Shares in Anglo-Swedish drug have closed down 8% in UK trade after the failure of its Iressa drug in a major clinical trial.
Two out of its three blockbuster drugs have been rejected
The lung cancer drug did not significantly prolong survival in patients with the disease.
This setback for the group follows the rejection by the US in October of its anti-coagulant pill Exanta.
Meanwhile, another of its major money spinners - cholesterol drug Crestor - is facing mounting safety concerns.
"This would be two of the three blockbuster drugs that were meant to power the company forward failing... and we've got risks on Crestor," said Nick Turner, analyst at brokers Jefferies.
AstraZeneca had hoped to pitch its Iressa drug against rival medicine Tarceva.
But Iressa proved no better than a placebo in extending lives in the trial involving 1,692 patients.
Tarceva - made by OSI Pharmaceuticals, Genentech and Roche - has already proved to be successful in helping prolong the life of lung cancer patients.
AztraZeneca has now appointed a new executive director to the board.
John Patterson will be in charge of drug development.
The company said Mr Patterson would make "substantial changes to the clinical organisation and its processes".
"I am determined to improve our development and regulatory performance, restore confidence in the company and value to shareholders," said chief executive Tom McKillop.