Biotech CSL fails at administering own medicine

2026-02-11 16:40:24

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CSL Ltd

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MELBOURNE, Feb 11 (Reuters Breakingviews) - If anything screams despair, it’s what CSL’s (CSL.AX), opens new tab finance chief Ken Lim uttered on the $54 billion biotech company’s Wednesday morning earnings call: “There’s significant untapped potential in this business”. Sure, such words aren’t always negative, like when startups are trying to convince prospective investors they’re in a fast-growing market. But Lim’s comment came after the board botched the much-needed removal, opens new tab the day before of CEO Paul McKenzie after months of problems that have wiped almost half the value off CSL’s stock. Whoever replaces him will have their work cut out.

Sure, not all the bad news is necessarily McKenzie’s - or the company’s - fault. For example, the anti-vaccine rhetoric of U.S. President Donald Trump’s administration has prompted fewer Americans than expected to get the flu jab in recent months.

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Trouble is, the Australian maker of plasma therapies and snake anti-venom is looking accident-prone. Over the past couple of years the financial performance of a couple of new drugs has disappointed. Then in August McKenzie suddenly ditched the time frame to bolster the core blood plasma unit’s gross margin. On the same day, perhaps in an attempt to offset the damage, he also unveiled an unattractive plan to spin off the flu business. The stock closed down almost 20%.

Yet directors still compensated executives handsomely enough to enrage shareholders, with 40% voting against pay proposals in October. That came on the same day CSL revealed more, albeit expected, falls in U.S. vaccination rates. Combined, these lopped another 15% off the stock.

So McKenzie’s departure, dressed up retirement, ought to be welcome. But it was poorly done. First, such news usually drops outside stock market opening hours - this one, though, came in the final minutes of trading, sending CSL down 5% and the broader index into negative territory. There’s also no successor: former CFO and new board member Gordon Naylor is being parachuted in until a permanent replacement can be found. That’s terrible planning by directors. Moreover, there’s no guarantee a new leader can bring much change: Chair Brian McNamee, despite being classified as independent, was CSL’s CEO for 23 years until 2013.

Nor was that the final straw: six-month earnings released on Wednesday included $1.6 billion in writedowns, in part on poorer prospects for Covid-19 vaccines, and sent net income down 81%. It prompted a further stock selloff. If CSL wants to win investors back on side, it needs to get better at taking its own medicine.

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Context News

Biotechnology company CSL in the final minutes of stock market trading on February 10 said CEO Paul McKenzie was retiring after three years in the role, effective immediately. Gordon Naylor, a former CFO at the company, was named as interim CEO while the board searches for a permanent replacement. Shares fell 5% on the news.
On February 11 CSL reported earnings for the first half of the financial year of $401 million, 81% lower than the same period in 2024. The result included restructuring and impairment costs of some $2 billion. Shares fell by as much as 12% in morning trading.

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Editing by Una Galani; Production by Aditya Srivastav

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Antony Currie

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Antony Currie joined Breakingviews when it opened its New York bureau in 2005, working there until moving to Melbourne, Australia in late 2020. He has covered everything from the car industry to investment banking, more recently adding sustainable finance and water security to his beats.

He holds a bachelor’s degree in German language and literature and a master’s degree in international relations, both from the University of Bristol.

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