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Vice President, Business and Financial Planning, Merck & Co.
Mike Klobuchar, Vice President, Business and Financial Planning, Merck & Co.
For Mike Klobuchar, seemingly at the launch point of a career rise in chemical engineering, a funny thing happened on the way to Princeton University to seek his PhD. He received a job offer from big pharma giant Merck & Co. Confronted with the attractive but difficult choice, he decided to break from the linear educational path common in his field of study-and rather than commit to another five years of schooling, put his skills to the fire.
That was 1998. Almost 20 years later, Klobuchar and the company he joined out of college and has stayed with since-racing on a function-spanning journey from R&D and manufacturing to chief of staff for Merck CEO Ken Frazier and now steering finance transformation and cross-divisional strategy-are happy he went off script.
“I wanted to test myself. I thought I was pretty good, but didn’t know how good,” says Klobuchar, a Purdue University grad at the time, with a B.S. in chemical engineering.
Landing at one of the top pharmaceutical and R&D organizations in the world, he says, was the ideal setting to see how his abilities stacked up. Joining Merck as a traditional process development engineer, Klobuchar spent his first few years with the company staying close to his technical roots. His work included designing more robust synthetic routes for APIs and conducting analytical techniques such as high performance liquid chromatography and mass spectrometry. He also managed the batch production and process development of Merck preclinical drug candidates in several multiscale pilot plants.
Along the way, Klobuchar spent a year in Puerto Rico, helping lead a plant launch and scale-up, and in 2002, he collected a master’s in chemical engineering from Rutgers. It was during this phase of his career, Klobuchar says, that he began to develop an interest in business and finance, sparked by the frustrating interplay that exists between R&D uncertainty and financial performance.
“It was a time where we experienced a lot of programs that never made it to market,” says Klobuchar. “What got me intellectually curious was knowing that if you didn’t yield revenue on all the technical resources that were being plowed in-from R&D through manufacturing-it just wasn’t a sustainable model. You start to think, well, maybe I could have contributed in more important ways if I was able to help frame the ways in which programs are selected, how the portfolio is managed, how resources are deployed.”
Shedding his lab coat, Klobuchar, now working as a manager in Merck’s research business operations-covering basic vaccines, biologics, and M&A integration-earned an MBA in general management from Villanova in 2006. From there, the Michigan native would take on increasingly broader strategic planning roles for the drugmaker in such areas as preclinical development and basic research. His accomplishments included installing the organizational design for Merck BioVentures, the company’s one-time independent biosimilars unit. As executive director of global discovery and preclinical finance, Klobuchar co-led the design and operation of the first Merck Research Corporate Venture Fund, which directed $250 million in equity investments to establish closer biotech relationships.
“I was able to talk to pure business folks but also talk to the scientists,” Klobuchar notes in describing his research finance approach. “Having cut my teeth in the labs, I was able to serve as a translator across the company. … What I found is that if you bring relevance to people’s work and you tie what they’re working on to something that’s critically important, it goes to the basic human instinct that we all get up for, which is to feel valued and feel we’re doing something that’s meaningful.”
Klobuchar’s next promotion would put such enterprise-wide thinking on its biggest stage yet for the New Jersey resident and father of twin 8-year-old boys. In 2012, Klobuchar, at age 37, was named associate vice president and chief of staff to the chairman, CEO, and president. He remembers his interview with Frazier, a former lawyer who joined Merck in 1992 and took over as chairman and CEO in 2011, as lasting “exactly eighteen minutes”-and in a good way. Klobuchar clicked quickly with the CEO, articulating and drawing from his multi-division background where he saw opportunities for the company to achieve success. That was enough for Frazier, who called him later to offer him the job.
“It was the moment of selection where he believed in me more than maybe I believed in myself,” says Klobuchar. “And that is so powerful. That feeling is something I seek to create in others.”
Now guiding executive-level support, Klobuchar led a number of administrative and strategic business initiatives. One notable example during his tenure was Merck’s initiation of a $2.5 billion restructuring effort in 2013, which included the creation of a new Center for Observational and Real-World Evidence. During this time, Merck also established a new oncology unit focused on immunotherapy treatment. Through the restructuring, Klobuchar was able to drive improvements in how Merck operated-not strictly in capital allocation and achieving cost targets, but, beyond the numbers, in creating a more competitive, efficient, and agile organization.
“That role allowed me to get inside the head of the CEO and understand what he sees and what is disconnected underneath in this company,” says Klobuchar.
The Merck executive continues to cultivate that “outside-in” mentality in his current role, leading short- and long-term business and financial planning for the company. Managing a staff of over 50, Klobuchar directs cross-functional activities designed to optimize Merck as a whole-financially and operationally. Benefiting that mission, he says, is his team’s unique position as an “unconflicted,” neutral third party, enabling it to bridge the disparate strategies and agendas inside the company to reveal a complete P&L profile for Merck. And then, working back, build improvements into the profile through cross-divisional-oriented approaches.
Klobuchar reports to Merck Chief Financial Officer Robert Davis. He says he’s grateful for mentors such as Davis, Frazier, and Merck head of R&D, Dr. Roger Perlmutter, for “pushing me and allowing me to be more comfortable with discomfort; the belief that real development and comfort never coexist. That nudge from them to say, ‘yes, you could fail, but this is really something that you had to do.’”
Merck, itself, has not shied away from demonstrating that philosophy in recent years. Analysts, in 2016, have been encouraged by Merck’s efforts to expand its pipeline. The company has also decided to invest more in exploratory and biomedical research. Keytruda, Merck’s breakthrough immuno-oncology therapy, won approval in the past two years for metastatic melanoma and non-small cell lung cancer, and, for the latter, showed strong results in a recent clinical trial as a potential first-line treatment. Commercially, Merck is projecting revenue of $39.1 billion to $40.1 billion in 2016 behind products such as Januvia, Janumet, Gardasil vaccine, and Keytruda. Given today’s challenging drug development and pricing climates, Klobuchar knows his team will play a critical role in the 125-year-old company’s future trajectory.
“I was really passionate when I started about solving technical challenges,” says Klobuchar, a motorcycle enthusiast and avid reader in his spare time. “But now I equally want to solve really complicated things that will create long-term value for Merck.”
- Michael Christel