Thursday, March 05, 2009

The Horse Race at Bristol

We admit to being impressed with the smaller-is-better strategy from Bristol-Myers Squibb under CEO Jim Cornelius.

He didn’t really have much choice, of course. The company’s got nearly $8 billion in revenue at risk by 2012 from the patent expirations of Plavix and Abilify. And Bristol doesn’t have the pockets Pfizer does to go buy itself a couple of years of earnings respite (see our analysis of Wy-Pfi here).

Instead, Bristol is going to take its lumps – and then re-set the growth clock from a smaller base with the products that will then be maturing from its “string of pearls” deals. And those products will have made Bristol a very different company – a specialist biopharma.

So granted Bristol is still independent when that time comes, who should run it? In creating a four-man executive committee, including himself, Jim Cornelius looks to have fired the starting gun in a three man race, with president and COO Lamberto Andreotti in pole position. Andreotti is a marketing guy – with as much or more experience in the kind of products Bristol is getting away from as in the products Bristol is going towards. He’s never run a biotech company, certainly. But since the directors appoint the CEO, a betting man would wager they’ll go with one of their own -- and Andreotti's just been appointed to the board. That's what the directors did last time, after all, appointing Cornelius to what was then supposed to be an interim role.

Then there’s Jean-Marc Huet. Smart young guy – and if not entirely the architect of Bristol’s spin-off strategy, then certainly its field commander (he arrived in ’08, after the sale of the imaging business and when the Convatec deal was well underway). And he was a pretty successful officer, too: the Mead-Johnson IPO managed to raise $720 million in what seems like the only IPO in forever. He gets pretty good marks from investors – Bristol’s stock has done better than most Big Pharmas since Huet’s arrival. And Cornelius was a CFO as well (a dim memory tells us he was the youngest CFO in Lilly’s history). But Huet doesn’t have much experience in health care (his background is more in the consumer world) – and right now, Big Pharma’s front-and-center example of a non-health care exec running a pharma, Jeff Kindler, hasn’t been winning too many admirers.

Elliott Sigal, the last member of the triumvirate: a biotech guy (was CEO of Mercator Genetics) and quite definitely the architect of the company’s scientific externalization strategy and its focus on high-medical-value, focused-market drugs. Along with an impressive string of deals, Sigal’s presided over an extraordinarily productive time for Bristol’s R&D – nine NMEs approved in five years, by our count (and yes, we know – can’t give him all the credit for that good fortune; have to acknowledge his predecessors, including the late James Palmer). So could Sigal get the top job? Maybe. But since Merck’s Roy Vagelos, Big Pharma’s been too chicken to appoint an R&D guy to run the business.

So the smart money’s on Andreotti. But Cornelius – as anyone who knows him can tell you – is a pretty close-to-the-vest guy. And he’ll undoubtedly have the biggest say in who gets to be his successor.

Image from Flickr user and used under a creative commons license.

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