Shares of Pharmaceutical Product Development Inc. slid Wednesday after the contract drug research company hired a new chief executive and promoted its previous CEO to a new post.
PPD said David Grange will become CEO on July 1, and Fredric Eshelman will take a newly created role as executive chairman of the board of directors. Grange is a retired Brigadier General of the U.S. Army, and has been on PPD's board since 2003. For the last four years, he has been CEO of the nonprofit McCormick Foundation.
Steven Halper, an analyst for Thomas Weisel Partners, said he was "perplexed" by the change. He believes the moves indicate a serious problem for the company.
"There are probably more significant operational issues at PPD than we previously believed," he wrote. "Given this management change as well as the results from other contract research organizations, we believe there are probably more operational issues affecting PPDI than the broader market slowdown," Halper wrote in a note to investors.
Shares of the Wilmington, N.C., company lost 51 cents, or 2.5 percent, to $19.83 in afternoon trading.
Other analysts appeared less concerned by the changes. Ross Muken of Deutsche Bank ( DB - news - people ) said it doesn't look like PPD plans any major strategic shifts. He noted that Eshelman is still in charge of overall strategy, and of the company's efforts to strike partnerships for its compounds.
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