Monday, January 17, 2011

Can Roche's New Hippe Pull Some Rabbits Out?

Hunziker's out, Hippe's in. As Roche's CFO, we mean. The Swiss drugs group confirmed Monday the appointment of Alan Hippe, previously CFO at Germany's largest steel maker, ThyssenKrupp. Hippe will replace Erich Hunziker after ten years running the tills at the pharma once dubbed "a bank with a drugs business on the side" (difficult to say which is worse, these days...).

But that comment was from a previous time, that of Hunziker's predecessor, Henri Meier. Meier was the wizard behind the partial acquisition of Genentech; Hunziker is credited with "obtaining favorable conditions" for the $46.8 billion full acquisition -- or "privatization" as Roche puts it in its release -- of Genentech in 2009; in other words, he carried off the great big corporate bond offering.

Perhaps Hunziker wanted a bit more credit than he got, though: German media speculation suggests he wanted the top job at Roche (that's Severin Schwan's job), so his departure "was expected", comments one London-based analyst, "especially now that the integration of Genentech is complete."

Hippe--another ambitious fellow who also, our media friends say, wanted the top job at Thyssen, and quit three years before his contract was due to end -- joins the growing handful of pharma CFOs with a background in heavy industry, where cost-cutting is a rather older friend than it is to the pharma industry. AstraZeneca's Simon Lowth came from Scottish Power PLC (we know how stingy the Scots are); Sanofi Aventis' Jerome Contamine, appointed in 2009, came from environmental services group Veolia.

Hippe's certainly got some slashing to follow through: Roche in September 2010 confirmed that a radical cost-cutting plan was in the works; in November 2010 details of "operational excellence" were released, including CHF1.8 billion in savings during 2011, CHF2.4 billion from 2012 onwards (that's excluding Genentech synergies) and 4880 fewer staff across the U.S and E.U.

Given that sentiment is at "an all time low" for Roche, according to analysts (not so surprising given the string of setbacks, from taspoglutide, to ocrelizumab, to trastuzumab DM1...not to mention Avastin troubles and biosimilar threats (who needs patent expiries, eh?)), Schwan will no doubt be hoping that Hippe can pull some Meier-style rabbits out of the hat, too.

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