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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: derekb.lowe@gmail.com Twitter: Dereklowe

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In the Pipeline: Don't miss Derek Lowe's excellent commentary on drug discovery and the pharma industry in general at In the Pipeline

In the Pipeline

« Good News, Now That I Think About It! | Main | Hobson's Choice »

July 30, 2006

Pfizer's Man at the Top

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Posted by Derek

I'm actually going to try to show some restraint and not make snide comments about Pfizer's announcement of a new CEO. True, Hank McKinnell is retiring at least a year before he said he was going to. But hey, I wouldn't want to be running Pfizer right now, either. And true, Pfizer's stock is down over 35% over his tenure - but as you can see from this chart, it wasn't until the first part of 2004 that PFE and the S&P 500 index definitively parted ways. And it's true that the new CEO, Jeffrey Kindler, is a lawyer rather than a scientist or businessman, has only been in the drug industry since 2002, and came to Pfizer from McDonald's.

The reason that I'm not throwing a fit about this is because I think, to a good first approximation, that it doesn't matter very much who the CEO of a large company is. As long as they're reasonably confident and competent, and not noticeably larcenous, it doesn't matter. I realize that I've just contradicted whole shelves of business books, but keep in mind that many of these are written by CEOs and/or the people that love them. I don't have much use for cults of personality, and that's what I think you get when you make too big a deal out of the top job. You can fill in the outlines of my opinion of, say, Jack Welch.

So I wish Jeffrey Kindler luck. As he's probably already noticed, he's in a rather different industry than the ones he's worked in before - and he shouldn't trust anyone who tries to tell him different. He should also show anyone the door who tries to make a case for exceptionalism, that Pfizer can succeed as a great behemoth because they're just so darn Pfizery. No, all he needs are a lot of smart, hard-working people, a lot of money, and - not least - some good fortune. Which is all anyone needs to be a success.

Comments (11) + TrackBacks (0) | Category: Business and Markets


COMMENTS

1. Insider on July 31, 2006 2:24 AM writes...

Good to see you using some restraint, Derek!

I, on the other hand, plan to "let rip".

Cheers.

Permalink to Comment

2. burt on July 31, 2006 10:45 AM writes...

It's about 4 years too late.

When he bought PHA, he bought two assets: the products and the people. He threw away about 90% of the more valuable asset. Good people can always fill your pipeline for you; good products only last until patent expiry. Moreover (other than St. Louis, which stayed open), the very few people he did relocate were of the under 40 crowd; the people least likely to be able to drive a project home.

The PHA diaspora will be making money for OTHER companies. In the mean time, I am hoping my PFE stock will see some bouyancy over the next few years.

But- a lawyer?

Permalink to Comment

3. secret milkshake on July 31, 2006 11:07 AM writes...

The problem were the unrealistic promises made to stockholders before the merger. To justify the cost of the merger, they have to conjure all kinds of rosy predictions - not only about combined sales but also about "savings by synergy". They were talking about 2 billions/year in post-merger savings - that means lots of people. They were hesitant to fire Pfizer folks and close the old Pfizer sites - so most of the layoffs came from Pharmacia. Merit, science, record of achievements - this had nothing to do with the decision. It was all about corporate megalomania, about Hank and his boys.

Permalink to Comment

4. burt on July 31, 2006 11:26 AM writes...

"Merit, science, record of achievements - this had nothing to do with the decision."

I was amused when they bought Esperion (?), a Michigan cardiovascular company born from the ashes of the Warner-Lambert take over (The W-L buy was pre-Hank, I think, but still indicative of "the problem with PFE management"). Cost them a billion, but, heck, it's only shareholder money.

Permalink to Comment

5. SRC on July 31, 2006 10:10 PM writes...

Derek,

I fully share your views on CEOs in general and Jack Welch in particular (you definitely should read this book).

Look for PFE to start "super-sizing" capsules, or offering product tie-ins with movie characters. Hey, it worked before...

Permalink to Comment

6. MTK on July 31, 2006 10:33 PM writes...

Well, I'll be a voice of dissent here.

a) I do think the CEO makes a difference. Maybe not in reality, but in perception, both internally and externally. And perception becomes reality.

b) For those who think the CEO does not make a difference, then what does it matter that this guy doesn't a long Pharma background? You can't have it both ways. Either the CEO is important and you better get someone experienced in the industry or it isn't in which case just get the best suit.

c) SRC actually has a point. Big Pharma ain't about R&D. It's about marketing. If you don't believe me, compare the marketing budget to the R&D budget for any of the Big Pharma. Of course, this guy wasn't from marketing at Mickey D's either, he was from legal. That's my beef (pun intended) with the pick. PFE needed a marketing guy.

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7. Kay on August 1, 2006 5:38 AM writes...

Because he is from the outside, perhaps he will have the courage to downsize the least productive research organization in history.

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8. Still Scared of Dinosaurs on August 1, 2006 7:20 AM writes...

Having worked in large and small biotechs, CROs, and even some pharma time, I firmly believe that the CEO makes a big difference. Maybe not always a good difference, but I do think that so much of the difference they make will not be perceived down the org chart.
In fact I suspect that the better the CEO the less apparent most of his/her contributions will be. Jack Welch was a glory hound, and it's rare to find folks in power who don't become enamored of having their booties smooched. Also, displays of power such as the occasional summary execution are good for the ego. Real leaders don't fall for this, but how many of them can you point to?
In pharma...in industry in general...anywhere?

Permalink to Comment

9. JSinger on August 1, 2006 8:33 AM writes...

Of course, this guy wasn't from marketing at Mickey D's either, he was from legal.

Also, my first reaction was "Hey, McDonalds is doing great these days!" but it seems like he left there just before they started turning things around.

Permalink to Comment

10. SRC on August 1, 2006 11:48 AM writes...

To follow on MTK's comment, big pharma is primarily about marketing, along with regulatory affairs, and manufacturing.

Is research and early development really compatible with a big company? Many times I don't think so. The personalities required for research and for, e.g., marketing or regulatory matters are just too disparate. A company inevitably collectively takes on one of those personalities, to the detriment of the other functions.

Perhaps the best model would be for big pharma to outsource research to startups, and just license in candidates at the point where their manpower, rock-like organization and financial heft actually add value - gaining regulatory approval, stuffing the distribution channcels, and marketing the hell out of whatever they've licensed.

Conversely, startups who want to become FIPCOs also need a reality check, and to receive the same advice - stick to what you're good at, and where you add value.

Permalink to Comment

11. Joe Y on August 2, 2006 10:06 AM writes...

Probably too late to the game, but Pharma R&D is fine, and pace SRC they do plenty of licenisng, outsourcing, start-up partnerships, etc. It is in PR, Marketing, and plain business savvy that they are gettng killed, exactly, to digress a moment, in the way the AMA is vis-a-vis the ABA, but for the same reasons.

The CEO is extraordinarily important in forming and implementing the corporate strategy. Hiring from outside Pharma is the necessary first step.

Is Jack Welch an egomaniacal blowhard? Sure. Is GE the best-run Fortune 500 in its industries? It's not even close.

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