Print

Email story

Comment

Email editor

A turnaround artist does it again

Fred Hassan has revived the fortunes of the drugmaker by installing a new executive team and selling a growth plan to all the right people.

By ASSOCIATED PRESS
Published September 21, 2006

KENILWORTH, N.J. - Fred Hassan calls running Schering-Plough Corp. the toughest job he's ever had: taking a drug company in critical condition, treating its ills simultaneously and restoring health.

But within 3½ years, the CEO has managed to put Schering-Plough back in the black, nudge up its stock price and cure most of the disorders he inherited from prior management. Those included slumping sales with little prospect of lucrative new drugs, a demoralized work force and multiple government investigations of corporate wrongdoing and manufacturing violations.

Schering-Plough makes prescription respiratory, cholesterol and hepatitis drugs and consumer items such as Coppertone sun-care lotions, Claritin allergy pills and Dr. Scholl's foot-care products. The company has been on the rebound since Hassan, a Harvard-trained MBA from Pakistan, took over.

"We have made enormous progress," Hassan, 60, said.

Last year, revenue and operating profit were up in all three divisions - prescription drugs, consumer and animal health - and the company had its first profit in three years, $269-million. The stock trades above $21, up nearly 20 percent under Hassan.

"He has come in and done a spectacular job in stabilizing what was a hemorrhaging company and then moving into a growth mode," said Deutsche Bank North America pharmaceuticals analyst Barbara Ryan. "I would say that he was the right man, because he's done the job.

"That doesn't mean that they are out of the woods," she added, noting the company hasn't been giving profit forecasts and has no new blockbuster drugs likely to hit the market before 2009.

With a fairly fixed cost base, Schering-Plough can't improve its bottom line without finding some high-revenue drugs, possibly through licensing or acquisitions, and it would be hard to outbid bigger rivals, Ryan said.

Hassan said he has restored trust with Food and Drug Administration officials, and he also had to win over shareholders, stock analysts, employees and customers with his ambitious five-year plan, rather than sell the company.

"I was able to show the board that this was a clear strategy that we could make happen," Hassan recalled.

It wasn't easy. Revenue had plunged nearly 20 percent in 2003 and was flat in 2004. Schering-Plough posted losses both years - almost $1-billion in 2004 - as its crucial prescription drug division saw operating profit plunge from $2.6-billion in 2002 to $13-million in 2004.

Hassan hand-picked a new executive team, including a research and development head with a strong record of getting new drugs approved, and installed a compliance officer to resolve problems with regulators. He stunned shareholders by slashing their dividend 68 percent and cut bonuses, eliminating his own, then wiped out profit sharing, another taboo.

"People will get behind and really work hard for someone like that because they feel that he's one of them," Ryan said, noting a "very loyal following" of Pharmacia executives went with him to Schering.

Fred Hassan

AGE: 60; born Nov. 12, 1945, in Multan, Pakistan.

PERSONAL: Lives in Morris County, N.J., with wife, Noreen; they have two daughters and a son, ages 17 to 29.

EDUCATION: Bachelor of science in chemical engineering from Imperial College of Science and Technology, University of London, 1967; master of business administration from Harvard Business School, 1972.

PROFESSIONAL: Schering-Plough CEO and chairman since April 2003; CEO of Pharmacia Corp. (previously Pharmacia & Upjohn), May 1997-2003; Executive vice president for pharmaceutical and medical products, and earlier positions at Wyeth, 1989-97.

[Last modified September 21, 2006, 10:01:49]