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GLAXO's OTC STRATEGY DEBATE PRECIPITATES MANAGEMENT CHANGES

This article was originally published in The Tan Sheet

Executive Summary

GLAXO's OTC STRATEGY DEBATE PRECIPITATES MANAGEMENT CHANGES at the top of the British parent, Glaxo Holdings PLC. The March 11 installation of R&D director Richard Sykes, PhD, to CEO and deputy chairman and Franz Humer, PhD, to chief operating director to replace departing vice-chairman Ernest Mario, PhD, is believed to have stemmed from a particularly heated recent board meeting in the U.K. where Glaxo's approach to the OTC product market was debated. 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 (ranitidine) is the company's first priority. Mario was said to support the OTC effort and perhaps a large acquisition to help accomplish that objective; Chairman Sir Paul Girolami is believed to favor a primary commitment to prescription drugs. With the departure of Mario, Pappas and the OTC effort will report to Humer. Mario's resignation statement cites "differences of opinion over the running of the business" as the reason for his resignation. The company described the shakeup as 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 the diminution of the role of U.S. operations in the corporate culture. Mario's meteoric 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) as the brightest star 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. 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. Humer 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 new position puts Humer in charge of all Glaxo operating companies outside the U.S.; he was previously group director in charge of marketing.
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