Forest Laboratories ($FRX) will have a new CEO when 2014 dawns. Longtime chief Howard Solomon will step out of that role on Dec. 31, with plans to stick around as chairman till next year's annual meeting and as a director for some time after that. In the meantime, Forest's search committee is hunting for a replacement, aiming to name someone before year's end.
When we say Solomon has served at Forest for a long time, we're talking really long. Now 86 years old, Solomon has worked at the company for almost 50 years, and he's been CEO for almost 37 of them. Obviously, he's presided over big changes at the company. In fact, when he took over, Forest wasn't even a drugmaker. It made vitamins.
Forest's next chapter will have a new author, though Solomon will be around to advise. "I will be 86 this August and I think the company is entitled to the rigorous assurances of continuity that a younger chief executive can provide," Solomon said in a statement. "I look forward to working with the board and new CEO, when identified."
The past few years have been stormy ones for Solomon and for his company. Forest's sales were largely built on Lexapro, the blockbuster antidepressant, and the company was scrambling to prepare for large-scale generic erosion. It was under investigation by the U.S. government for off-label marketing and ultimately agreed to pay $313 million to settle the probe.
Solomon himself was targeted for exclusion from the pharma industry, but he ultimately fought off the Department of Health and Human Services' move. And meanwhile, Forest was under attack from activist investor Carl Icahn, who mounted two proxy fights in 2011 and 2012 for seats on the board.
Last year's proxy battle was particularly personal. In fact, Icahn zeroed in on Forest's succession planning--or lack thereof--alleging that Solomon was grooming his son to take over. Icahn also accused Forest's board of being too cozy with Solomon, as did several shareholder lawsuits, which claimed the company paid Solomon too much.
The company's revenue is still sliding, thanks to Lexapro generics; for its fiscal third quarter ended March 31, sales dropped by 41%. Forest saw growth in the new drugs Solomon promises will turn the tide, but rebuilding will take some time, and the company expects results for the full year to be weaker than hoped for last year.
Still, Forest's board figures better times are ahead, partly because of Solomon's pipeline-building efforts. "With the launches of a new generation of products, all advanced under Howard's stewardship, Forest is positioned to build on [its] success," lead independent director Kenneth Goodman said in a statement. And search committee member Gerald Lieberman echoed that sentiment: "Our mission and focus now is to find the right CEO to take our products forward and build on the platform that Howard helped put in place."
- see the release from Forest