>> After a year marked by laggardly sales, profit warnings, and soured investments, Bristol-Myers Squibb Co. seeking to ease its pain with a new finance chief… The drug company named pharmaceutical veteran Andrew Bonfield CFO, replacing Fred Schiff…
Schiff left Bristol-Myers in April—and not under the best of circumstances… Company had just lowered its guidance for first quarter and all of 2002… In explaining Schiff’s departure, CEO Peter Dolan stated that he had previously “begun working on CFO succession” as part of his plan to improve the company’s performance. Ouch…
Bonfield joins Bristol-Myers from oil company BG Group, but spent bulk of career at British drugmaker SmithKline Beecham… During his 11 years there, he rose through the finance ranks to become CFO in 1999… Indeed, as CFO, Bonfield was part of team that executed Glaxo-Wellcome M&A deal in 2000, which formed world’s biggest pharmaceutical company… But Bonfield apparently lost out to Glaxo CFO in bid for top finance post of the new drug colossus—and moved on to oil company BG Group just days after completion of Glaxo-Wellcome merger…
In United Kingdom, Bonfield considered something of a boy-wonder… His 1991 appointment to director and VP of corporate accounts at Smith-Kline made him youngest VP in Smith-Kline history…
Bonfield will need to draw heavily on his industry experience at Bristol-Myers Squibb, however… Company garnered criticism last fall for its practice of pressuring pharmacies and drug distributors to buy more drugs than they needed—part of Bristol’s push to boost earnings… Plan backfired as those same customers, still working off their inventories, scaled back their orders for first quarter this year… With a number of drugs with expired patents, sales at company took a precipitous fall… In the earnings call before Schiff’s resignation, company’s management said 2002 earnings would be down as much as 46 percent…
Exacerbating Bristol-Myers Squibb’s woes: deals many observers consider overpriced… Last fall’s acquisition of DuPont Co. pharmaceutical unit was, at $8 billion, about $2 billion more than rival bids… Then there was the embarrassing ImClone investment: Bristol paid a record $2 billion for a 20 percent stake of the biotech and a cut of profits from ImClone’s cancer drug Erbitux… But Food and Drug Administration rejected ImClone’s application to market Erbitux on grounds of insufficient research… Ensuing scandal involving insider trading at ImClone didn’t make Bristol-Myers Squibb look any better in the deal…
How bad was the ImClone deal? Even lawmakers in Congress—not exactly astute managers of money—want to know why Bristol-Myers would be willing to pay so much for ImClone… As CFO.com reported last week, congressional investigators want to know “how Bristol-Myers can invest so much money for something that appears not valid, and second, why the board of ImClone would allow such a dilution of shares with a tender offer from Bristol-Myers.” That, according to Rep. Clifford Stearns, member of a House committee investigating ImClone.
According to that report, congressional investigators have information that raised doubts about Erbitux’s prospects for winning FDA approval months before Bristol-Myers agreed to its deal with ImClone.
Indeed, recent problems at Bristol-Myers Squibb sufficient to prompt rumors of a takeover… Bonfield’s appointment may not end the rumors, but the appointment has been lauded by analysts… “It’s good for the company,” one analyst told the Financial Times, citing Bonfield’s long tenure at SmithKline… Fund manager Matt Stephani, who manages Idex Great Companies-America Fund, which holds nearly 400,000 shares of Bristol, fairly gushed in an interview with Reuters, calling hire a “great move.”
(Editor’s note: To find out more about the recent rash of CFO firings and departures, including that of Fred Schiff, read “To Pursue Other Interests.”)
