Pfizer Names 32-Year Veteran Read CEO as Top-Selling Lipitor Faces Rivals
Read, 57, the head of Pfizer’s global biopharmaceutical operations since 2006, replaces Jeffrey B. Kindler, 55, who retired saying he needed to “recharge my batteries” after a “period extremely demanding on me personally,” according to a statement yesterday from the New York-based company. Kindler’s retirement is effective immediately, said Ray Kerins, a spokesman for Pfizer, in a telephone interview.
Kindler was named CEO on July 28, 2006. Since then, the shares have fallen 35 percent before today in New York trading. Pfizer will lose patent protection in the U.S. next year for Lipitor, which had $11.4 billion in sales last year. While the drugmaker moved to make up for the expected losses by paying $68 billion in 2009 to acquire Wyeth, it also has had four setbacks this year in developing its research pipeline.
“This seems sudden,” said Les Funtleyder, a Miller Tabak & Co. portfolio manager in New York, in a telephone interview yesterday. “It hasn’t been an easy ride for” for Kindler, he said. “The stock has underperformed. Pharma in general and Pfizer in particular have had a tough couple of years.”
The board will elect a new chairman to replace Kindler at a meeting within two weeks, the statement said. Pfizer shares rose 24 cents, or 1.5 percent, to $16.96 at 10:19 a.m. in New York Stock exchange composite trading.
“The departure is sudden but I doubt there was one event per se that caused Kindler’s” retirement, said Tim Anderson, an analyst with Sanford C. Bernstein & Co. in San Francisco, in an e-mail. It is “highly likely he was pushed.”
Pfizer’sKerins said Kindler “wasn’t pushed out,” and declined to comment further on the timing of the changeover.
Last month, Pfizer and Bristol-Myers Squibb Co. halted a trial of their experimental blood thinner, apixaban, after an increase in bleeding outweighed benefits for patients who recently suffered a heart attack or severe chest pain. The treatment was being tested to prevent heart complications in patients with a condition known as acute coronary syndrome.
In March, the company said its experimental Alzheimer’s drug Dimebon, which analysts said could have generated $5 billion in annual sales, failed to help patients in a late-stage test. That same month, Sutent, approved for kidney and stomach cancers, failed in two studies to shrink breast tumors, and the experimental drug figitumumab didn’t help lung cancer patients.
Pfizer also said yesterday it was creating a $75 million fund and new compliance panel to settle shareholders’ lawsuits that charge top company officials failed to stop illegal marketing of drugs. Pfizer last year paid $2.3 billion to settle U.S. claims it marketed treatments for unapproved purposes.
“It is in the best interests of the company and our shareholders to reach an agreement that allows us to put this matter behind us on favorable terms,” Pfizer’s Kerins said in an e-mail. The agreement was unrelated to Kindler’s departure, Kerins said.
Months after Kindler took the helm in 2006, Pfizer halted development of its most promising drug in testing, the cholesterol drug torcetrapib, which was intended to help Pfizer offset the loss of sales from Lipitor. To cut costs since, Kindler has fired more than 14,000 workers, closed research labs and manufacturing plants.
The acquisition of Wyeth added the Enbrel arthritis treatment and Prevnar pneumonia vaccine to Pfizer’s product line. The shares, though, fell as much as 19 percent in the six months following the deal.
Pfizer’s price-earnings ratio for the past year is lower than 91 percent of pharmaceutical industry peers and below 97 percent of companies in the Standard & Poor’s 500 index, according to data compiled by Bloomberg. Kindler finishes at a low point; Pfizer’s price-earnings ratio in 2010 is 7.3, lower than the annual average for each year he’s been in charge.
Pfizer raised Kindler’s annual salary to $1.8 million in April, from $1.6 million, “to reflect the increased complexity of the organization,” the company said in a filing in March. His incentive target award increased to $2.71 million, and the grant value of a long-term incentive award rose to $12 million.
The company estimated that Kindler would receive a total of $15.5 million in case of termination of his employment “without cause.” Termination from a change in control of the company, or his death or disability, would have resulted in a higher payout.
Read has been at Pfizer since 1978, and has run Pfizer’s businesses in Latin America, Europe and Africa.
His naming as CEO “is not really a surprise, but what is surprising is the timing,” Miller Tabak’s Funtleyder said.
David Maris, a New York-based health care analyst at CLSA, a unit of Credit Agricole SA, said he expects Pfizer’s shares to reach $25 over the next 12 months. He expects more acquisitions, particularly in emerging markets, he said.
“They know they’re behind in China, and want to do more,” Maris said in a telephone interview. “They know they want to do more in Brazil. China, Brazil and Latin America will be the highest priorities. Now, when they need to drill down and buy individual companies, they will have someone who is much more operationally focused, who can ask the right questions, someone who has been in the drug industry.”
Constance J. Horner, the board’s lead independent director, cited Read’s experience in emerging markets in announcing the change.
Read “has brought to product development a focus and commitment to advance only medicines that have clear value to our customers,” Horner said in the statement. “Today’s business leaders need to understand global markets, drive change and innovation, and move quickly to adapt to competitive pressures. Ian’s track record throughout his career has demonstrated these exact strengths.”
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