Take Me to Your Leader - Pharmaceutical Executive

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Take Me to Your Leader
Turnover in the top 10 has new CEOs racing to reinvent the way their companies do business. But who has the courage to lead the industry itself back to greatness?


Pharmaceutical Executive


Robert Essner, who spent 15 years at Wyeth before taking over as CEO in 2001, has marshaled a $450 million R&D assault on Alzheimer's. "This is going to be the disease, and maybe one of the biggest healthcare political issues, of my generation," Essner told the New York Times. Essner has empowered his R&D guru, Dr. Robert Ruffalo, to take what Bill Trombetta praises as a "tough-love approach to drug development, using new technologies and metrics to speed it up and cut costs."

Novartis' Daniel Vasella received high marks from the Pharm Exec panel. The head of Sandoz when it merged with Ciba-Geigy in 1996 to form Novartis, Vasella seized the opportunity to separate R from D, moving research to the biotech hotbed of Cambridge, MA, while development stayed in sleepy Basel. He was an early proponent of in-licensing. And when the rest of pharma was shedding generics businesses, Vasella bucked the trend by sticking with Sandoz.

Most famously, Vasella stuck with an experimental drug for chronic myeloid leukemia, heeding the pleas of patients, though the niche market seemed to offer minimal profits. That drug became Gleevec (imatinib), Novartis' second-biggest seller, pulling in $500 million a year for use in numerous cancers. "His reign has been branded as innovative partly because of Gleevec," says Bill Trombetta.

Fred Hassan was recruited by Schering-Plough because of his rep as a turnaround wizard. His first day on the job, he conducted a survey, soliciting advice from all employees about the firm's five most urgent problems. He cleared up a federal fraud investigation, announcing a new ethical regime. "If you ever have to choose between doing what's right and making a sale," he told reps at an annual sales meeting, "walk away from the sale."

Then the blockbuster sales of Claritin (loratadine) sagged and cash got tight. Convinced that Schering's sales force was a key asset—and that within a few years, new launches would keep it busy—he decided to distribute the pain equally among all Schering stakeholders, cutting dividends, slashing bonuses, and ending executive perks. (But hands off R&D.) He warned employees and shareholders that it might take seven years to turn a profit. Hassan did it in two. "I want to build things, not just fix them," he says.

What makes these three CEOs' actions leadership is that they were courageous, innovative, and ethical. Yet the bittersweet question nags at the mind: Can any of these trailblazers go far enough, fast enough?

Ernst & Young's David DeMarco is doubtful. While it's true that Wyeth, Novartis, and Schering are now better companies, he says, "these bold moves only help create the platform that enables transformation to take place." To DeMarco, the key is to get pharma where it needs to be in 10 or 20 years. By then he expects the industry to have two new drivers: health outcomes, including pharmacoeconomics, and cooperation, such as biomarker sharing and other cross-company alliances.

Today's leader, says Kai Lindholst, "is challenging R&D management to question their assumptions and constantly adjust to new technologies and breakthroughs." The effervescence of new knowledge in hot fields like oncology has rendered the top-down R&D model obsolete. Execs need to motivate frontline scientists to make decisions and then hold them accountable. "If scientists are incentivized, they back the projects that are going to 'go' rather than just aiming for a high number that makes the pipeline look robust," says Lindholst.

Lindholst gives props to GSK's J.P. Garnier and his R&D head, Dr. Tachi Yamada, for pioneering this innovative structure with their seven Centers of Excellence, each with its own independent resources and mission. The model, which was eyed warily when first launched in 2001, has produced a truly robust pipeline and been copied by Big Pharma rivals.

But Lindholst adds that only Roche, under Franz Humer, has innovated the innovation, by integrating discovery, clinical, and commercial teams in each of the independent disease centers, sparking strategic planning for a molecule's entire life cycle.


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