Perrigo CEO to Retire After Only 14 Months on the Job
June 6, 2017
(Last Updated: June 6, 2017 at 08:00am PT)
By Alex Keown, BioSpace.com Breaking News Staff
DUBLIN – After only 14 months on the job, Perrigo Chief Executive Officer John Hendrickson is already planning to leave the company.
On late Monday Perrigo, which has its U.S. headquarters in Allegan, Mich., announced Hendrickson’s plans to retire from the company. There was no specified time frame for Hendrickson’s departure. Hendrickson will remain with the company until a replacement has been found and then for an additional 60 days to support the transition, according to the statement.
A long-time Perrigo veteran, Hendrickson stepped in after Joe Papa left the company to helm embattled Valeant Pharmaceuticals in April 2016. Hendrickson stepped into the leadership role after the company fended off a takeover attempt from Mylan . Since then though, the company has seen its share of struggles, including the reduction in revenue forecasts and investor dissatisfaction.
In a statement, Hendrickson said his decision to retire from the company after 28 years has not been easy, but he said it was the right time both personally and professionally.
“I am privileged to have led Perrigo, particularly as we've met the challenges we faced and stabilized the business in a time of transition. I am extraordinarily proud of what we have accomplished since I joined the company in 1989. I am confident the company will successfully execute on our strategic plan to return to consolidated growth in 2018 and to advance our commitment to providing Quality Affordable Healthcare Products to customers and consumers around the world,” Hendrickson said in his statement.
Earlier this year the company projected a preliminary loss for 2016 and also said it was initiating a plan to streamline its organizational structure to save $130 million by mid-2018. At the time Hendrickson said the cuts will allow the company to be more streamlined and efficient. Perrigo is projecting 2017 net sales of $5 billion to $5.2 billion with earnings of $3.39 to $3.74 per diluted share.
The company also went through several rounds of layoffs over the past year, including terminating about 750 positions in February. The company also sold off its share of the royalty stream for multiple sclerosis drug Tysabri in deal worth up to $2.85 billion. Perrigo acquired a share of royalty rights to Tysabri in 2013 as part of the acquisition of Elan Corporation . Biogen owns the marketing rights to Tysabri as part of its own deal with Elan.
Perrigo’s new strategic game plan was spurred by activist investor Starboard Value, which controls about 6.7 percent of company shares. Starboard has been critical of Perrigo leadership for some time. In September, Starboard sent the company a letter criticizing “operational and financial missteps’’ in the wake of Perrigo’s 2015 decision to spurn Mylan’s takeover bid.
Another issue that spooked investors during Hendrickson’s tenure was a Department of Justice investigation into the company over drug pricing. In May, search warrants were executed at their offices regarding an ongoing DOJ investigation into drug pricing in the pharmaceutical industry. The investigation is part of a federal inquiry into industry-wide pricing practices. The company said it was cooperating with the investigation.
Hendrickson isn’t the only C-suite executive to depart the company in recent months. In February, Chief Financial Officer Judy Brown left Perrigo for a role at Amgen . The company appointed Ron Winowiecki as acting CFO.
Shares of Perrigo are down slightly in pre-market trading at $71.04.
Dewy Steadman, a pharmaceutical analysts at Canaccord Genuity, said the leadership change could be beneficial to the company with a potential to unlock shareholder value. If the leadership transition is orderly, Steadman said investors could see the beginnings of Perrigo’s strategic transformation by the company’s 2017 investor day.
"Overall, we see opportunity in Perrigo if the company is able to define and detail durable growth in the consumer business, commit to definitively keeping or selling the generics business, and deploy capital to drive inorganic growth," Steadman said in an email.