LONDON – AstraZeneca plc is expected to boost deal-making and mergers and acquisitions activity after CEO David Brennan gave in to pressure from shareholders and agreed to resign his post.

In the short term, AstraZeneca will be run by Simon Lowth, CFO, who will be in charge until a new CEO is found to replace Brennan, who has led the London-based company for more than six years, as the patent cliff loomed closer.

The announcement was made in advance of the company's annual meeting with shareholders in London Thursday, and as AstraZeneca unveiled dismal results for the first quarter of 2012, with profits down 38 percent at $2.05 billion.

Lowth told an analysts' meeting held to discuss the financial results, "strengthening the pipeline is the first priority."

The figures provided a white knuckle view of what it feels like to be falling off the patent cliff, with generic competition leading to an 18 percent fall in sales of Nexium (Esomeprazole); a 25 percent fall in Seroquel XL (quetiapine) sales; a 39 percent fall in Arimidex (Anastrozole) and 40 percent fall in sales of Merrem (Meropenem).

Commenting on his resignation Brennan told the analysts' meeting the sector is currently facing pressures, "the likes of which I've not witnessed in my 36 years in the industry." In addition to loss of exclusivity, government attempts to constrain health care costs are taking a significant toll and, overall, revenues in the U.S. in the first quarter were down by 12 percent and in western Europe by 19 percent.

AstraZeneca is seen as being behind the curve in M&A activity, with its one major move into biotech, the $15.6 billion acquisition of Medimmune Inc in 2007, yet to provide the pipeline inputs that were hoped for. (See BioWorld Today, April 24, 2007.)

Brennan pointed to the recent agreement with Amgen Inc. in which the two partners will co-develop and market five products, and the $1 .26 billion acquisition of Ardea Biosciences Inc., of San Diego, announced on Monday, as demonstrations that AstraZeneca is making headway in shoring up the pipeline.

However, the results also show that while the Amgen and Ardea deals are two steps forward, there was also a step back on the partnering front, with AstraZeneca taking a $50 million write-down against TC-5214, being developed in collaboration with Targacept Inc., after it was announced in March that Phase III studies investigating the drug as an adjunct therapy to an antidepressant in patients with major depressive disorder failed to meet the endpoint. (See BioWorld Today, April 24, 2012.)

Mark Clark, analyst at Deutsche Bank said Brennan's resignation will lead to speculation that AstraZeneca will bolster its M&A activity, while Naresh Chouhan at Liberum Capital said, "The prospect of a deal has increased significantly due to poor pipeline delivery and the need to buy earnings."

An upcoming annual review of strategy may lead to an explicit change in the company's approach to M&A, but for now Lowth said, "Our priorities in terms of business development are clear." AstraZeneca is interested in more peer-to-peer collaborations like that with Amgen, it wants to do more traditional in-licensing and is "very active in a number of situations;" and it wants "to acquire attractive late-stage assets as seen in Ardea," Lowth added.