By Randall Osborne
Chiron Corp.'s 14-month search for a CEO ended with the hiring of former Glaxo Wellcome plc executive Sean Lance, who takes over the position on May 1.
Lance will replace Edward Penhoet, co-founder of Chiron, who has been serving as interim CEO and will become vice chairman.
"We thought it could take a year to find the right individual, and someone of Lance's caliber doesn't come along every day," Penhoet told BioWorld Today.
From 1985 to 1997, Lance moved up in the ranks of London-based Glaxo.
"He resigned in November of last year," Penhoet said. "At that point, he was chief operating officer, and he had been designated as the next CEO."
Lance's departure from Glaxo came when he "got into a philosophical difference with the chairman over merger strategies," Penhoet said.
In January, Glaxo confirmed it had been talking with American Home Products, of Madison, N.J., about a possible merger, but that deal fell through. The following month, Glaxo said it was discussing a merger with SmithKline Beecham plc, of London — another deal that failed to materialize. (See BioWorld Today, Feb. 3, 1998, p. 1.)
"I don't think Lance is against mergers per se," Penhoet said, adding that Lance helped implement the 1995 merger between Glaxo plc and Wellcome plc.
Penhoet said Lance "has a strategic view of when they make sense and when they don't. He's neither pro- nor anti-merger, but he wants to make sure any merger has a strong business rationale."
As CEO, Lance will be responsible for Chiron's diagnostics, therapeutics and vaccines units, along with its research branch, Chiron Technologies.
Chiron, of Emeryville, Calif., also named a new chief financial officer, James Sulat, former chief financial officer for Stanford Health Services, the clinical health care delivery arm of the Stanford University Medical Center, in Palo Alto, Calif. Sulat begins his job April 1.
Penhoet said Lance "thoroughly evaluated" Sulat, and agreed with his hiring.
"We came very close to hiring someone else [as CEO] last September," Penhoet added. "So, in a sense, we carried out two searches. I wasn't leaving the company, so we had the luxury of casting a broad net."
Peter Ginsberg, an analyst with Piper Jaffray Inc., of Minneapolis, called Lance a "really excellent" choice.
"He's not a scientist, he's a business guy, and this is exactly what [Chiron] needed," as the company gains strength after a slump in January, Ginsberg said.
"The investment community is catching on to the fact that this company is transforming itself," he added.
In 1996, Chiron listed 78 percent of sales in diagnostics and vision products. In 1999, Ginsberg said, 100 percent of the company's sales revenues will come from therapeutics, vaccines and technology.
"One of the keys will be the spinoff of the diagnostics business, which we think will take place later this year," Ginsberg said.
The spinoff most likely will take the form of a joint venture, with Chiron holding less than 50 percent, he said.
"Chiron would not be involved in the day-to-day management," Ginsberg said. "The company would still get revenues, but diagnostics would not be on the product sales line."
Ginsberg said Lance's background equips him to accomplish what Chiron needs.
"Focusing this company is very important to our whole thesis," he said. "Lance is the kind of person who can do it."
Penhoet, in his role as vice chairman, will serve as the company's primary governmental contact, as well as its liaison with academic and corporate collaborators — a job about which he has "mixed feelings" but mostly good ones, he said.
"The decision to move on was mine, a year ago," Penhoet said. "I enjoy this other role, and I've made a lot of contacts over the years. It's the right thing for Chiron and the right thing for me."
Chiron reported revenues in 1997 totaling $1.162 billion, compared with $1.101 billion the year before. (See BioWorld Today, Feb. 9, 1998, p. 1.)
The company's stock (NASDAQ:CHIR) closed Monday at $21.437, up $0.375. *