View from City Road: Fisons pays a heavy price for its inside job

Cedric Scroggs' summary dismissal as chief executive of Fisons proves that the City was right all along: he was the wrong choice to replace John Kerridge two years ago. The group should have chosen an external candidate with the strength and determination to tackle problems quickly and ruthlessly. They range from inadequate drug production plant to imprudent accounting.

An internal candidate was always going to find it difficult to do that. Mr Scroggs' authority was also undermined by the rapid transformation of his former division, scientific instruments, from star performer to problem child.

Patrick Egan, Fisons' chairman, who chose Mr Scroggs, rationalises the mistake by pointing out that headhunters failed to come up with a suitable candidate for the money on offer. But he is taking no chances this time: both the chief executive and finance director will be appointed from outside.

Two years on, attracting an outsider will be much harder. The pharmaceuticals industry has lost what glamour it had in 1991 and it is clear it will be hard to keep sales and profits moving smoothly ahead in future - particularly for such a minor player as Fisons. It is scarcely in the top 50 in a multinational industry.

That is doubly true now Fisons has lost its one potential wonder drug, the asthma treatment Tipredene. There is little else exciting in the pipeline.

The cyclical nature of the scientific instruments division, and its vulnerability to disaster, have been highlighted over the past year. Halving the dividend is also an admission that cash generation will not be strong enough to give a new boss much leeway.

Such problems are likely to deter potential bidders, which, together with the seemingly solid yield, offered the only reason to invest in the group's shares. Mr Egan has only himself to blame for the events of the past 18 months.