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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

« Enzymes Do Whatever They Want To | Main | Spectroscopic Days »

September 12, 2006

Walking the Plank at Bristol-Myers Squibb

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Posted by Derek

As had been expected for several days, Bristol-Myers Squibb CEO Peter Dolan was ousted today, along with general counsel Richard Willard. This is part of the fallout over the Apotex disaster, and it was looking increasingly like the company was either going to have to fire these two or face possible charges.

I can recommend this analysis by Robert Steyer at TheStreet.com. As he points out, the abortive Apotex deal was both stupid and embarrassing. BMS had already been in trouble over channel stuffing, inflating its wholesale numbers to meet targets, so it wasn't the best time to sign an envelope-pushing deal with a competitor to restrict supply.

Bristol-Myers Squibb, for its part, has released a statement on the Apotex deal, which contains this ringing declaration of principle:

". . .there is no evidence from which to conclude that the company or any of its employees acted unlawfully."

Well, OK then! Actually, I'm sure that's true. But if you restrict that statement to the boardroom and replace the word "unlawfully" with "intelligently", we could have some room to negotiate here. There have been signs for years now. Under Dolan, BMS has grievously overpaid for several assets (in my view and that of many others) and made some serious high-level mistakes. It's also been a rather grim investment during his tenure. I mean, I mock Pfizer for its stock performance, but you'd have been better off owing it than BMS over the last few years - heck, you'd have been better off owning Merck and riding out the Vioxx news. Don't believe me? (To be fair, your best investment choice among those three would have been to bury your money in a coffee can in the backyard, but you don't often get that option from the typical financial advisor).

Now, I made the argument here a month or two ago that CEOs don't matter as much as people think they do - but I left myself some room to maneuver, because that statement applies to anyone reasonably competent. Some of my readers made the point that the people at the top can set the tone for an entire organization, for better or worse, and perhaps this is a good example. I hope the company gets its act together, because it should be a bigger force in the industry than it is. The past few years, from what I can see, have been a wasted opportunity, and this is no time to be wasting them.

Comments (7) + TrackBacks (0) | Category: Business and Markets


COMMENTS

1. Insider on September 13, 2006 2:45 AM writes...

Re your last paragraph.

What about a company's chairman?

BMS's chairman was offering Dolan 100% support only a couple weeks ago.

Now look!

Poor judgement? Reason to go???

Permalink to Comment

2. Derek Lowe on September 13, 2006 5:59 AM writes...

I take any statement of "100% support" in politics or high-level business to be more or less background noise. Look at the number of executives, candidates, coaches, etc. who've been launched down the garbage chute after such expressions of confidence. . .

Permalink to Comment

3. Misterzeta on September 13, 2006 9:47 AM writes...

You're right about the management issues of BMS and the overall quality of a company relying over just a couple of ageing blockbuster. But your financial comparison chart is actually misleading, because if you move the timeline down to 2 years instead of 5, you'll see that BMS loses less money than the other 2 companies !

Numbers tell what you want them to !

Thanks for the nice work and comments anyway.

Permalink to Comment

4. GATC on September 13, 2006 10:05 AM writes...

He was way too young to be a CEO in the first place; maybe at a start-up building computers in a garage in CA.........

Permalink to Comment

5. Ed Vawter on September 13, 2006 11:36 AM writes...

Having worked for BMS in the early 90's, I can say this is the kind of thing you get when folks making the decisions are lawyers rather than people who have spent a lifetime working in the industry. I always felt, even back then, that they tried to push the limit too far too many times.

Permalink to Comment

6. John Thacker on September 13, 2006 3:24 PM writes...

Under Dolan, BMS has grievously overpaid for several assets (in my view and that of many others) and made some serious high-level mistakes.

Amusingly, you can make that same statement about another Dolan and the New York Islanders.

Permalink to Comment

7. JUAN YANES on March 7, 2007 1:06 PM writes...

I HAVE A PRESCRIPTION FOR ERBITUX (CETUXIMAB) FOR A RELATIVE WHO LIVED IN CUBA WHO HAS LUNG CANCER AND HER DOCTOR PRESCRIBED THIS MEDICATION. COULD YOU TELL ME WHERE CAN I PURCHASE THIS ITEM. THANKS

Permalink to Comment

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