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"Big pharma CEOs: The winners and losers"

This just in from CNN, so it must be true:

WINNER: Bob Essner CEO Wyeth
LOSER: Peter Dolan, soon-to-be-ex-CEO (?) Bristol-Myers

Here's the scoop from CNN. CNN has compared the performance of various drug company CEO's. Performance, you know the word that applies to all employees when they get their raise, EXCEPT the CEO.


The arena's worst-performer was Bristol-Myers Squibb CEO Peter Dolan. Since he took over Bristol on May 1, 2001, the 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 and 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.

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."

58% drop in stock value equals "superb job." IF you are the CEO.

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 and 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 (down $0.67 to $29.94, Charts) 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," where 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.


I remember Bob Essner. I used to work for him. At the last lunch we attended together he did something that I still haven't forgotten. He took his seat assignment card from his table, moved it over to my table and put it next to mine, then moved the other person's seat assignment to his old table. Then he sat down next to me and spent the lunch talking with me. Never knew why he did that. I left shortly after that.

Robert Essner of Wyeth has emerged as the best-performing CEO in the U.S. drug industry. Wyeth has enjoyed a stock price gain of about 28 percent since Essner took the No. 1 job on Jan., 1, 2003, though the New Jersey-based company still underperformed the S&P 500's gain of 49 percent during that same period.

How did Essner do it? Analysts say that Wyeth's stock price had already bottomed out before he arrived because the fen-phen scandal that preceded him. Fen-phen is a diet drug combo that Wyeth, formerly known as American Home Products, withdrew in 1997 after it was found to increase the risk of diseased heart valves. Two years later, the company paid a $3.75 billion settlement to thousands of former fen-phen users.

Since then, Wyeth's core business has become "one of the best in the industry," said LeCroy of Natexis Bleichroeder, with a solid pipeline and few patent expirations.

"We see this a lot when a CEO comes in at the bottom," said LeCroy. "If you come in at the bottom, you're set up for success."

Me thinks that this should really help Fred Hassan at Schering-Plough. Imagine if he'd still been at Pharmacia? The company would have been in a downward spin and his reputation gone. Instead he had the luck to be pushed out by Pfizer, who took over the products that later bombed. Fred moved to Schering, a company with major issues. I wouldn't be surprised if he comes out on top in a few years. After he's sold Schering to someone else.


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