Biggest test yet for a scientist who became a boardroom star
Wednesday 04 February 1998
Sir Richard describes Glaxo's pounds 9.4bn hostile takeover of Wellcome in March 1995 as the most thrilling period of his life. The pounds 117bn merger of his group with SmithKline Beecham would put that in the shade.
Few would have written this script when he joined Glaxo as deputy chief executive of the research division in 1986. He was known merely as a scientist while the corporate path to the top appeared blocked by a host of charismatic figures.
But by March 1993 potential competitors such as Bernard Taylor and Ernie Mario had fallen by the wayside and Sir Richard was - to the surprise of City observers at the time - installed as deputy chairman and chief executive of Glaxo plc.
Knighted in 1994, he became chairman of the combined Glaxo Wellcome group in May last year. But he remains a down to earth family man, his Yorkshire accent linking him still to his birthplace, a village outside Huddersfield.
It is classic rags to riches tale. The youngest of three sons, his father was a carpenter and his mother worked a smallholding. He now has two children of his own and a home in Chalfont St Giles, Buckinghamshire.
He is now a member of the Royal Society, but was no runaway success at the local grammar school, leaving at 16 to work at the pathology laboratories of Huddersfield Royal Infirmary.
Practical work fired him up. After studying at night school he went on to win a first class degree in microbiology at London University before obtaining a doctorate in microbial biochemistry at Bristol.
His enthusiasm for matching scientific research with business came after his nine years at the Squibb Institute for Medical Research in the US. "I loved America, it's my kind of place. Lots of energy, drive and enthusiasm," he once said.
As deputy chairman and chief executive of Glaxo, Sir Richard proved he could mix the gravitas of a scientist with the acumen of a businessman. Glaxo needed it. The City was worried that management was becoming complacent after discovering sudden success with Zantac, the anti-ulcer pill that became the world's best selling drug.
Zantac had provided 43 per cent of Glaxo's turnover and put a second division company into the giants' league. But the US patent ran out in 1997 and few in the Glaxo hierarchy seemed aware of the pending problems.
Sir Richard grasped the nettle immediately. His comeback strategy was to launch the audacious bid for an undervalued Wellcome and set about cutting costs with a zeal that astonished some of his former associates.
Secondly, he pushed the Glaxo Welcome research arm hard for new products and by the first half of 1997 had seen sales of those drugs launched since 1990 rise by 50 per cent.
Despite an expected 1997 profits slowdown, the Glaxo share price rose as analysts remain convinced that Sir Richard's continuing optimism about the future is well founded. The proposed SmithKline deal has sent stocks racing
It all looked so effortless, with the potential deal triggered by Sir Richard picking up the phone to SmithKline's chief executive, Jan Leschly. The two have known each other since their days at Squibb Corporation but they have things in common outside business as well. Mr Leschly is a former Davis Cup tennis player but the Glaxo boss is also a keep-fit fan who is pretty nifty with a racquet.
James Culverwell, pharmaceutical analyst with Merrill Lynch, confirms that Sir Richard will greatly add to his reputation if the latest deal goes through: "The timing of both Wellcome and SmithKline mergers has been excellent."
Robin Gilbert of Panmure Gordon has little but praise for the Glaxo boss: "Scientists turned top industrialists are pretty rare. Sir Richard has been an outstanding success. He is a balanced individual who knows his own mind."
Not everyone sings his praises. One City figure said: "He is well regarded but he can be abrasive, impatient and opinionated."
The departure last year of Sean Lance, originally brought in as chairman- designate, was seen by some as an example that Sir Richard, like his predecessor Sir Paul Girolami, might not be the easiest person to work with.
Critics also point to the ulcer drug, Tritec, and the anaesthesia relief, Ultiva, as examples of the Glaxo chairman trumpeting products that failed to fly commercially.
Such comments are unlikely to worry Sir Richard. He once said: "I cannot run a company on the basis of what people think about me. I have to run it on the basis of what I believe is right for it in the long-term."
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