Big pharma CEOs: The winners and losers
A look at how the nation's top drug outfits have performed since their respective CEOs took the helm.
By Aaron Smith, staff writer

NEW YORK ( -- Big Pharma's chief executives are navigating some choppy waters thanks to everything from drug patent expirations to consumer lawsuits. But some are faring better than others.

The arena's worst performer was Bristol-Myers Squibb CEO Peter Dolan. Since he took over Bristol on May 1, 2001, the New York drugmaker's stock price has plunged 58 percent, compared to a gain on the S&P 500 Index of about 4 percent in the same period.

Dolan's days as chief executive could be numbered, given his faltering attempt to try to keep the company's top-selling blood-thinning drug Plavix free from generic competition. A generic could drastically erode Plavix's sales, which totaled $3.8 billion in 2005.

Plavix's patent doesn't actually expire for another six years, but the FDA has nevertheless given the OK to a privately held Canadian company, Apotex, to start producing a generic version of the blood thinner.

But since Apotex does not have legal clearance to do this, Bristol has requested an injunction to block generic Plavix, which is before Judge Sidney Stein of the U.S. Southern District in New York. Stein was scheduled to issue his ruling on this on Monday but has yet to do so.

In an effort to stave off Apotex's generic Plavix, Dolan previously offered to settle with the Canadian company for $40 million. However, the Department of Justice is now investigating Dolan as part of an antitrust criminal investigation into that settlement offer.

In answer to news reports that board members were considering giving the Dolan the heave-ho, Bristol chairman Jim Robinson released a statement saying that "Peter [Dolan] has done a superb job in turning around the company" and "has the full and complete confidence of the Board."

But if Bristol's injunction fails to block generic Plavix, then analysts say that could be the coup de grace for Dolan.

"I would expect [Dolan] to get ousted in the next few months," said Jon LeCroy, analyst for Natexis Bleichroeder. "If they don't get the injunction this week, he'll be out very soon."

"My opinion is that Bristol-Myers' assets should be in someone else's hands," said Michael Krensavage, analyst for Raymond James, who believes that the arrival of generic Plavix could force Bristol to cut its dividend or even to sell the company.

This isn't Dolan's first mistake, analysts say. Months after he'd taken the job, in the fall of 2001, Bristol bought ImClone for $1.2 billion with the expectation that cancer drug Erbitux would soon be on the market, but it was held up by the FDA. Then, the biotech's insider-trading scandal surrounding CEO Sam Waksal and Martha Stewart hit.

Also in 2001, Dolan announced that Bristol had been engaged in "channel stuffing," in which wholesalers were persuaded to load up their inventories with billions of dollars in drugs that they didn't need right away. That elevated sales in 2001 but caused them to crash in 2002.

"I've been quite amazed that Dolan weathered the channel-stuffing issue, but I think the Apotex debacle is the end," said Krensavage of Raymond James.

Big Pharma's other CEOs

Out of the six major American drugmakers - including Schering-Plough, Wyeth and Eli Lilly & Co. - only Merck and Pfizer shares managed to beat the S&P's performance since the entry of their new chief executives.

Pfizer's new CEO, Jeffrey Kindler, took the job just last month, on July 28. That's not enough time to read much into the stock price gain of nearly 4 percent, which beat the S&P gain of nearly 2 percent.

But Merck has had its CEO a little bit longer. The stock price for Merck is up 17 percent since Dick Clark became CEO on May 5, 2005, beating the S&P's gain of 13 percent.

Like many new CEOs in the drug business, Clark came in at the bottom, when the company stock had already been battered by the Vioxx scandal, and for now investors are willing to give the new guy a chance.

"Wall Street views these [CEO] changes favorably and they tend to give them a honeymoon period," said Les Funtleyder, analyst for Miller Tabak. "They get a couple of quarters and then they hammer them."

The analysts interviewed for this story do not own shares in the companies mentioned here.

(Correction: An earlier version of this story misidentified the Wyeth stock performance since Robert Essner became CEO. regrets the error.)

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