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GLAXO HOLDINGS NAMES SYKES (R&D) AND HUMER (MARKETING) AS MANAGEMENT TEAM

Executive Summary

GLAXO HOLDINGS NAMES SYKES (R&D) AND HUMER (MARKETING) AS MANAGEMENT TEAM to replace outgoing Glaxo Holdings plc CEO and Deputy Chairman Ernest Mario, PhD, in a management reorganization announced March 11. Former Group R&D Director Richard Sykes, PhD, will assume Mario's title. Franz Humer, PhD, will support Sykes as chief operating director, a new position that puts him in charge of all Glaxo operating companies outside the U.S.; Humer was previously group director in charge of marketing. Glaxo's U.S. subsidiary will report directly to Sykes. The shake-up is designed to "extend the executive responsibility at the very top to a broader team" as well as "strengthen our central organization to assist the Board in implementing the Group's policies and strategies," Glaxo said. The shift to Sykes and Humer represents a de-Americanization of Glaxo's senior corporate management and perhaps a diminution of the influence of the U.S. subsidiary within Glaxo's corporate political structure. Mario's meteroic rise to the chief executive post of the British holding company within three years of joining the firm reflected the emergence of Glaxo, Inc. (the U.S. subsidiary) in a leading position among Glaxo's worldwide operations. Through the six months ended Dec. 31, 1992, the U.S. operations provided fully 38% of Glaxo's total worldwide sales. With Mario at the center of Glaxo's worldwide operations, the interests and business culture of the U.S. subsidiary were pre- eminent. The head of the U.S. operation, Charles Sanders, MD, will continue to sit on the Glaxo Holdings board and will have a degree of special status, reporting directly to Sykes. The other regional directors and European operations will report to Humer. Sykes, 50, has been R&D director since 1987. He joined Glaxo for a second career with the company in 1986 after nine years at the Squibb Institute for Medical Research, where he was VP- infectious and metabolic diseases. Mario and Sanders also joined Glaxo in the wave of emigres from Squibb in the mid 1980s. Sykes' first stint at Glaxo extended from 1972 to 1977, during which time he was head of the antibiotic research unit. He received his doctorate in microbial biochemistry from Bristol University and is a visiting professor at King's College in London. As chief exec, Sykes is described as becoming "responsible" to Chairman Sir Paul Girolami "for managing the worldwide group." Glaxo's corporate affairs and fund management operations will report directly to Girolami. Humer is a 12-year Glaxo veteran who started out as area controller for Southern Europe and became the director of marketing development and product licensing in 1986. He was also responsible for Glaxo's operations in Eastern Europe, Africa, the Middle East and Scandinavia. Humer, 46, was named to Glaxo's board in July 1989. He is a familiar figure to the U.S. financial community, having made a major presentation on Glaxo's commercial strategies in New York in December 1990 ("The Pink Sheet" Dec. 10, 1990, p. 11). Mario's resignation statement cites "differences of opinion over the running of the business" as the reason for his resignation. Mario moved to the top management spot in May 1989, three years after joining Glaxo's U.S. subsidiary in 1986 as president and chief operating officer. Mario's statement says: "I want to emphasize that my resignation has been made in an amicable and constructive manner." The timing of Mario's departure coincides with a flap in the British press over the future of the company's flagship product, Zantac. The acknowledgement of a management dispute and the installation of a new team may act as a cathartic to distract some of the negative attention to the company's product line. The firm is on the verge of bringing Imitrex (sumatriptan) injectable to the U.S. market. A launch meeting for the sales force is set for the week of March 15-19. Two points of contention are said to have catalyzed the management differences at Glaxo. One was the domination of the American business culture over Glaxo's other operating subsidiaries. The other was a debate over the company's commitment to businesses outside of the prescription drug field. Mario's departure is understood to have been precipitated by a particularly heated recent board meeting at which the company's strategy for expansion into the OTC drug business was a key subject. Glaxo announced in late January that it was reconsidering its OTC strategy with the appointment of managing director Arthur Pappas to "develop and implement Glaxo's strategy for the over- the-counter market in respect of the Group's present product portfolio." Presumably, an OTC version of Zantac is the company's first priority. Mario was said to support the OTC effort and to have perhaps been urging a major acquisition; Girolami is believed to favor a primary commitment to prescription drugs. Pappas and the OTC effort will report to Humer.
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