It's Christmas Eve, and here are five pharmaceutical turkeys for your stocking. It's been a rotten year generally in the drug business, with revenues declining and tens of thousands of layoffs. But these five companies have performed even worse than their peers and competitors. Investigations? Insider trading? Dirty factories? Recalls? Management churn? Scandals? They've got it all. In ascending order of incompetence, BNET presents the five worst drug companies of 2009. Drumroll, please ...
5. Mylan (MYL)
There's nothing wrong at Mylan that can't be fixed, but management seems intent on wallowing in a firestorm of bad publicity, much of it of its own making. Mylan's year was dominated by allegations in the Pittsburgh Post-Gazette that workers at one of its plants overrode safety devices in the making of its drugs. The FDA inspected and gave Mylan a clean bill of health. Mylan then sued the P-G, not once but twice, in a transparent attempt to find out who the paper's sources were. The suits appear to be an extension of an internal witchhunt for a mole who has been leaking bad news about the company. Coupled with that, Mylan's CFO left after just a few months on the job. The C-suite churn followed the 2007 exit of Mylan's COO, after it emerged her credentials were bogus. Mylan ended the year with a $121 million settlement with the Department of Justice regarding Medicaid rebates. The icing on the cake: Mylan's Dey unit staffers appear to be engaged in a civil war with the management that acquired them.
4. Elan (ELN)
Elan holds two potentially amazing drugs, Tysabri for MS and bapineuzumab, an in-development Alzheimer's drug. Despite these blessings, management shoots itself in the foot at every step. They did a $1.4 billion financing deal with Johnson & Johnson that enraged Biogen, their equal partner on Tysabri. That partnership is now a suicide pact between two companies that hate each other. (Note to management: When a blogger can correctly predict the outcome of your contract litigation, you're in trouble.) This flub came despite the arrival of adult supervision on the board of directors. At one point, Elan chairman Kyran McLaughlin told the FT that he and CEO Kelly Martin were qualified to run Elan because they were Irish. And don't forget the corporate jets. Elan ended the year cooperating with an SEC probe regarding its press releases.
3. Genzyme (GENZ)
Your company holds a monopoly on a drug for Gaucher's disease. It's a license to print money. How do you screw this up? Do what what Genzyme did: Introduce a bunch of garbage -- literally bits of rubber and metal -- into your drugs. Have this come after one of your sites was infected with a virus. Get two new drugs rejected by the FDA and have a third one dropped during R&D. Meanwhile, make sure your CEO spends the year enriching himself with a $10 million stock sale on top of $50 million in compensation over the previous three years. That's why Genzyme ended the year with Genzyme's founder calling for CEO Henri Termeer to resign.
2. Sequenom (SQNM)
In late April, Sequenom announced an internal investigation into the data it was using in its development of a test for Down Syndrome. In September, it revealed that data was "inadequately substantiated" and that work would begin again. The CEO and six other execs were kicked out. The company is currently under investigation by the SEC and the FBI. One of the departing execs was sued for alleged insider trading prior to the release of bad news. Sequenom ended the year with one of its partners accusing the company of passing on "deliberately doctored" information. On its last earnings call, one analyst asked how long the company could survive on its cash in hand ($39 million). The CEO said, "we can't really answer that," adding he may have to turn to the debt or capital markets.
1. Ranbaxy (RANB.BO)
So much has gone wrong at Ranbaxy this year it's difficult to know where to start. The company began by admitting it had submitted fake data to the FDA, changing its CEO and committing to a corrective action plan. More than 30 Ranbaxy plants were banned from shipping to the U.S. Since then it has failed to deliver shipments for AstraZeneca's Nexium operations and initiated two recalls of the skin drug Sotret. The day before Christmas Eve the company announced it received yet another FDA warning letter about conditions in one of its American labs. If anything can go wrong, it will go wrong at Ranbaxy. This company may be unfixable.
BNET wishes all these companies a happy new year!
Image by Flickr user Mike Fleming, CC.