Charting the course in a sea filled with sharks

Feb/11/2007 09:26 Filed in: Pharma Business
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The return of Michael Dell, as CEO of Dell Computers, was hailed as good news by Wall Street which is ironic because the problems at Dell were primarily caused by trying to please the Street. CEO's today not only have to please shareholders but more and more have to cater to Wall Street analysts who don't understand the meaning of the word strategic and all too often are focused on short term outlook rather than long term growth. This is especially true in the pharma business where CEO's are caught in the middle trying to please MBA analysts while focusing on the longer term outlook of their companies.



Pfizer's recent decision to trim up to 20% of its employees was due to some bad news. First a successor to their blockbuster Lipitor failed in clinical trials and second most of their top sellers, Zoloft & Lipitor, are due to come off patent in the near future. What better way to ensure the stock stays attractive than to layoff people? Eli Lilly recently announced another settlement in the Zyprexa litigation and the completed purchase of Icos, the biotechnology company that they comarketed Cialis with. With all this money flowing out Lilly has had to tighten its belt to ensure that they meet the Streets expectations. To do this I am sure that a lot of programs will be cut including investment in R&D. While this will keep analysts happy now it may mean trouble 5-10 years down the road.


I am an avid reader of business magazines, websites and books and one thing is becoming more apparent to me: great leaders are hard to come by ! CEO's are treated like rock stars with perks that range from private jets to exclusive residences. If they stay on, even for a short period of time, they can leave with golden parachutes that ensure they never have to work again. They know that while they are there their goal is to ensure the stock remains attractive even if it means making bad short term decisions. Have 5 drugs in the pipeline? Well we can only afford to fund two for clinical trials and further development so let's pick the two with the biggest potential for ROI. The problem with model of course is that drugs were never looked at in terms of ROI it was always about patients.


Great leaders have a vision of where they are going and how they want to get there. They are not afraid to go against the prevailing winds and chart a course for new markets. It's too bad that most pharma CEO's spend more time looking at the numbers than with their customers because what we do is so important to extending life and providing a better quality of life. Maybe it's time to remind them that the reason we're in business is for people...not banks.
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