Chris Hughes is a Bloomberg Gadfly columnist covering deals. He previously worked for Reuters Breakingviews, as well as the Financial Times and the Independent newspaper.

It doesn't take much to knock about $4 billion from the value of a giant drug company whose shares have had a good run this year. That's how much AstraZeneca Plc lost as its stock fell 5 percent in early London trading on Thursday, after Israeli business publication Calcalist said CEO Pascal Soriot was poised to join Teva Pharmaceutical Industries Ltd.

Success for pharmaceutical companies comes down to scientists discovering blockbuster drugs. This is a by-product of management's ability to foster an innovative environment and make the right decisions about which projects to back and which to ditch. Individual leadership is a small part of the formula. It's easier to imagine a CEO single-handedly screwing things up at AstraZeneca, by doing an overpriced acquisition for example, rather than being solely responsible for the successes of its 60,000 staff.

Yet the mere whiff of Soriot's exit caused the biggest drop in the stock since early last year. At first blush, you might see this as the cult of the superstar CEO in action. But Soriot isn't exactly popular. Many investors were unhappy that he and his board rejected Pfizer Inc.'s 55 pounds per share takeover offer in 2014. The stock hit that level only in June, and that's with the help of sterling's devaluation. Had investors taken Pfizer's paper, their holdings would be worth even more now. 

Astral Projections
Drug giant's shares have reached level of Pfizer's offer (helped by sterling's fall)
Source: Bloomberg

Rather, the general worry is the stain on AstraZeneca should Soriot prove willing to trade an $81 billion company at the forefront a medical research for a $34 billion firm focused on generic copycat drugs. Teva might pay more -- including a reported $20 million signing bonus. Soriot received 13.4 million pounds ($17.3 million) last year from AstraZeneca. But the train set would be smaller. Surely that would suggest Soriot harbors doubts about AstraZeneca's prospects?

The particular concern is whether he has a bad feeling about Mystic, the non-small-cell lung cancer program in late-stage trials. An update on this is due imminently. Investors are expectant. In reality, Soriot shouldn't be in command of any non-public material information for long enough to arrange an exit to another company.

Whatever the Mystic data reveals, the share price fall is a warning about the state of AstraZeneca's succession planning. Unlike certain other big drug companies, the executive board members comprise only Soriot and the CFO. The up and coming talent on the senior management team is less visible to investors and less likely to have public company experience from non-executive roles. GlaxoSmithKline Plc poached AstraZeneca's European boss earlier this year. Internal successors aren't obvious and pharma CEOs are among the trickier executive search mandates.

Soriot shouldn't see himself as the $4 billion CEO. Perhaps the recent stock rally wasn't built on the most solid of foundations.

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Chris Hughes in London at

To contact the editor responsible for this story:
James Boxell at