The Friendly Persuasion — An Interview with Fred Hassan

May 01, 2013

John Halpern/Photographer
While it is widely known that the biopharmaceutical industry is confronting disruptive changes to a business model that dates back well into the last century, less is said about the generational shift taking place among managers at every level of today's pharma organization. Knowledge transfer—the handing down of substantive skills and process awareness, combined with individual learned intuition—has never been more important to successfully charting a new path forward. One key source of insights for this next generation of c-suite climbers is "Reinvent: A Leader's Playbook for Serial Success," written by former Schering-Plough CEO Fred Hassan, whose long career as the driver of no less than six well executed business turnarounds was punctuated by three successive slots on the cover of our magazine. His book's advice is written in the active tense, and is neatly categorized into the three elements of "Me"—authentic, purposeful, and connected—and "We"—leading, raising expectations through example, and winning, not just once, but often. As part of our planning for this year's latest crop of Emerging Pharma Leaders, Pharm Exec's Editor-in-Chief William Looney met last month with Hassan in his new role as non-executive chairman of Avon Products Co., whose own customer-centric business model might just be one fragrant shoot for reviving Big Pharma's tired brand. The following is an edited version of our discussion.

Looney: Based on your 30 years of experience in biopharmaceuticals, do you believe that the ebb and flow of the business cycle is the driver of ultimate success—how much does leadership intervention count?

Hassan: Industries and companies are not fixed objects but living, breathing organisms that must continuously adapt to survive. All industries evolve; the biopharmaceuticals business is no exception. The classical model of the lifecycle of a business runs from the embryonic stage, to the growth spurt, to maturing competition, and then finally to commoditization. Most observers today see our industry at the competition stage. We are not yet a commoditized business, but growth has faded and we are certainly no longer in an embryonic state.

In my view, the peak era for growth started to fade after the year 2000, coinciding with the fading of the small molecule therapy platform focused on serving a mass market of patients with chronic diseases. Much of this segment of the business is headed toward outright commoditization. What we fail to realize, however, is the very process of decline opens new corridors of growth. Science is going to succeed once again in providing new and lucrative markets for those companies that recognize opportunity and seize it first. I recall how, in the 1980s, monoclonal antibodies were praised for the science but panned for their commercial potential—too many potential side-effects and too hard to manufacture, it was said. But industry found ways to surmount these hurdles, resulting in a flood of new breakthrough products, from Rituxan and Remicade to Humira and Enbrel. That success has spurred more competition, and a new cycle of growth. Entirely new product segments, like targeted medicines with companion diagnostics, will take the industry in different directions. Shaping and directing change in a way that creates new opportunities depends entirely on the human element—a strong leader, by definition, is never a mere captive of the business cycle.

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