The many extracts on these pages are from copyright material. They are owned by the reference given or its owner. They are reproduced here for educational purposes and to stimulate public debate about the provision of health and aged care. I consider this to be "fair use" in the common interest. They should not be reproduced for commercial purposes. The material is selective and I have not included denials and explanations. I am not claiming that all of the allegations are true. The intention is to show the general thrust of corporate practices as well as the nature and extent of any allegations made.

Links to Site Maps

Corporate Practices

to print)

Path to this page

Austr Hosp Companies
Mayne access page
Other pages

Entry to Privatisation
Privatisation Background
Australian states
Gen. Pract. Corporatisation
General Practice/Pathology:-
Sonic&Co . . Foundation
Lifecare . . . Endeavour
Primary . . Revesco&related

Hospital Companies

Affinity Health
Alpha Healthcare
Austr. Hosp. Care
Hosps of Austr (HOA)
Insurer hospitals
James Hardie & HCC
McGoldrick's comps
Markalinga & AME
Mayne Health & HCoA
Moran Healthcare
Nova Health
Ramsay Hlth Care
US grps HCA & AMI

Small Hosp groups

Mayne Pages
Mayne access page

1886-1994 - - - refs
Collusion - - - refs
1995-2000 - - - refs
Clippings 1998
Conflicts&Scan scam
2000-2001 - - - refs
Smedley - - refs
Health Story

Affinity Hlth & Citigroup
2004-2005 Break up
Mayne Diagnostics
Restrict Mayne

This web page documents Mayne's inept management and steady decline during 2004 and 2005, and its break up into local and international companies in November 2005. It also documents the end of the tarnished Mayne name as a local operator although it still tarnishes the international operation. This new international drug company is seen as a likely takeover target.

Australian section     

Mayne Finally Breaks Up





This web page documents the ultimate demise of the once mighty Mayne name in Australia. It tells the story of Mayne's continued decline during 2004 and 2005.

In November 2005 Mayne demerged into local and international companies. The international operation kept the Mayne name. The market believes that this demerger is simply a sale technique and that these groups will fragment further and be mopped up by more successful operators. Mayne denies this and the decisions it is making look as if they intend these companies to continue.

This was a company which established a giant diversified empire around a trucking business built on fraud and deception during much of the 20th century. This fraud was exposed in 1990 and Mayne was convicted in 1994. The trucking business was no longer competitive. Persuaded by Dr Barry Catchlove Mayne switched its focus to health care and over the years sold off most of its other businesses to expand in health.

The company has been capital and assets rich but it has consistently failed to generate the promised profits from its businesses. It has pushed the limits, yet consistently performed worse than its peers.

Mayne has a history of promising shareholders much and then doing everything wrong. There has been debacle after debacle. Driven by a blind one stop shop diversified commercial health care model it has expanded into every field of health care and dominated the private health sector in Australia.

Its poor performance has led financiers and analysts to press for a break up of the company into multiple smaller businesses. Over the years it sold many of its non-medical businesses but retained the one stop diversified model of care. When its hospital division collapsed it recognised its problems and sold off its entire portfolio of hospitals in 2003.




The material on this web page makes much of the ineptitude and lack of experience in health care of Mayne's management. This reflects the way the press have interpreted it. The analysts are market analysts and the critics are market investors. They consequently see this within a practical marketplace pattern of thinking.

There is a much more fundamental problem which underlies all of the material about Mayne on this web site. It is well illustrated if you step back and look behind the many quotes on this page. This issue is one we can call perspective, frame of understanding or world view. The functionality of any social activity is closely related to the extent to which this world view adequately reflects the situation in which the people concerned live out their lives and motivates them to function for society's overall benefit as well as their own. This concept is closely related to and part of a community's culture. Mayne more than any other corporation has adopted pure market thinking and applied it to the health care context - a context where a marketplace understanding of the suituation is not congruent with the reality. Unlike corporations in the USA Mayne has not had the power to conquer the health care world and impose its dissonant perspective. Had it done so we may have seen greater exploitation of citizens by Mayne and by others who were forced to compete.

Mayne's successful competitors Ramsay and Healthscope have recognised this difference in perspective and accepted the leverage the medical profession have through their control over patient admissions. They have sought to compromise their marketplace perspectives to this reality and in the Australian context this has given them a competitive advantage. This is not to suggest that the situation created by and the operation of these companies is desirable or functional for sick citizens or the health care system. Clearly it is not. The tensions created between competing perspectives result in pressures which are too precariously balanced, a balance which can easily swing the wrong way. It places the health professions in a precarious position and requires more resolve and dedication from them than the public has any right to expect.



A Company Run by Bankers

Since 1995 management has taken its plans to its bankers and institutional investors for approval and to a very large extent the company has been run as a commercial enterprise by the marketplace and not as a health care enterprise for the community.

Catchlove promoted this One Stop commercial model to Mayne's manager Bob Dalziel and together they sold it to institutional investors who gave their approval. The company then used its assets to buy into every health care sector in Australia.

When it ultimately came to implementing his policies Catchlove seems to have realised what the consequences would be and simply sat on his hands until he and Dalzeil were ousted.

May 2005 Disappointed Investors

Mayne has consistently disappointed investors over the past five years in the wake of a grand plan under former chief executive Peter Smedley to turn it into Australia's first real health-care conglomerate, which included the $2.45 billion takeover of FH Faulding in 2001.

But the vision to form a network of hospitals, pathology and radiology practices, pharmacies and pharmaceutical products under the Mayne red dot logo ultimately floundered and new management has subsequently undertaken a series of changes in direction and asset sales.
Break-up pill gives Mayne shares a lift Australian Financial Review May 5, 2005

It was left to the new management under the market's Mr Fixit, Peter Smedley to implement this business model and cop the consequences. Smedley also embarked on an explosive series of takeover and entered the pharmaceutical sector. Doctors became alarmed by Maynes management strategy and walked away from Mayne hospitals causing that business to collapse.

Management has lacked understanding of health care. It followed market prescriptions without awareness of the consequences. It has consulted institutional investors and bankers before every decision but not its doctors.

As Mayne broke up in 2005 one analysts eventually grasped the problem. Mayne has been run as a business by bankers with no knowledge of health. It has never been run as a medical service. Not surprisingly it has under-performed in every area where it operates and its competitors have done better. When Mayne has sold money losing businesses, the new owners have made them profitable.

Long suffering shareholders have been repeatedly disappointed. The only advice resisted has been to break up the company and sell it to those who could run it profitably. Eventually Mayne had no choice but to do so.

One wonders whether this investor and analyst driven policy is a wise move. I argue that the companies still intend to operate on a dominant market model of health care. What is required is a community/medical structure and philosophy

Feb 2004 Not performing

"They lack clarity in their strategic direction and their operational result always seems to be weaker than their peers'," he (Investors Mutual senior portfolio manager Monik Kotecha) said.
Mayne Stumbles Over Generics February 26, 2004

May 2005 No health expertise

"The bottom line is that Mayne Group always had pretty good assets but they essentially had a management team that had no experience in this industry."
Mayne fires on plan for health carve up The West Australian May 5, 2005

May 2005 Run by bankers

For too long Mayne has been run by bankers and, like some others in the market, has overlaid management theory on businesses where it does not work.

Mayne as it is structured was going nowhere - other than perhaps backwards.
Mayne wasn't able to extract value from these hospitals where others were. It's hard to forget Mayne's great war with the doctors a few years back when corporate headquarters imposed its centralised view of management on a bunch of highly skilled and intelligent but slightly precious doctors. They referred Mayne management to the proctologist.

Mayne had to create a new management plan to retrace its steps with the doctors in control. But it was never destined to work under Mayne's ownership.
Too many bankers - but they're right The Sydney Morning Herald May 5, 2005



Performance 2004 and 2005

The sale of the hospitals was only one of the post Smedley divestments by new management.

Feb 2004 Already divesting assets

It has been a tough first 18 months as chief executive of Mayne Group for Stuart James . During that time Mayne has jettisoned its once-core logistics and hospitals divisions as well as divesting several non-core consumer products such as the soap and sunscreen businesses.
Mayne Offers Injection Of Faith Australian Financial Review February 27, 2004

After the sale of its hospitals in November 2003 Mayne was asset and money rich but lacked suitable takeover targets. It opted instead to buy back shares.

Jan 2005 Share buyback

Mayne Group has divulged details of an off-market share buyback of up to $350 million, dousing market fears that the healthcare conglomerate would embark upon an acquisition spree after concluding the sale of its hospitals division.
Mayne Opts For Share Buyback Tender Australian Financial Review January 31. 2004

Mar 2005 Share buyback

HEALTH giant Mayne got the green light yesterday to buy back up to $500 million of the company over the next year.

Shareholders voted 81 per cent in favour of the deal, overruling a small group of opponents who argued for a special dividend, saying directors had favoured larger stockholders.
Mayne's $500m buyback approved Hobart Mercury March 5, 2004

The company switched its focus to its drug business. It promised its shareholders that this would prosper. This optimism was reflected in improved share values early in early 2004 but this soon turned to gloom as analysts challenged managements assertions.

Feb 2004 Policy

The restructuring strategy is designed to transform Mayne into a specialty generic injectible pharmaceutical company with interests in diagnostic testing to supply consistent cash flow.
Mayne Offers Injection Of Faith Australian Financial Review February 27, 2004

Feb 2005 Apparent good health

MAYNE Group's first interim report since shedding its hospitals business last year has seen the medical services company's bottom line return to good health.
Selling hospitals turns around Mayne Group Advertiser, The (Adelaide) February 26, 2004

Jul 2004 The markets has doubts

But after Mayne bailed up analysts at a Sydney hotel on Tuesday to tell them its shares were undervalued, the number-crunchers returned to their desks and proceeded to debunk Mayne's line of argument.
It (broker) is worried that the momentum story Mayne is pushing with regards to acquisitions and increased R&D disguises erosion of the underlying generic pharmaceuticals business.
Unmoved on Mayne Australian Financial Review July 8, 2004

Mayne managed to massage earnings in the second half of 2004 and made claims to improved performance. Analysts were divided about its significance but the pessimists were right.

Aug 2005 Doubts

In any case, with others questioning the extent to which the out performance may be more due to non-operating issues, such as tax and interest savings, Mayne will have to deliver much more than one upgrade to be forgiven by the market.
Market Wrap : Send in a vet Australian Financial Review August 5, 2004

Dec 2004 Optimists

There is a growing belief among many analysts and fund managers that pharmaceutical and health-care company Mayne Group has finally found its place in the world.

After years of promising starts that often led to embarrassing failures, sell-offs and countless rounds of restructuring, Mayne has started to produce the kind of returns investors had always hoped for and believed the company should be able to deliver.

This has earned Mayne upgrades from sector analysts and a rampaging share price. The stock has risen from a low of about $3 at the beginning of the year to a high of $4.50 earlier this month a gain of 50 per cent.
Mayne Group lives up to analysts' expectations Australian Financial Review December 1, 2004

The company lacked direction and clear plans to make itself profitable. Its fortunes declined steadily during 2005. Even when it agreed to break up into two companies in November 2005 it could offer little credible prospect of profitability for these companies. Its share price continued to decline.

Feb 2005 Scared investors

MAYNE Group has struggled to sell the merits of its latest financial result to the market, its share price sliding as much as 8 per cent yesterday on a subtle profit warning.
Spooked investors take cane to Mayne The Age February 24, 2005

Apr 2005 Shares sliding

Mayne, which has fallen as much as 25 per cent in recent months, ended yesterday at $3.66, down 5c.
Ramsay raising a sign of health The Sydney Morning Herald April 19, 2005

Apr 2005 A lot of unhappiness

Mayne Group is again the subject of investor rumblings - the latest concerns ranging from a sagging share price to once-underperforming assets starring in other hands, as well as criticism of management.

Just 18 months after pocketing $813 million for the sale of most of its hospital portfolio to Affinity Health, Mayne investors had to endure Ramsay Health Care paying Affinity $1.4 billion for those same hospitals 10 days ago.
"The one thing that can be said unequivocally about the Mayne Group assets is that anybody who has bought assets from Mayne Group has miraculously made money from those assets," Mr Raftopulos (from Constellation Asset Management) said.
Other analysts have challenged Mayne over its drug supplies, alleging it is sitting on a stockpile of soon-to-expire drugs that it can't sell.

Longer than expected shutdowns at two drug-making factories have also added uncertainty to Mayne's second half earnings, with analysts saying the market will reserve judgement until the fallout from the plant closures can be evaluated.
Mayne's fast losing friends The Sydney Morning Herald April 26, 2005

May 2005 More pessimism - prossible break up

A break-up, which could include a listing of the $1.75 billion pharmaceuticals arm on the New York or London stock exchanges, would be yet another shift in strategy for Mayne.

Investors Mutual portfolio manager Andrew King said Mayne had lacked a clear and coherent strategy for some time and this had been damaging shareholder returns.

"Mayne has shown over the past few years a propensity to destroy shareholder value," he said.
Break-up pill gives Mayne shares a lift Australian Financial Review May 5, 2005

Aug 2005 Even management negative for the future

Mayne Pharma's earnings before interest, tax and amortisation would be flat this year as a result of natural price erosion of its products and the cloud over some of its key drugs because of litigation, Mr James said.

Turning to domestic operations, Mr James said he was "not happy" with the returns generated by the diagnostic imaging business. Also, pharmacy operations had lost market share.
Mayne expects flat earnings even as demerger proceeds Australian Financial Review August 25, 2005

Aug 2005 Pharmaceutical business prospects disappoint

Considering the hundreds of millions plunged into Mayne Pharma over the past few years and the way it had been talked up, the market was expecting something a lot better than CEO Stuart James's prognosis of flat growth for the division in 2005-06.
Street Talk : Mayne Pharma's poor result brings matters to a head Australian Financial Review August 26, 2005

Oct 2005 Demerger viewed suspiciously

SHARES in healthcare conglomerate Mayne Group fell nearly 4 per cent yesterday as brokers assessed the company's plan to demerge.
Mayne's demerger plans fail to impress The Courier-Mail October 12, 2005



Lacklustre Management

Following Peter Smedley's departure, his right hand man Stuart James took over management. Much of the management team remained intact.

James experience was as Smedley's shadow and right hand man in oil, insurance and banking. His credibility was tarnished by Smedley's legacy. He was strongly supported by the board, but investors were unimpressed by his suitability and then by his performance. At one stage they pressed for his departure.

Apr 2004 James Head on the block

The speculation centred on talk that major shareholders had called a meeting with the healthcare and logistics company's board to discuss strategy.
But fund managers interviewed by the Herald none of whom would speak on the record recall there being a compelling argument to support such a move (ie sacking James).

They put forward a couple of choices. Either break up the company and sell it, or get someone in who specialises in running healthcare.

Since then, the share price has gone nowhere, there have been ructions at board level and the speculation persists about the future of management.
"We are very annoyed with management and we have expressed that very forcefully to the chairman [Peter Willcox]," one says.

"This company is disintegrating," says another. "I'm astounded management is still in place. What's wrong with this board?"
Such stories add to the market's conviction James and his senior management team still, after 18 months in the job, lack the experience to run a pharmaceuticals company. The argument goes that the business of healthcare is so distinctive it really needs a healthcare expert to successfully run it.
The Pain In Mayne Falls Mainly On The . . . Shareholder The Sydney Morning Herald April 10, 2004

Apr 2004 Smedley's man

Around the market, James is still seen as a Smedley-type "deal maker" rather than an operational manager capable of actually running the company so that it produces a reasonable return on assets.
Mayne's Vitamin Deficiency Business Review Weekly April 22, 2004

May 2005 Getting rid of management

"The demerger is good news if the board and management leaves with it," said fund manager George Raftopulos of Constellation Capital Management, a Mayne shareholder."
Mayne fires on plan for health carve up The West Australian May 5, 2005

May 2005 No experience

"The bottom line is that Mayne Group always had pretty good assets but they essentially had a management team that had no experience in this industry."
Mayne fires on plan for health carve up The West Australian May 5, 2005

May 2005 Welcoming a management change

Once the split occurs there will be a change of management and the market believes a change in ownership as well.

And this is exactly why the share price shot up 17 per cent yesterday on the news.
Too many bankers - but they're right The Sydney Morning Herald May 5, 2005

In spite of investors lack of confidence and James' poor performance the board gave him a big pay rise in November 2003 after the sale of the Mayne hospitals. When the company broke up at the end of 2005 and he finally departed he got a massive pay out.

Nov 2003 James large bonus

MAYNE Group chief executive Stuart James will be eligible for a bonus of up to 150 per cent of his base salary after changes to his remuneration were approved by shareholders yesterday.

Mayne chairman Peter Willcox told yesterday's annual meeting that Mr James' remuneration needed to be overhauled to match that of his peers.
Investors up bonus for boss November 11, 2003

Oct 2005 James departure golden handshake

James, who was contracted to the end of August 2007, will bank about $3.05 million in cash.

He will also be issued the 1.26 million or so shares - valued at close to $7 million at last glance - that would have been forthcoming under the executive incentive plan.

Plus there's a further $875,000 in cash to make up for the shares James would have earned this financial year
FULL DISCLOSURE : James' expensive exit is the Mayne event The Age October 11, 2005



Board shake up

Peter Wilcox, Mayne's chairman did try to change the board but this did not include dumping the Smedley team. He set a maximum 9 year term for directors. Now the company is splitting up new boards are hopefully being appointed

Apr 2004 Time expired directors

Mayne Group chairman Peter Willcox is set to orchestrate an unprecedented board shake-up at the company by removing several long-serving directors and sparking a new debate about tenure in Australia's boardrooms.
Mr Willcox justifies his decision to impose nine-year terms on Mayne's directors by pointing to his own moves to voluntarily leave boards after six to eight years.
Board Tenure A New Battleground Australian Financial Review April 5. 2004



Moving to the USA

With such a poor image in Australia, there was some speculation that the company would move internationally and list on the New York or London stock exchanges. In the end the company split into local and international companies with the former dropping the Mayne name and the latter listing internationally.

Apr 2004 Speculation

Mayne Group is hosing down speculation that it's considering following News Corp and moving its headquarters to the United States.
A Mayne spokesman confirmed that while the board could consider shifting its headquarters to the US, it is not on the agenda at this stage.
Mayne hoses down US speculation AAP Bulletins April 13, 2004




Mayne did try to sell off some of its businesses but did not have much joy.. As part of its purchase of Fauldings, Mayne had wanted to sell off its injectable business. Fortunately for Mayne the deal fell through and this ultimately proved to be one of its more profitable ventures.

Mayne also sought to sell off its drug distribution business in Australia but could not find a buyer prepared to pay what it wanted. The uncertainty surrounding this prolonged effort caused many Australian customers to go elsewhere. Mayne tried to get them back by offering financial incentives rather than stability.

Jan 2004 Selling its pharmacy services

Mayne is also in talks with several parties over the possible sale of its pharmacy services business, a wholesaler of products to the pharmaceutical industry which has a book value of $380 million.
Mayne Opts For Share Buyback Tender Australian Financial Review January 31. 2004

Feb 2004 Unable to find a buyer

The talks collapsed after Mayne lost a major client drug giant GlaxoSmithKline which led the potential suitor to aggressively argue for a drop in price to well below the division's book value of $384 million. James was not prepared to part with the asset at that price, so Mayne has returned to the drawing board and is now in discussions with several financial buyers who are looking to secure a leveraged buyout.
Mayne Offers Injection Of Faith Australian Financial Review February 27, 2004

Mar 2004 Cutomers defect from Mayne to Sigma

Mr de Alwis said the figures so far this financial year indicated that this growth would be maintained as Sigma gained market share as customers defected from Mayne.

Mr de Alwis said three out of four pharmacists it signed up came from Mayne.
"The reason most people are looking to leave is the level of uncertainty about the business, and they are getting uncomfortable about it," he said.
Sigma Expects Nothing But Good Health Australian Financial Review March 23, 2004

Apr 2004 Sale abandoned

Mayne Group has withdrawn its wholesale pharmacy distribution business from sale after more than six months of speculation about the future of the Adelaide-based operation.
Mayne Group supplies around 2500 chemists nationally from the wholesale business it acquired from the Adelaide-based Fauldings.
Mayne Group says no to suitors - Mayne Group has withdrawn... Inside Retailing April 26, 2004

May 2004 Buying back customers

Mayne Group is offering generous discounts and frequent flyer points to chemists who sign up with the company as it sets out to regain market share in pharmacy distribution.

The group has already approached a number of selected chemists in Tasmania with an array of attractive offers, including between 3.2% and 5% off the best price of certain product lines, plus upfront cash payments for customers through the Mayne Loyalty Incentive Rebate, for chemists who signed exclusively with Mayne for a 12-month period.
The process caused Mayne to lose market share to the two other groups, which it is now trying to claw back.
Troubled pharmacy distributor ups the ante Inside Retailing May 17, 2004




Mayne was cashed up and promised share holders growth. It made only a small number of purchases. Locally it was very interested in buying Gribbles Pathology but backed out when it became clear that there would be too many competition issues to justify this.

Sept 2004 Looking at Gribbles

Mayne has approached Gribbles with a view to bolstering the pathology side of its business by generating more volume and scale through the acquisition.
Mayne play would face ACCC hurdles: analysts The Age September 17, 2004

Oct 2004 Competition problems

Previous expressions of interest from Mayne Group and Sonic Healthcare have fallen by the wayside - competition concerns are seen as making such deals impossible to achieve.
Healthscope tries to seal Gribbles deal The Sydney Morning Herald October 19, 2004

Nov A war chest with nowhere to go

COMPETITION issues may have prevented Mayne Group from taking a tilt at pathology business Gribbles, but it still has a war chest of up to $600 million if the right opportunity arises.
Mayne looks past Gribbles The Australian November 10, 2004

Directors sanctioned the international purchase of AaiPharma, in spite of the objections of one of its most experienced directors who resigned in protest. This US company was in regulatory trouble and had little prospect for growth. Analysts were scathing.

Mar 2004 Board split over aaiPharma

A RELATIVELY small pharmaceuticals acquisition in the US has split the Mayne Group board and led to the resignation of non-executive director Ross Buckland.
US buy splits Mayne board March 6, 2004

Apr 2004 aaiPharma a poisoned chalice in serious trouble

The struggling health-care company seems to have made another blunder in its search for redemption.

If Mayne Group's chief executive, Stuart James, was hoping that its recent acquisition of the injectible-vitamin business of the United States company aaiPharma would boost confidence in the company and its push into specialty pharmaceuticals, he was sadly mistaken.
Despite the best efforts of the company to present the expansion as a positive move, the response of brokers, analysts and institutions has been negative. In turn, criticism of the purchase in the market and by a non-executive director, Ross Buckland, who resigned in protest at the deal, has created more doubts about James's future.

How Mayne could have agreed to pay so much for the business is a mystery, even to people used to Mayne's inexplicable decisions. AaiPharma has reported no substantial sales growth for several years, and it is in a tiny market that offers only moderate growth prospects - - -
Since Mayne's purchase was announced, aaiPharma has run into serious financial and regulatory problems in the US. At the end of March, it reported it was likely to receive subpoenas from US regulators, investigating whether it had inflated its earnings by improperly booking sales, a practice known as "channel-stuffing". Also in March, unhappy aaiPharma shareholders filed a legal action in the US District Court, alleging that the company sold more drugs to distributors than they could process. The company has also said it will need to restate its earnings for 2003.
Mayne's Vitamin Deficiency Business Review Weekly April 22, 2004

Dec 2004 Or perhaps a poisonous toad!

It was soon revealed that aaiPharma was facing serious regulatory and financial problems. Mayne finally concluded the deal, but withheld 10 per cent of the purchase price to offset any potential claims.
Kissing toads: why mega mergers are risky business Australian Financial Review December 9, 2004

Mayne also expanded its international pharmacy business with less controversial purchases in Germany and Italy.

Jul 2005 Buying in Europe

Mayne said it had increased its presence in Italy by acquiring two generic pharmaceutical companies specialising in the hospital segment: Biologici Italia Laboratoroes and PHT Pharma.
Mayne also said it was acquiring German pharmaceutical firm Onkoworks, which sells generic oncology products to specialist doctors in private practices.

Mr James said the German generic pharmaceutical market was the largest in Europe.
Mayne makes small bolt-on acquisitions in Europe Australian Associated Press Financial News Wire July 1, 2005




Mayne's Problems

Mayne continued to be plagued by regulatory and other problems which pushed its share price down. There seems to have been a perception that its drugs were largely has-beens on the way out.

Some of its generic drugs were found to be in breech of existing patents in the UK and Australia . It was penalised in the USA for inadequately reporting drug reactions. Its international injectable business faced strong competition and a rival developed a new drug superior to the one which Mayne had promoted to push up its flagging share price.

Feb 2004 Promising much from injectables

Top management is banking on the injectible drugs business to show the sceptics that it can deliver value, writes Brett Foley.
Mayne Offers Injection Of Faith Australian Financial Review February 27, 2004

Feb 2005 US regulators warn Mayne about drug complications

The powerful US regulator has sent Mayne a warning letter detailing a list of compliance breaches that occurred mainly between 2003 and 2004.

These include not submitting reports on serious and unexpected adverse reactions, including multi-organ failure following an injection of the drug famotidine.

Other breaches relate to failing to submit reports in the required time frame, not carrying out follow-up investigations and inadequate documentation.
Mayne cops FDA slap Helen Matterson February 11, 2005 (Note I was unable to the trace source so could not verify accuracy. I could not find other reports verifying this)

Feb 2005 Drug patent infringed in the UK

PHARMACEUTICALS and diagnostics firm Mayne Group said yesterday an English court ruling that it had infringed a drug patent could cost it up to $5 million.

Mayne said the English Court of Appeal had ruled that Mayne's generic version of breast cancer treatment Epirubicin infringed a patent of Pfizer Inc subsidiary Pharmacia Italia. Mayne shares closed up 2c yesterday at $4.55.
Patently guilty The Australian February 19, 2005

Apr 2005 Another company tops a key Mayne drug.

Stockbroker Smith Barney Citigroup has doubts over Mayne Group's (MAY) ability to recoup its investment in breast and ovarian cancer drug treatments (paclitaxel) in the medium term.
Smith Barney Citigroup said American Pharmaceutical's Abraxane drug had superior safety and efficacy profiles, which are seen as important in the US market, and placed doubt on whether Mayne could capitalise on its $US110 million ($143 million) paclitaxel-related acquisitions.
Rival drug pain for Mayne The West Australian April 14, 2005

Aug 2005 Drug patent infringed in Australia

Mayne Group Ltd (ASX code: MAY) reports the Federal Court of Australia (Victorian Division) today ruled that Mayne Pharma's formulation of Epirubicin infringes a patent of the innovator - Pharmacia Italia SPA (a subsidiary of Pfizer Inc).
Federal Court rules Mayne infringing patent Ralph Wragg Australian Business News August 5, 2005

Nov 2005 A patent infringed in the USA too

Mayne Group Ltd in its Explanatory Memorandum regarding the proposed demerger of Mayne Pharma disclosed the company is involved in litigation in the US regarding its generic injectable formulation of the anaesthetic product Propofol.

Mayne advised the US District Court Southern District of New York has ruled that Mayne Pharma's injectable formulation of Propofol infringes a patent of the innovator, AstraZeneca Pharmaceuticals.

In Australia Mayne was hurt more by the collapse of Pan Pharmaceutical than its competitors. In addition its lack lustre performance and poor name resulted in the flight of many of the dpharmacies which used its distribution service. It responded with inducements to get them back. The tax man was also after Mayne.

Feb 2004 Generics and Pharmacy services stutter

Mayne Group's stated growth platform of generic pharmaceuticals appeared to stutter yesterday when its operating earnings fell due to a lack of new product launches and the strong Australian dollar.

Mayne's pharmacy services division also underperformed as uncertainty over its sale led to a disappointing result.
Mayne Stumbles Over Generics February 26, 2004

Feb 2005 The impact of Pan Pharmaceuticals collapse

Mayne Group is Australia's largest player in the complementary health business, producing up to 650 different products across five different brand names. It had the most to lose from the Pan recall as it was Pan's largest contract customer.

Mayne is seeking up to $43 million in damages, costs and lost sales through the Victorian Supreme Court.
Mayne acquired the complementary health business when it bought South Australian-based FH Faulding & Co in 2001. Faulding had earlier bought Vaughan Bullivant's vitamin empire.
Collapse Hasn't Stopped Customers Popping Pills Australian Financial Review February 26, 2004

Nov 2005 Tax problems

SHAREHOLDERS in Mayne Group's proposed Symbion Health spin-off could be exposed to a $1million claim by the NSW Office of State Revenue over unpaid payroll tax.

Mayne disclosed the impending legal action in a brief statement lodged with the stock exchange after trading closed on Friday.
(Mayne) - - - said it was preparing to defend a claim by the Office of State Revenue that payments relating to doctors operating in Mayne's 14 medical centres in NSW are subject to payroll tax.
In the memorandum Mayne said corporate providers typically do not employ the doctors that consult in their premises, but offer back and front office support in the form of administrative, finance and nursing services.

"The medical centre operator is typically paid based on a percentage of the revenue the doctors' bill to their patients," Mayne said.
Tax man makes a house call on Mayne Daily Telegraph November 14, 2005



The break up

Mayne was repeatedly urged to sell off its businesses to someone who could make them profitable. There was intense speculation about takeovers and potential buyers.

Feb 2004 Pressures to break up the company

However, the asset sales sparked fears that Mayne is heading for a break-up. Global and domestic diagnostics players such as Alliance Imaging , Roche Diagnostics , Unilabs , Gribbles Group and MIA Group will carve up those operations, leaving the generic injectibles business to be snapped up by an international pharmaceutical giant.
"With the hospitals gone, investment bankers will look to match curious parties with other Mayne assets. Given that Mayne operates divisions at sub-industry margins, there should always be parties willing to ascribe a higher value to the assets," Citigroup's Andrew Goodsall says.
Mayne Offers Injection Of Faith Australian Financial Review February 27, 2004

Aug 2004 Takeover probes not welcomed

It was perhaps inevitable that unloved health-care group Mayne would become subject to takeover advances this year, but the Peter Willcox-led Mayne board has told those international drug companies knocking on its door that it is not for sale. Not now anyway.
Mayne is understood to have spoken to corporate advisers about the "feelers" it has been getting from offshore drug companies thought to include Novartis, Teva, Merck and Baxter as well as private equity players that have lined up to take over Mayne's drug distribution and diagnostics operations.

All this explains why Mayne has been exhibiting all the tell-tale signs of being in takeover defence mode. In June, it put a higher valuation on itself than the market and earlier this month unveiled a surprise profit upgrade that analysts questioned the genuineness of.
Of course, this would be about the fifth time in three years it has been in serious takeover talks to no avail.
Foreign players circle Mayne Australian Financial Review August 26, 2004

Apr 2005 Can't continue like this

In the wake of its recent massaging of its earnings guidance, analysts, investors and investment bankers have taken a potshot at the group, saying it can't continue to operate pharmaceuticals, pharmacy and diagnostics.

While Mayne's Stuart James remains committed to all divisions, one M&A type said yesterday Mayne was an "obvious target" to be broken up.
Healthy rumour mill in health The Sydney Morning Herald April 1, 2005

In 2005 Mayne agreed to break up the company. It decided to demerge the company into two - a local business Symbion Health, and an international pharmacology business Mayne Pharma. The tarnished Mayne name would leave Australia.

The market has interpreted this as no more than a mechanism for selling off the company, a way of inviting buyers to make offers. While Mayne has agreed to look at offers if they are made, and several groups have expressed interest, it is playing hard to get.

May 2005 The break up

The break-up of the once mighty conglomerate Mayne Group is set to be completed by next year after the company yesterday unveiled plans to split its remaining pharmaceutical and health care businesses.
Mayne fires on plan for health carve up The West Australian May 5, 2005

May 2005 Will consider offers

Mayne Group is considering splitting its global pharmaceutical and Australian-based health-care operations in a $3.5 billion restructuring, but has admitted it would sell the businesses if a trade sale boosted shareholder value.

A break-up, which could include a listing of the $1.75 billion pharmaceuticals arm on the New York or London stock exchanges, would be yet another shift in strategy for Mayne.
Break-up pill gives Mayne shares a lift Australian Financial Review May 5, 2005

May 2005 Analysts see it as a sale

A demerger is just another way of putting the business up for sale.

The only surprise is that, given the chronically troubled and eternally shrinking Mayne has demonstrated little evidence that it would break through its underperformance barrier, it has taken Willcox this long to act.

The decision to demerge the offshore from the local business is yet another way to carve up this company and, in doing so, put it on the market for someone else to run.
The demerger works better than selling one part of the business and distributing the proceeds because a demerger now comes with rollover tax relief.
As one analyst commented yesterday - this is an investment banker's solution to poor management.
Too many bankers - but they're right The Sydney Morning Herald May 5, 2005

May 2005 And the buyers are interested

PRIVATE equity players are circling Mayne Group's domestic healthcare business in the hope of picking it up in a trade sale after the company said on Wednesday it planned to split the operations from the global pharmaceuticals arm.
Healthy interest in Mayne assets The Australian May 6, 2005

May 2005 Local companies eyeing assets

Healthcare companies Sigma and Australian Pharmaceutical Industries have wasted no time expressing interest in Mayne Group assets following the conglomerate's announcement of plans to demerge.
Macquarie Equities healthcare team said "by contemplating a demerger of its businesses, Mayne is effectively waving the white flag in terms of its ability to generate acceptable returns across its portfolio of healthcare assets".
Sigma, AustPharm circle Mayne The Sydney Morning Herald May 6, 2005

May 2005 Affinity interest

It is believed bankers at UBS, Credit Suisse First Boston and Citigroup have called Affinity's management team, offering a range of strategies and enticements to bring them on board.
Affinity closes in on Mayne's diagnostics Australian Financial Review May 30, 2005

Oct 2005 Cost of demerger

MAYNE Group will spend $85 million to split its global pharmaceutical business from its domestic operations. Investors will vote on the plan next month.
$85m bill to carve up health group The Age October 11, 2005

Nov 2005 Demerger approved by shareholders

Mayne Group shareholders meeting yesterday overwhelmingly approved the demerger - - - -
Reviews pledged for baby Maynes Courier Mail November 17, 2005

Nov 2005 Supreme court approval

Healthcare conglomerate Mayne Group will start trading as two separate entities from Monday after winning approval from the Supreme Court of Victoria for its demerger.
Mayne demerger approved Australian Associated Press Financial News Wire November 18, 2005

Under the demerger arrangement local group Symbion was the renamed continuation of Mayne. It spun off the new entity Mayne Pharma at a "fair price". Under the fair price arrangement Symbion would experience the losses if Mayne Pharma's share price, and so value, was not maintained. Both were listed on the Australian stock exchange but it seems likely that Mayne Pharma will list elsewhere in the future and even move its headquarters.

New floats, especially those with prospects for a takeover usually engender enthusiasm. Both new companies traded well in spite of gloomy forcasts for these companies as entities.

Nov 2005 Ignoring analysts

Investors are putting to one side the flow of less than positive news from healthcare company Mayne Group ahead of the company's demerger vote tomorrow.

The stock has rallied nearly 11 per cent in the past five days, with brokers reporting institutional investors fighting to get set ahead of the demerger.
Still, if there's a chance of a takeover, everybody wants in.
Punters ignore bad news on Mayne The Sydney Morning Herald November 15, 2005

Nov 2005 Share prices up

Mayne Group shares have been boosted by news of the demerger plans and on Friday closed at $5.93, which would give each of new shares a value of $2.965.

Symbion Health shares quickly shot past this in early trade on Monday, and by 1124 AEDT they were up 8.5 cents or 2.87 per cent to $3.05.

Mayne Pharma shares debuted on the market at 1100 AEDT at $2.68 but by 1123 AEDT had risen to $2.90.
Mayne demerged entities hits market AAP Bulletins November 21, 2005

Nov 2005 Symbion is the original Mayne

The healthcare conglomerate has hived off its global pharmaceuticals business, now called Mayne Pharma, and rebranded its domestic business Symbion Health to allow the two entities to focus on their strengths.
Mayne's offspring make healthy market debut Australian Associated Press Financial News Wire November 21, 2005



The Two New Companies

Investors, bankers and analysts may have considered this as another way of selling the business and that Mayne was playing hard ball in order to push up prices. Mayne has denied this and its actions suggest that it mean it.

The highly credible and popular Robert Cooke was tempted away from the crumbling rump of Affinity's hospitals and accepted management of the local company Symbion Health. James had been optimistic about leading the international Mayne Pharma but the job went to an international appointee, another sign that both these companies were there for the long haul.

Jun 2005 Mayne is adamant

They are, however, destined to be disappointed because Mayne is adamant that it isn't going to sell off those businesses piecemeal.

There are several reasons for its reluctance. The most obvious is the risk that the better businesses would be readily sold, leaving Mayne with a sub-scale collection of the leftovers.
The lightweights are circling and trying to land a punch, but the Mayne event hasn't even begun The Age June 1, 2005

Aug 2005 Appointing Cooke

Pharmaceuticals and diagnostics firm Mayne Group Ltd will appoint Robert Cooke as group managing director and chief executive of Mayne's Australian healthcare businesses.
Mayne to make former hospitals boss head of domestic healthcare Australian Associated Press Financial News Wire August 9, 2005

Sept 2005 Appointing an outsider

Mayne Group has again passed over its own pool of highly paid executives to appoint an outsider to lead one of its demerged businesses, naming foreign industry veteran Thierry Soursac yesterday as the chief executive of Mayne Pharma.
Outsider becomes Mayne man Australian Financial Review September 1, 2005

Aug 2005 James sidelined

The choice will sideline current Mayne chief executive Stuart James who yesterday unveiled a 14.7 per cent dive in full-year net profit to $80.45 million and forecast flat earnings growth for the key parts of demerged businesses this year.
Mayne expects flat earnings even as demerger proceeds Australian Financial Review August 25, 2005

The two businesses Mayne was setting up were not the sort of core business groups that analysts and bankers wanted. The international pharmaceutical business had a narrower focus than the hotchpotch of unrelated businesses which made up the local company. Diagnostics have little affinity with generic drugs and complementary medications.

May 2005 Diverse businesses

The pharma business centres on generic injectible drugs, notably anti-cancer treatments, and was inherited with Mayne's $2.4 billion acquisition of FH Faulding in 2002. Around 70 per cent of its business is in Europe and North America.

The domestic business includes the second biggest pathology and medical diagnostics network in Australia, including Western Diagnostic Pathology in Perth, as well as nearly 50 medical centres around Australia.

It also distributes pharmaceutical and over-the-counter products to pharmacies operating under its retail banners, Chem mart, Terry White Chemists and the Medicine Shoppe.

Its consumer products division produces and wholesales vitamin and mineral supplements including Nature's Own, Cenovis, Natural Nutrition and BioOrganic brands.
Mayne fires on plan for health carve up The West Australian May 5, 2005

The market was not enthused by the prospects for the new companies, particularly when Stuart James was so negative about them. Standard and Poor were unenthusiastic about the demerger and Mayne's share price continued to fall.

Oct 2005 S&P unimpressed

Ratings agency Standard & Poor's (S&P) today placed healthcare conglomerate Mayne Group Ltd on creditwatch after Mayne released details on its proposed demerger of its global pharmaceuticals business (Mayne Pharma) and its domestic healthcare businesses (to be known as Symbion Health).
S&P places Mayne on creditwatch Australian Associated Press Financial News Wire October 10, 2005

Oct 2005 Impact of demerger

Mayne Group's proposed $3.5 billion split into two listed companies will tarnish the outlook for the Australian healthcare business, credit ratings agency Standard & Poor's Ratings Services said yesterday.
Mayne's healthcare split under spotlight Northern Territory News/Sunday Territorian October 11, 2005


The new debut was all about convincing institutional shareholders and keeping the share price up. Robert Cooke did not wait for a study of the business before wading in with a promise to reduce costs by massive staff cuts for Symbion. The investors love that! The lure for investors in Mayne Pharma was the prospect of a takeover and its new chief executive was quick to feed that interest. Maynes share price rose before the demerger and both new companies listed well.

Nov 2005 Mayne Pharma

THE new chief executive of Mayne Group spin-off Mayne Pharma, Frenchman Thierry Soursac, may not have met all his senior executives yet or finalised a strategy, but he is certain of one thing -- the international pharmaceutical business must remain tightly focused on oncology, or anti-cancer treatments.

He has big ambitions to expand beyond a focus on generic, or copy, drugs, yesterday signalling moves into securing licences over original drugs and developing biologically based generics that are more difficult to develop but potentially more lucrative.
The spin-off has been achieved by issuing all Mayne shareholders a share in Mayne Pharma, which will be financed by a $1.6 billion capital reduction valuing Mayne Pharma at $2.49 a share. The residual Mayne Group will then change its name to Symbion.
Doctor prescribes Mayne Pharma direction
The Australian November 17, 2005

Nov 2005 Takeover hope for Mayne Pharma

Shares in Mayne Group's newly spun-off injectable drugs business, Mayne Pharma, debuted strongly yesterday, fuelled by recent comments from new boss Thierry Soursac that the company is an attractive takeover target.

But analysts have raised concerns over Mayne Pharma's operations and the likelihood it will be taken over. It is understood some are considering rating Mayne Pharma a sell.
"It's all takeover speculation in the price, and the higher the price, the more improbable the takeover. If nothing materialises in six months, that's when you might have disappointment."
Healthy debut for Mayne's new baby The Sydney Morning Herald November 22, 2005

Nov 2005 Symbion cost cutting

New Symbion Health boss Robert Cooke has launched a sweeping restructure of the former Mayne division after only one day in the job, announcing a redundancy program and an end to the corporate largesse that has seen it underperform peers for many years.

Mr Cooke, the former head of Mayne's hospital division, also plans to slim the company's head office structure amid fears the company can no longer sustain its bloated cost base.

He told the 11,000 employees of the former domestic health assets of Mayne yesterday that the unspecified number of voluntary redundancies would be followed by a targeted campaign. The first of possibly two or three restructuring rounds would be completed before Christmas as he tries to cut up to $40 million of costs from the group.

"I simply couldn't wait any longer," Mr Cooke told The Australian Financial Review. "We had to act straightaway as I couldn't continue to run this business for another few months on the high costs I've inherited."
Symbion goes under the knife Australian Financial Review November 22, 2005


Web Page History
This page created Nov 2005 by
Michael Wynne