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HGS Picks Watkins as New Chief Executive

By Michael S. Rosenwald
Washington Post Staff Writer
Monday, November 22, 2004; Page E01

Human Genome Sciences Inc. plans to announce today that it has hired a 20-year product development veteran from Abbott Laboratories Inc. as chief executive. H. Thomas Watkins, 51, will face the challenge of completing the Rockville company's makeover from gene hunter to drug marketer.

Watkins replaces William A. Haseltine, the colorful scientist who founded HGS in 1992. Haseltine served as chairman and chief executive until announcing his retirement in March, saying: "I'm a scientist. I am not a commercial person."

H. Thomas Watkins most recently served as president of TAP Pharmaceutical Products Inc. (Courtesy Of Human Genome Sciences)

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Watkins is the opposite. A former management consultant with McKinsey and Co., he has never worked in a lab, but he has been a senior executive in several Abbott divisions, primarily developing diagnostic devices. Most recently he was president of TAP Pharmaceutical Products Inc., a joint venture of Abbott, based in the Chicago suburbs, and Takeda Pharmaceutical Co. of Japan. It sells Prevacid, the popular acid-reflux therapy.

Watkins "is thoughtful, analytical, with the highest integrity, and he has the primal focus on the marketplace that will really charge up the organization," said Argeris N. Karabelas, who succeeded Haseltine as HGS chairman in October.

In the late 1990s, HGS rode the excitement surrounding the mapping of the human genome to a stock price of $109. Recent times have proved more difficult. The company, which lost $185.3 million last year, has yet to market a drug. Shares of HGS closed Friday at $10.47, down 60 cents.

But HGS products are moving closer to the marketplace. It has several in advanced human testing, including potential treatments for lupus, rheumatoid arthritis, cancer and hepatitis. Watkins was chosen over two other finalists, Karabelas said, because board members thought he was the right person to "position those products for the needs of the marketplace."

Watkins, who also will be named a director, said one of his first tasks will be making sure the company, which employs about 900 people, is working efficiently.

"Are we moving toward selling world-class products as quickly as we can?" Watkins said. "Are we efficient?" He didn't rule out cutting jobs, but he noted that the company already laid off more than 200 employees, in March.

He said he would take time to learn about the company's technology and products. "I don't see specific areas of major change and direction, but you know, I haven't been there a single day yet," he said.

Karabelas said he was impressed with Watkins's record. He doubled TAP's revenue, from $2 billion to $4 billion over six years, while helping the company recover from allegations that it broke federal law by inflating prices and offering doctors kickbacks to prescribe its prostate cancer drug. The company pleaded guilty and paid $875 million in fines and civil liabilities.

Watkins, who was not with TAP when the violations occurred, instituted new corporate governance rules. He said he also banned his sales staff from using common but questionable marketing tactics. One of the ploys he banned, he said, was known as "flowers and flee." On Valentine's Day, a drug salesperson would meet a doctor at a flower shop to buy flowers for the doctor's sweetheart in exchange for time to pitch a drug.

The terms of Watkins's contract with HGS are expected to be disclosed this week.

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