- Consumer and specialty drugmaker Perrigo installed its third CEO in less than three years on Monday, in a move that one Wall Street analyst described as a "very surprising development."
- Murray Kessler, who served as the top executive at Lorillard Tobacco Company until mid-2015, is taking over for Perrigo chief Uwe Roehrhoff effective immediately, according to an Oct. 8 statement. Roehrhoff's departure comes less than 10 months after he replaced former CEO John Hendrickson.
- "Given the decision to separate the Rx pharmaceuticals business and pursue a consumer-focused strategy, the Board is looking forward to partnering with him to develop Perrigo's strategic plan," Rolf Classon, chairman of the board of directors, said of Kessler in the statement.
It's been a transitional year for Perrigo, which in August said it would spin off its generic prescription drug arm from the company's consumer healthcare unit. The move — part of what Perrigo called a "strategic road-map" — was meant to create more efficient businesses and grow shareholder value, according to Roehrhoff.
"At the risk of oversimplifying, the Rx business model operates in an innovative product-driven marketplace that requires intense agility and focused portfolio management, servicing a limited number of distributors," he said on the company's second quarter earnings call.
"This business model is distinctly different from our durable consumer businesses, which creates customized solutions, combining the capabilities of fast-moving consumer goods and self-care solutions by leveraging a complex supply chain designed to meet customers at their point of purchase."
Yet the split didn't receive a warm welcome from investors, with Perrigo shares trading down roughly 10% on the news. Year to date, shares have fallen more than 20% to around $69.25 apiece by late Tuesday morning.
Roehrhoff's departure suggests Perrigo isn't through shaking things up either.
The company has actually gone through multiple CEOs since Joseph Papa left for Valeant Pharmaceuticals, now Bausch Health, in spring 2016. Papa was first succeeded by Perrigo veteran John Hendrickson, who would announce plans to retire in June 2017 and officially leave the reins to Roehrhoff by January 2018.
The latest CEO appointment in Kessler comes with pros and cons, according to Jefferies analyst David Steinberg.
On the one hand, he has decades of experience leading consumer product companies — such as at Lorillard Tobacco, which was sold to Reynolds American for $27 billion in 2014, and at Connecticut-based UST, which was sold to Altria for $12 billion in 2008. Running tobacco businesses means Kessler is also comfortable working in stringent regulatory environments.
But on the other, he hasn't ever captained a healthcare or pharmaceutical business.
Whether it's Reohrhoff "or now Mr. Kessler who is at the helm, it remains unclear how Perrigo will deliver on the company's value creation roadmap that was commissioned by management and the Board," Steinberg wrote in an Oct. 9 investor note.
That ambiguity apparently isn't sitting well with shareholders, as the $69.25 per share value that Perrigo stock was trading at Tuesday morning reflected a 5% decline from the value seen at Monday's market close.