our earnings will only be X because I am making investments for the future.”
Brennan looks comfortable all round, at ease as a boss and as an industry mouthpiece. His sales background sets him apart — he is never happier than when pitching to an audience. His father sold second-hand cars, and Brennan says he learnt young how to close a deal.
Those who work with him say his skills are more subtle than that now, but behind the palpable energy, Brennan is good at making connections.
“He has that capacity to engage you,” says Billy Tauzin, the former US Congressman who now lobbies for the pharmaceutical sector in Washington. “He simplifies the complex, and he can have down-to-earth conversations.”
And that, adds Tauzin, has been vital in winning round sceptical reformers in America. “We are dealing with a new administration that mistrusts us, yet David has given us clear instructions to find common ground, and to work with groups we have never worked with before.”
The same approach is visible inside Astra Zeneca, according to Alexis de Rosnay, vice-chairman of Lazard, who advises Brennan. “Big pharma has a lot of sacred cows, and he’s not afraid to challenge them. He asks the soul-searching questions: are you spending the right money? Is it yielding the right products?”
That focus comes from Brennan’s early experience. He was pushed into the industry by his elder brother, a research chemist at Johnson & Johnson. “He got the brains,” says Brennan wryly.
Brennan’s first job was at Merck, selling drugs to surgeries and hospitals. Later he moved into Merck’s American joint venture with Astra. That was taken over by the Swedish company full-time.
Brennan joined Astra US after its boss Lars Bildman was fired for sexually harassing female employees. Astra had to pay $10m to settle a suit brought by 80 employees, and Astra Zeneca is still pursuing Bildman to recover $7m in salary and bonuses. Brennan is clearly not the forgive-and-forget type.
His agitated alertness intensifies when I mention sales ethics. “We revised our code of conduct after I took the top job,” he says. “We train all 65,000 employees on it, and we enforce it. We lose a significant number of people each year through breaches of it. Others get disciplined, and managers get bonuses docked if [breaches occur] on their watch. It’s our position of strength. So when someone says to me, ‘in Asia, we have certain practices . . .’, I say, ‘in Astra Zeneca, we don’t’.”
And that’s important as the company expands its presence in China. “We sell there, we make there, and we’ve established a research group there,” he says.
It also counts as he wants his industry to be known for the benefits it brings to mankind, not its transgressions. This is almost a mantra with the current crop of big pharma bosses. “There were things we did that we shouldn’t have been doing,” he acknowledges, “but transparency makes that go away.”
So how will the Obama healthcare reforms affect Astra Zeneca’s bottom line? “We don’t know yet,” he says. It’s not clear what will be pushed through this winter.
Legislation may include a clampdown on drug pricing, but its effect will depend on what type of products you sell, says Brennan. It may take years to work through. Public insurance will also provide a raft of new consumers. The impact on Astra Zeneca, which takes 46% of revenues from America, may be small.
Yet pharmaceutical companies have already been accused of ramping up prices in America to maximise profit before any measures are taken. Not Astra Zeneca, says Brennan. “We have a price rise once a year and we haven’t changed it as a result of possible healthcare legislation.”
And others? “I see some people taking increases more than once a year, but I wouldn’t say it’s extraordinary or because of healthcare reform.”
The only time he hesitates is when I ask if he would move Astra Zeneca’s British base. It has 11,000 employees here, but sales account for only 3% of total. “We are here because of the technical base that’s available, and that’s something that the government has to reinforce here, to make sure we’ve got good people to bring into the research labs.”
The only other thing that would persuade the company to move would be corporation tax. “The environment is challenging here, you know it.”
And his own future? “It’s up to the board,” he shrugs. “But I love what I do, and it’s the only reason I am here. You know, when you tell your wife you’re going from a lovely house in suburban Philadelphia to a three-bedroom flat on St John’s Wood high street, and she says, ‘tell me again, you are CEO? . . .’”
He laughs. “It’s exciting,” he sums up. “You can have big influences.” Then he is bouncing off like a released spring, saying goodbye — he has a Washington-bound plane to catch.
Corporate jet? “I only fly scheduled,” he corrects me. And you can’t keep the president’s men waiting.
VITAL STATISTICS
Born: August 17, 1953
Marital status: married, with four children
School: Norristown Area High School, Pennsylvania
University: Gettysburg College
First job: salesman at Merck
Salary: £2.5m including bonus
Car: black BMW X5 Homes: St John’s Wood and Philadelphia, plus a beach house in New Jersey
Book: March of Folly: From Troy to Vietnam
Music: Motown
Gadget: “My Kindle. It’s fantastic. I’m using it to read Baptism by Fire: Eight Presidents Who Took Office In Times Of Crisis.”
Last holiday: New Jersey
WORKING DAY
THE Astra Zeneca chief executive wakes at his home in St John’s Wood, north London, at 5am. “I work out downstairs watching BBC World News, then Business Report, take a cup of coffee to the wife, and am out the house by 7am,” says David Brennan.
He is at his desk in Mayfair before 7.30. “I have 10 executives reporting directly to me. I talk to them every week. I focus a lot on research and development, and our commercial activities. I review country performance, and region performance.”
Brennan works till 7pm and then often has to go to a dinner. He likes to be in bed by 11pm. He travels three weeks in four. “In this job it’s 24/7 — off a plane in Brazil, shower, two hours later in a room with 100 people. You better be sharp.”
DOWNTIME
DAVID BRENNAN relaxes by taking photos, though he is never sure where he has put his cameras. “I have cameras here and in America. We have two homes, and my wife flies back and forth. We also have four kids, and six grandkids, and one of my sons is an officer in the US Navy.”
He exercises by cycling. “I do 25-30 miles every Sunday.” He also likes to scuba dive. Where? “In the water,” he says straight-faced, then apologises. “Cayman Islands.”
Brennan sometimes spends his money on art, but prefers to save.
There is a sidewiki!!
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