OUR LEAD FEATURE THIS MONTH ON 15 NEW EMERGING PHARMA LEADERS 

is a window into what makes our publication unique. In 2007, 

 began a systematic annual search to identify and highlight those men—and women—that in our purely editorial view had real prospects for a future key to the "c suite." Two of our early choices—Sanofi's Chris Viehbacher and Heather Bresch of Mylan—have made it to the very top, as CEO.  

More important, however, is the way in which each year's list serves as an indicator of wider trends in management priorities and the culture of the workplace. Early lists anticipated the rise of new strategic functions like supply chain management, market access, compliance, and chief information officer. Our selections also track the industry's gradual acceptance of leadership diversity, with the growing representation of women countered by a still sketchy rate of progress among minorities. Broader still, this year's list provides a backdrop to the immigrant experience, particularly in how the contributions of newcomers adds to our nation's capacity to innovate.  

 And outside interests for this multinational group range from the new age virtues of meditation to advocacy for same sex marriage. This represents a near seismic shift away from that cliché fixation of previous generations of industry management: collecting mulligans on the golf course. 

These important indicators of cultural change are reinforcing the transition in Big Pharma away from the "era of expertise," where tenure and technical skills drove performance, to the "era of behavior," where intuition and people skills are prized assets. If the markets today provide no clear direction, then leadership is less about commanding the ship than in being first to identify trends, spot problems, and shape better questions that at least help define what needs to be done. A focus on behavior also means that interdependence and collaboration are key drivers of process, while ethics has to be treated as an element of business performance rather than a legal or public relations sidebar.  

second feature this month reinforces this view of living in an age of impermanence, one where literally anything can happen. Two international experts in crisis management take a close look at the industry's vulnerability to organized or individual random acts of terror, politically-motivated disruptions, or more conventional crimes of blackmail and theft—and find that company planning to mitigate these threats is spotty because it fails to contemplate the unthinkable. The industry's weakest link is its own supply chain, the disruption of which can cause incalculable harm to physical assets and human life but also impairs something as basic as trust—the very foundation of that legal right we call "license to operate." 

The US FDA and other regulatory agencies are openly expressing concern about how computer "malware" can with a single keystroke transform medical devices into weapons that kill or maim, or confound drug prescriptions to facilitate inappropriate dosing, endangering public health. And one unheralded manifestation of the global economic slowdown since 2008 is the explosion of black market trading in sub-standard goods. Europol, the European crime-fighting agency, states that trade in counterfeit medicines and foodstuffs has doubled in the region since the recession hit.  

To counter the threats, the story recommends major investments in scenario planning focused on avoiding that "failure of imagination" which leads to silo gaps across the organization and less readiness to face an emergency. Another point is expanding the human resources function's capabilities in screening recruits and identifying employees who may wish harm to the company, other employees, or top executives.  

Finally, we present an industry newcomer's perspective on fostering innovation within the cultures of Big Pharma. While the biopharmaceutical sector depends on innovation for its very existence, the high failure rate on new compounds suggests that it knows little on how practically to achieve it—at least in a way that is consistent with the expectations of shareholders. Cegedim Relationship Management VP Richie Etwaru applies learnings from the retail financial sector to underscore how Big Pharma's future depends on forging a bigger emotional bond with providers and patients. The evidence-based, scientific biases of the industry too often forgets that pharma, like banking, is a "people" business. That hard factual core must be balanced with a soft personal encounter. After all, who doesn't identify with the desire for good health? 

Articles

William Looney introduces this year's selection of 15 pharma professionals that, on our view, have real prospects for a future key to the C-suite.

Talent, Terror, and the Turnaround

With the payment data collection date rapidly approaching (August 1, 2013), soon to be affected parties are scrambling to interpret, or reinterpret, just what exactly the Physician Payment Sunshine Act will require. The tone of the discussion has moved from shoulder-shrugging semantic hilarity—'Is candy a snack or a meal?' or 'What's the fair market value of a cup of coffee?'—to wide-eyed anxiety and direct pleas to regulators.  

At the end of April, James Madara, EVP and CEO of the American Medical Association, argued in a letter to the Centers for Medicare & Medicaid Services (CMS) that handing out peer-reviewed articles from scientific journals does not represent a transfer of value, or a payment, since most physicians already have subscriptions, or institutional access to most scientific journals. Reprints, therefore, should be excluded from the reporting process.  

FDA already regulates pharma's dissemination of reprints to physicians, to prevent inappropriate promotion or marketing, wrote Madara. The Sunshine Act's additional paperwork requirements associated with "fairly and accurately reporting on reprints for articles that are widely available for free to physicians could chill such exchanges of information." After the burn comes the chill; will CMS provide some aloe for reprint "transfers of value" after the fact, or hand out sunscreen by way of a reprints exclusion before August 1? 

A panel of experts at last month's Drug Information Association (DIA) meeting all agreed that physicians don't want to see their names show up on a pharma payments list, simply because they chose to read a reprint from a scientific journal. One option, according to the panel, is to send a link to the journal article, and hope the physician either has a subscription, or ponies up the reading fee (which could be anywhere from $10 to $30 for a single article). Without specific guidance from CMS, however, any approach is an educated guess about what will appease regulators. Monica Kwarcinski, executive director, medical services, at Purdue Pharma, said her company is planning to report the copyright clearance cost for each journal article disseminated. 

Questions from the audience were dead serious; gone were the jokey lamentations about the difficulty of justifying physician green fees in Hawaii, or even whether a USB flash drive is an okay gift for a doc when it has patient education materials on it. One audience member wanted to know how he should value a journal supplement, as opposed to a reprint. Another wondered what would happen when a physician who did not request a reprint shows up on a list with a "value" next to his name. A third wanted to know how to value journal reprints bought in bulk, with unknown recipients.  

CMS will surely have to clarify its needs at some point. It's easy to say that legislation like the Sunshine Act is incomplete, that it doesn't answer critical questions about the specifics of what it's requiring. But if the Act and guidance were three times as long and twice as specific, it would be criticized as unwieldy and overwhelming (over 900 pages!), and even then, politicians wouldn't have anticipated a debate on whether candy is a snack or a meal.  

Regardless of what industry leaders think of regulators, Congress and the current administration, it must be assumed that companies doing everything they can to obey new laws will be given the benefit of the doubt if they fall short, but can show they meant well. For those who hope to skirt new regulations and continue bad practices by focusing on conflicting minutia or minor obfuscations instead of the guiding spirit of the law, your flabbergasted expression won't be enough to stop the penalties from piling up. With the sun coming out it's important to sweat the small stuff, but not to a fault. CMS isn't looking to burn everyone. 

Column

Pharma and physicians worry about getting sunburned by the Sunshine Act.

What is a Journal Reprint Worth?

Pharmaceutical production is a global industry, with increasingly long supply chains and greater reliance on vendors for raw materials and finished products. While these developments may reduce production costs and expand access to important medicines around the world, they also raise the risk of lax quality control and widespread drug diversion and counterfeiting. Drug shortages appear to be one result, raising calls for intense regulatory scrutiny. The proliferation of fake and substandard medicines also points to the need for better control over the pharmaceutical supply chain in the United States and overseas.  

Congress addressed some of these problems in the FDA Safety & Innovation Act (FDASIA) of 2012 by requiring manufacturers to notify FDA of pending shortages. It also strengthened the agency's authority to oversee and block substandard imports, to inspect foreign manufacturers, and to levy stiffer penalties for drug counterfeiting. But FDASIA failed to establish a much-debated system for tracking drugs and medical products through the supply chain. That issue is now before Congress, along with proposals to strengthen FDA oversight of large-scale drug compounders. In both cases, the House and Senate are far apart, raising doubts about effective action.  

That is somewhat surprising, because there's usually a sharp response on Capitol Hill when contaminated medicines lead to dozens of deaths and widespread illness. The legislators generally agree on the need for clearer standards to prevent broad distribution of illegally compounded injectible drugs, yet pharmacists are leery of greater FDA control over these operations. A bipartisan Senate measure would provide FDA with authority to regulate a new category of commercial compounders—large-scale operators that sell risky injectibles across state lines without prior individual prescriptions. FDA supports this move, as well as provisions that leave "traditional" pharmacy compounders under state law.  

However, House Republicans oppose giving FDA more control over compounders, claiming that the agency already has sufficient authority to regulate illegal operators and should do that more effectively. At recent hearings before the House Energy & Commerce Committee, Republicans attacked FDA officials for failing to move aggressively against large compounders that caused hundreds of serious fungal infections. FDA reported on its recent efforts to beef up inspections of "high risk" compounders and close down violative operators. But agency inspectors had to obtain court orders to enter some facilities that tried to block their visits, illustrating the inadequacy of the current law.   

The Senate Health, Education, Labor & Pensions (HELP) Committee linked its compounding bill to a measure establishing an electronic tracking system for prescription drugs. The legislation requires lot-level tracking initially, but sets up a 10-year process for adopting a unit-level traceability system, as preferred by FDA. However, legislation approved by the full House in June establishes an "enhanced" drug tracking system—but without a clear path to unit-level reporting.  

Both House and Senate track-and-trace bills pre-empt state laws, a move championed by pharma companies anxious to halt adoption of diverse drug tracking programs on the state level. But broad pre-emption has drawn opposition from California members of Congress who oppose any federal drug tracking system that is less stringent than the one set for implementation at home in 2015. Congressional leaders have talked about enacting legislation by August, but agreement may take much longer.  

Meanwhile, shortages and security are causing serious health problems around the world. The President's Emergency Plan for AIDS Relief (PEPFAR), which has provided $1.2 billion in antiretroviral drugs to some five million people in Africa and other nations during its first 10 years, is taking steps to ensure the security of its supply chains. An April 2013 report from the Government Accountability Office (GAO) notes the need for better inventory controls and records to avoid shortages, waste and loss of supplies—especially if the program is to expand to serve 23 million eligible people.  

Efforts to control and treat tuberculosis have been hampered by shortages of first-line treatment isoniazid (INH) in the United States and abroad. While US public health officials are worried, the situation is more deadly in India and other regions where there's great danger of generating multi-drug resistant TB strains if patients have to stop taking medicines. Manufacturers Sandoz and Teva have moved to ramp up production in response to a temporary shut-down at VersaPharm. But delayed and unclear procurement projections by government health programs, as well as low prices for these widely used drugs, have discouraged additional manufacturers to move into the TB drug market.    

A flood of counterfeit and falsified antimalarial drugs in Africa and other developing nations has generated calls from the Obama administration and international organizations for more aggressive strategies to track drug supplies. Many of the bogus products have no active ingredient, while diversion of genuine drugs robs public health programs of vital treatments. These developments raise the specter of generating resistance to effective medicines, which would undermine a decade of progress in reducing malaria-related deaths.  

The President's Malaria Initiative is working with local authorities to better protect international and local supply chains, while also encouraging manufacturers to add special markers or tags to packages of artemisinin-based combination therapies, currently the most effective antimalarials. The fight against malaria may be strengthened by progress in development of a synthetic version of artemisinin, with has begun production at a Sanofi plant in Italy. In addition, FDA is testing use of a handheld counterfeit drug detection device, developed by agency scientists to determine quickly if a medical product is real or bogus. 

Pharm Exec's Washington correspondent. She can be reached at 

FDA wants pharma leaders to do more to ensure drug quality at home and abroad. Our Washington correspondent Jill Wechsler reports.

Seeking Supply Chain Security

The US commission studying the September 11, 2001 Al Qaeda attack on New York and Washington concluded that America's vulnerability resulted from a "failure of imagination"—specifically, a failure to envision the improbable but possible use of hijacked airlines as weapons of mass destruction. To date, no pharmaceutical company's scientists or technology have been traced to a domestic or international act of terrorism. Yet despite the absence of any documented attempt to exploit gaps in current pharma security via direct or cyber-based subterfuge, we have analyzed the risks and are prepared to caution the industry against at least three other "failures of imagination"—even if they appear unlikely today. These are:  

» The potential for terrorists to steal via cyber-theft confidential proprietary technology or materials directly, or through contracted surrogates.  

» The potential for a disgruntled or blackmailed employee—or a new employee who has been inadequately screened—to exploit opportunities from within a company to introduce toxic contaminants into the final production stages or packaging of medicines or vaccines.  

» The potential for terrorists to gain access to pharmaceutical and biologic technology and apply it in such a manner as to inflict chemical or bio-terrorism indiscriminately, placing thousands—even millions—of people at risk. 

For decades, the production and sale of fake drugs were largely confined to the third world; the danger was mostly to solid dosage forms. Recently, fake solid and injectable brand drugs have penetrated the industrialized economies, exposing both the industry and its customers to more risks than might meet the eye. 

» Chronic shortages of generic injectable drugs have driven gray market prices up by thousands of percent—making them, for the first time, candidates for potential counterfeiting. Counterfeiters today may feel they have even greater latitude in picking from a whole panel of short-supply injectables, due to the shortages of many very basic drugs and their less complex generic labels and packaging. The potential "market" for fakes of generic injectable drugs extends to thousands of hospital and clinics—covering even more territory than the brand injectable drugs they've counterfeited to date. 

» The FDA has discovered fake injectable brand drugs in United States hospitals and clinics. First to appear were fake Procrit and Epogen, then fake Avastin. Some of these fakes originate with domestic criminals; others with as-yet unidentified foreign manufacturers.  

» Beyond the fake erectile-dysfunction and narcotic drugs sold on the Internet, investigators have found in US pharmacies near-perfect truly counterfeit Lipitor tablets containing atorvastatin, packaged along with diverted overseas-manufactured tablets of the genuine drug, assembled in counterfeit dose packs.  

» Baxter's tragic experience with long-trusted Chinese suppliers of heparin precursor—the substitution of that key ingredient with a toxic chemical was designed to fool the incoming US factory assay—demonstrated the vulnerability of both brand and generic companies to overtly criminal economically motivated adulteration by overseas vendors in their raw materials supply chain.  

These criminal exploitations of gaps in the US drug system have been noted by terrorist groups and rogue states. A "failure of imagination" could result from companies failing to consider how committed criminal, political, and terrorist groups might seek to exploit gaps in their employment screening, computer networks, or supply chains to insert fake versions—even toxic fakes—into their distribution channels. 

» The global pharmaceutical industry has been specifically targeted by the leftist international hacking organization "Anonymous," whose sympathies appear closely allied with those of violent animal rights groups that have targeted pharma in the past, and with terrorist organizations known to finance their activities through the sale of counterfeit amphetamine Captagon and fake Western drugs. 

» Hackers of unknown origin or intent have successfully penetrated the computer networks of Pfizer, Abbott, and Boston Scientific. Those penetrations may have lasted a month or more until discovered.  

» Criminals hacked into the computers of America's largest security company, ADT, obtaining vital security data from companies which was then used to break in and steal from their warehouses and trucks. One of their targets was a drug supply warehouse for Eli Lilly, from which they stole $75 million in inventory covering a wide range of drugs. Other companies whose drugs were stolen and then resold include Glaxo SmithKline and Novo Nordisk, as thieves targeted both warehouses and long distance trucks.  

» The stolen Novo Nordisk cargo was insulin, which other criminals then sold to small distributors who resold it to the giant Kroger pharmacy chain, which inadvertently bought it even after an FDA warning. Fortune magazine claimed one patient in Ohio who took the insulin went into convulsions; another, in Texas, saw his blood sugar spike. 

» Counterfeit Avastin manufactured in the Middle East penetrated both European and United States gray-market distribution, and was discovered being administered to patients—after passing through the lawless conflict-zone in Syria. 

» Middle East terrorist factions of Hezbollah and HAMAS have been cited by the US Drug Enforcement Agency as manufacturing millions of dollars annually in counterfeit prescription drugs and amphetamines and selling them through criminal networks, both in the Middle East and Latin America. Nineteen Hezbollah operatives in Michigan who ordinarily specialized in dealing in untaxed cigarettes, were indicted in 2006 by a Federal grand jury for trafficking as many as 50,000 counterfeit Viagra tablets into the United States from Canada, and transmitting proceeds from their operations to Hezbollah. Four years earlier, the DEA discovered a similar operation smuggling large quantities of pseudoephedrine from Canada—destined for methamphetamine manufacturing in the Midwest and Mexico, with profits going to Hezbollah.  

» Hezbollah, HAMAS, and Iran have developed their own hacking teams, with evidence that they operate both alone and with the assistance of Russian criminal gangs. Hezbollah took responsibility for having hacked into the networks of the US banking giant Wells Fargo. Bank of America and CitiBank have also been hacked. 

Pharma's HR department: A potential gap in corporate security

The 2001 "Amerithrax" anthrax letter attack uncovered gaps in Defense Department screening of scientists with access to dangerous substances, and management's inadequate monitoring of changes in employee personality due to potential triggers. 

The anthrax-containing letters sent to the Senate were traced to lone-wolf defense scientist Bruce Ivins at the Army's Fort Detrick research labs. Ivins is believed to have begun mailing his letters because of his anger at loss of funding for a research project. So respected was Ivins that he was assigned by the Department of Defense to assist the FBI in seeking the anthrax-letter terrorist—and for months, actually sent investigators in wrong directions.  

What should trouble pharma HR is that Ivins' credentials and experience would have made him a candidate for a top research position at just about any global drug company where he might have applied for employment. Ivins' managers failed to take note of personality traits that might have tipped them off that something was wrong, especially after his anthrax vaccine was placed on a development back burner. Management might have detected issues brought to the attention of the FBI by a former university colleague that he had persistently harassed for years. In fact, Ivins had performed poorly on psychiatric tests, but the results weren't followed up.  

Equally troubling to pharma HR should be the multiple mistruths in the CV of Steven Hatfill, the scientist falsely accused of being the originator of the anthrax letters. When reporters began researching Hatfill, they uncovered multiple academic degrees and honors he had never received. All these claims should have been verified before Hatfill was given access to some of the nation's most virulent organism stores. 

What should not be missed by pharma HR is that someone with a profoundly falsified CV did gain access to laboratories where his incompetence could have endangered coworkers and the nation. Resumes for those with such potential access must be rigorously examined, and all claimed degrees, published papers, and experience validated.  

In February, armed thieves disguised as police broke through the perimeter fence of the Brussels airport and stole more than $50 million in gems from the cargo hold of a airliner about to take off. The security gaps that enabled such a precise theft appear to have been guided by inside information by airport personnel. Following the Brussels theft, an airline security specialist made observations about airport security that may merit considerations for possible parallels for pharmaceutical companies:  

"Ground crews are largely unseen by the general public. But in much the same way as flight crews, they have intimate knowledge about their work environment. They also have unrestricted access to the exterior and interior of aircraft. Despite this access, these employees are not subject to the same security screenings as passengers and most flight crews." 

The Brussels incident suggests the industry needs to consider tighter screening of all who enter their facilities, including those who clean premises—both offices and labs. Many such functions are outsourced to companies paying minimum wage, and—despite blanket assurances and signed commitments—minimally checking immigration status. Unsecured computers left logged on, passwords and codes for copying machines taped to inside desk drawers, loose documents on desks, notebooks beside experiments left running at night—all represent potential security risks.  

Cyber-attacks reveal every industry's vulnerability

Until recently, an international competitor or a terrorist group wishing to obtain and capitalize on a pharma company's confidential technology would have had to recruit multiple scientists and manufacturing engineers, or insert operatives as employees capable of stealing lethal organisms or chemicals. Today, however, criminal, political, and terrorist groups might use teams of dedicated hackers to steal the same information an intruding terrorist masquerading as a scientist might try to obtain. And evidence suggests they are doing just that. 

According to a 2011 report by the US financial news network Bloomberg, international hackers have already penetrated the networks of top pharma companies (Pfizer and Abbott), at least one medical device company (Boston Scientific)—and even the US FDA's Parkland, Maryland computer bank. The hackers, likely Chinese from their IP addresses, appear to have broken into the computer systems of the hotel Internet services provider iBahn, used by traveling executives around the world. In addition to being able to view both unencrypted and encrypted e-mails, security authorities believe the iBahn hackers may have inserted malware to the laptops of those executives, enabling them to capture passwords typed by the executives.  

The Shionogi case: What happens when pharma fails to monitor ex-employees

Every landlord knows to change the locks after a tenant leaves—but at least one pharmaceutical company didn't similarly change the internal passwords after an IT worker left—and suffered the consequences. Jason Cornish, a former IT specialist of Shionogi, Inc., the United States subsidiary of that Japanese pharmaceutical company, resigned just ahead of a major cutback that made redundant a former supervisor and close friend. In revenge for his friend's termination, Cornish gained unauthorized access to Shionogi's computer network using a "back door" he'd installed before his resignation. Cornish then used the secretly installed software program to delete the contents of each of 15 "virtual hosts" on Shionogi's computer network.  

These 15 virtual hosts (subdivisions on a computer designed to make it function like several computers) housed the equivalent of 88 different computer servers. Cornish used his familiarity with Shionogi's network to identify each of these virtual hosts by name or by its corresponding Internet Protocol address. 

The deleted servers housed most of Shionogi's American computer infrastructure, including the company's e-mail and Blackberry servers, its order tracking system, and its financial management software. The attack effectively froze Shionogi's operations for a number of days, leaving company employees unable to ship product, cut checks, or communicate by e-mail.  

Cornish was eventually traced to the IP address of a McDonald's restaurant in Georgia where he'd charged a meal with a credit card at the time the Shionogi systems had been hacked. He was sentenced to 41 months in prison, and required to pay $812,567 in restitution. 

The Shionogi experience demonstrates just a small fraction of the risk of improperly secured computer systems, and failure to consider the possibility of criminal or terrorist acts by former employees who leave with valued information. The risk of cyber-access for pharma goes far beyond vandalizing a company's systems—it potentially spans criminal interest in a company's secret manufacturing and security technology, as well as providing the gist for political attacks designed to embarrass or damage the pharmaceutical industry.  

Suppose, for example, a former pharma company IT specialist sells his access information to criminals with economic or political clients: 

» The access information could be sold to international customers interested in mining the company's R&D computers for unpatented technology or secret manufacturing technology. It could steal the company's unpublished adverse reactions reports, tests using laboratory animals, or information on the status of contract negotiations. 

» The same information could be used to access a company's HR records, where terrorists could find employees with internationally vulnerable families—employees who could be blackmailed to steal biologicals or toxins with terror potential, or to reveal technology such as how to produce the three-micron particles needed to weaponize agents like anthrax. 

» Counterfeiters might value knowing the source and composition of proprietary coatings and packaging materials, so they can more easily produce fakes capable of escaping detection by the closest visual examination.  

» Criminals in the raw materials supply chain may wish to exploit knowledge of incoming assay tests so they can subvert those tests by substituting cheap adulterated additives. Baxter's Chinese suppliers of heparin precursor knew about Baxter's safety inspection tests, and substituted cheap oversulfated chondroitin for expensive heparin precursor.  

» Other criminals in the supply chain may wish to learn how to penetrate track-and-trace security—or even the schedule of truck shipments to distant warehouses or wholesalers. 

» The Japanese terror group Aum Shinrikyo, responsible for a 1995 sarin gas attack on the Tokyo subway system, tried to manufacture anthrax and botulinum toxin from common non-pathologic strains. They didn't order pathologic forms from lab supply houses because of traceability after an attack. Today, a terrorist group might use its digital expertise to exploit gaps in a pharmaceutical company's computerized purchase-authorization process to generate orders for dangerous biologicals, and to intercept those orders in transit—thus obtaining vastly more potent organisms than the ones the Japanese cult tried to culture and scale up almost 20 years ago.  The cyber threat to pharma from terrorist groups is especially troubling in Japan, because the surviving members of Aum Shinrikyo—regrouped under an organization named with the Hebrew letter "Aleph"—has morphed into a software company specializing in security software. Before its front company names were penetrated, Aleph sold its software programs to at least 10 government agencies, including the Defense Ministry, and more than 80 major Japanese companies. Although the software was removed when its developers were identified, Japanese security officials worry that inadvertent collaboration with terrorist-background individuals might have given them valuable information on how major companies and the government protect their secrets. 

Features

How vulnerable is Big Pharma to the predations of organized terrorist groups or that rogue malcontent with an agenda to wreak havoc on society?

Dangerous Liaisons: Terrorism and Pharma

Meet the Emerging Pharma Leaders of 2013. These 15 trend setters represent the future of an industry that knows it must change: the question is how, and to what? Past successes in a small molecule world of big, undifferentiated mass markets combined with a complacent business culture, reinforced by long, leisurely product cycles, have spawned a new shackle called size. "Big Pharma" is not a pejorative to us, but it is for many others. What is clear is this year's winners can't depend on that easy surplus from earlier times to carry their careers forward.  

Instead, as the industry shrinks to fit a more challenging competitive set, they must steer their own way through an obstacle course of opposites that we characterize as "growing to be small." Today, it's all about expanding the business while avoiding bloat, the traditional by-product of success: staying externally focused; eliminating internal barriers to faster decision-making; collaborating with others to defray risks; getting close to the customer, who often wears many hats; and creating dominant therapy positions in multiple niche markets that, when combined, produce equivalent blockbuster results, at lower fixed costs and less hassle.  

The search for commercial models that make sense in this new world of work is reflected in the diversity of backgrounds of this 2013 class of leaders. They include line executives from generic medicines and vaccines, two adjacent business units which under turbulent market conditions have emerged as key sources of product and process innovation. Several of this year's winners have graduated to new roles that reflect the growing importance the "c suite" places on knowledge retention throughout the organization. Other recipients hold positions that reflect the need for active, institutionalized collaboration between the R&D and commercial product teams, at the earliest stage of the development cycle. And in a business where customer insight is still in short supply, we find more leaders are entering the industry with valuable outside exposure to the fickle affiliations of the retail trade.  

As we profile these rising leaders who are still charting their journey to success, 

 decided to take a closer look at the organizational mindset that breeds top talent, posing the basic question: does company culture count? We spoke with Jenn Mann, vice president, human resources for the health analytics and software giant SAS, which since it's founding in 1976 as a supplier of agricultural data to North Carolina's land grant program, has emphasized a culture that challenges every employee to make a difference—starting with the customer.  

The root of the SAS culture is what Mann refers to as the "SAS employment brand." "We begin with the awareness that human resources are the company's best and most costly resource, so we have to invest in it. Workplace recognition—which we do deliberately, in innumerable ways—is connected to revenue growth. We can measure it; it's not coincidental. All of the companies in our space are filling positions from the same talent pool, which explains why being branded as a strong employer gives us an edge." Finding that talent is particularly important as SAS grows into a global enterprise; approximately 50 percent of its 13,000 employees are now based outside the United States.  

What skills are most needed among new industry leaders? Mann lists three: a solid grounding in technology and how it affects the overall customer experience; softer, relationship skills, like communicating effectively on complex topics that can be understood by different audiences; and focused, analytical thinking—the kind that drives innovation, which SAS defines simply as meeting the changing needs of customers before they are even aware of them. 

, Senior Vice President Commercial Affairs, Genentech 

, General Manager Russia, Teva Pharmaceuticals 

, Vice President  Drug Metabolism and Pharmacokinetics, Vertex Pharmaceuticals 			

, Executive Vice President and Chief Operating Officer, PaxVax, Inc. 

, Vice President R&D, Accorda Therapeutics 

, Executive Director Commercial Development, XenoPort 

, Senior Director/Team Leader U.S. Oncology Managed Markets, Pfizer 

, Executive Director Global Public Sector Lead Woman's Health, Merck & Co.  

, Vice President, Global Oncology Strategy, Astellas Pharma, Inc. 

, Vice President, Portfolio & Decision Analysis, Pfizer 

, Senior Director of Program Leadership and Management, Biogen-Idec 

, Associate Vice President of Business Excellence, Sanofi 

, Director of HIV Marketing, Gilead Sciences 	

Top Grade in Generics — Jeff George, Sandoz

In today's generics business, there is no sense of entitlement—profit margins are middling, product timing is defiantly of the moment, and every last inch of commercial turf is contested. For Sandoz' Global Head Jeff George, the appropriate response to all this market mayhem is to invest each of his waking moments with a sense of urgency. "The first asset required of a leader in the generics business today is: you've got to have drive." Precisely because the barriers to entry in generics are so low, he says, maintaining a competitive edge often depends on distinctive individual character traits like energy, passion, analytical clarity, and that sheer will to win.  

At age 39, George occupies a pivotal role in the industry, leading a high-profile business with nearly $9 billion in annual turnover and a workforce of approximately 26,000 people located in over 140 countries. Sandoz, a division of Novartis, ranks a close second to global leader Teva in annual sales of generics. The business has a large footprint. Sandoz manages an inventory of some 25,000 SKUs with an annual production volume of 49 billion tablets and injectables manufactured at 45 different sites in 17 countries; some of this activity is conducted in cooperation with external partners, of which there are more than 200. Six percent of the world's population—420 million people—was given a Sandoz medicine last year and the company is now closing in on serving 500 million patients.  

The position he holds within Novartis is commensurate to the responsibility. George is the youngest member of the Novartis Group's Executive Committee and reports directly to Novartis CEO Joe Jimenez. George considers both Jimenez and incoming Novartis Chairman Joerg Reinhardt as key mentors, as Reinhardt was instrumental in recruiting George to Novartis in January 2007 to head the Western and Eastern European vaccines business. More recently, Jimenez and former Chairman and CEO Dan Vasella have been major influences, as George worked for Jimenez first at Novartis Pharma and then assumed the larger role at Sandoz. 

Family background and a diversity of positions in his early career helped smooth George's transition to the "c suite." His father, Bill George, led the device manufacturer Medtronics for many years. George obtained a Harvard MBA and then took his first post as a consultant at McKinsey & Company, which led to assignments in the retail consumer business, ending up as head of strategy and business development for a division of Gap Inc., where he was instrumental in building the Banana Republic brand.  

This retail background did more to prepare him for his current role in pharmaceuticals than might commonly be assumed. "My experience allowed me to see that a key sweet spot for the pharmaceutical industry lies at the nexus between healthcare and retail. Healthcare today is an increasingly consumer-driven business, one in which pharmaceuticals are required to demonstrate value to many stakeholders beyond the physician. Understanding retailing is helpful to make the case for medicines in an environment where patients and payers have real choices." George notes that he applies the lessons he learned from retail by constantly underscoring Sandoz' association with and commitment to quality. "I've made it clear to everyone that we live or die on this—it's central to our business mission and reputation."  

Since assuming the top job at Sandoz in October 2008, George has pursued a strategy to grow and transform the generics business through innovation—in products, process, technologies, and people. "It may seem counter-intuitive, but the generics business today is where new ideas on how to create operational efficiencies, expand patient access and market cost-effective product solutions for payers are all coming together," George says. He notes that the generic business itself is consolidating to become more competitive in global markets. "In 2000, the top four generics companies together had only a 13 percent market share; today, it's approaching 30 percent. So you have to innovate to survive." 

Under his leadership, Sandoz has built on its historic base in INN generics to establish an unrivaled position in complex, differentiated generics that carry a heavy dose of science, often developed in cooperation with the patented, R&D side of the Novartis business. These differentiated generics provide that coveted "blue ocean" space—where Sandoz can stand alone, ahead of the competition—by requiring more costly science and extra regulatory hurdles, or by being hard to manufacture.  

Biosimilars, injectables, and specialty drugs like ophthalmics and dermatologics now account for roughly 45 percent of Sandoz's sales, up from 30 percent when George came on board in 2008. Sandoz has captured the number one global sales position in each of these categories, supplementing organic growth with a targeted acquisition strategy, where Sandoz has bought leading-edge companies in dermatology (Fougera, in 2012), injectable oncologics (EBEWE Pharma, in 2009), and respiratory care (Oriel Therapeutics, 2010).  

Sandoz has notched a particularly strong performance in biosimilars. The company began prepping for a stake in this area way back in 1996 and was the first big industry player to introduce a biosimilar, launching its version of Pfizer's Genotropin in Europe in 2006. Partly because of that foresight, Sandoz over the last five years has quintupled sales in this segment to secure a 50 percent share of the regulated worldwide market.  

Another element in George's innovation agenda is making Sandoz a leader in access to medicine among underserved populations in the developing world. "The cost benefit ratio from use of quality generics is second to none, and our price points bring the Sandoz product line in reach of 90 percent of the world's population." Specifically, he sees long-term commercial potential for the company in Africa, where Sandoz is testing out new, needs-relevant approaches to drug distribution and patient education. There is an element of altruism here that is unusual for a generic company, but George stresses that every access initiative pursued by Sandoz is designed ultimately to be profitable, in keeping with the parent company philosophy that only those programs that can pay their own way will remain sustainable in the face of economic downturns or management changes.  

 "I made three trips to Africa last year and will go again at least twice this year. All the factors for success are there, including a growing, youthful population; expanding investment and strong GDP performance; and huge unmet medical need, particularly for high quality, affordable drugs. I'm convinced governments, providers, and patients will remember who pioneered in investing in sub-Saharan Africa's health infrastructure—I want that company to be Novartis."  

These and other achievements secured to date rest in large part on a deliberate, personal effort by George to change the Sandoz culture. "I decided culture should not be an unconscious artifact—something that is just there—but rather a tool for creating change, something that we had to make a deliberate effort to shape."  

One of the first things George did was convene an internal team to decide what Sandoz wanted to be. That review led to the definition of three pillars to define a new Sandoz culture. These are: recognizing people as the company's single greatest asset, recruiting and retaining the best; ensuring high-performance behaviors, always acting with a sense of urgency to drive results for patients, shareholders, and fellow employees; and keeping a constant focus on the customer, through an outward-looking perspective receptive to new ideas. George leads by example, spending over half his time on the road, visiting 20 to 25 countries a year on average, meeting customers and other stakeholders.  

Another hallmark is the range of new people George has brought into the organization, revitalizing what was once a more monolithic demographic. "There are nine different nationalities represented on my Sandoz leadership team. So I've seen firsthand the clear positive link between diversity and the capacity to innovate."  

Buttressing all three pillars is a personal commitment by George to build a culture that celebrates success. "One of the things I look for in people I hire is the ability to recognize the contributions of others. Given all that companies today ask for and expect from their employees, it's critical that managers learn it doesn't take much energy to say 'thank you.'" George spends a good chunk of his time handing out colleague performance awards—in fact, it's done systematically, every business quarter. "The goodwill it brings has an enormous ripple effect on trust and morale, values that are critical to successful execution down the line."  

asked George what leadership skills and capabilities will be entry-level requirements for the next generation of industry leaders. The way he defines it, it's a mix—of mainstays that remain constant over time and the fresh, standout qualities that provide an edge as the commercial model adapts to disruptive market changes.  

"What is constant is the ability to define a mission for the enterprise and then build a vision around it that everyone in the organization can understand. Central to this task is establishing a real sense of value differentiation—what makes us unique and will persuade our customers to choose us over the competition?" The second follows naturally. "It's about people. Developing talent and building a great team. I spend more time on people than anything else. "  

George references Novartis's former chairman for one of the most essential new skills: cementing the link between big picture strategy and excellence in operational execution. "Dan Vasella called it the ability to 'zoom in and zoom out,' a combination of big-picture, conceptual thinking and analytical and operational depth you rarely find in one person. The norm is that leaders tend to be stronger in one than the other. Tomorrow's leaders must cultivate both."  

The other new skill is what George refers to as simple learning agility, in its various forms—mental agility, results agility, change agility, and people agility. "It's also key to have an innate drive to succeed. I find this is the character type most suited to thriving in a climate of flux and uncertainty, where people have to work across different cultures or functions less familiar to them, and to cope with business conditions that range from growth to turnarounds to entrepreneurial startups." His final bit of advice: strive to be self-aware, always with an eye to making a positive impact on others (George notes he probably says 'thank you' 20 times a day); manage your energy by staying centered (George meditates every morning); try to listen first (something he has long worked on); and—most of all—be ready. "The pace of change in the industry is a constant; thinking and acting fast are a prerequisite for success." 

Insight to Execution — Alexander Hardy, Genentech

Would Americans rather see their most talented graduate students go to work for Big Finance, or Big Pharma? Twenty-one years ago, Alexander Hardy, a Genentech SVP and head of the company's HER2 oncology franchise, was at the University of Michigan "doing my MBA and thinking that I was going to work in something like the World Bank." Instead, Eli Lilly unearthed his resume and convinced him to do an internship in Indianapolis. After a summer in the drug business, Hardy, an Englishman, was intrigued. On top of the usual business challenges, pharma dealt with "much longer time scales, a heavy element of social responsibility, ethical challenges, complex products, and a more sophisticated customer base than any other industry," says Hardy. "I thought, this is going to be a fascinating place to have a career."  

Meet the Emerging Pharma Leaders of 2013. These 15 trend setters represent the future of an industry that knows it must change: the question is how, and to what?

Pharm Exec's 2013 Emerging Pharma Leaders

The lifeblood of the life sciences industry is continuous innovation—it is not a business that can survive by standing still. Keeping innovation moving ahead at a steady, productive pace is becoming much more difficult, due to constricting margins, policy changes, and an abrupt redefinition of the traditional roles of patients, payers, and providers. Responding to this challenge requires moving toward an industry design where innovating beyond the product R&D cycle becomes ingrained and commonplace, a standard practice throughout the entire organization. And the best way to make that transition is to look at precedents and best practices in an industry that has confronted similar structural issues and come out ahead: financial services. As one who has experienced the effort to build a new innovation mindset in the office canyons of Wall Street, I'd like to share with 

What drove successful innovation in financial services is the understanding that there is not one but many platforms for advancing it. There are multiple types of innovation, each requiring a set of correlated, comprehensive—and carefully coordinated—structural changes to the underlying organization. These changes go far beyond conventional innovation-building tactics such as that open employee brainstorming jam every Friday. Instead, they impact the heart of how companies are organized. In fact, moving forward often requires a leap of faith, being difficult to define, test, perfect, and install.  

A simple way to think about innovation types is in the construct of a 2X2 matrix, mapping "outside-in" versus "inside-out" innovations, and "evolutionary" versus "revolutionary" innovations. Since this matrix is not named, let's call it the c-level four quadrant (C4Q) innovation matrix (table below).  

Mapping innovation types triggers attention to the processes needed to capture and/or cultivate each innovation type. What operating model, organizational design, and incentive model changes may be needed? What kinds of partnerships are required to cultivate each innovation type? The C4Q Innovation Matrix is also illustrative in demonstrating that, in the financial industry, thinking and acting to foster innovation is not just a job for the CIO or CTO but requires the other "c suite" functions, including CEO, COO, CFO, and CMO, to make material contributions as well. 

Whatever the model, experience in the financial sector shows that companies must avoid a situation where good ideas are trapped in the traditional command and control organizational structure, in which case the structure will dictate the strategy. Instead, a true innovation redesign requires the reverse: that the strategy will determine the organization's structure, and that rewards and incentives will follow that strategy rather than being guided by the notion that the larger a leader's proverbial ship, the larger the said leader's compensation.  

In other words, the biggest challenges are internal. First and foremost is the negative incentive that employees confront when asked to innovate, best expressed in the simple question: what does it mean to me and my job? The hard reality is that when inside-out innovations create better work streams and enhanced efficiencies, the result can lead to the elimination of entire departments, product lines, and the individual career paths associated with them.  

One key lesson in tackling this implicit barrier to innovation is to introduce a new organizational design, one where employees are encouraged to innovate themselves out of a role. This example of encouraging leaders to cannibalize themselves to achieve something innovative confronts the elephant in the room. It changes the conventional thinking from "if I don't have anything to do, then what is my value" to "I can't wait to innovate away everything I do, so I can deliver new value." This creative manner of thinking about the implications of organizational change is easier realized when innovation is thought of in types, instead of as a single entity.  

Another precedent drawn from financial sector is the importance of changing the mindset in allocating program and project budgets. Traditionally, project work originates from the requirements of the line business and thus carries a strong ROI component. Innovating companies have abandoned that hard and fast stipulation and actually insist that a specific portion of the project budget be earmarked for innovation. The concept has been adopted in funding for product R&D in life sciences, but it needs to be extended out further, to the entire supply chain, including manufacturing, technology, logistics/operations, sales, and distribution. This horizontal extension of earmarking for innovation beyond R&D must be a COO responsibility. The investment governance process must be deliberately designed to fund innovation projects past the idea phase into the championing and execution phases, avoiding the tendency for progress to stop at the very moment when an innovation is endorsed.  

One key example from COO leadership in the financial sector is to design and install an innovation chargeback model, much like the line of business chargeback models for shared services such as IT network, storage, and human resources. This allows lines of businesses closest to the customer to take innovation seriously as a shared service, and to better identify, prioritize, and install voice of customer, outside-in innovations. In this type of operating model, governance changes are many times best executed by a COO instead of a CIO or CTO. Reorienting innovation funding through the chargeback model also discourages the use of prioritization measures, which in their short-term focus and reliance on measurement tend to avoid taking a real stake in something as potentially disruptive as innovation. And stopping "un-innovation" is an important element in innovating. 

Small, sell-side vendors are becoming interesting sources of innovation. Larger organizations are advised to cultivate their innovation roots by establishing a constant supply of relationships with them. Yet large organizations often lack the insight and experience to productively engage with this group. CFOs can accelerate internal innovation by designing partnerships where other "c suite" CIOs, CTOs, and COOs can "make space" for these relationships, in contrast to traditional thinking that selectively chooses and then displaces one vendor with another. An example of how to make space for new small vendors is creating a quasi-venture capital company within the larger organization, which can ring-fence investments in small, co-creating mini-ventures, away from the process and bureaucratic overhead of large organizations. This is already happening in life sciences on the R&D front, but experience in finance shows it can work effectively to drive innovation in many other critical pharma support functions. CFOs should take the lead in creating the commercial environment for this larger partnership ecosystem around small vendors.  

The CMO: listening and mapping the customer 

As many management consulting companies predicted, the Chief Marketing Officer (CMO) is spending more on technology and is usually closer to the customer than other c-level officers. In the life sciences sector, where many companies have consumer OTC businesses, listening to customers is not new. However, the issue of where we listen, the veracity of the information we obtain, the new vocabularies around value that we listen to, and the speed in converting data sourced from just listening to value creating insight has changed. While this is very much a big data and social media conversation, it is hardly a CIO- or CTO-only topic. CMOs are consistently pressed to listen to new types of customers, on new types of channels, and around new streams of data. There is rich potential for this externally focused dialogue to deliver true, "outside-in" innovations. In life sciences, where the customer can include the physician, the patient, the pharmacist, the payer, and the public, often all at the same time, listening could not be more important to product success. We know it has never been more complex than it is today.  

Technology enchants us as consumers by serving electronically everything we want: where we want it, when, and how. This expectation of being emotionally satisfied is increasing, spreading beyond the value delivered to us digitally, to the value delivered to us physically. Financial services learned the importance of anticipating such "emotional requirements" early in the product lifecycle. The practice here is to add emotional requirements as a precursor to the business requirements, to satisfy the consumer's heightened insistence on engaging emotionally with a product.  

Achieving this is particularly critical to innovating in medicine, due to the uniquely personal implications of striving to maintain and improve health—the precondition for all good things in life. Following the models devised in financial services to make customers more comfortable with a similar personal connection—building a secure, lifetime income—Big Pharma can reboot its own innovation machine, based on organization designs where innovation is the deliberate driver, not a haphazard result. 

 is Group Vice-President, Cloud and Digital Innovation, at Cegedim Relationship Management. He can be reached at 

The lifeblood of the life sciences industry is continuous innovation-it is not a business that can survive by standing still.

Innovation Calls Across the C-suite: Lessons From Wall Street

From the Editor

Our lead feature this month on 15 new Emerging Pharma Leaders is a window into what makes our publication unique. In 2007, Pharm Exec began a systematic annual search to identify and highlight those men-and women-that in our purely editorial view had real prospects for a future key to the "c suite." Two of our early choices-Sanofi's Chris Viehbacher and Heather Bresch of Mylan-have made it to the very top, as CEO.

This sponsored supplement was produced by Focus Reports.  

For exclusive interviews and more info, please log onto 

Under the administration of President Juan Manuel Santos, Colombia is focusing on bolstering the commercial sector. Thanks to the ratification of free trade agreements with 14 countries around the world since 2011, including the United States, foreign direct investment reached a record high of COP 29 trillion (USD 16 billion) in 2012. While this is good news for the pharmaceutical industry, there is still a strong debate about how healthcare in Colombia can be improved. While Colombia enjoys near-universal coverage, a feat rarely seen in Latin America, the financial strain caused by this broad coverage has created the need for change. The industry is watching as the country enters a period of transformation.

CÃ³digo-Huella-Laberinto (Fingerprints) by Maria Ruiz, Courtesy of Janssen Colombia			

"The title of your report is 'Confidence in Uncertainty'," remarked Alejandro Gaviria, Minister of Health and Social Protection of Colombia, as he sipped a freshly brewed tinto coffee from his office in the historic Candelaria district of Bogotá. "Ultimately, it is my goal to foster more confidence in the system and among all stakeholders in the health industry. Therefore, I hope that your next report in Colombia will be called 'Confidence and Certainty.' Colombia is in an exciting state of change, and the country has great potential as one of the most promising emerging markets in the world today." 

Alejandro Gaviria, Minister of Health and Social Protection			

Colombia has experienced economic improvement in recent years. Since 2010, the country has shown an average of 5.1 percent growth in GDP, placing it well above the Latin American average. Colombia's trade balance increased from $24.6 billion in 2002 to $119.3 billion in 2012. The country's foreign currency rating was recently upgraded by credit agency Standard and Poor's from BBB- to BBB, increasing the country's attractiveness for foreign direct investment (FDI). The country's debt to GDP ratio has decreased from 40 percent in 2010 to 33 percent today. 

Rafael Romero PiÃ±eros, President Commission 7 â Chamber of Representatives			

The pharmaceutical industry is no exception. Business Monitor International has estimated an increase in pharmaceutical sales from COP 7.55 billion (USD 4.2 billion) in 2012 to COP 8.07 billion (USD 4.45 billion) in 2013, suggesting that there is growth in Colombia, but at a rather slow rate. This may be indicative of potential but it is unclear if Colombia will experience a surge anytime soon. 

Blanca Elvira Cajigas, Director General INVIMA			

President Santos appointed economist Alejandro Gaviria as the new Minister of Health and Social Protection in September 2012. Gaviria's priority has been to create health reform that would introduce the next episode of Colombia's payer system, following the introduction of Law 100 in 1993, which extended health coverage to nearly all of the country's population.  

Francisco de Paula Gomez, Executive President, AFIDRO			

This Law created a mixture of private and public health insurance providers, or Entidades Promotoras de Salud (EPS). While this system brought about near-universal health coverage, some argue that the EPS has evolved over the last twenty years into a business, rather than being a basic right guaranteed to all Colombians. Many accuse the EPS of corruption and mishandling finances. 

Mr. Rodrigo Arcila Gomez, Executive Director ANDI			

Gaviria attributed the system's financial stress to an increase in recobros, or requests for reimbursement of drugs and treatments not included in the Plan Obligatorio de Salud (POS), which lists all medications to which Colombians are entitled. Insurance providers have struggled to reimburse patients for these treatments, and lack of resources reached a breaking point in 2009 when the Colombian government declared a Social Emergency Crisis and passed a number of tax laws in 2010 to save the system. However, this did not build a long-term solution.  

Tecnoquimicas is permanently commited to applying the latest tecnologies and highest standards in its manufacturing processes. (Soft gel capsule production area).			

Colombia's health system operates under two schemes, contributory and subsidized. Forty percent of the Colombian population holds formal employment and receives health insurance through the contributory scheme that is paid for by both employees and employers, granting access to private hospitals.The remaining 60 percent of the population, who do not hold formal employment, are subsidized by the public health system, which is generally of lesser quality.  

Michael Himmel, General Manager Andean Region, Takeda			

One of the biggest changes Gaviria has proposed is the replacement of the EPS with a single-payer publicly funded "Fondo Unico." The contributory and subsidized systems were combined in 2012, and both would operate under the Fondo Unico. "With this new fund, we need to have the best control of resources possible, which will re-establish the legitimacy of the system. It can be seen as a 'fund of investment'," said Gaviria. Another change could replace the POS with "Mi Plan," which would remove many financially crippling items from the POS such as cosmetic and aesthetic treatments.  

Mario Sturion, General Manager North Latin America Cluster, Janssen			

"The Law 100/93 allowed some functions of the State to be delegated to the private sector," said Gaviria. "This ruling essentially created a virtual fund. Twenty years later, one can see that it is not sustainable anymore. We realized that the State has to take on some functions."  

Sales Development of the Colombian Pharmaceutical Industry			

According to Rafael Romero Piñeros, President of the Seventh Commission of the Chamber of Representatives, which addresses a number of social issues including health, a purely publicly funded program would allow resources to be directly reinvested into services such as primary care and disease prevention. The system had previously essentially existed as a triangle: "the patient was paying for a service and then charging it back to the State," commented Romero. "That intermediate step will cease to exist, and therefore corruption will disappear. The success of the reforms will depend on the strength of the government and the collaboration of many different actors."  

As part of the ongoing restructuring of Colombia's healthcare model, the National Institute of Food and Drug Surveillance (INVIMA), Colombia's food and drug regulatory body, has undergone major transformation. The Institute was certified in 2010 as one of five National Regulatory Authorities of Regional Reference by the public health institution Pan-American Health Organization in Latin America. "This positions INVIMA as a national regulatory authority within the international sanitary environment," noted Dr. Blanca Elvira Cajigas de Acosta, director general of INVIMA.  

INVIMA enforces standards set by the Ministry of Health. Biotechnology regulations, which have never existed in Colombia before, have been discussed for years but never fully implemented by the Ministry. Francisco de Paula Gomez, president of the Association of Research and Development of Pharmaceutical Laboratories (AFIDRO), says that this has been a long time coming. "We are talking about a sanitary regulation and the minimum set of regulations must be enforced according to the prerequisites of the World Health Organization (WHO)," he said. "I believe that in order to promulgate growth in this area, there needs to be a greater number of companies and medicines in the market, particularly innovative biotherapeutic medicines and high quality biosimilars, and not just some questionable medicines whose origins are in some process of biotechnology."  

Mauricio Botero, General Manager Sanofi			

Michael Himmel, general manager Andean Region of Japanese pharmaceutical company Takeda, noted that "the difference between Colombia and other Latin American markets basically lies in the comparative de-centralization of key customers over the country. Being successful in Colombia means being able to adapt to this structural and geographical reality. The fact that Colombian healthcare practitioners are professional and very well prepared makes this task manageable." The evidence of this de-centralization is seen in that pharmaceutical companies are found not only in Bogotá but throughout the country. Colombia's flagship pharmaceutical company, Tecnoquímicas, is based in Cali, as well as multinationals such as Johnson & Johnson, or Reckitt Benckiser. Procaps, another of Colombia's biggest pharmaceutical companies is headquartered in Baranquilla. Colombia's pharmaceutical market is also unusual in that a number of the top companies in the country are domestic. This may be an indicator of the growth potential for local companies looking to expand in the Colombian market.  

Gloria Stella Gonzalez Perez, President Advance Scientific			

Pharmaceuticals contribute roughly 2.5 percent of the Colombian economy and the majority of companies in the country have been steadily increasing profits. Rodrigo Arcila Gomez, executive director of the Pharmaceutical Chamber of the National Business Association (ANDI) notes that "the problem of insecurity has decreased, external debt is controlled well, and foreign investment is increasing. For the time being, the pharmaceutical sector is importing more than exporting. However, the cost of production is really low," which, according to Gomez, is a solid advantage for Colombia.  

Alberto Bravo Borda, Executive President ASINFAR			

The fact that all three credit agencies have upgraded Colombia's government debt to investment grade, according to the Central Intelligence Agency Factbook, is an indication of an improving economy. Mario Sturion, general manager North Latin America cluster of Janssen said that "Colombia enjoys free trade agreements with many countries around the world. As a result, Colombia will be more aligned with international standards and regulations moving forward. Colombia also has a history of strong people development with universities, international programs and research institutes that nurture a well-prepared labor force. Colombia is a key country of focus for Janssen in Latin America." According to Sturion, Colombia offers "a stable political and economic environment, centers of excellence that can properly conduct international clinical trials and respect for intellectual property rights and innovation." 

Emilio Sardi A., Executive Vice President Tecnoquimicas			

Colombia also has geographic advantages. "To be in Colombia is an advantage because it is an entry door for Central America," said Gloria Stella Gonzalez Perez, president of local pharmaceutical company Advance Scientific Group. "If I am in Asia, or in Europe, Colombia is very strategic in terms of logistics. Similarly, for investors, the fact that Colombia has harbors in two different oceans is an advantage for importing raw materials or technology. Moreover, Bogotá has many advantages: its infrastructure, talented people, and good training programs for the pharmaceutical industry."  

Colombia’s GDP has historically fluctuated between 4% and 7%, similar to household consumption expenditure			

While numbers indicate slow growth, the pharmaceutical industry of Colombia has much room for potential given the country's economic improvement.  Colombia's GDP has grown at a faster rate than Latin America's over the last 25 years. A quick walk throughout any of Colombia's major cities demonstrates a real sense of development that might not have existed as little as 20 years ago. However, even with the qualities for which stakeholders have accounted, there are still more mountains to climb to ensure Colombia's strong position in the global pharmaceutical market.  

Ensuring quality in all its processes and products is a priority in Tecnoquimicas. (Quality control laboratory in one of the manufacturing plants located in Cali, Colombia)			

Clinical trials have become increasingly important for pharmaceutical companies in Colombia. For Rolf Hoenger, CEO of Productos Roche S.A., innovation is key. "Innovation guarantees that you are competitive in the market," Hoenger stated. "As long as you produce and bring new molecules to the market, you can be very successful. This is especially true in Roche's case where there are clearly differentiated products. Innovation always pays off because you always bring something to the market that is asked for."  

Country Report

Under the administration of President Juan Manuel Santos, Colombia is focusing on bolstering the commercial sector. Thanks to the ratification of free trade agreements with 14 countries around the world since 2011, including the United States, foreign direct investment reached a record high of COP 29 trillion (USD 16 billion) in 2012. While this is good news for the pharmaceutical industry, there is still a strong debate about how healthcare in Colombia can be improved.

Pharmaceutical Executive-07-01-2013

Talent, Terror, and the Turnaround

What is a Journal Reprint Worth?

Seeking Supply Chain Security

Dangerous Liaisons: Terrorism and Pharma

Pharm Exec's 2013 Emerging Pharma Leaders

Innovation Calls Across the C-suite: Lessons From Wall Street

Talent, Terror, and the Turnaround

Country Report: Colombia