Succinctly Shire: CEO Flemming Ornskov - Pharmaceutical Executive


Succinctly Shire: CEO Flemming Ornskov

Pharmaceutical Executive

PE: How do you intend to deploy Shire's in-house R&D capabilities going forward?

Ornskov: Angus Russell actually did an outstanding job in building up Shire's in-house R&D capabilities. In the field of rare diseases, we are second to none in the work our labs are doing in pre- and mid-stage clinical research. We are improving at the late-stage level as well. I have every confidence that Shire today is able to deliver to the market internally-sourced NCEs for rare diseases. Outside of rare diseases, our preference is to acquire later stage assets, develop them, and win registration. It is also important to note that Shire presently spends about 18 percent of revenues on R&D, or close to $1 billion a year. Hence it's time to change that old image of Shire.

PE: In what ways does the new organization seek to capitalize on these next stages of growth for Shire?

Ornskov: Shire has been posting growth rates above the market norm for many years. To manage that growth, we created a number of business units with a keen focus on the therapeutic area and full responsibility for all our activities there. In due course we had a BU incorporating all the rare disease business of our acquired company, HGT; followed by specialty medicines; behavioral science; and later another BU on regenerative medicine. Looking ahead, however, and taking into account the aggressive expansion plans in a number of new therapeutic areas, I concluded it was counterproductive to continue on this path. There was a scalability issue, with multiple duplicative, mainly service, positions for each BU leading to a lot of bureaucratic overhang, not to mention the risk of silo thinking. In fact, during my early visits as CEO to the Shire marketing and sales force, I got feedback that organizational rigidity was starting to constrict the information flow and slow decisions.

So I took a step back, and devised a new organizational structure whose principal feature is to consolidate all administrative, non-commercial functions into a single, corporate, service-oriented unit. The plan integrates formerly separate R&D activities into one organization; business development forms another. Then we sharpened the focus around five reconstituted BUs: rare diseases, consisting of the HGT products we inherited from the acquisition; neuroscience [formerly behavioral science]; gastrointestinal; regenerative medicine; and internal medicine, which mainly covers "heritage" assets that are nearing the end of the product cycle. Building on the SARcode Bioscience acquisition, we are likely to create a new BU on ophthalmology. Hematology could be another future BU for us.

Creating a central, overarching locus for prioritized decision-making across the portfolio are the two executive steering committees, on the pipeline and in-line businesses. I am chairing both committees for now. This is where the buck stops.

Most important, I took heed of what the sales force told me about the danger of letting internal intrigue push us away from the customer. The feedback told me we had to move immediately to remove all barriers between Shire and the customer. That's precisely what we did: the organization is much flatter than it was before. There is a quick way to get the attention of senior management.

PE: Why did you abandon the name of your acquired company, HGT, and turn it into a BU now called rare diseases?

Ornskov: We thought the designation of HGT was too confining—not every rare disease is driven entirely by genetics. The criteria should be as broad as possible. I also like to have names that resonate with customers and patients; I don't think the new name of the BU requires much explanation.

PE: Has the strategy plan been shaped by your previous management experience in line operations in big companies like Merck, Novartis, and Bayer?

Ornskov: Definitely. My years at Bayer gave me a strong grounding in how to manage a BU from the perspective of the customer. I followed the same strategy at Bayer, where I helped set the foundation for its current very strong pipeline through this mixing of internal, in-house R&D and external sourcing through licensing and M&A. Bayer has benefited immensely from its unrelenting customer focus: never strong in ophthalmology, it has broken new ground with the partnership it forged with Regeneron on Eylea, for wet age-related macular degeneration; with Onyx, and Nexavar, it has made itself a major player in oncology.

The conclusion I draw is that if a BU is closely aligned to the customer base, you can quickly pick up the pace and become a player in segments that historically have been tangential to your core. Whether the asset comes from your own lab or is externally sourced means very little. In fact, allowing both units to compete to identify and develop that asset raises the bar on performance throughout the entire organization. This Bayer model has propelled it from being known mainly for a 19th century product, aspirin, to a company that today has one of the most innovative drug pipelines in the industry. It's not just luck—it's the core focus on learning everything about your customer. This is what is going to drive Shire to the next level as well.


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