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Hassan hits the ground running on Schering-Plough re-organisation

Published on 28/10/03 at 04:45pm

Fred Hassan has announced a major re-organisation of Schering-Plough's pharmaceutical operations just 17 days after taking on the job of turning around the ailing business.

The unveiling of a recovery strategy was timed to coincide with news of another bad quarter, with pharmaceutical sales falling 26%, largely due to the continuing post-patent expiry decline in sales of allergy blockbuster Claritin.

The results compound a long-standing decline in Schering-Plough's sales, which have combined with legal and regulatory problems to depress the company's share price.

The new chief executive has withdrawn previous earnings per share for the full year, saying he did not want to be constrained by the previous management's business assumptions.

"As I promised when I accepted this challenging assignment, we are moving swiftly to address urgent issues while also taking actions that will build a strong Schering-Plough for the long term", Mr Hassan said.

The radical restructure will begin with a wholesale re-organisation of the company's core prescription pharmaceutical businesses, which currently operate as independent units.

Mr Hassan's opinion of Schering-Plough's current structure and management are clear, with the company declaring that its "current decentralised operating system is being replaced by globalised system with strong management".

The strong management will come in the shape of Carrie Cox, who served under Hassan as Executive VP and President of the global prescription business at Pharmacia before its recent acquisition by Pfizer.

Ms Cox will take up the same role at Schering-Plough, with former head of pharmaceuticals Tom Lauda demoted to leading non-US operations while Rich Zahn will remain in charge of the US business.

"The steps we are announcing today begin to install the strong globalised systems that are required to turn the situation around. These steps also introduce a new focus on cost management, and launch structural changes that will allow us to generate long-term growth", Mr Hassan said. "These are our first steps. There will be more to come".

News on a far-reaching review of the company's global R&D operations will be announced at a second quarter conference on 23 July, while manufacturing will be reviewed along similar lines.

Schering-Plough was fined $500 million last year after the FDA uncovered several of its plants to be in breach of current good manufacturing practice, and is still working to meet agreed improvement targets.

The company's Animal Health and Consumer health businesses will now be combined into one business unit.

Sales of Claritin dwindled to just $109 million in the first quarter compared to $659 million in the same period last year, largely thanks to a huge drop in US demand and exaggerated by wholesale stocking patterns.

The decline of Claritin masked strong growth in a handful of products, including Claritin's follow up Clarinex (NeoClarityn in the UK) nasal allergy spray Nasonex, and anti-clotting drug Integrilin.

The company's brightest hope, novel cholesterol absorption drug Zetia (Ezetrol in the UK), recorded $41 million US sales in the first quarter, and was recently launched across the European Union.

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