What’s behind the top-level exits at pharma MNCs?

PT Jyothi Datta Mumbai | Updated on August 15, 2019 Published on August 15, 2019

In the past eight months, the chiefs of three multinational drugmakers have left or announced plans to leave their companies, leading to speculation over what was behind the exits. Were they linked to challenges in the domestic market, changes in the parent company’s strategy or were they just a sheer coincidence in timing?

Just last week, multinational drug-maker MSD said MD Vivek Vasudev Kamath was leaving to “pursue external opportunities”. The decision comes a little over two years after he took over from outgoing head KG Ananthakrishnan. Kamath is leaving at the end of this month and a successor is yet to be announced.

In April, after having served as Managing Director of Janssen India for over five years, Sanjiv Navangul left Johnson & Johnson’s pharma company “to pursue other opportunities”, the company said. Sarthak Ranade is the new man in, having taken charge in May.

And in June, Novartis India appointed Sanjay Murdeshwar as Vice-Chairman and Managing Director, following the exit of Milan Paleja, who stepped down on May 31. Paleja’s exit came not long after that of his predecessor Jawed Zia, who left in March 2018, just days after taking over the top job from then outgoing India-head Ranjit Shahani. Zia had, however, been with the company for several years.

A similar case of revolving doors had been witnessed about four years ago involving top-level changes at Pfizer and Abbott.

India challenges

India does come with a bunch of challenges on intellectual property rights, fluid rules, price control etc, said a consultant, who did not want to be named. But the domestic market grew at a “not-so-bad 9 per cent”, he added, indicating that the exits may be a quirk of timing.

Another industry-watcher, who works with MNCs, however, observed that sometimes the change in companies may not be overt. Companies are becoming digital-oriented and patient-centric, as compared to the traditional customer-centric outlook. And that can be tough on financial performance. These subtle changes in requirements can pre-empt exits, he said, speaking generically and not of specific instances.

Usually people leave for better career prospects or “a better visiting card”, as one observer put it, while others may have personal reasons “after having been there and done that”.

Business dynamics

MSD in India operates through three legal entities: MSD Pharmaceuticals Pvt Ltd, Organon (India) Pvt Ltd, and Fulford (India) Ltd. But it has been more low-profile than, say, Novartis or J&J.

Novartis has in recent years seen massive changes globally, with its vaccines business being swapped with GlaxoSmithKline’s cancer drugs business, among other things. It also has a new global CEO, Vasant (Vas) Narasimhan, since last February.

On the successive exits of Zia and Paleja, a Novartis spokesperson said it was “speculative” to see a pattern in leadership changes in an industry.

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Published on August 15, 2019
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