Management Turnover as Change Agent

Friday, December 17, 2010

CEO Watch - William C. Weldon, Johnson and Johnson, Update #2

Back in late September we examined for the second time the problems William Weldon, Johnson and Johnson’s JNJ (NYSE) CEO, faced after firm encountered a spate of major over the counter drug recalls. Johnson and Johnson under Weldon’s leadership has not done a great job in handling these problems and for that matter, continues to find itself facing new problems. Just recently one of the firm’s subsidiaries had to recall one of the firm’s over the counter antacid products, Rolaids. Up to this point the board has appeared to support Weldon but we finally Alex Gorskyhave seen some action in this area. Earlier this week J and J, as reported in the Wall Street Journal, announced some management changes that have increased the battle for Weldon’s succession. According to the Journal,

J and J, New Brunswick, N.J., named Alex Gorsky, head of the medical devices and diagnostics unit, and Sheri McCoy, who heads the pharmaceutical unit, as vice chairmen of the executive committee and members of the office of the chairman, effective Jan. 3, 2011.

The race to succeed Weldon had previously appeared to be narrowed to Gorsky and McCoy in September when Colleen Goggins said she planned to step down as head of J and J’s third major unit, the consumer healthcare business. The consumer unit has been beleaguered by a series of product recalls due to quality lapses.Sheri McCoy

Johnson and Johnson must find new ways to get its house in order. Despite good financial results the continuing recall problems could ultimately have a very adverse impact on the firm going forward. Stay tuned as succession plans appear to be moving full steam ahead.

Monday, December 6, 2010

Against the Grain - Pfizer CEO Resigns Unexpectedly

Jeffrey Kindler, Pfizer’s PFE (NYSE) CEO for the last four years, announced his resignation on Sunday. The firm announced that Kindler would be replaced with longtime employee and executive, Ian C. Read. Kindler’s weekend resignation announcement has been interpreted by many as an ouster. Pfizer has been languishing for sometime under Kindler’s tutelage. This has all been happening while many of the other big pharma companies have been doing quite well. Despite a major reorganization and tremendous acquisitions (2009 acquisition of Wyeth Drugs) while in charJeffrey Kindlerge, Kindler, a lawyer by trade with a focus on sales, has found himself under pressure from shareholders and apparently the board. While in charge, Kindler saw a number of research related failures with regard to potential blockbuster drugs and has been in charge asIan C. Read major patented drugs will see their protection expire shortly, e.g., Lipitor.According to the company’s press release Kindler was quoted on the change as follows,

My nearly nine years at Pfizer and, particularly the last four and a half as CEO, have been extremely exciting and rewarding. I feel our team can proudly boast of some transformational accomplishments. However, the combination of meeting the requirements of our many stakeholders around the world and the 24/7 nature of my responsibilities, has made this period extremely demanding on me personally. Now that we are about to complete a full year of operating Pfizer and Wyeth together, with our world-class team fully in place, I have concluded the time is right to turn the leadership of the company over to Ian Read. Ian is an outstanding and experienced pharmaceutical executive who I know will make the next phase of the company’s future a successful one. He is more than ready to take on these responsibilities and I am excited at the opportunity to recharge my batteries, spend some rare time with my family, and prepare for the next challenge in my career.One year stock performance of Pfizer

The sudden change at Pfizer seems to make a great deal of sense. The appointment of Read, an in-house executive with vast experience, is the right type of change for such a large company that needs to get back down to basics on all its different business fronts. Keep a close eye on the firm as we move forward. Read is already in charge.