20 Highest-Paid Biopharma CEOs of 2012

Call it a rite of spring. Every year about this time, FiercePharma takes a look at executive compensation in the industry, and we rank the highest-paid CEOs. If you're a regular reader, you'll notice that this year's list is longer than previous editions. And there's a reason for that: curiosity.

As we were beginning to gather numbers from biopharma companies' proxy statements and annual reports, news surfaced that Valeant Pharmaceuticals ($VRX) and Actavis ($ACT) had been in merger talks. The former CEO of Mylan ($MYL), one of Actavis' rivals, regularly appeared on our highest-paid executives list, so we looked up the numbers on Actavis. No dice; CEO Paul Bisaro may have pulled off his biggest merger ever last year, but $8.66 million in compensation still didn't qualify him for our ranking.

Then, we pulled out Valeant's proxy statement. And while CEO Michael Pearson didn't earn enough in 2012 to make the cutoff--his compensation just surpassed $6 million--he should have been at the top of the list last year. Pearson's 2011 pay package broke $36 million. He collected more than $18 million in stock and option awards, plus a special $13.7 million dividend payment, stemming from agreements negotiated years before.

We hate to miss a scoop. Naturally. So, we vowed to avoid making the same mistake this time around. Rather than limit our executive-pay search to the biggest pharma companies and biotechs, plus the usual suspects who often make CEO-pay rankings, we used a bigger net. We collected compensation information from 50 companies, including numbers for CEOs, CFOs, R&D chiefs and other top executives.

Partly because of this search, but mostly because of big bonuses and awards at fast-growing Regeneron ($REGN), we have a brand-new No. 1 on our list. That's Regeneron CEO Leonard Schleifer, whose 2012 compensation totaled $30.047 million. You'll notice some other newbies, such as Leonard Bell from Alexion ($ALXN), whose pay bump put him in 12th place. And then there are familiar faces, such as Pfizer ($PFE) CEO Ian Read; Johnson & Johnson's ($JNJ) former chairman and CEO, William Weldon; and Eli Lilly ($LLY) CEO John Lechleiter, who hung on in 10th place.

Many of the companies we researched pay their top people far less than the $10 million that served as our cutoff figure. Novo Nordisk ($NVO) CEO Lars Sorensen, who has presided over double-digit growth there for several years, collected a package of cash and stock awards worth about $5 million for 2012. GlaxoSmithKline ($GSK) CEO Andrew Witty made less than $6 million himself; he took a pay cut for the year because of Glaxo's shortfall on certain performance targets.

And then there are others who would have made the list, had their titles been different. There's Regeneron R&D chief George Yancopoulos, whose extraordinary $81 million in compensation shows how much the company appreciates its newly minted blockbuster, Eylea. There's Mylan Chairman Robert Coury, who used to be a fixture on our list until Heather Bresch took over as CEO; he made more than $28 million last year. Novartis' ($NVS) former chairman Daniel Vasella could have qualified for 12th place with his $13.98 million in compensation.

Vasella, then, gives us a quick segue to the ongoing debate over executive pay. In Switzerland, populist dismay at some high-profile compensation figures led to a public vote earlier this year. Citizens voted in new restrictions on common bonuses, such as golden parachutes, and gave shareholders a binding vote on executive pay. And local analysts figure that late-breaking news of Vasella's behind-the-scenes noncompete agreement--worth some $78 million over 5 years--helped pay activists to get out the vote. (Vasella ended up refusing the deal, by the way.)

In the U.S., where executives are paid more than anywhere else in the world, shareholders at some companies have successfully lobbied for a greater emphasis on performance pay and against extraordinary bonuses, such as change-in-control payments that send top executives on their way with tens of millions after a merger. Other companies have instituted "say-on-pay" advisory votes for shareholders, but those often end up as rubber stamps for the status quo.

1  Leonard 'Len' Schleifer - Regeneron	11  Joe Jimenez - Novartis
2  William Weldon - Johnson & Johnson	12  Leonard Bell - Alexion Pharmaceuticals
3  Ian Read - Pfizer	13  Robert Bradway - Amgen
4  Miles White - Abbott Laboratories	14  George Scangos - Biogen Idec
5  David Pyott - Allergan	15  Severin Schwan - Roche
6  Robert Parkinson - Baxter International	16  Angus Russell - Shire
7  Lamberto Andreotti - Bristol-Myers Squibb	17  Alex Gorsky - Johnson & Johnson
8  Kenneth Frazier - Merck	18  Robert Hugin - Celgene
9  John Martin - Gilead Sciences	19  Heather Bresch - Mylan
10  John Lechleiter - Eli Lilly	20  Christopher Viehbacher - Sanofi

Actavis to Buy Warner Chilcott in All-Stock Deal

The generic drug maker Actavis agreed on Monday to buy Warner Chilcott, a smaller rival, for about $5 billion in stock, in the latest flurry of deal-making in the specialty drug industry.

The merger comes after Actavis’s talks to sell itself to Valeant Pharmaceuticals fell through last month. After the failure of that proposed deal, Actavis turned to its talks with Warner Chilcott while turning down deal entreaties from bigger drug makers like Mylan, according to a person briefed on the matter.

Under the terms of the deal, the company will pay 0.16 of an Actavis share for each Warner Chilcott share. At Friday’s closing prices, that amounts to $20.08 a share, nearly 5 percent higher than Warner Chilcott’s closing price that day. Actavis will also assume Warner Chilcott’s $3.5 billion in long-term debt.

The combined company is expected to have about $11 billion in annual revenue, with focuses on products for women’s health, urology and dermatology. Actavis, itself the product of a merger of Watson Pharmaceuticals of the United States and Actavis of Switzerland, now specializes in generic drugs, including a version of Lipitor.

“We have set as our strategic corporate objective to build a leading global specialty pharmaceutical company,” Paul M. Bisaro, Actavis’s chief executive, said in a statement. “The combination of Actavis and Warner Chilcott creates a strong specialty brand portfolio focused in therapeutic categories with strong growth potential, and is supported by a deep pipeline of development programs.”

The merged company would be based in Ireland, Warner Chilcott’s current home, to take advantage of favorable tax laws in that country.

The deal requires the approval of shareholders in both companies, as well as the sanction of the Irish High Court.

The biggest shareholder of Warner Chilcott is Fidelity Management and Research, the mutual fund company, which held a 10 percent stake as of earlier this month, according to Bloomberg data. Fidelity Management is the second-largest shareholder of Actavis, with a stake of 5.7 percent, the data showed.

Actavis was advised by Bank of America Merrill Lynch and Greenhill & Company, while Warner Chilcott was advised by Deutsche Bank.

Top 10 Cardio Drugs 2012

For years, cardio was king. The world's all-time best-selling drug, Pfizer's Lipitor, after all, is an antihyperlipidemic drug. Cardio drugs have traditionally made up one of the largest categories of therapeutic treatment in the drug universe.

 

According to EvaluatePharma's World Preview 2018 report, combined sales of antihypertensive drugs and antihyperlipidemics were more than $70 billion in 2011. That would put them at the top of the heap. Sales of antihypertensive drugs alone were more than $40 billion that year, making them the second-largest therapy area defined by the report, behind oncology drugs at $64.4 billion. The list, compiled by EvaluatePharma, includes the theraputic areas categorized as cardio, so it does not include some products sometimes used for heart disease but not in that therapeutic area, including blood thinners like Plavix. 

But many of the top cardio drugs are long in the tooth, and generics are now eating their lunch. Did I mention Lipitor? Sales cratered last year, falling nearly 60%. Despite that, the drug placed third among the top 10 cardio drugs of 2012, a reminder of the stature it had achieved. Four of the top 10 have lost patent protection in the last two years, and most will be off patent by 2016, with only Merck's Vytorin protected until 2017.

Last year, the top 10 cardio drugs racked up sales of $28.644 billion, down 23% from the $37.271 billion they sold in 2011. Still, the group has made a lot of money for its companies for years and, in some cases, completely changed the treatment of heart disease.

It is an interesting list. Only Merck has two drugs in the top 10. The other drugmakers make up a broad swath of the pharma industry. Read our report below, and if you have some insights you would like to share, please do.

1.     Crestor

2.     Diovan

3.     Lipitor

4.     Zetia

5.     Benicar

6.     Micardis

7.     Avapro

8.     Vytorin

9.     Blopress

10.  Tracleer

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