Thursday, June 27, 2013

Drug Channels News Roundup: June 2013

Before you leave for the July 4th holiday, take a few minutes to read the latest collection of Drug Channels news stories. This month, I highlight three especially provocative articles:
  • Greed is Still Good—McKesson’s CEO keeps cashing in
  • Customer Experience Beats Location—Walgreens reorganizes for growth
  • Innovation is Even Better—Negative consequences of the generic wave
Plus, a special patriotic message from Sam the American Eagle. Happy 237th birthday, America!

For McKesson's CEO, A Pension of $159 Million
Once again, we're reminded why McKesson CEO John Hammergren is the poster child for excessive executive compensation. The Wall Street Journal’s analysis reveals that Hammergren’s outrageous pension was goosed by a compliant board. In 2009, his pension's value was a mere $84.6 million, as I noted in McKesson’s CEO Cashes In.

Hammergren has been a very good CEO. And, in a free market, shareholders are certainly entitled to give him whatever they want. I just don't understand why the Board continues to let this compensation farce continue. Pharmaceutical manufacturers can take cold comfort in knowing that Hammergren will surely take good care of their distribution fees.

For a harsh but enlightening look at Hammergren's problematic riches, see this 2011 Forbes article: Why America's Highest Paid CEOs Are Insanely Overpaid.

Changing Structures and Behaviors at Walgreens
Despite its self-congratulatory tone, this article provides useful insights into recent changes in Walgreen’s organizational structure. The authors, who work for Walgreens, describe the company’s migration from a drugstore location business focus to a culture based on the customer experience. They also describe the company’s efforts to increase regional and local accountability. It sure sounds good in the article, although there are few facts to support the authors’ assertions.

The U.S. prescription drug market is dominated by generics. Is that a good thing?
Here’s an outstanding, must-read article on the pharmaceutical industry’s future. The Manhattan Institute’s Paul Howard argues persuasively that generic domination has negative long-term consequences for innovation. He also suggests sensible reforms that would encourage more innovation. Everyone should read and think about Paul’s article.

The Muppets: Stars & Stripes FOREVER!
Bork bork bork! Click here if you can’t see the video below.

1 comment:

  1. From today's Wall Street Journal:

    "An influential union investment group is opposing the re-election of McKesson Corp.'s chairman and two other directors, citing what the group said was excessive chief-executive pay, the company's failure to heed a shareholder advisory vote calling for splitting the chairman and chief executive roles and other governance issues."

    Full story: McKesson Holders Urged to Vote Against Chairman