Just how dysfunctional are most biopharma companies ? For an answer to that you need to read an article in this month’s Fortune magazine called : “What happened at Pfizer ?” The article paints a sad state of affairs during CEO’ Jeff Kindler’s tenure and more importantly it paints a picture of a pharma company more interested in investors and the bottom line than in patients and healthcare.
The article itself is quite lengthy but there are some lessons to be learned. Perhaps the biggest lesson is that a Board should do a hell of a lot more research when appointing a CEO and that research not only has to be around past performance it has to be around management style and leadership. Here are some key tidbits from the article;
- There was the ex-CEO who couldn’t relinquish his power and quietly maneuvered to undercut two successors he had helped install.
- Then there was the human resources chief who divided the staff rather than uniting it.
- Most of all, there was Kindler himself, a bright man with some fresh ideas for reforming Pfizer but a person who agonized over decisions even as he second-guessed everybody else’s actions.
Kindler had an aggressive, combative side according to sources from the writers at Fortune. While at Mc Donald’s he cleaned sacking inside and outside lawyers. He rarely trusted experienced subordinates to perform their jobs without his scrutiny. And when he was unhappy about something, he made his feelings bluntly known — sometimes through angry voicemails left late at night.
From the moment he entered management, Kindler was marked by two traits.
First, he remained a confrontational trial lawyer: He sought knowledge through interrogation; he was skeptical of what he was told, even when it came from people who knew far more about a subject than he did; and he bored in relentlessly on small details, always searching for the sort of nuance that could make or break a legal case — but seemed trivial in other contexts.
The second: For all Kindler’s talents, he remained palpably insecure, acutely sensitive to anything or anyone he feared might undermine his standing. Some years later, after Kindler was named CEO of Pfizer, a CNBC reporter asked him on-air whether “a guy who sold chicken” — Kindler — was qualified to run a pharma company. He didn’t talk to CNBC again for more than a year.
A warning that was ignored ?
Kindler’s selection as CEO came as a shock. One of his direct reports had a particularly dramatic reaction. George Evans was a low-key, respected lawyer who had worked at Pfizer 26 years. He’d been a candidate for the top legal job when Kindler was hired, and was general counsel for the pharmaceutical division. On Saturday, Evans read of his boss’s elevation in the New York Times. On Monday he resigned. “At the end of the day, you have to have some level of respect for the person you are working for,” Evans tells Fortune. “Having watched Jeff in action over a number of years, I just couldn’t work for a company that had him as its CEO.”
For all of Kindler’s lack of pharma experience, he didn’t seem to trust Pfizer veterans that did have it. He often turned to outsiders, including experts and former colleagues, for counsel on business issues. And he employed swarms of consultants, working on initiatives to reorganize Pfizer into business units (instead of geographical regions), change reporting lines, and trim bureaucracy. As long-time staffers saw it, everything — and everyone — associated with the old Pfizer was under attack.
Perhaps the only thing as destructive to Kindler as his inability to trust his colleagues was the one Pfizer executive in whom he did place his trust: Mary McLeod. The head of human resources under Kindler, McLeod would leverage her relationship to the CEO to become both his emissary and a power in her own right. Kindler’s loyalty to her would undercut him at a crucial moment.
Ms. McLeod’s tenure at Schwab, one of her previous employers, had ended disastrously, though there’s no sign Kindler knew that when he brought McLeod in. As Schwab’s head of HR and chief of staff to CEO David Pottruck in the early 2000s, McLeod had proved toxic, according to six members of Pottruck’s executive team. They say she isolated him from other points of view and went to extraordinary lengths to remove rivals. Meanwhile she criticized him behind his back and bragged that she had the CEO under her thumb.
After an internal investigation, Pottruck fired McLeod in 2004, he confirms. In an e-mail sent to McLeod the day of her termination, read aloud to Fortune, Pottruck wrote: “The issues are about the perceptions others have of you around character, integrity and divisiveness … There is a perception that you do not tell the truth.”
According to the article Ms McLeod was using a company helicopter to come to work even as Pfizer was laying off thousands of employees. She also had a salary that was close to a million dollars a year.
The whole plot started to unravel as members of the Pfizer executive leadership team became more disillusioned with Mr Kindlers leadership style, especially his choices to bring in outside executives who had no pharmaceutical experience at all.It all came to a head when three members of the Board summoned Mr Kindler to a meeting at an airport meeting room and promptly asked for his resignation. But don’t feel sorry for him because he left with a nice golden parachute.
My impressions of the story
You have to wonder why in the hell a Board, any Board, would appoint someone who was known to have an abrasive management style ? More importantly throughout this whole story we don’t once hear any Pfizer executive ask “what’s best for our customer or patients ?” It’s all about money and preparing a company for the loss of patent on blockbuster drugs.
Now of course I am aware that the CEO has a primary responsibility to shareholders and to the Board but surely doing what is right for patients and customers can’t be bad for business.
We are left with an impression of a paranoid CEO who micromanaged his people and didn’t trust anyone except people he appointed. That is a bad recipe for a pharma company that was started in the 1800′s in Brooklyn. The damage done by Mr Kindler to Pfizer is still being repaired but we will never know if his decision to close R&D facilities, including the one that developed Lipitor, will have any strategic direction on the future of the company. The scientist who was considered the father of Lipitor was laid off and now works for Genentech.
If you are going to lead you need to trust those around you and make your decision based on what they recommend. However in the pharma industry you also need to ensure that every decision you make is not only based on what is good for investors but good for customers and patients so that employees will choose the right path. It seems that Mr Kindler and Ms McLeod left a lot of damage in their wake and only time will tell if Pfizer can rebound.
- Social Showdown! Boehringer, Pfizer and Sanofi US on facebook (stwem.com)
- Inside Straight: Pfortune On Pfizer (abovethelaw.com)
- Pfizer Exec: This Is How You “Manage Up” And Get Promoted By Two CEOs (PFE) (businessinsider.com)
- Ultimate Transparency is always a Risk (applewoody.wordpress.com)
- A New Take on Pfizer’s Former C.E.O. (prescriptions.blogs.nytimes.com)
- Earnings Preview: Pfizer to report on 2nd quarter (sfgate.com)
- Pfizer to buy pain drug developer Icagen for $56M (seattlepi.com)