Health Care and Economic Development and Life Science & Biotech

Roche CEO search continues with no end in sight: Sudden departure of Madaus last October opened up broad search for successor

January 31, 2005

Roche Diagnostics Corp. is still searching for a CEO to lead its North American headquarters in Indianapolis, and the company has cast a wide net.

Roche is searching "internally, locally, nationally and internationally" for the right executive to replace Martin D. Madaus, spokeswoman Doyia Turner said.

Madaus, 45, left in October to become president and CEO of Millipore Corp. in Massachusetts, Turner said.

The search is going well, she said, but the company has no time frame for completing it. Turner said the company is looking for someone who can further Roche's position as a "global leader in diagnostics."

"This person would ideally have a background in health care, if not specifically diagnostics," she said.

Roche Diagnostics Division head Heino von Prondzynski is running the search from the Swiss headquarters of parent Roche Holding AG. The parent bases its pharmaceutical and diagnostics divisions in Basel, Switzerland.

The vacancy actually flew under the radar screen for several European analysts covering the company. A few said they didn't even know there was a vacancy.

Nick Turner, a London-based analyst for Jefferies International, said he figured the company would be flexible with the search parameters.

"I don't think they'd have a line of succession at the company, not at that level," he said.

Neither does David J. Denis, a finance professor at Purdue University's Krannert School of Management. He noted that Madaus was relatively young for a CEO, and he left suddenly.

"When someone leaves suddenly like this, oftentimes the company is caught off guard; they're not ready yet," he said.

Companies normally put people in top management positions as a way to prepare them to take over if something happens to the CEO. This provides a less expensive and more efficient way to find a successor than an external search.

An external hire also arrives with little knowledge about the company, Denis noted.

"You're trying to assess that person's ability to assimilate themselves into the organization," Denis said. "Clearly, that's more difficult to do with an outsider."

There is no prescribed timetable for CEO searches, the finance professor said, noting that it's "not at all unusual that this process could take six months or so."

Madaus joined the Roche predecessor in Indianapolis, Boehringer Mannheim Corp., based in Germany, in 1989. Nearly a decade later, he led the integration of Boehringer Mannheim Canada into Roche Diagnostics Canada. Roche bought Boehringer's parent in 1998.

Madaus became the president and CEO in Indianapolis in 2000, replacing Dennert Ware.

The new leader will take over a growing operation that's active in the city's life sciences development. The Hague Road campus is home to North American research and development for Roche Diagnostics. It churns out glucose meters, insulin pumps and 4 billion blood-test strips each year, among other products.

The company also develops molecular diagnostics tests of DNA for HIV, hepatitis and pregnancy in Indianapolis.

Last year, Roche moved insulin-pumpmaker Disetronic Medical Systems from Minnesota to a new home in Fishers. Earlier this month, the company bought some office buildings near its Indianapolis location to provide room for more growth, Turner said.

Outside its own business, Roche executive Wayne Burris has a seat on the BioCrossroads board of directors, spokeswoman Jenny Siminski said. BioCrossroads is an initiative of life sciences and economic development leaders that aims to boost development in that segment.

Roche executive Joerg Schreiber also runs one of eight BioCrossroads teams charged with finding commercial opportunities for research.

Siminski said Roche's CEO search hasn't affected the company's role in life sciences development.



Peter Schnitzler contributed to this report.
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