Last Sunday the board of directors at Pfizer, the world's largest pharmaceutical company, announced that Jeffrey Kindler was stepping down from his position as the company's CEO. The usual platitudes were expressed about Kindler wanting to spend more time with his family, away from the 24/7 demands of the job. Industry observers offered more plausible reasons, including some of the following.
• The board was disappointed that Pfizer's stock performed more poorly than that of its Big Pharma competitors
• Kindler's vision for the company consisted of relying on internal R&D for growth, instead of the serial megamergers that marked his two predecessors, yet Pfizer's poor performance in clinical research under Kindler led the board to replace him
• Kindler's refusal to name a chief operating officer, coupled with his own disengagement from research and marketing activities, "cost him his job as chief executive."
All these perspectives probably have some validity. The only one that appears dubious is from the usually insightful Derek Lowe. In essence Lowe, a lab scientist working in pharma, argues that it makes no difference who captains this Titanic because the Big Pharmas are too big, bureaucratic and sclerotic to be effective, regardless of the leadership.
While there's certainly an element of truth to this, Lowe's observation here represents the knee-jerk reflex of his occupation. Pharma's lab people must continually suffer the frustrations of working as subordinates to business managers and the larger the business entity, the stickier the red tape, the greater the delays and the more bizarre the budgeting processes they must endure. For the men and women in white coats, the whole environment often seems antithetical to scientific advancement.
To put Lowe's complaint in perspective, however, people during the 1980s and early '90s said many of the same things about IBM's diseconomy of scale and hidebound processes until Lou Gerstner took over and transformed the company into an IT consultancy that was vertically integrated with hardware and software. In other words, leadership can make a substantial difference and, as the former head of Novartis' pharma business, Thomas Ebeling, said last year, the past two generations of pharma leadership have been horrendous.
In the case of Pfizer, the questionable leadership starts with the board. The relevant question is not why the board decided to replace Kindler on Sunday, but what in the world were they thinking in 2006 when they appointed him as their CEO? Here's a guy who: (a) is a lawyer, an occupational disqualification if there ever was one; (b) didn't know his ass from an aspirin about the pharmaceutical industry and (c) possessed management experience limited to two years at the Boston Chicken division of McDonald's. No wonder one of Kindler's rivals for the CEO position in 2006 threw a psychotic fit on the top floor at 42nd Street. She was probably thinking that all her Pfizer stock and options would remain permanently under water if the board put this guy in charge of running the company. It turns out there was some remarkable foresight in her episode of madness.
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