Brea-based medical testing products company Beckman Coulter Inc. finds itself in the unusual position of searching for a chief executive.
The company, known for orderly transitions at the top, is in the process of defining job requirements for its next chief executive before starting a search.
It’s “too early” to comment, Beckman spokeswoman Mary Luthy said last week.
Earlier this month, Scott Garrett’s five-year run as Beckman’s boss abruptly ended in the wake of a costly test recall that has brought a falling out with Wall Street.
J. Robert “Bob” Hurley, Beckman’s senior vice president of human resources and a key player on a recent acquisition in Japan, is serving as Beckman’s interim chief executive. Garrett is staying on as an employee through Jan. 15 to help with the transition.
Beckman makes medical testing machines and chemicals used by hospitals, medical laboratories and researchers.
It’s unlikely a new executive will be in place before year’s end, said William Bonello, a Minneapolis-based analyst with RBC Capital Markets.
Beckman needs to look outside the company for its next leader, according to another Wall Street analyst.
“After lapses in quality control and regulatory functions, we think that the market would respond best to an outsider,” said David Lewis of Morgan Stanley.
Investors have pounded Beckman over quality and regulatory issues stemming from the March recall of a profitable test to detect heart attacks.
The recall has prompted a big downward revision in Beckman’s 2010 profit projection and driven a 30% drop this year in Beckman’s shares, which had a market value of $3.3 billion last week.
Qualifications
Beckman’s next chief needs to have “a strong aptitude and interest for science and medicine,” said Bob Ruh, a San Francisco-based global sector leader for medical devices at Korn/Ferry International, an executive search firm based in Los Angeles.
Leadership skills, a track record of building companies and business and financial acumen also are important, said Ruh, who isn’t involved with Beckman’s search.
Most companies of Beckman’s size tend to look at internal candidates as well as outsiders, according to Ruh.
Even if investors and analysts express a preference for an outsider, directors “need to keep their focus on finding the best candidate, period,” Ruh said.
Garrett was just the third Beckman chief executive in some 20 years.
He was something of an outsider—he arrived at Beckman in 2002 to run its dominant clinical diagnostics business.
Garrett’s background included leading Dade Behring Inc., a Beckman rival that evolved out of Baxter International Inc. of the Chicago area.
He replaced longtime Beckman chief John Wareham in an orderly, planned transition back in 2005. Wareham, who was with Beckman and its predecessor since 1968, became chief executive in 1998.
Before that, Louis Rosso was Beckman’s chief executive. Rosso, who took over the top spot in 1988, was at the helm when Beckman was spun off in 1989 from what’s now GlaxoSmithKline PLC.
A GlaxoSmithKline predecessor bought what then was Fullerton-based Beckman Instruments Inc. in 1982.
Although Beckman’s board hasn’t yet outlined how it plans to replace Garrett, questions linger about why he stepped down.
Earlier this month, Paul Glyer, Beckman’s senior vice president of strategy, business development and communications, reiterated during a Morgan Stanley healthcare conference that Garrett’s exit wasn’t tied to any one event.
“The company has determined that a change at this particular time is in the company’s best interest,” Glyer told conference attendees.
Garrett had been a Wall Street favorite prior to the recall and its fallout.
For much of his tenure, Beckman’s shares outpaced Standard & Poor’s 500 index. In 2009, Beckman’s shares saw a 50% gain, versus 23% for the S&P 500.
Beckman’s yearly sales grew from $2.4 billion in 2004, the year before Garrett became chief executive, to $3.3 billion in 2009.
Reforms
The executive also received praise—and some criticism—for modernizing a company known for stability and reverence of founder Arnold O. Beckman, who died in 2004 at the age of 104.
Garrett changed how Beckman recorded revenue for leases of its machines that run medical tests, reworked how Beckman distributed its products and moved the company from its longtime Fullerton headquarters to company offices in neighboring Brea.
But Garrett’s efforts to streamline Beckman brought grumbling from the company faithful, who saw it as too much of a departure from the ways of founder Beckman and those of Wallace and Joseph Coulter, who founded key 1998 acquisition Coulter Corp.
