Perrigo Shakes Up Exec Roster and Board, Hands Out a Fistful of Pink Slips
April 17, 2017
By Mark Terry, BioSpace.com Breaking News Staff
Perrigo , headquartered in Allegan, Mich., announced that it was laying off less than 50 non-production staffers. The cuts are related to restructuring announced in February.
In addition to the layoffs, a warehouse project planned for Allegan Township has been delayed.
Perrigo has been making numerous changes this last year. On February 27, 2017, the company reported select preliminary unaudited 2016 financial results and initial 2017 guidance.
“Calendar year 2016 was a transitional year for Perrigo, as we took decisive action focused on growth, leadership and cost,” said John Hendrickson, the company’s chief executive officer, in a statement at the time. “Preliminary full-year adjusted net sales were $5.5 billion, at the high end of our revised guidance range, with continued strong cash flow generation. Strong performance by our CHCA business contributed to these record results. Additionally, we made significant progress against the action plan we developed earlier in the year with several decisive initiatives.”
The first of those initiatives was a strategic portfolio review, which included the sale of the Tysabri royalty stream. The second was improved international business, with several key leadership changes, as well as the cancellation of unprofitable distribution agreements. And third, the reconstitution of the board of directors.
On February 27, the company also announced that Ron Winowiecki, senior vice president, Business Finance, had been appointed acting chief financial officer. Judy Brown, executive vice president, Business Operations and chief financial officer, resigned, effective April 1. On the same day, the company announced that Svend Andersen had been appointed executive vice president and president, Consumer Healthcare International (CHCI). Andersen replaces Sharon Kochan, who will remain as a key executive for the company and businesses in Australia and Israel.
On November 10, 2016, Perrigo announced that as part of its ongoing business review, it was evaluating strategic alternatives for the rights to the royalty stream from sales of its multiple sclerosis (MS) drug Tysabri (natalizumab).
Hendrickson said in a statement at the time, “We continue to make progress on and take action against our stated strategic and operational plans first outlined in April 2016. Tysabri dramatically improves the quality of life of patients with multiple sclerosis and its royalty stream provides a strong and predictable cash flow. However, after careful consideration, we believe now is the right time to review strategic alternatives for Tysabri in order to monetize the value of this attractive asset. Perrigo remains committed to its investment grade rating regardless of the outcome of this review.”
On March 27, 2017, the company divested the rights to the royalties of Tysabri to RPI Finance Trust, an affiliate of Royalty Pharma, for $2.2 billion in cash and up to $650 million in royalties if global net sales hits specific thresholds in 2018 and 2020.
And Hendrickson’s third point was a refresh of the company’s board of directors. On February 7, the company indicated it had made an agreement with Starboard Value, which owns about 6.7 percent of Perrigo shares. Under the deal, Jeffrey Smith, Starboard’s chief executive officer and chief investment officer, as well as Bradley Alford, operating partner at Advent International Corporation, and Jeffrey Kindler, venture partner at Lux Capital and chief executive officer of Centrexion Corporation, joined Perrigo’s board. Starboard will also recommend two additional directors. The company’s previous directors, Herman Morris, Shlomo Yanai, Michael Jendermoa, and Gary Kunkle stepped down immediately.
Of the layoffs, employers were asked to take voluntary retirement packages. Others were asked to shift to other positions within the company.
In terms of the warehouse, construction started recently on the 600,000-square-foot building, with a budget of $31 billion. However, Perrigo has indicated it is pushing the project back.