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SMITHKLINE BEECHAM DRUG BUSINESS WILL BE HEADED FROM LONDON BY EX-SQUIBB

Executive Summary

SMITHKLINE BEECHAM DRUG BUSINESS WILL BE HEADED FROM LONDON BY EX-SQUIBB President Jan Leschly in a major post-merger top management change effective June 11. Leschly will be stepping into one corporate melding job after walking away from a similar situation nine months ago. He left the top operating post at Squibb in mid-October of last year, within three months of the Bristol-Myers Squibb merger. Leschly was with Squibb for 10 years, joining the firm in 1979. He had served as pharmaceutical president of the Danish firm Novo before joining Squibb. Leschly, 49, will head the SmithKline Beecham ethical drug businesses with the title of chairman-pharmaceuticals. He will replace John Chappell who has held the post since the merger. Chappell, who reported to SmithKline Beecham Chief Executive Robert Bauman after the merger, was a 27-year veteran of the SmithKline drug business. Chappell, 53, is the second experienced drug industry exec to leave abruptly after working closely with Bauman during Beecham's attempt to move into the ranks of the major worldwide drug companies. Beecham hired James Andrews from Sterling to help in its initial expansion search in the drug industry. Andress left the organization and the drug industry in October 1989 after the merger ("The Pink Sheet," Oct. 16, T&G-2). Chappel was also a SmithKline Beecham board member. Leschly was generally regarded as a protege of, and potential heir-apparent for, Squibb Chairman Richard Furlaud during his decade of affiliation with that business. After the Bristol-Myers merger, Leschly's position within the combined businesses was much less clear. When he left Bristol-Myers Squibb, Leschly was a co-equal on the organization charts with the head of Bristol-Myers ethical drug business, Wayne Davidson, and the heads of Bristol-Myers' other major operating segments. Like several of the departing top Squibb execs, Leschly left with a lucrative package: according to pre-merger agreements, Leschly was in line to receive at least$2.1 mil. in salary continuation benefits and Bristol-Myers Squibb stock worth about $4.5 mil. at the time of the merger. In the SmithKline Beecham organization, Leschly will have the top ethical drug position and a more secure place in a management group that has been greatly thinned during recent years. A new second spot in the drug management is being created for Frederick Kyle. A veteran of the international pharmaceutical business at SmithKline and Richardson-Merrell, Kyle, 57, has been president of U.S. pharmaceuticals since 1988. He will now assume the title of president of commercial operations (pharmaceuticals), in charge of manufacturing and marketing worldwide. He will be located in Philadelphia. The company says that it is searching for a new head for the U.S. business. SmithKline Beecham has experienced a significant experience drain among its U.S. pharmaceutical management group. In addition to Chappell's recent departure and the stream of SK&F losses prior to the merger, the firm recently has lost its top Beecham U.S. drug execs: Ted Wood (president) resigning in April and Jon Kaeuper (head of anti-infectives) moving to Fujisawa-Lyphomed in June. In interviews on his appointment, Leschly is stressing his challenge vis-a-vis the company's $550 mil. annual pharmaceutical R&D budget. SmithKline Beecham R&D Chairman Keith Mansford will report to Leschly. Squibb's success with Capoten fueled that company's growth during Leschly's time with the company. A large R&D pipeline was built at Squibb under the leadership of Leschly and current Glaxo Chief Operating Officer Charles Sanders. As head of SmithKline Beecham's drug business, Leschly will be in head-to-head competition with two of his former top associates at Squibb, now upper echelon execs at Glaxo: Sanders and Glaxo Chairman Earnest Mario. Leschly, a Danish citizen, may have a more immediate challenge: to draw on his international background and experience in an attempt to bring in near-term product candidates for the U.S. market. SmithKline-Beecham is waiting on an NSAID approval in the U.S. for Relifex. A 5-HT uptake inhibitor antidepressant Aropax (paroxetine) reached NDA filing in November 1989 ("The Pink Sheet" April 9, p. 9). Squibb created a joint venture with Novo during Leschly's tenure with the company.

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