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
News
Lois Pryce... Life Without a Postcode. Lois lives on a boat with her husband.. Registering to vote in the election has prooved to be very difficult without a fixed residential post code. (David Sandison)
newsHow living on a houseboat meant I didn't officially 'exist'
Arts and Entertainment
Cassetteboy's latest video is called Emperor's New Clothes rap
videoThe political parody genius duo strike again with new video
Sport
Steven Fletcher scores the second goal for Scotland
cricketBut they have to bounce back to beat Gibraltar in Euro 2016 qualifier
News
news
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
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

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Ashdown Group: Learning and Development Programme Manager

£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor
How to make your own Easter egg: Willie Harcourt-Cooze shares his chocolate recipes

How to make your own Easter egg

Willie Harcourt-Cooze talks about his love affair with 'cacao' - and creates an Easter egg especially for The Independent on Sunday
Bill Granger recipes: Our chef declares barbecue season open with his twist on a tradtional Easter Sunday lamb lunch

Bill Granger's twist on Easter Sunday lunch

Next weekend, our chef plans to return to his Aussie roots by firing up the barbecue
Joe Marler: 'It's the way I think the game should be played'

Joe Marler: 'It's the way I think the game should be played'

The England prop relives the highs and lows of last Saturday's remarkable afternoon of Six Nations rugby
Cricket World Cup 2015: Has the success of the tournament spelt the end for Test matches?

Cricket World Cup 2015

Has the success of the tournament spelt the end for Test matches?
The Last Word: Justin Gatlin knows the price of everything, the value of nothing

Michael Calvin's Last Word

Justin Gatlin knows the price of everything, the value of nothing