They’re seasoned. They’re determined. And they’re about to assume the top spot at some of the world’s largest medical device companies.
Meet the Chief Executive Class of 2011, now starting their freshman year at the helms of Boston Scientific Inc., Wright Medical Group Inc., Biomedical Structures LLC and Vision-Sciences Inc., among other firms. This group follows a larger class of new leaders who began their reign earlier this year at such companies as Smith & Nephew plc, Medtronic Inc., Beckman Coulter Inc., DePuy Orthopaedics, DJO Global Inc. and Spectranetics Corporation.
The newest class of CEOs was named over a six-week period in late summer, with three of the appointments announced within eight days of each other. Leading the pack was Vision-Sciences Inc., anOrangeburg, N.Y.-based manufacturer of infection control solutions for flexible endoscopy. The company appointed Cynthia F. Ansari as CEO on Aug. 10 and elected her to the board.
Ansari replaced interim CEO Warren Bielke, who is now director of strategicinitiatives. Ansari has nearly 20 years ofexperience in the medical device industry. She held a number of executive positions at Stryker Corp., most recently serving as vice president of global marketing.
The next Chief Executive class inductee was Dean Tulumaris, a former MemryCorporation CEO who is now the new leader of Biomedical Structures, a Warwick, R.I.-based provider of biomedical textiles for medical devices. Company officials formally announced the appointment on Sept. 12, with board chairman Randy Spencer boasting that Tulumaris will help “accelerate Biomedical Structures’s expansion of capabilities and services for customers.”
Tulumaris seems to have a knack for expanding corporate capabilities. As Memry’s CEO, he orchestrated a “systematic” expansion of the company’s production capabilities, both organically and through strategic acquisitions. His efforts, according toBiomedical executives, helped Memry’s revenues to nearly double in three years.
Tulumaris spent seven years as CEO of Memry, an independent Nitinol manufacturer based in Bethel, Conn. He held two other positions simultaneously, according to his LinkedIn profile: chief operations officer and vice president/general manager. Tulumaris left Memry in December 2009 to become president of Newington, Conn.-based Aero Tube Technologies LLC, a startup purchased earlier this year by aerospace parts maker C&P Machine Company Inc. in South Windsor, Conn. After leaving Aero Tube in February, Tulumaris accepted a position at Draka Cableteq USA Inc., a North Dighton, Mass.-based manufacturer of standard and specialty cables. The company—a division of Draka Holding N.V. in Amsterdam (the Netherlands)—operates facilities in Taunton, Mass. (a mere three miles from its headquarters), Schuylkill Haven, Pa., and Hickory, N.C. Earlier in his career, Tulumaris worked at MedSource Technologies Inc. (before its June 2004 acquisition by Wilmington, Mass.-headquartered Accellent) and Rubbermaid Home Products.
Just 24 hours after Tulumaris made his debut at Biomedical Structures, Boston Scientific bigwigs went public on Sept. 13 with their choice for a successor to CEO J. Raymond Elliott, who is set to retire on Dec. 31. The management team named Johnson & Johnson executive Michael Mahoney as president, effective Oct. 17, to align withElliott’s departure from his day-to-day job (he still will remain on Boston Scientific’s board of directors as a non-executivedirector, according to the company).
Mahoney, 46, will be elevated to CEO in November 2012 after fulfilling his post-employment obligations to J&J. As president, Mahoney initially will oversee only the cardiac rhythm management and endoscopy divisions within Boston Scientific, as well as numerous corporate functions. By August 2012, the company’s neuromodulation unit will become his responsibility too. Control of all divisions, however, including those that more directly compete with J&J—particularly the cardiovascular and peripheral vascular divisions—won’t come until November 2012.
“We reached an amicable agreement with Boston Scientific that will enable Mike Mahoney to pursue this opportunity, while protecting our competitive interests and proprietary information,” J&J spokeswoman Carol Goodrich told The Gray Sheet.
That “amicable agreement” triggered loads of questions and renewed speculation about a possible J&J-Boston Scientific merger, particularly in light of J&J’s decision earlier this year to leave the drug-coated stent market. The poaching of Mahoney from J&J adds a new chapter in a heated competition between the two companies, which have fought bitterly over market share for their products as well as acquisition rights to implantable defibrillator manufacturer Guidant Corp. Boston Scientific snatched up Guidant for $28.4 billion in 2006 after outbidding J&J in a last-minute gambit.
Besides possibly intensifying the rivalry between Boston Scientific and J&J,Mahoney’s slow transition to CEO potentially could adversely impact business cohesion and consistency at the company, analysts contend. Larry Biegelsen, a Wells Fargo analyst, said in a Sept. 13 note that the long and somewhat complicated changeover process “could cause confusion and near-term uncertainty in the business.”
Elliott disagrees. He believes the drawn-out process will have a positive impact on the Natick, Mass.-based medical device behemoth.
“There are a number of businesses that Mike has no exposure to, even though J&J is very broad,” he said during a Sept. 14 question-and-answer session at the Morgan Stanley Global Healthcare Conference in New York, N.Y. “The timing allows Mike to learn all the things he doesn’t know…Itmay look a little peculiar on paper to people. But I actually think it’s a real bonus for Mike. I think it’s a real bonus for the company too.”
It might also prove to be a bonus for Hank Kucheman, a 16-year Boston Scientific veteran and executive vice president who heads the Cardiology, Rhythm and Vascular (CRV) Group, the company’s largest business unit. Kucheman will act as CEO during Mahoney’s gradual transition and join the company’s board of directors. Once Mahoney assumes full leadership of Boston Scientific, Kucheman will move into an unspecified advisory role and remain on the board.
Before he was given responsibility of the CRV Group, Kucheman was senior vice president and group president for Boston Scientific’s Cardiovascular Group, where he led the commercialization strategy for the firm’s drug-eluting stent program. He joined the company during the acquisition of SCIMED Life Systems Inc., a manufacturer of minimally invasive surgical catheters, in late 1994. Kucheman held a variety of sales and marketing positions at SCIMED; his earlier experience includes stints at Charter Medical Corporation and Control Data Corporation. He began his career at the U.S. Air Force Academy Hospital in Colorado and later worked as a Healthcare Planner in the U.S. Surgeon General’s Office.
Mahoney was appointed worldwide chairman of J&J’s medical device and diagnostics group in January. He earlier led the company’s DePuy unit, which manufactures orthopedic and neurological devices. DePuy, the biggest seller of artificial hips, announced a recall of 93,000 hip implants in August 2010 due to higher than expected rates of repeat surgeries.
Mahoney worked at a General Electric Co. unit and ran a Louisville, Colo.-based healthcare supply chain company before taking over J&J’s knee and hip joint business in 2007. He had been considered a rising star at the New Brunswick, N.J., company with the long-term potential to advance higher, so his decision to leave came as a surprise, sources told The Wall Street Journal.
Perhaps the most stunning aspect ofMahoney’s decision to leave J&J was his readiness to temporarily accept a diminished role at Boston Scientific. “This whole scenario is more than a tad unusual,” Los Angeles, Calif.-based attorney Larry Drapkin, a partner at Mitchell, Silberberg & Knupp LLP, told the Journal. “Everybody wants to choose a CEO and have him up and running [immediately] rather than sit on the sideline.”
Sitting on the sidelines for more than a year could make Mahoney’s job more difficult once he enters the big game, analysts claim. One of his main tasks as CEO will be reinvigorating eroding sales and finding new markets to enter. Revenue from the company’s devices to regulate the heart and prop open clogged arteries has declined in recent years as researchers questioned their safety. As a result, Boston Scientific is cutting 1,200 to 1,400 jobs, or about 5 percent of its workforce, to reduce costs as much as $275 million. And though he may have strong opinions about ways to boost sales, as president, Mahoney may have to rely on Boston Scientific’s board to set the company’s strategic direction—at least for the next year or so.
“You’re separating the people running the company from the people who are calling the shots, and this company has a big strategic issue—where is its growth going to come from?” Michael Weinstein, a J.P. Morgan analyst, noted to the Journal. That disconnect, he added, is likely to make the solution more evasive for Mahoney.
The speculation and brouhaha surrounding Mahoney’s appointment as CEO nearly overshadowed an announcement six days later from Wright Medical Group Inc. about Robert J. Palmisano’s appointment as president and CEO. His appointment became effective on Sept. 17.
“[Bob’s] ability to enhance operational and financial results will make him an ideal leader...,” David D. Stevens, interim president and CEO, said. Stevens remains board chairman and a member of the Nominating, Compliance and Governance Committee. “In recent months, we have taken many steps to better position the company for success, including strengthening our compliance program and implementing a plan to reduce operational costs. We believe Bob is the right person to continue building on this progress…”
With generous salary bonuses and stock options, Palmisano has quite an incentive to continue building on the company’s progress. According a filing with the U.S. Securities and Exchange Commission (SEC), Palmisano will be given a guaranteed bonus of 100 percent of his base pay, pro-rated to Sept. 1 (2011). In addition, he can triple his pay next year through a 200 percent performance bonus if certain pre-set goals are met, and he can purchase up to 610,000 shares of Wright Medical Group stock, which will be vested in equal annual installments over a three-year period after the grant date. Plus, he’ll receive an annual equity grant that is equal to 300 percent of his annual base salary, composed of non-qualified stock options and restricted stock, the SEC filing states.
Palmisano, 67, left a venture partnerposition at international life-sciences venture capital firm SV Life Sciences to take the top position at Wright. Before joining SV Life Sciences, Palmisano was president and CEO of ev3 Inc. until it was purchased by Covidien plc last year for $2.3 billion. His stint at ev3 was preceded by four-year reign as chief executive at Irvine, Calif.-based IntraLease Corp. (now part ofAbbott Medical Optics). Between 2001 and 2003, Palmisano served as CEO of MacroChem Corp., a Lexington, Mass.-based specialty pharmaceutical company.
Palmisano’s appointment was announced just five months after the resignation of former CEO Gary Henley and the termination of chief technology officer Frank Bono. Three other senior executives resigned in May.