FILE – In this Jan. 26, 2009 file photo, Jeffrey Kindler, chairman and CEO of Pfizer, speaks at a news conference in New York. Kindler, the head of the world’s biggest drugmaker, Pfizer Inc., has stepped down unexpectedly after less than five years at the helm. (AP Photo/Mark Lennihan, File)
Jeffrey B. Kindler, Pfizer Inc.’s CEO and chairman, abruptly stepped down Sunday after 4 1/2 years leading the world’s biggest drugmaker, saying he needed to “recharge my batteries.”
Analysts, however, said he more likely was forced out by a board and institutional investors unhappy with Pfizer’s languishing stock price, failures of numerous important experimental drugs and a strategy emphasizing repeated acquisitions to bolster revenue and slash costs as a way to improve the bottom line.
Ian Read, who has run Pfizer’s worldwide pharmaceutical operations since 2006 and has spent his entire career at the company, took over immediately as chief executive and president.
Kindler, who reorganized most of the company’s operations and made an imprint on the industry, said he plans to spend more time with his family while preparing for new challenges, according to a company statement. It gave no further details on his departure.
However, Pfizer’s board appears poised to keep more control for now, saying it will elect one of its members as a non-executive chairman within the next two weeks.
Kindler, a Harvard Law School graduate and former McDonald’s Corp. executive who joined Pfizer in 2002, revamped its sprawling pharmaceutical sales operation into five divisions that gave their leaders more control and responsibility. That shift significantly boosted revenue in emerging markets and stabilized sales of older medicines hit by generic competition in the wealthiest countries by promoting them heavily elsewhere.
Kindler also pulled off a huge acquisition that ensures Pfizer remains at the top of the pharmaceutical industry for years to come, buying Wyeth for $68 billion in October 2009. The deal allowed Pfizer to metamorphosize overnight from a maker of blockbuster pills such as cholesterol fighter Lipitor, the world’s top-selling drug at nearly $13 billion a year, to a highly diversified company. It now has an impressive and lucrative biologic drug business, plus veterinary medicines and consumer health products including Centrum vitamins and Advil and Anacin pain relievers.
“Now that we are about to complete a full year of operating Pfizer and Wyeth together, with our world-class team fully in place, I have concluded the time is right to turn the leadership of the company over to Ian Read,” Kindler said in a statement.
The company halved its dividend to help pay for Wyeth — infuriating investors and driving down the stock price. It’s only risen $1.10 in the 23 months since it was announced and is down about 30 percent since Kindler took over.
“I think what you’re seeing is board frustration,” said analyst Steve Brozak of WBB Securities.
He said Pfizer also mysteriously backed out of at least one partnership with a small biotech company whose experimental drug recently passed an important clinical test. Kindler’s latest big acquisition, $3.6 billion for pain drug maker King Pharmaceuticals, may have been the last straw for the board.
Les Funtleyder, health care portfolio manager at Miller Tabak, said he thinks managers of pension and other institutional funds also were frustrated, given that other pharmaceutical companies have generally performed better.
Most of Pfizer’s peers have stock prices two or three times its current $17.62.
“He was dealt a difficult hand when (a promising cholesterol drug called) torcetrapib failed and there was no successor to Lipitor,” Funtleyder said, adding, “He might have done a better job.”
He said the sudden announcement on a Sunday night was suspicious.
The company declined AP requests for interviews with Kindler and Read.
“This is probably a wake-up call for every other CEO that thinks they can buy their way out of a problematic health care market” with acquisitions, Brozak said.
In recent years, Pfizer has suffered multiple failures of promising experimental drugs in the very-expensive late stages of testing, plus other problems. In September 2009, the company got hit with a record $2.3 billion government fine for illegally promoting a number of medicines for unapproved uses that were inappropriate for some patients — a practice that’s widespread in the industry.
But the biggest problem is that Lipitor will face generic competition in the U.S. in December 2011, and it’s unlikely any of Pfizer’s recent deals can make up for the billions in Lipitor sales that will quickly disappear.
Constance J. Horner, the lead independent director of Pfizer’s board, said in a statement that Kindler had recruited talented new leaders, set up more focused and agile business units, and made the company stronger and more focused.
As the chairman of the trade group Pharmaceutical Research and Manufacturers of America, Kindler was instrumental in lining up drugmaker support for this year’s health care overhaul in a deal that ultimately will bring those companies more customers and sales. The industry had vigorously fought and helped defeat the Clinton administration’s attempt to reform health care in 1994, but did an about-face this time.
Read, 57, was promoted in 2006 to head the global pharmaceutical business, which has about 40,000 employees and brings in about 85 percent of Pfizer’s revenue — about $61 billion a year. It sells everything from pain drug Lyrica and impotence pill Viagra to cancer drugs and specialty medicines, generally pricey injected drugs for complex, chronic diseases.
Horner said he “has brought to product development a focus and commitment to advance only medicines that have clear value to our customers,” adding his track record shows he understands global markets and can quickly adapt to competitive pressures.
Read began his career at New York-based Pfizer as an operational auditor in 1978, but his undergraduate training, at London University, was in chemical engineering.
He moved up through leadership positions in Pfizer’s Latin America operations, then oversaw operations in Europe, Canada and other areas. By 2002, he was head of operations in Latin America, Africa and the Middle East.