One of the biggest shareholders in AstraZeneca, the pharmaceutical group, has questioned the long-term viability of the Big Pharma business model by asking whether it could discourage the development of new medicines.

Borje Eckholm, president and chief executive of Investor AB, the Swedish investment group linked to the Wallenberg family that holds a 3.5 per cent stake in AstraZeneca worth more than $2 billion (£1 billion), said a “fundamental question” existed over whether huge, vertically integrated pharmaceutical companies make the most effective use of their research funding.

“You have to ask yourself: do you have economies of scale in R&D? It's not clear but one of the fundamental ways that companies create value for shareholders is strong R&D. It raises the question: is big better? Maybe you have to split it up into smaller parts.”

Mr Ekholm said it was possible there could be more productive ways of developing new medicines including farming out research to smaller organisations with a more entrepreneurial culture. He also said there was unlikely to be a silver bullet to the problem for the industry.

He added that Investor remains committed to its holding in AstraZeneca, as it has held shares in the pre-merger Astra group since the 1930s.

Like many large pharmaceutical companies, in recent years, AstraZeneca has suffered several late-stage failures of promising drugs such as Exanta, a blood-clot medicine, Galida, a diabetes drug, and Cerovive, an anti-stroke drug.

The industry is grappling with rising research costs and intense competition from generic drug manufacturers, while the number of new, blockbuster medicines reaching the market is falling.

AstraZeneca employs 13,000 of its 67,000 staff in research and spent $5billion on R&D in 2007.

The company, which declined to comment of Mr Eckholm's views, has been more willing to experiment with new approaches than its competitors.

In February, it spun off some of its gastro-intestinal research unit into a new biotech company backed by a three private equity firms, retaining a minority stake.

Speaking to The Times in the Stockholm headquarters of Investor, which controls a €15 billion (£11.8 billion) business empire spanning companies that comprise 40 per cent of Sweden's stock market such as SEB, Electrolux and Ericsson, Jacob Wallenberg, the chairman, said that the group planned to shift an increasing portion of its portfolio into unlisted companies over the next three to four years.

He said that better returns were potentially available there and also emphasised the growing pressures of helping to run publicly listed companies. “I have been on public boards for more than 20 years and the focus of the work on the board has changed dramatically,” he said. “The amount of time that I spend as a board member on questions that are parallel to the pure business question has exploded.

“The public market has become part of the political field where every question of interest to society is being superimposed on publicly quoted companies, be it CSR [corporate social responsibility], females on boards, being a good public citizen. More and more people are scratching their heads on how much time is reasonable to spend on all these questions.”

Mr Wallenberg said Investor would raise its investment in unlisted companies to 25 per cent of its total portfolio up from 13 per cent in 2006. After the recent sale of its holding in Scania, the truckmaker, to Volkswagen, Investor is likely soon to have about €2 billion in cash to invest in private companies.

Mr Wallenberg said that healthcare, engineering and environmental companies based in the Nordic region were of particular interest.

Investor expects to make about four investments in private companies over the next few years each worth between €700 and €800 million. It was also among a number of bidders for Vin & Sprit, the Absolut vodka owner, which was bought this week by French drinks group Pernod Ricard.

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