Relationship Marketing Strategy and implementation

of reducing the Group’s 1991 pretax profit to a level materially below that

achieved last year ... It must be emphasised that this reduction in profits is

essentially short term in nature as it arises specifically from the production

issues outlined above, and relates exclusively to one factory, the Holmes

Chapel site in the UK.

... It is expected that once full supply is resumed next year, it will be pos-

sible to recapture the sales levels and market share enjoyed in the US for

these two products before the disruption occurred. It is likely that the first

six months of 1992 will suffer to some extent, and that it will be towards the

end of that year before full normality is restored ... Because of the Board’s

confidence in the future growth of the business it sees no reason to alter the

policy of sustained growth of the Company’s dividend.^25

Disagreements with the FDA

Fisons was reportedly furious with the FDA, blaming the delay in clearing
Imferon and Opticrom on a dispute between the FDA’s Washington and
Buffalo offices.26, 27Within minutes of the announcement, a further £340
million was sliced off the value of the company. The affair had by now
reduced the price of the company’s stock by a third, wiping over £1 billion
off its stock market value.
Fisons’ longer-term growth prospects were now in doubt. As one analyst
observed, ‘They’ve been growing through acquisitions based on their
shares, and with the shares so weak, they won’t be able to keep it up.’^28
There were suggestions too by some media commentators that, in its deter-
mination to deliver above-average earnings growth, Fisons had neglected
to invest in its production facilities. The Financial Timesraised this and
similar questions:

Even in the context of Fisons’ accident-prone history, yesterday’s gruesome

announcement leaves the company with much to explain. Exasperated share-

holders will want to know why the loss of £40m worth of US drug sales is

costing the company £65m in profits this year. They may also wonder why

Fisons is taking 18 months to raise manufacturing standards on two of its

main products to the levels required by the world’s largest pharmaceutical

market. Fisons’ share price has been weakening for six months as the scale

of the disaster became gradually apparent. But there has been more to it than

that. Fisons’ management style, marked by occasional secrecy and apparent

self-satisfaction, is more respected than trusted in the market. The company

now has to convince investors that the problem is indeed isolated and that

profits, having fallen to perhaps £185m this year, can rebound to £250m in

1992.^29

The referral and influence market domains 279