Ron Zwanziger resigns as Alere CEO – July 13, 2014

Executive Highlights

  • Mr. Ron Zwanziger recently resigned after 13 years as Alere’s CEO and leader of the company’s re-entrance into the diabetes arena in 2011.
  • The company’s current COO, Mr. Namal Nawana, will serve as interim CEO while the company searches for a longer-term replacement.

Alere announced earlier this month the resignation of CEO and President Mr. Ron Zwanziger, Dr. Jerry McAleer, Senior Vice President of Research and Development, and Dr. Dave Scott, Chief Scientific Officer. The changes takes effect immediately. Mr. Zwanziger joined as CEO in 2001 and began developing the company’s diabetes care business in 2011 with the acquisition of point-of-care A1c provider Axis-Shield and diabetes testing supplies provider Arriva Medical. Mr. Namal Nawana, Alere’s current COO, will act as the company’s interim CEO and President while the company searches for a longer-term replacement; he will also continue all COO duties. We are not sure about who is taking over on the R&D front but we imagine that there will certainly be less investment in diabetes given the industry profitability decline since competitive bidding. Diabetes care revenue comprises only ~7% of the company’s business and has declined over time, so investing less, rather than more, as Mr. Zwanziger did during his time there, is likely to be a driving factor in the company’s overall strategy. There was not from what we can see a major positive ROI in any of the acquisitions that Mr. Zwanziger led in terms of diabetes “service” companies, although we certainly think the company could do well in terms of helping the underinsured.

Before his time at Alere, Mr. Zwanziger was a force in diabetes, having served as CEO of both MediSense (1981-1991) before its sale to Abbott for ~$900 million in 1996 (Mr. Zwanziger left Medisense after Dr. Bob Coleman was hired to take on the CEO position), and Inverness Medical Technology (1992-2001) before its sale to J&J for $1.3 million in 2001. Both were sold at high revenue multiples at a time when blood glucose monitoring was a very profitable business. Following the Inverness acquisition, Mr. Zwanziger served as the CEO of the newly spun off company, Alere. As part of the deal, Alere was under a ten-year diabetes non-compete agreement with J&J – notably, Mr. Zwanziger began developing Alere’s own diabetes care business with the acquisition of Axis-Shield and Arriva Medical one day after the non-compete agreement ended in November 2011.

Although Mr. Zwanziger had been optimistic about Alere’s diabetes care prospects, the field has changed markedly within the last several years. Although Alere has a mail-order diabetes supplies business, which some expected would aid sales as competitive bidding came into effect, Alere experienced a 3% year-over-year (YOY) decline in 1Q14 in its mail-order business. Alere’s diabetes sales more broadly (which includes mail-order supplies, in-patient point-of-care, and laboratory testing) rose 1% YOY in 1Q14 – although this the lowest growth since the company re-entered diabetes care in 2011 (please see our 1Q14 financial report  for additional details), it was a respectable gain relative to the rest of the field.  The dynamics in diabetes have never been more complex; we’ll look for more detail on Alere’s 2Q14 call.

  • As background, Mr. Nawana has served as Alere’s COO since December 2012, with an additional 15 years of leadership experience at J&J – most recently, he has served as Worldwide President of DePuy Synthes Spine at J&J, quite a senior position. Given Mr. Ron Zwanziger’s strong leadership background in the diabetes field, we will be interested to see how Mr. Nawana continues the development of the diabetes care business, and what the view on diabetes will be for Alere’s next CEO.


-- by Hannah Martin, Adam Brown, and Kelly Close