In 2007, Bob Essner felt justifiably triumphant. He had engineered a successful turnaround of Wyeth, the pharmaceutical giant, after six years of reinventing the company.
But even after increasing revenue by 30%—to $20.4 billion—Essner suddenly lost his job. What went wrong?
One possibility is that he overhyped three Wyeth medications in development. When federal regulators refused to approve these drugs, it stung.
The regulatory setback was bad enough. But Essner made matters worse by giving overly optimistic sales projections for the three drugs. He promised they’d become blockbusters, raising expectations beyond any reasonable bar.
“The company was extraordinarily bullish about the pipeline [of drugs],” one analyst recalled. “Our view of those products was poor. Even without the regulatory issues, the products were not all that compelling.”
Visionary leaders often paint a rosy picture of the future. But Essner’s tendency to hype products that weren’t even approved exposes a downside of expressing aggressive optimism.
Wyeth’s board of directors didn’t castigate Essner. Indeed, they emphasized that his exit was part of an orchestrated succession plan.
Yet industry observers figured his abrupt departure at age 59 may have been accelerated by what seemed like overselling of the company’s pipeline of products.
When forecasting sales, provide realistic projections based on reliable data.
— Adapted from “Lessons from a Big Pharma downfall,” John Simons, www.money.cnn.com.