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Executive Summary

A.L. LABS NEW HEAD OF OPERATIONS IS CFO JEFFERY SMITH following the resignation of President Richard Storm, the company announced June 30. Smith, 44, chief financial officer for A.L. Labs since 1984, will assume the new title of exec VP and will join a newly-created "Office of the Chief Executive." The office will also include Chairman E. W. Sissener and Vice Chairman Roy Cohen, Storm's predecessor as president and CEO. The office of president will remain vacant for now, Cohen said, while Smith is given the opportunity to prove himself on the job. Storm's resignation comes just six months after he joined the company on Jan. 15 ("The Pink Sheet" Jan. 28, T&G-6). Storm, 58, a thirty-year veteran of the pharmaceutical industry, joined A.L. Labs from Rorer, where he was an exec-VP. Storm has no immediate plans, A.L. Labs said. Storm and the company "mutually agreed" that it would be best for him to resign, Cohen said. Cohen characterized the management changes as an effort to turn toward home-grown management based on "a thorough understanding of the company's business, history and strategy." Storm's background in the research-based pharmaceutical industry did not mesh as well as hoped with A.L. Lab's "unique" corporate profile, Cohen said. A.L. Labs was founded as an animal health business in 1975, and expanded to generic drug development and distribution with the acquisitions of Parmed, Barre-National, and NMC labs. The company's growth has been fueled by its reliance on "value-added" branded generics directed toward niche markets (such as liquid, topical, and aerosol dosages), Cohen said, and not by reliance on R&D. Although Rorer was reshaped through acquisitions and divestitures during Storm's eight-year tenure, A.L. Labs felt that his approach to acquisitions was not suitable for the company. Research-based companies look for different things in an acquisition and operate through large acquisition staffs, Cohen said. Smith's financial background and experience with the company should put him in a position to further "the company's growth strategy . . . within the lean corporate management structure of A.L. Labs," the company said. A.L. Labs has a narrow financing window in which to fund several relatively large acquisitions, a fact that may have lent a sense of urgency to the decision to replace Storm. In September 1990, A.L. Labs secured a two-year $ 220 mil. loan to support acquisitions. The company stressed that it believes that the coming year will be a time of dramatic consolidation in the generic industry, and it wants to emerge as a player. To date, the company has used the funds to expand its animal health line through two acquisitions, but it expects that the bulk of the money will go toward human health acquisitions.

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