Limbering up for drugs bid battle; THE MONDAY INTERVIEW; Stuart Wallis

Fisons' chief executive, who today unveils his defence to the hostile bid from Rhone-Poulenc Rorer, talks to Magnus Grimond

September could be a momentous month for Stuart Wallis. After only a year as chief executive of drugs group Fisons, today he faces probably the biggest test of his career as he fends off the unwanted pounds 1.7bn bid from French-owned US rival Rhone-Poulenc Rorer.

He promises a robust response, and he's "extremely confident" that Fisons will escape the clutches of RPR at the offered price of 240p a share.

The defence will centre on Fison's new inhalant devices for its anti- asthma drugs which, Mr Wallis claims, could extend the commercial life of elderly drugs going off patent by as much as 10 to 12 years. A second- generation device which uses CFC propellent gas is already said to be a world leader. But the jewel in the crown is the Ultrahaler, claimed to be at the leading edge of technology in non-propellent inhalers and the only one likely to meet the high standards of the important US market. RPR has already had discussions with the British group about acquiring this device, but so have several larger companies with stronger franchises in the asthma market, according to Mr Wallis, and the possibilities do not end there. Cancer treatments form just one new area where the devices could be used to deliver drugs.

The value of these assets, which could form a key bargaining chip for bringing new drugs into the group, gives him confidence that a higher price can be extracted for Fisons.

With Fisons' shares standing well clear of the bid, Mr Wallis has plenty of support in that view. The market is optimistic that either RPR will have to raise its offer or Fisons will be rescued by a white knight, but Mr Wallis is not pinning his hopes on either. He is not letting the bid distract him from the radical course he set out on a year ago. That has already reversed Fisons' image as the sick man of the drugs industry and raised its share price from 105p to 193p even before RPR's arrival on the scene.

In pursuing his strategy, Mr Wallis has sacrificed some sacred cows. A pounds 600m disposal programme has included the sale of most of the research and development capability, but it has restored the group's creaking finances and put it in the position to make acquisitions for the first time in five years.

Mr Wallis faces the tough task of rebuilding the business. "I have always made it very clear that I saw this as the first stage of a much more important development for Fisons. I do not see, and nor does the board see that Fisons, as a half-a-billion pound stand-alone business, has a place in the fast-changing pharmaceutical market."

He admits to "a huge disadvantage" in his lack of knowledge of the sector, but believes his experience at packaging group Bowater (now Rexam) stands him in good stead, given the enormous changes in the packaging industry. He sees the drugs industry eventually polarising between eight and 12 very large international companies, which would include giants Glaxo Wellcome, Merck, SmithKline Beecham, and a number of smaller companies which will not have major r&d spending budgets, but will buy in products. The key at this bottom end of the scale will be sales and marketing operations, or access to them. It is in this smaller category that he sees Fisons, "concentrating in areas the major pharmaceutical companies do not see as of prime importance to themselves because the total market opportunities are too small for them".

The aim is to propel Fisons to the top of these niche markets, commanding a share of 50 per cent or more, where the size does not represent a threat to the major companies. Mr Wallis sees this group's new role as providing an opportunity for the big drugs groups to offload second-line drugs at good prices. For Fisons, such products would have a much greater importance, allowing far greater marketing and manufacturing resources to be devoted to them. Medeva, with whom Fisons had abortive merger discussions earlier in the year, has been most obviously successful at pursuing this strategy in the UK, but Mr Wallis believes there are better examples in the US. There, he says, companies like Forest, Ivax and Roberts have comparable or better drug portfolios to Medeva. "Those are all companies that are similar sizes [to Fisons], but none of them have the sales and marketing distribution that Fisons has, which is worldwide in all the major pharmaceutical markets, nor do they have our manufacturing capabilities."

RPR has attacked Fisons' ability to bring in the drugs from outside necessary to expand the group and some analysts have questioned the lack of progress to date. Mr Wallis promises that deals will come "quite soon". But he won't be panicked "just because the irritant of RPR is out there".

Fisons now has a strategic planning department, headed by John Bailey, a main board director. Whether the department gets a chance to do much will depend on institutional investors' reaction to the bid. So far they are enthusiastic about what he has done.

RPR has left the way open for a higher offer in exchange for a recommendation from the Fisons board. "I know there is a lot of loyalty out there," says Mr Wallis. "If the big offer comes in, I am an absolute realist and so is the team here and indeed we would encourage our shareholders to accept that offer. It is not a final quest to stay independent... I wouldn't have a major problem about walking away from it now, but there's more to be had out of this business and I want our shareholders to understand that."

If Mr Wallis walks away with a bid that puts anywhere close to pounds 2bn into shareholders' pockets, few will begrudge him the pounds 1.4m or so he stands to gain from payoffs and through share options. He claims not to be interested in the money, but with his reputation as a turnaround specialist now established, he looks set to make much more.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
The Doctor and Clara have their first real heart to heart since he regenerated in 'Deep Breath'
TV
Life and Style
Apple showed no sign of losing its talent for product launches with the new, slightly larger iPhone 6 making headlines
techSecurity breaches and overhyped start-ups dominated a year in which very little changed (save the size of your phone)
Arts and Entertainment
Jamie Oliver
filmTV chef Jamie Oliver turned down role in The Hobbit
News
The official police photograph of Dustin Diamond taken after he was arrested in Wisconsin
peopleDownfall of the TV star charged with bar stabbing
PROMOTED VIDEO
Arts and Entertainment
Jeremy Clarkson, left, and Richard Hammond upset the locals in South America
tvReview: Top Gear team flee Patagonia as Christmas special reaches its climax in the style of Butch and Sundance
News
people
Sport
Ashley Barnes of Burnley scores their second goal
footballMan City vs Burnley match report
Arts and Entertainment
Peter Mayhew as Chewbacca alongside Harrison Ford's Han Solo in 'Star Wars'
film
News
i100
Arts and Entertainment
Man of action: Christian Bale stars in Exodus: Gods and Kings
film
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Arts and Entertainment
Tracy Emin's 1998 piece 'My Bed' on display at Christie's
artOne expert claims she did not
Arts and Entertainment
Catherine (Sarah Lancashire) in Happy Valley ((C) Red Productions/Ben Blackall)
TV
News
Hackers revealed Oscar-winning actress Lawrence was paid less than her male co-stars in American Hustle
people
Arts and Entertainment
Clueless? Locked-door mysteries are the ultimate manifestation of the cerebral detective story
booksAs a new collection of the genre’s best is published, its editor explains the rules of engagement
Sport
Robin van Persie is blocked by Hugo Lloris
footballTottenham vs Manchester United match report
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

Selby Jennings: Quantitative Research | Equity | New York

Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

Selby Jennings: SVP Model Validation

Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

Day In a Page

A timely reminder of the bloody anniversary we all forgot

A timely reminder of the bloody anniversary we all forgot

Who remembers that this week we enter the 150th anniversary year of the end of the American Civil War, asks Robert Fisk
Homeless Veterans appeal: Former soldiers pay their respects to a friend who also served

Homeless Veterans appeal

Former soldiers pay their respects to a friend who also served
Downfall of Dustin 'Screech' Diamond, the 'Saved By The Bell' star charged with bar stabbing

Scarred by the bell

The downfall of the TV star charged with bar stabbing
Why 2014 was a year of technological let-downs

Why 2014 was a year of technological let-downs

Security breaches and overhyped start-ups dominated a year in which very little changed (save the size of your phone)
Cuba's golf revolution: But will the revolutionary nation take 'bourgeois' game to its heart?

Will revolutionary Cuba take 'bourgeois' golf to its heart?

Fidel Castro ridiculed the game – but now investment in leisure resort projects is welcome
The Locked Room Mysteries: As a new collection of the genre’s best is published, its editor Otto Penzler explains the rules of engagement

The Locked Room Mysteries

As a new collection of the genre’s best is published, its editor explains the rules of engagement
Amy Adams on playing painter Margaret Keane in Tim Burton's Big Eyes

How I made myself Keane

Amy Adams hadn’t wanted to take the role of artist Margaret Keane, because she’d had enough of playing victims. But then she had a daughter, and saw the painter in a new light
Ed Richards: Parting view of Ofcom chief. . . we hate jokes on the disabled

Parting view of Ofcom chief... we hate jokes on the disabled

Bad language once got TV viewers irate, inciting calls to broadcasting switchboards. But now there is a worse offender, says retiring head of the media watchdog, Ed Richards
A look back at fashion in 2014: Wear in review

Wear in review

A look back at fashion in 2014
Ian Herbert: My 10 hopes for sport in 2015. Might just one of them happen?

Ian Herbert: My 10 hopes for sport in 2015

Might just one of them happen?
War with Isis: The West needs more than a White Knight

The West needs more than a White Knight

Despite billions spent on weapons, the US has not been able to counter Isis's gruesome tactics, says Patrick Cockburn
Return to Helmand: Private Davey Graham recalls the day he was shot by the Taliban

'The day I was shot by the Taliban'

Private Davey Graham was shot five times during an ambush in 2007 - it was the first, controversial photograph to show the dangers our soldiers faced in Helmand province
Revealed: the best and worst airlines for delays

Revealed: the best and worst airlines for delays

Many flyers are failing to claim compensation to which they are entitled, a new survey has found
The stories that defined 2014: From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions

The stories that defined 2014

From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions
Stoke-on-Trent becomes first British city to be classified as 'disaster resilient' by the United Nations

Disaster looming? Now you know where to head...

Which British city has become the first to be awarded special 'resilience' status by the UN?