It's bittersweet being one of the leaders of an industry that is not sustainable," a top pharma CEO recently told Carolyn Buck Luce, Ernst & Young's global pharmaceutical sector leader. Bittersweet is a poignant word for a hard-driving exec to issue. But it offers a clue to the pathos that strikes even the guys making eight digits when they contemplate pharma's unprecedented pressures—and, in a certain sense, their own professional mortality. About the best any Big Pharma CEO can hope for these days is 10 years in which to clean up messes, pump up morale, and start breaking a path to sustainability. If he is very lucky, he might—might—get to see a beloved molecule graduate to approved drughood.
Pipeline and products are but two of the CEO's multitude of responsibilities today. "An industry leader needs a broad set of general management skills rather than deep skills in a functional area, as in the past," says Murray Aitken, senior vice president of corporate strategy at IMS Health. "Running a big pharma has become immensely complex, with an expansion on all fronts: globalization, diversity of business units, portfolios, and a broader set of stakeholders."
After interviewing almost 20 analysts, researchers, academics, and industry insiders, this reporter cannot overstate the magnitude and urgency of the CEOs' mandate according to these observers. Buck Luce put it best, calling the challenge "nothing less than reinventing the way business is done." How big a reinvention? Think of the photographic industry's move to digital imaging and the way the automotive companies developed financial-services offerings.
Pharma's top firms have seen rapid turnover at the top in the past decade or so. Consider: Bristol-Myers Squibbs' James Cornelius was tapped in April, Pfizer's Jeffrey Kindler and AstraZeneca's David Brennan in 2006, Merck's Richard Clark in 2005, Schering-Plough's Fred Hassan in 2003, Wyeth's Robert Essner in 2001, GlaxoSmithKline's J.P. Garnier in 2000, Abbott's Miles White and Lilly's Sidney Taurel in 1999, Roche's Dr. Franz Humer in 1998, and Novartis' Daniel Vasella in 1996. (This trend is not unique to pharma, however. According to Booz Allen, annual CEO turnover jumped 59 percent from 1995 to 2006.)