Shire CEO to Retire in 2013; Bayer’s Ornskov Gets Top Job
Shire Plc (SHP) said Bayer AG (BAYN)’s Flemming Ornskov will take over as chief executive officer of the world’s biggest maker of attention-deficit disorder drugs, following the retirement of Angus Russell next year.
Ornskov is chief marketing officer and global head of strategic marketing for general and specialty medicine at Bayer, Dublin-based Shire said today in a statement. The company, which has management offices in Basingstoke, England, also reported third-quarter profit that missed analysts’ estimates.
The executive takes over a company with a market value of almost 10 billion pounds ($16 billion) and annual sales of $4.2 billion, built by Russell with more than two dozen acquisitions since 1999. Russell, 56, has been with Shire for 13 years and has worked in the pharmaceutical industry for 32 years.
“When I joined it, we were this little specialist company that was like others, reformulating” medicines, Russell said on a conference call with journalists. “That became a model that wasn’t sustainable. Then we got into rare genetic diseases. Now we’re forging our own way.”
At Bayer, Ornskov presided over growth in the company’s Aspirin brand and fought challenges to the Yasmin group of contraceptives. Danish by birth and a doctor by training, he studied business at INSEAD in France and earned a master’s degree in public health at Harvard University. He has headed the cardiovascular and diabetes franchise at Novartis AG (NOVN) and led biotech companies in the U.S. and in Denmark before taking a job at Bausch & Lomb Inc. He joined Leverkusen, Germany-based Bayer in June 2010.
“Flemming is an excellent successor and I’m confident he will lead the company into its next era of growth,” Russell said on the call. Ornskov will be based at Shire’s U.S. offices outside Philadelphia.
Russell, who got married last year, said he doesn’t expect to take on another executive role.
“One of the major issues is spending more time with my family,” Russell said. “I have many interests, both business and non-business.”
Chairman Matthew Emmens said Russell has “turned his head toward race cars and family. He wants to go play. We appreciate what he’s done.”
Shire began its search for a new president for its specialty pharmaceuticals business in April, and wanted to hire a candidate who could be a successor to Russell, the company said today.
“We are a bit confused by this disclosure given it appeared that Angus was still very much engaged in the business and had been a key component in the transition/creation of the current Shire,” Cowen & Co. analysts led by Ken Cacciatore wrote in a note to investors. “The explanation given at this point is the business is expanding further and more aggressively into international markets in which Ornskov has significant experience.”
Shares (SHPG) of Shire closed down 0.5 percent at 1,769 pence in London. The stock had lost 20 percent this year through yesterday, including reinvested dividends, compared with a 15 percent return in the Bloomberg Europe Pharmaceutical Index. (BEPHARM)
Shire plans to buy back as much as $500 million in shares after ending the quarter with more than $1.3 billion in cash. The repurchasing program won’t limit the company’s ability to make acquisitions, the company said. Shire is seeking purchases in the areas of rare genetic diseases, blood disorders, neurodegenerative diseases, gastrointestinal illnesses, regenerative medicine, diabetes and skin repair.
“We will continue to be an acquisitive company,” Emmens said on a conference call.
Earnings per American depositary share, excluding some items, rose to $1.36 from $1.28 a year earlier in the third quarter, Shire said in a separate statement. The average estimate of 12 analysts compiled by Bloomberg was for profit of $1.46. Revenue was little changed at $1.1 billion, compared with the average analyst estimate of $1.16 billion. Currency fluctuations reduced reported sales by $28 million, Chief Financial Officer Graham Hetherington said.
Sales of the Vyvanse pill for attention-deficit hyperactivity disorder rose 24 percent to $247.1 million. Revenue from Intuniv, another ADHD medication, increased 23 percent to $69 million. Sales of Adderall XR, also for ADHD, dropped 32 percent to $32 million amid increasing generic competition.
Royalties and other revenue for the full year will be about 15 percent to 20 percent lower than last year, compared with a previous forecast of 25 percent to 35 percent, Shire said.
The results put Shire on track for earnings growth of at least 10 percent this year, which the company predicted it would achieve when it announced second-quarter results on Aug. 1. Shire expects product sales to increase by about 12 percent in 2012.
“Shire’s growth has slowed because of generic competition to Adderall XR showing that it does face some of the issues facing big pharma,” Mick Cooper, an analyst at Edison Investment Research in London, said in an e-mailed statement. “However, the underlying growth remains strong and Angus Russell will be leaving Shire in a very strong position.”
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