Wednesday, December 8, 2010

Can New Leadership Rejuvenate Big Pharma?

The last five years have not been great ones for the large-cap pharmaceutical space. Not only has the industry been tainted by high-profile safety scandals, but many would-be blockbuster drugs have failed late stage trials. While that has been going on, generic companies have constantly chewed at the rich profit margins of branded drugs. Making matters even worse, the industry's leaders apparently decided to play things safe; launching huge intra-industry mergers and waves of cost-cutting in favor of funding innovative and far-sighted R&D.

What is striking, though, is how relatively short the tenures of Big Pharma's current crop of CEOs are. Five years' experience on the job qualifies one as a "veteran", and many major firms have switched leadership relatively recently. While it has been quite a long time since Big Pharma has produced a CEO on par with Steve Jobs, Larry Ellison or John Chambers, imagine the buzz in the tech-world if these major top kicks all left in relatively close succession. (For more, see Becoming A CEO.)

Pfizer is the Latest ...
The most recent major drug company to see a change at the top is Pfizer (NYSE:PFE), as the company announced Monday morning that Jeffrey Kindler was resigning/retiring and that Ian Read would take over the position of CEO.

This move was not part of a formal succession plan and comes as something of a surprise. Mr. Kindler was not necessarily widely-loved by Pfizer's analysts (or long-term shareholders), but it is not as though this resignation was a response to a collection of torch-wielding mobs outside Pfizer's corporate headquarters. Still, for a company that once produced double-digit returns on capital, the performance under Kindler's watch was not exemplary and the company has been slow to recharge its pipeline with promising compounds to mitigate oncoming patent expirations. (For more, see Measuring The Medicine Makers.)
 

Please click below to go to the full article at Investopedia:
http://stocks.investopedia.com/stock-analysis/2010/Can-New-Leadership-Rejuvenate-Big-Pharma-MRK-PFE-LLY-AZN-SNY-GSK-NVS1208.aspx

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