Adcock shares mute on CEO's appointment
Fin24.com - Apr 4th 2014, 08:13
Johannesburg - Adcock Ingram [JSE:AIP] named Kevin Wakeford as its new chief executive on Thursday, an appointment aimed at turning around the fortunes of the country's No.2 drugmaker.
However, shares in the firm hardly moved on the news. At 13:00 GMT, the stock was trading 0.2% higher at R58.64 compared with a 0.5% fall on the JSE All-share index.
The appointment of Wakeford followed the widely expected resignation of Jonathan Louw, whose leadership of the struggling firm had been criticised by top shareholder Bidvest Group.
Wakeford inherits a company that has underperformed both operationally and in the stock market, hit by over-reliance on the heavily regulated local drugs market and a poor distribution network.
Adcock's share price has fallen 2.7% over the last two years, compared with a 41% rise in Johannesburg's All-Share index. The shares of its closest rival, Aspen Pharmacare, the market leader by both revenue and market value, have more than doubled in the same period.
Wakeford, who starts immediately, spent 10 years with Bidvest and has headed its travel and aviation unit for the past three. The pharmaceutical industry is unchartered territory for him.
Since Adcock is a drugs distributor, not a developer, it needs someone who can improve its network, said Reuben Beelders, portfolio manager at Gryphon Asset Management in Cape Town, which holds shares in Adcock.
"This is a distribution business. What you need here is someone with strong distribution and the ability to execute. The Bidvest guys generally have that," Beelders said.
"As an investor I'm actually quite bullish about the events of the past few days."
Bidvest, which has businesses ranging from freight and auto sales to frozen food, earlier this year increased its stake in Adcock to over a third to block a $1.2bn Chilean takeover of the Johannesburg-based firm.
Bidvest has since been pushing through changes at Adcock, with Bidvest Chief Executive Brian Joffe replacing Khotso Mokhele as chairman of the drug firm in February.
"The board decided that strong business skills are what is required to lead Adcock Ingram's recovery and growth into the future," Joffe said in a statement.
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