As lawyer Kindler loses court battles, army man Clark strengthens his defences with a flanking strategy
Every time a new face takes on the mantle of a CEO in a pharma company, bold promises and impressive statements are the order of the day, giving aggrieved shareholders assurance of better times ahead. But perhaps, deep inside, every incoming CEO of a pharma company is well aware that he could be in for several sleepless nights ahead, as he simultaneously keeps track of expiring patents, lawsuits, litigations, et al, not to mention sluggish sales volumes and increasing generic competition. Some make the cut and some don’t and the story of the head honchos of Pfizer & Merck illustrates this perfectly.
When Jeffrey Kindler took the helm of the $139.5 billion Pfizer Inc. in 2006, he dauntlessly proclaimed to completely transform virtually every aspect of doing business with concrete, hard-hitting action plans. The appointment of Harvard Law School alumni Kindler reflected the Board’s decision to elevate a relatively new employee and to reiterate the dominance of legal issues in the pharma sector. In a similar vein, Richard T. Clark, an ex-Lieutenant in the US Army, announced on his appointment as CEO of the $88.7 billion worth Merck & Co. in 2005 that his top priorities would be “meeting needs of patients and building shareholder values.” So here we had two CEOs taking over the helm of two iconic US-based pharma companies facing not-so-iconic prospects. But that’s where the similarities pretty much ended.
Merck & Co. was reeling in the face of litigations against its painkiller Vioxx (introduced in 1999), after receiving complaints of increased heart attacks and strokes from customers. The lawsuits were seriously undermining Merck’s future prospects. Understanding this, Clark ensured that Merck increased its legal reserves for the litigation to $858 million. The reserve, which was set up with an estimate of potential legal cost throughout 2008, finally bore sweet fruits, when over 44,000 plaintiffs got themselves enrolled in a proposed $4.85 billion settlement. In doing so, Clark has set an example for other pharma players. A stiff price to pay, but it has left Merck in a better position to chart its future course; which is exemplary, considering it had been all but written off when the Vioxx imbroglio first reared its head.
On the other hand, Kindler has begun to lose the support of Pfizer’s shareholders. Even after 20 months in office, Kindler has done little to make the shareholders believe that he would “virtually transform every aspect of doing business,” as was stated by him. He has, until now, not been able to find a solution to overcome the impending loss of $13 billion of annual revenue from the cholesterol drug Lipitor, which is slated to lose its patent in 2010 and face competition from generic drugs, apart from simply stating that Pfizer will file for approval of 15-20 products between 2010 and 2012.
Every time a new face takes on the mantle of a CEO in a pharma company, bold promises and impressive statements are the order of the day, giving aggrieved shareholders assurance of better times ahead. But perhaps, deep inside, every incoming CEO of a pharma company is well aware that he could be in for several sleepless nights ahead, as he simultaneously keeps track of expiring patents, lawsuits, litigations, et al, not to mention sluggish sales volumes and increasing generic competition. Some make the cut and some don’t and the story of the head honchos of Pfizer & Merck illustrates this perfectly.
When Jeffrey Kindler took the helm of the $139.5 billion Pfizer Inc. in 2006, he dauntlessly proclaimed to completely transform virtually every aspect of doing business with concrete, hard-hitting action plans. The appointment of Harvard Law School alumni Kindler reflected the Board’s decision to elevate a relatively new employee and to reiterate the dominance of legal issues in the pharma sector. In a similar vein, Richard T. Clark, an ex-Lieutenant in the US Army, announced on his appointment as CEO of the $88.7 billion worth Merck & Co. in 2005 that his top priorities would be “meeting needs of patients and building shareholder values.” So here we had two CEOs taking over the helm of two iconic US-based pharma companies facing not-so-iconic prospects. But that’s where the similarities pretty much ended.
Merck & Co. was reeling in the face of litigations against its painkiller Vioxx (introduced in 1999), after receiving complaints of increased heart attacks and strokes from customers. The lawsuits were seriously undermining Merck’s future prospects. Understanding this, Clark ensured that Merck increased its legal reserves for the litigation to $858 million. The reserve, which was set up with an estimate of potential legal cost throughout 2008, finally bore sweet fruits, when over 44,000 plaintiffs got themselves enrolled in a proposed $4.85 billion settlement. In doing so, Clark has set an example for other pharma players. A stiff price to pay, but it has left Merck in a better position to chart its future course; which is exemplary, considering it had been all but written off when the Vioxx imbroglio first reared its head.
On the other hand, Kindler has begun to lose the support of Pfizer’s shareholders. Even after 20 months in office, Kindler has done little to make the shareholders believe that he would “virtually transform every aspect of doing business,” as was stated by him. He has, until now, not been able to find a solution to overcome the impending loss of $13 billion of annual revenue from the cholesterol drug Lipitor, which is slated to lose its patent in 2010 and face competition from generic drugs, apart from simply stating that Pfizer will file for approval of 15-20 products between 2010 and 2012.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face
