NEWS OF THE WEEK PHARMACEUTICALS
SCHERING-PLOUGH TO SLICE DEEPER Troubled drug firm takes more action to cut costs and rebuild its businesses
S
CHERING-PLOUGH
CEO
Fred Hassan has completed a "100-day, 360-degree review" of the drug company he has headed since April. The outcome includes lower anticipated earnings for 2003 and 2004, a 68% dividend cut, and even deeper cost cutting than was announced in July. In a statement read to analysts by the company's investor relations staff, Hassan said his review confirms the need for aggressive measures to stabilize the company and create a base on which to SPACE
build a turnaround. He intends to use some of the savings to bolster key products such as the new cholesterol-lowering drug Zetia. The company will accelerate and intensify cost-cutting actions to deliver savings in excess of the $200 million target previously announced. It will launch a voluntary retirement program expected to yield a head-count reduction of at least 1,000 people as the first phase of a planned global workforce reduction. Other cutbacks include the elimination of bonuses for 2003,
POLICY
LEARNING FROM COLUMBIA Report blames NASA culture, foam strike for space shuttle loss •Sj?-*
A
VERDICT Gehman (right) and moderator Laura Brown discuss the investigation of the loss of Columbia, shown blasting off from the Kennedy Space Center on Jan. 16. 6
C&EN / SEPTEMBER
PIECE OF FOAM WAS THE
physical cause of the space shuttle Columbia accident on Feb. 1 (C&EN, June 16, page 7). But NASAs shuttle program management practices, including scheduling pressures, were just as responsible, according to the final
1 . 2003
report of the Columbia Accident Investigation Board (CAIB). The 248-page report, released last week, points to NASAs history and organizational behavior— or culture—as a root cause of the tragedy "We consider it unlikely that the accident was a random event; rather, it was likely related in some degree to NASAs budgets, history, and program culture, as well as to the politics," the report says. Released just seven months after the catastrophic loss of the shuttle Columbia during its reentry into the atmosphere,
including Hassan's voluntary relinquishment of a possible $2 million for meeting performance goals; no payout of a 15% of salary profit-sharing program for all employees; a freeze on all routine merit increases through 2004; and tighter controls on new hires, meeting and entertainment expenses, and travel, including selling the corporate jet. Other executive privileges will be cut as well "to set therighttone at the top," the company says. The analysts were incensed that Hassan wasn't present to answer questions. However, the staff defended the CEO, citing his hard work and desire for transparency in releasing the news immediately, despite his own scheduling conflict. Hassan is expected to comment publicly with the release of Schering-Plough's third-quarter earnings in October and at a November meeting withanalysts.-ANN THAYER killing all seven astronauts onboard, the comprehensive report provides a road map for changes at the agency, NASA Administrator Sean O'Keefe explained. "We get it," O'Keefe told reporters. It's not about changing faces; it's about making institutional changes, he said, adding that NASA will be focusing on examining and altering negative cultural practices. The report is intended to serve as the basis for vigorous debate about the future ofspace missions, says CAIB ChairmanretiredAdm. Harold W Gehmanjr. Congress is left to take up the policy questions, such as: How long should NASA fly the remaining shuttles? What is the proper balance of human and robotic missions? To address these policy questions, a series of hearings are scheduled, beginning on Sept. 4 by the House Science Committee and the following week by the Senate Commerce, Science & Transportation Committee.—SUSAN M0RRISSEY HTTP://WWW.CEN-ONLINE.ORG
