CSL CEO Paul McKenzie has departed, now what for the fallen biotech giant?

In a bombshell 4pm announcement, investors learned that CSL CEO Paul McKenzie was departing the company effective that very afternoon following a tenure of nearly 3 years. It was clear that something had to give, but this is still a shock as it occurred a day before company results and resulted in McKenzies’ tenure lasting 3 years, the shortest of any CEO post-privitisation.

What has happened has happened, and investors are now wondering what is next. We already know he will be replaced by Gordon Naylor on an interim basis – he is an existing executive who was promoted into the top seat after a >30 year career at the company which included as CFO and President of the Seqirus division. But are more radical changes coming? Will the company ever get back to the glory days again.

What are the Best ASX Stocks to invest in right now?

Check our buy/sell tips

Why former CSL CEO Paul McKenzie departed

CSL Chair Brian McNamee declared,’ Now is the right time for new leadership to continue to drive CSL’s strategic transformation and performance’. In other words, new leadership was needed – the board clearly was not confident the company could get back to the glory days under McKenzie, at least as fast as analysts and investors wanted. CSL’s share price has nearly halved from all time peaks, wiping tens of millions of dollars off shareholder value.

The departure announcement credited McKenzie with some achievements at the company such as the commercialisation of the world’s first gene therapy for haemophilia B (Hemgenix) and improving plasma yields through internal initiatives.

But CSL is struggling, there is no denying it.

CSL is in bad shape

This was most manifest when the company released its FY25 results, which led to a 15% plunge in a day (something unthinkable for a company that big unless things were that bad). The irony is that there was growth, but modest growth in 5% revenue growth and low to mid double digit underlying net profit growth. These were seen as tepid given high growth seen previously.

Moreover, some divisions performed poorly. Americans aren’t keen on vaccines right now with vaccine sceptic Robert Kennedy as healthcare secretary and it showed in the Sequirus results. Perhaps even more influential was the guidance for FY26. Management guided to much slower revenue growth (about 4–5 % at constant currency) and profit growth (NPATA growth in the mid-single digits) compared with prior expectations — and later this guidance was cut further to 2–3 % revenue growth and 4–7 % NPATA growth when updated mid-year.

That was well below what analysts had been modelling (many had expected 7–12 %+ growth), signaling a meaningful deceleration. This downgrade of forward expectations is precisely what markets punish most harshly because it changes the entire valuation narrative of a stock that once commanded premium growth multiples.

The structural headwinds and lack of confidence things would get better hurt too. We already noted the decline in US vaccination rates. But there were other problems including cost pressures and margin concerns in parts of the Behring division, and broader strategic shifts like workforce reductions and a planned spin-off that created uncertainty rather than clarity. These elements amplified investor worry that growth wasn’t just cyclical but somewhat structural, and that margin recovery would take longer than previously assumed.

The company announced 3000 jobs and that it would demerge Seqirus – a plan that has not gone ahead yet. A further blow came in October where forecasts were downgraded again and the company copped a ‘second strike’ where for the second year in a row, over 25% of votes cast against the remuneration report. This forced an automatic motion to spill the board, even though it was rejected, the (second) strike alone was a bad sign.

Call them conspiracy theorists but…

…why do this just before market close right before your results? The argument has been made by some analysts that it is a sign the results are bad. For our part, let’s just say this wouldn’t be happening if the results were good.

The ASX 200 finished today slightly in the red (i.e. down by 2.7 points or 0.03%), and all because of the 5% drop in CSL shares post the announcement. Funnily enough, the ASX announced its own CEO was departing too, but there’s no doubt that the departure of Paul McKenzie was bigger news.

We would imagine tomorrow the company and its new CEO will announce further initiatives. Even if these make a difference, investor confidence in CSL is at an all-time low and it will take more than good PR to restore it.

Conclusion

It is hard to think 6 years ago, CSL was briefly Australia’s largest company at $145bn. Now it is below $90bn. Of course, it is still the biggest healthcare stock with Chemist Warehouse/Sigma only at $35bn, although CBA and BHP are over $250bn.

In one sense, the widened gap isn’t entirely CSL’s fault because CBA is Australia’s biggest bank and BHP has ridden the waves of commodity prices. But even if CSL couldn’t have stopped anti-vaxxers in America, it is not entirely blameless for its plight. The bottom line is that the company is barely growing and it isn’t clear what plan there is (if indeed there is a plan) to bring it back to the glory days.