The Book on Daniel - Pharmaceutical Executive


The Book on Daniel

Pharmaceutical Executive

The Transformative Imperative

The Vasella back story has been repeated so often that the details are almost the stuff of legend. His youth in rural Switzerland was "blighted by illness": asthma at age five, then TB and meningitis at eight; at 10, he watched an older sister die from Hodgkin's lymphoma; three years later, his father died suddenly. A career in medicine may have seemed like fate rather than a decision. In any case, his rise was swift; specializing in internal medicine, he found himself, at age 31, married with children, an attending physician at a university hospital in Berne.

Then he lost himself. The details of Daniel Vasella's move from medicine to business are sketchy in the various published accounts. In the most dramatic version, he suffered a "breakdown"; according to others, a mentor suggested that he enter psychotherapy to deal with his arrogance or, alternately, as a kind of pedagogical experience. In fact, Vasella underwent a four-year psychoanalysis, a treatment he has described as transformative. "Psychoanalysis liberated me from my past and my destructive patterns," he told Pharm Exec. "It can make transparent who you really are, what you like, how you want to live your life."

In 1987, he joined Sandoz as a drug rep in East Hanover, NJ—reportedly against the advice of the chairman of the board, Marc Moret, who happened to be the uncle of Vasella's wife, Anne-Laurence. A year later he was named product manager for Sandostatin, a new growth hormone–inhibiting analog for rare pancreatic tumors—not exactly a blockbuster-to-be. But Vasella got researchers, clinicians, and marketers to see Sandostatin's potential, ultimately expanding its indications to other rare tumors. Soon he was the head of the pharmaceutical division. When the merger of Ciba-Geigy and Sandoz was finally sealed in 1996, Moret tapped 43-year-old Vasella as CEO.

If psychoanalysis introduced Vasella to the transformative imperative, Vasella did the same for Novartis. He imposed performance-based compensation, laid off 12,500 staff, and then established an $80 million VC fund to help former Novartians fund startups. In his first two years he nearly doubled the US sales force; by 2000, he had doubled R&D investment. Annual drug sales rose at double-digit rates.

Yet under his leadership, Novartis has seen its share of reversals. In 2007, US sales dropped due to copycat competition for a slew of Novartis' primary-care products. FDA nixed cox-2 inhibitor Prexige, flagging kidney danger; Galvus, its DPP-4 inhibitor for type-2 diabetes, never even got past US regulators. The company had to yank Zelnorm for safety issues. These setbacks contributed to a 45 percent drop in fourth quarter profits, resulting in a 33 percent pay cut for Vasella.

His response to the downturn was sweeping. He announced a cost-cutting regime dubiously dubbed Forward Initiative, aiming for $1.6 billion in savings by 2011. He also axed another 2,500 jobs, including a near-total turnover at the top. Thomas Ebeling, global head of pharma, got the boot; he was replaced by Joe Jimenez, a recent star hire from Heinz.

Last December, the turnover continued. Vasella tapped longtime lieutenant Joerg Reinhardt to be his new chief operating officer. Then Vasella removed veteran Andreas Rummelt from the top generics spot, substituting emerging-markets chief Jeff George. At the same time, Andrin Oswald became head of the vaccines and diagnostics division. Next April, Jonathan Symonds, the former AstraZeneca CFO, will grab the financial reins when current CFO Raymond Breu gets his gold watch. Indeed, the clock on Vasella's own tenure would seem to be running down.


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