Chief Executives’ Same Old Excuses

How many times do we have to endure the explanations of why chemical and pharmaceutical companies are experiencing slow growth or a decline in earnings?

Dow Chief Executive Officer Andrew N. Liveris stated, “Price was a large negative driver in our results, with broad-based declines driven by weak market conditions, significant downward movements in raw material costs, and currency headwinds, particularly in Europe” (C&EN, Nov. 12, 2012, page 18). In the same article, DuPont CEO Ellen J. Kullman blamed earnings declines on weaker economic conditions, particularly in China and Europe.

Big pharma Bristol-Myers Squibb saw double-digit drops in sales from patent expiration of Avapro and Plavix, while AstraZeneca lost 18.6% in sales from expiration of Seroquel IR and Nexium (page 21). AstraZeneca CEO Pascal Soriot said, “In addition to the well-known challenges that confront the pharmaceutical sector as a whole, the loss of exclusivity of several of our brands in major markets has largely defined the financial performance in the first nine months of 2012.” Wow, profound.

These are three quotes from three large companies and they say the same thing. I find this in every article I read on the performance of the chemical and pharma industries. These companies have known about the economic slowdown and soon-to-expire patents.

We have known that we are in a slow-growth economy for the past two or three years. Why weren’t these companies better prepared to endure the fiscal crisis and loss of exclusivity from generics that they knew was coming? CEOs are paid to get results and to find innovative ways to endure the hardships of these economic times. Simply stating the obvious and shutting down facilities with massive layoffs is not creative, is not ingenious, lacks vision, and places the burden of poor financial results on the shoulders of the chemical worker.

We need to have a better accountability of upper management’s job performance rather than passing the buck to Europe and China and insulting the American worker.

Scott A. Schlipp
Milwaukee