Medicine man seeking a tonic

The chairman of the Wellcome drugs group is looking for a rival bidder to fight off Glaxo. William Kay says it's a case of once bitten, twice shy : Pr ofile of John Robb
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The Independent Online
LETTING Ernest Saunders bath your children may not be every up-and-coming executive's idea of a smart career move. But in the early 1970s, John Robb, now chairman and chief executive of the beleaguered Wellcome drugs group, counted himself such aclose friend of Saunders that he afforded him the privilege when the former Guinness chief came visiting the Robb home in Kuala Lumpur, Malaysia. In those days, they were both at what is now SmithKline Beecham, when that group was divided between medicine and supermarket brands such as Ribena and Lucozade.

"Ernest had made a really major move up the ladder to become head of the international division," recalled Robb. "A few years later, I decided that if I was going to get anywhere I had to have international experience, and Ernest offered me a job as headof the Far East operation."

So with his wife, Janet, two sons and a daughter, he set off for KL, as the locals call it. Saunders would naturally turn up from time to time on regular global tours of his territory.

"My wife and I have fond memories of him coming out and bathing the children," said Robb. "For about three years we were very close, and I felt that what happened afterwards at Guinness was very sad." Robb was referring to the controversial Guinness takeover of Distillers in 1986, which eventually led to Saunders and three others being sent to jail.

Robb, a taciturn Scot with a twinkle in his eye, had his own world turned upside down two weeks ago tomorrow, when his counterpart at Glaxo, Sir Richard Sykes, phoned him at 8.20am to say that he was launching a £9.2bn takeover bid for Wellcome.

"Life is full of surprises," Robb wryly observed, "but I always thought that successful businesses were relatively secure. It seems not."

To say that Sir Richard's call upset Robb would be a considerable understatement, particularly as the Glaxo chief had taken the precaution of secretly negotiating to buy the Wellcome Trust's near 40 per cent stake in the public company, an overhang from the days when the pharmaceuticals business was merely a commercial adjunct to the trust's money-raising activities. "It was a great surprise," Robb admitted as he leaned back at the conference table in his light, airy but functional room in Wellcome head office overlooking London's Euston station. "We are still at a loss as to why the trust did it that way, particularly as we have worked hand in glove in the past to help the trust achieve its objectives."

But by last Friday, he had recovered his poise and was able to raise a smile over an issue that could end his career at 59 - although the pain of severance would be soothed by a handsome pay-off.

Faced with a bidder that has already committed itself not to raise its opening offer unless an auction develops, Robb's reaction has been to try to stimulate a rival bid.

Step one in that process has been to rush out Wellcome's annual results a month early. They were duly published on Thursday and predictably showed a healthy increase in sales and profits.

Such is Wellcome's size that a counter-bid will almost certainly have to be from abroad. Robb flew to the United States last week to woo potential suitors. He refused to comment on suggestions that the shortlist has quickly come down to two or three realistic runners, arguing instead that some of the possibles may have been waiting for Wellcome's results.

"Wellcome is a high-quality pharmaceuticals company," Robb declared. "They don't grow on trees, so anyone who is interested in the industry is bound to look at us. And they have to think of what happens in a competitive situation, if Wellcome falls intosomeone else's hands."

That may in the end add up to little more than whistling in the wind, but Robb's options are limited. He can and probably will fight the trust in court to see if he can stop it selling to Glaxo, but he has accepted that Wellcome's independence is at an end.

It is frustrating for Robb to be reduced to little more than a pawn in what is being increasingly seen in the City as a done deal. But at least he knows where he stands this time.

On the last occasion Robb was treated like a pawn he suffered the added indignity of being kept in the dark. This was the ruthless coup organised nearly a decade ago by the charismatic merchant banker Lord Keith, to oust Sir Ronald Halstead as head of Beecham.

Robb was the heir apparent, and seemed to have Keith's blessing. But then Keith headhunted Bob Bauman from the US to be executive chairman.

"I was something of a pawn in the whole Halstead situation," he explained, "because I was the last one to be told that there was this coup going on. Lord Keith told me there was going to be a change at the top - but he wouldn't say who was going to be chairman. The lesson I learned was that you should never accept a job until you know who your boss is going to be."

Bauman and Robb did not get on, and after two years Robb left for Wellcome, to serve a year's apprenticeship before taking over the reins from Sir Alfred Shepperd. But Sir Ronald still believes that Wellcome's gain was Beech-am's loss.

"He was one of my bright young men whom I encouraged to reach a fairly senior position," Sir Ronald remembered. "He is tough, hard-working, with a good brain, very demanding in terms of getting things done. I think he could have succeeded me as chairman and chief executive, and at Wellcome he got the sort of job of which he was capable. And I think he is responding to the Glaxo bid exactly as I would expect."

Wellcome was a distinct change of direction for Robb, who left school in Edinburgh at 16, did National Service and went straight to work as the family could not afford to support him through further education.

He joined Heinz as a salesman and became interested in the then-novel discipline of marketing: this was 1956. He moved to the US tinned food group's market research centre at Harlesden, north London. "My pay went up from £8 a week to £9.50," said Robb with a Scots grumble, "but half the increase was taken up by bed and breakfast." In 1966 he went to Beecham, where he stayed 23 years.

Not surprisingly, Robb's views on marketing have changed in that time - and so have his priorities.

Three years ago, when he was encouraging US institutions on to the share register as part of a £2.5bn placing of part of the trust's stake, he was keen to stress that marketing Wellcome's sophisticated drugs was not like selling baked beans. But last week, when the emphasis had been all on profitability, he insisted: "At the end of the day marketing is marketing. It's more important now than ever before to give the customers what they want."

When he arrived in 1989, Wellcome could boast five Nobel prize winners and a string of key drug discoveries. It was less good at punching its weight in clocking up sales. "You could almost take the scientific side as read," Robb argued. "Wellcome was brilliant at finding drugs, but not so good at capitalising on them - and scientists hate that just as much as anyone else. My job has been to restore the balance between the two."

One result was the speed with which the group's latest anti-herpes drug, Valtrex, received official approval in 19 countries simultaneously. That lobbying process is now also seen as part of the marketing drive.

But Robb was confronted with a very different problem when he joined Wellcome. He had to cope with the furore over Retrovir, the Aids suppressant, when public gratitude at the discovery was overtaken by indignation at the price demanded for it - £6,000 for a year's course.

"That reflected the pressure on us to introduce the drug at an earlier stage of its development than normal," said Robb. "As our experience both of manufacturing and dosage increased, so we were able to reduce the overall cost. Usually we would have gonethrough a learning curve before we launched it."

Robin Gilbert, pharmaceuticals analyst at the stockbrokers Panmure Gordon, said: "Retrovir was an accident waiting to happen, but I think Robb has done a very good job in making the company more commercial and steering it through a difficult period in terms of the world drug industry."

It is only a pity that this may turn out to be his epitaph. But, like the good Scot he is, if Glaxo wins, Robb will probably unwind with a vigorous round of golf - in which the ball may bear an uncanny resemblance to Sir Richard Sykes.