Organon CEO resigns over 'improper' contraceptive sales

The chief executive of Organon, Kevin Ali, has agreed to step down after an internal investigation into sales of its Nexplanon contraceptive implant in the US revealed dubious practices.

The probe by Organon's audit committee found that some US wholesalers were asked to purchase more Nexplanon than they needed over several quarters between 2022 and 2025. In some instances, the company waived inventory management norms associated with caps on days of inventory in exchange for the wholesalers accepting the higher sales, enabling them to get incentive fees for which they otherwise would not have been eligible.

According to a company statement, even though the over-purchases represented less than 1% of company revenues, they ensured Organon met internal guidance and investor revenue expectations.

"Based on the results to date of the audit committee's investigation, the board determined that these wholesaler sales practices were improper, and that certain of the company's prior statements were inaccurate or incomplete," said the company.

While he has resigned, rather than being sacked, Ali has agreed to leave his post without being entitled to any severance payments or equity-related retirement benefits. He will be replaced on an interim basis by Joseph Morrissey, currently head of manufacturing and supply at Organon.

Morrisey, who has held his current role since 2021, will get a $1 million boost to his salary, a $1 million award of restricted stock, and a raise in his bonus to 100% of his salary, according to an SEC filing.

Board chair Carrie Cox will also take on the role of executive chair on an interim basis to support Morrissey in his new role, and Robert Essner will assume the role of lead independent director while the search for a permanent CEO plays out.

"While the findings to date do not necessitate a restatement or revision to any previously issued financial statements, the company is taking remedial actions to improve its financial controls and address any material weaknesses," said Organon.

Ali's departure comes shortly after Organon was found to have breached the pharma industry code of practice in the UK for promoting Nexplanon for an unapproved indication, specifically for use to prevent pregnancies in teens younger than 18.