CSL’s post-Perrault paroxysm
Our greatest biotech export is at the crossroads, or was it just t-boned?
The $27 billion value wipeout experienced by CSL shareholders last week stands as a stark reminder of the pitfalls awaiting those who buy the sizzle from a chief executive who is strapping on the parachute, with one foot out the plane door.
The colossal sell-off can be linked back to a vision espoused by former CEO Paul Perreault – who had been in office for nearly 10 years at that point – to dramatically improve the profit margins of CSL's core blood products division by improving the productivity of the blood fractionation process.
In briefings for buy-side and sell-side analysts, Perreault and his finance team said that they aimed to lift intravenous immunoglobulin recovery rates from around 4 grams per litre to as much as 5 grams per litre. There were a raft of initiatives – with sexy names like Horizon 1 and Horizon 2 – that promised to drive a major increase in gross profit margins.