Bristol-Myers Squibb Co ousted Peter Dolan as chief executive at the urging of a federal monitor tasked with ensuring the drug maker's compliance with a deferred-prosecution agreement. In an apparent move to reassure investors, the company also decided to maintain its attractive dividend.
Several analysts and investors had speculated about whether the board would keep its US$0.28-a-share dividend given a lowered earnings forecast as sales of its best-selling drug Plavix tumbled because of earlier-than-expected competition from a cheaper generic pill.
"The board opted to hold onto the status quo to recognize the loyalty of investors," said Friedman Billings Ramsey analyst David Moskowitz. "The ridding of Dolan sends a strong message that the board was listening to investors."
Earlier on Tuesday, Bristol-Myers pushed out Dolan and said its general counsel, Richard Willard, would leave the company. Dolan has been CEO since 2001, and Willard was appointed general counsel in October.
The departures are the latest in a recent housecleaning trend in Big Pharma. Pfizer Inc replaced CEO Hank McKinnell in July, and Merck & Co's CEO Raymond Gilmartin vacated his post early last year.
Bristol Myers' move came a day after a federal monitor, Judge Frederick Lacey, recommended at a board meeting that the company fire both Dolan and Willard.
Chairman James Robinson insisted that the board did not "fire" Dolan and Willard, calling their leaving an "involuntary departure." Robinson could not provide details on Dolan's severance package as one had not been drawn up.
Lacey was appointed monitor of the New York-based company in June last year after Bristol-Myers settled federal charges for an accounting scandal that cost the company US$800 million at drug maker Eli Lilly and Co.
Sandra Leung, the company's corporate secretary, was named interim general counsel, and will be aided by former FBI Director Louis Freeh, a board member and former general counsel.
Cornelius said that he will not apply for the permanent position. The board formed a special committee to fill the vacant positions permanently.
Apotex launched generic Plavix early last month, and quickly grabbed about 75 percent of new prescriptions. Plavix is the second best-selling drug in the world, with annual sales of about US$5.9 billion.