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Richard Bergström — Europe's Medicine Man

Pharmaceutical ExecutivePharmaceutical Executive-10-01-2012
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The new head of EFPIA faces a Promethean challenge: selling the merits of costly science and innovation in an era of bristling competition, fiscal crisis, and declining demographics.

He is an incongruity in the staid corridors of Brussels pharma policy. Bronzed, athletic, and—whenever possible—without a necktie, he's personable, articulate, almost hyperactive—and always ready to offer a sharp-edged view.

Richard Bergström, the new man at the head of Europe's lead pharmaceutical industry association, is going to need all of these characteristics—and a lot more besides—if he is to succeed in coaxing a fragmented and deeply conservative sector to face up to the multiple challenges of the 21st century.

His job as director-general of the European Federation of Pharmaceutical Industries and Associations (EFPIA) isn't made any easier by the speed at which the world is changing around the pharma sector. He took over in early 2011, at a time of unprecedented financial turbulence for the industry, and for Europe. And things have only got worse since then.

Crisis-induced austerity programs in many European countries are biting cruelly into everyday pharmaceutical industry operations, often intensifying existing competitive tensions within the sector. An internal EFPIA document estimates that price cuts introduced in 2010 have lopped more than €5.5 billion off company sales in the region.

The longer-term threat of a collapse of Europe's social security schemes looms ever closer, in a perfect storm where an aging population drives massive demand for increasingly expensive healthcare against a background of rising unemployment and diminishing tax revenues.

Prising open the still-unexplored potential of new and more highly targeted medicine depends on overcoming the instinctive caution of regulatory authorities, while assuring investors chastened by the high costs and rates of attrition in top-end research that their money is well spent. There is also uncertainty about long-term commercial strategies. The big companies are frankly nervous about abandoning an established business model focused on blockbuster drugs for mass markets. Yet hopes of winning support for coherent industrial policies designed around more efficient deployment of technology in healthcare are repeatedly dampened by resistance from cash-strapped finance ministers with a short-term vision.

While this is difficult enough to address at the national level, it is all the harder to deal with in the complex environment of the 27-country European Union (EU), with constant uncertainty over just which politicians and bureaucrats are driving policy, and in what direction. An added headache is the shifting dynamics of a world business environment that is tilting rapidly towards emerging economies, in which Europe's long-standing prominence in the pharma sector appears increasingly fragile.

With shadows over the future of the EU currency now darkening the political sphere and prompting fears of a collapse to outright depression, putting the very integrity of the EU under unprecedented strain, the question arises: Is Bergström that fresh face who has been handed a poisoned chalice?

Sweden shows the way

On paper, this new industry spokesman is well-qualified. He comes to the job with an unusually broad-ranging background that embraces science, experience as a government regulator, and inside knowledge of companies and international pharmaceutical policy issues. From 2001 to last year, he was director-general of LIF, the Swedish Association of the Pharmaceutical Industry. Prior to that he spent a decade working for leading firms in Switzerland: with Novartis, and subsequently as director for EU regulatory strategy at Roche. His regulatory experience includes a spell as assistant head of registration at the Swedish Medical Products Agency. And his government appointments have included vice-chairmanship of the board of the prestigious Karolinska Institute in Stockholm.

In addition, Bergström has acquired a broad perspective on the industry through long-standing membership on the board of EFPIA as well as the Council of the International Federation of Pharmaceutical Manufacturers Associations (IFPMA). He has had a front row seat in international discussions on some of the industry's hottest issues, ranging from medicines marketing codes to positioning on health technology assessment. According to Andrew Witty, CEO of GlaxoSmithKline and president of EFPIA, who helped advance his appointment, Bergström's "experience and approach are exactly what we need at this time."

Bergström himself puts his selection down to the fact that "I knew the industry in depth." He says it was clear that the CEOs involved had decided against looking for "a Brussels politician who knows his way around Brussels and has a fat contact book." His interview for the job was very concrete and practical, he recounts. "They asked me about details of the industry."

New man for a new mission

The prominent role of the CEOs in his appointment process highlights the increased influence of company bosses in the affairs of EFPIA. Not by chance did Witty greet the decision with an expression of confidence that Bergström "will lead the continued transformation of EFPIA." EFPIA is indeed in a process of transformation.

Richard Bergström’s Career at a Glance

In formal terms, this transition began before Bergström's arrival in the director-general's chair. EFPIA had been a classic federation of national industry associations since its inception 30 years ago as the European Federation of Pharmaceutical Industry Associations. But five years ago, following some serious strong-arming by Big Pharma, the constitution of the federation was changed, creating a curious hybrid in which individual companies joined the national associations and were formally accepted as members—creating the European Federation of Pharmaceutical Industries and Associations.

CEOs in the driver's seat

That minor change in wording concealed a major change in the structures of European pharma industry representation. Simply put, Big Pharma imposed itself on the organization through a newly-created board composed of CEOs. The associations that had hitherto decided policy were relegated to a secondary role, with seats on a tactically focused executive committee. The essence is that the board—that is to say the big firms—became the strategic decision-maker and the guarantor that EFPIA policy stays in line with what is coyly referred to as the "global context"—a phrase which translates as avoiding too much incoherence with the other key pharma organizations around the world. The modified architecture sprang from the frustration of many CEOs—who through their companies were ultimately footing most of the bill for the entire network of associations as well as the European Federation itself—at what they regarded as a lack of effective, coordinated intervention to improve the operating climate for companies across Europe.

But new structures were not enough to effect the transformation. This is where Bergström comes in. "Our industry's CEOs have tasked me and EFPIA to plan for the long-term," he says, describing it as "a painful exercise of aligning the industry's research and development pipeline with what society considers it actually needs, and is able and willing to pay for."

Mandate beyond Brussels

"EFPIA is not what it was two years ago," Bergström says flatly. "But," he adds modestly, "not because I've changed it. This is the consequence of changed expectations in society. CEOs knew EFPIA would have to adapt in a changing world."

The new director-general is scrupulous to avoid comparisons with his two predecessors in the post. He is too young to remember the early days of EFPIA, when its first director-general, Nelly Baudrihaye, prided herself on stitching up deals virtually without reference to the member associations over cozy lunches in the best local restaurants with the tiny handful of EU officials who were dealing with pharmaceuticals. Even under Brian Ager, who took over in 1995, much of the focus was on developing an effective advocacy machine in Brussels. Ager turned a small lobby group into a multidisciplinary team, created separate sub-associations for vaccines and for small biotechnology firms, and moved the headquarters from the elegant Brussels suburbs into the heart of the European district, to allow closer contacts with EU officials, diplomats, and politicians.

Members of the EFPIA Board

"It's not only Brussels anymore", says Bergström. "The job has been redefined. CEOs decided they need an organization that is to deal not just with Brussels, but with member states too, to tackle the European region as a whole." He describes the adaptation as a complement to the approach many firms take to Europe, with senior managers responsible for the region. And the result is that the new boss of EFPIA spends nearly as much time tackling problems on the ground in the member countries as he does in his office in Brussels.

Since he started the job last year, he has been in an almost ceaseless round of shuttle diplomacy in the countries where the fiscal crisis has hit hardest and pharmaceutical companies have suffered most. It has often fallen to him to negotiate with national governments on ways to limit the damage, amid a tangle of—frequently divergent—pressures from CEOs, local area managers, national industry associations, and the EU authorities. Bergström's balancing act is no easy task. Local general managers and national industry associations each have their own agendas and objectives, and do not automatically welcome intrusions from the man from Brussels. Implicitly, Bergström recognizes the tensions. "Among the member associations I have no mandate, and the member associations certainly do not report to me."

What is beginning to make a difference, he says, is that the company CEOs are now more willing to stand behind EFPIA as the leading spokesman for the industry throughout the European region. "There is now an expectation that member associations will conform to policy designed to apply for the entire region of Europe—that is new," he says. "CEOs are very smart, and they have recognized how to use EFPIA to get people to move and change their views." High on the list of this mandate for region-wide advocacy is weaning national health authorities off the practice of therapeutic and cross-national reference pricing, and winning support at the European level for the concept of differential pricing.

In dealing with the immediate healthcare funding problems, the industry line is that it is ready to take some pain in working with cash strapped governments to bridge the gap. But taking the pain is not the same as taking the mickey. The negotiating message is a tough one. CEOs are not prepared to bail out bankrupt healthcare systems or to countenance persistent tolerance for unauthorized copy products from local manufacturers that deprive patients of access to true innovative medicines. Nor is the industry willing to accept emergency price reduction measures—such as in Greece—exported to the rest of Europe via international reference pricing.

One of Bergström's refrains is that Europe must not slip into the race to the bottom by seeking to acquire new medicines at the lowest possible cost. That will destroy incentives for innovation and damage research. So the talk of industry's responsibilities to Europe's patients is matched with thinly-veiled warnings that companies might be forced to disinvest systematically from markets with hostile environments.

Already, EFPIA has documented plenty of evidence of the pain in purely financial terms. In Greece, Ireland, Italy, Portugal, and Spain alone, the pharmaceutical industry claims it contributed more than €7 billion for 2010 and 2011 in price-cuts and discounts. Hospitals and regional governments in just four of those countries already owed EFPIA companies more than €15 billion in the spring of 2012—nearly half of it in Spain, and payment delays are getting longer and longer.

The figures are not just aggregates from EFPIA: In a deliberate coordinated way, companies are throwing their own data into the mix too. For example, AstraZeneca announced that austerity measures in Europe took $1 billion off its bottom line in 2011. And companies are quietly taking their products off markets where prices are forced down below what they regard as economically feasible levels.

Ties that bind

This broader vision of Europe as a homogenous region is matched by a new strategy for the industry at the global level. The same CEOs that appointed Bergström are attempting to revitalize the IFPMA, based in Geneva. Relations with the biggest player of all—Washington-based Pharmaceutical Research and Manufacturers of America (PhRMA)—whose annual budget far exceeds EFPIA's much more modest resources—have also evolved.

The long history of a "delicate," turf conscious relationship between the two organizations in Europe was one of the factors that drove the restructuring at EFPIA. The story has it that PhRMA was pressured to close its office in Brussels (and its parallel lobbying activities in EU circles) in exchange for seats for US-based company CEOs on the new board of the reconfigured EFPIA. Bergström, who was involved in those discussions in his capacity as head of Sweden's LIF, offers a more nuanced version. PhRMA "no longer has an office in Brussels, but links are still close," he says, emphasizing that increased communication with Washington has led to better consensus. The mechanism for consultation has also been more specifically defined. "There is an understanding that while the chair of EFPIA's executive committee is from a European-based company, the vice-chair will by tradition be a PhRMA appointee," he says.

Bergström suggests that the shift was dictated by the need for a greater degree of strategic consensus as the stakes became higher in the European policy debate. "Today, we have to challenge countries like France and Germany at the highest political level and talk to the International Monetary Fund or the EU Commission on Portugal or on Greece. For that, it is imperative we go forward with a single consistent message." The consequence, whatever the reasoning behind it, is that of the 26 companies on the EFPIA board at present, 17 are European and nine are US-owned.

A US putsch?

Despite the improved structure, there remains some smoldering resentment in parts of the European industry over what many saw as a putsch by US firms—in which the recent reorganization amounted to a reverse takeover, creating a sort of European PhRMA. And smaller firms, and smaller associations, can be heard to mutter about marginalization of their role in the new EFPIA.

Parallel US policy activity in Europe has not ceased entirely. Some local groups of US companies continue to operate in parts of Europe, such as the United Kingdom. "These groups are very helpful, particularly in central and eastern Europe, where national associations are still in a building phase," says Bergström. "The US flag is a good one to wave in some countries, so it's often good to get help from US diplomatic missions." Meanwhile, most of the effort that PhRMA used to put into lobbying in Brussels has been switched to emerging markets, he says, with a focus on assessing how the industry can make sure it has a sustained presence in the right debates in China and Russia.

The new man is also having to bed in the new configurations of the expanded EFPIA. In addition to the constitutional changes, membership has grown in parallel to the recent enlargements of the EU into the former Soviet bloc. Even further, in fact, since the Russian and Ukrainian pharma associations have also been admitted to EFPIA—a step that the EU itself is a long way from making. Inevitably, it is taking some time for the culture in many of these countries to adapt to new norms, and it falls to Bergström to push things along there.

"It all fits together, and the way that CEOs have arranged things with the leading associations is that we work together in the policy space," he says. He points out that EFPIA has obtained from the board a slightly increased budget for next year for the sole purpose of supporting good policy development in the emerging markets. "If China wants an HTA system we should help them to see what's happening here in Europe. And in regulatory terms, Russia's insistence on its own clinical trials rules, Turkey's desire to impose its own GMP, or China's particular take on biologics all pose challenges. There's a real mission for us in Europe in helping these countries to develop suitable models. The point is we are no longer a national or regional industry. This is a global industry, so 10 years from now Chinese companies could be EFPIA members—and we would welcome them if they subscribe to the same philosophy on adding value to society with ethical science and innovation."

The message is economics

The new man in the post also has more in store than just fronting for the cause. Top of the list of new priorities is finding better ways to expand understanding of what the industry does and how it contributes to economic growth— to answer the simple question of why it is worth it to governments and the public to have a strong biopharmaceutical industry in Europe. As Bergström puts it: "There is a desire at senior levels within the industry to have better data that proves our value—to foster and shape discussions that go wider than just the immediate budget problems of a Greece or Portugal."

EFPIA is nowadays invited to forward-looking meetings at senior levels in European politics, including the European Central Bank and with finance ministers. This new financial dimension of its engagement is a result of the constant concern of governments over how to carry out long-term reform of healthcare and pensions. "They want our views," says Bergström. "Not at the level of the suitability of individual products, or even in HTA discussions of how to quantify the comparative advantages of one product over another. Rather, the decision makers want input on how to deal with the really big systemic challenges. So we need to have a better picture ourselves of how well healthcare systems are working, and how they need to adapt and evolve."

Bergström recognizes this is new territory for the industry. "Previously it was in many respects relatively easy for industry, because we could just focus on seeking better prices for drugs, and didn't get involved in management of healthcare overall. But this approach is no longer feasible. Every European or national discussion of economics covers health, and we thus have to take that on board ourselves, because this is shaping the context in which we have to operate as a business."

EFPIA also needs to be able to answer strategic questions from Europe's economy ministers about how it can deliver value as an exporting industry and as a high-tech generator of employment. "For this we are scrambling. We don't have good estimates of the value the industry brings to the economy and society as a whole, including the contribution made by generics, for instance, or the jobs and spinoffs brought by the smaller businesses that the industry supports."

Science shows the way

Bergström has not been given the job just to act as the CEO's designated pit bull in tough economic battles. He brings to the job an independent, almost missionary zeal about the promise of new scientific discoveries. "Industry needs to be very vocal on what this new science can deliver. If we do not change the terms of the debate, the vaulting promise of molecular biology will not result in new products that reach patients. Then we will all have failed in our mission to society," he says.

Characteristically, within months of taking office, he booked one of the most prestigious conference centers in Brussels and delivered a public lecture entitled "Is society ready for the new science?" Speaking without notes (and without necktie), he held court with an audience of senior officials, industry leaders, academics, and the media for over an hour, with a presentation novel in substance and style that tried to move the debate about pharmaceuticals into a strategic discussion of the future. While he is fully aware that scientific progress is difficult to predict, with many unanswered questions posed by personalized medicine and advanced therapies, he depicts the regulatory and financial obstacles as challenges—ones that the industry and governments have a moral duty to overcome. And he is insistent on finding new incentives for innovation.

An unflagging supporter of collaborative research and development efforts, he is on the board of the $2 billion Innovative Medicines Initiative (IMI), Europe's largest public-private initiative, which is partly funded by EFPIA, and which aims to speed up medicines development through joint research projects and networks of industrial and academic experts. One of his favorite IMI projects was launched in early 2012 with the aim of developing new antibiotics. In this, Bergström foresees an unprecedented open sharing of knowledge. "We are on the cusp of a new public private partnership, where we will collaborate in a way you have never seen before," he says, suggesting companies will pool the results from co-funding clinical trials. He has also been spearheading discussions with European authorities about how better market and pricing conditions might be set for new antibiotics. The IMI project offers, he claims, a test-bed both for scientific collaboration and for new models to finance innovation. Further ahead, he is lobbying for a new and bigger version of IMI in the EU's next research and innovation program for 2014-2020, known as Horizon 2020.

Talk to me

Bergström's enthusiasm for collaborative research is matched by his attachment to dialogue and trust with the external community. From the day he got the EFPIA job, he presented himself as someone who has "learned to listen to governments and other stakeholders to make sure that my industry meets the expectations of society."

His interest in good governance goes back a long way. When he was running LIF, he had no hesitation in describing an alleged bribery case in Sweden involving Merck-Serono as "totally unacceptable," and publicly distancing the association from the actions of the company. He used to serve on the board of IMM, the Swedish Institute against Corruption, and since 2006 he has been an advisor to the World Health Organization on good governance in medicine.

A key priority for him is to oversee work within EFPIA on trust development, in a bid to overcome persistent allegations of dubious marketing practices and undue industry influence on regulatory decisions. "We have to develop better trust, so EFPIA now has a trust agenda," he says emphatically. "We've established a baseline for perception monitoring—so that we're not down there with the tobacco industry."

The internal barriers to meeting this challenge are no easier in Europe than in the United States, and high-profile lapses on the promotion and corrupt pricing side continue to be documented eagerly by health campaigners as evidence that no one in the medicines game can be trusted. Just as he took office, major scandals broke involving safety and promotional lapses around an anti-diabetic product marketed by an EFPIA member company, Servier of France. "Mediator was a big setback for France," he accepts, and there is still work to do to respond when companies get out of line, or where past behavior is now resulting in public sanction and fines. But, he underlines, these scandals merely pave the way for remedial and preventive action that reformers like him can initiate, designed to clean house.

Bergström chairs a new EFPIA committee which develops the public policy line to be taken on trust, reputation, and compliance, and he has been leading a drive to build a sector-wide platform on corporate social responsibility, through the conclusion of an agreement with patient associations, doctors, and pharmacists on ethical conduct that he hopes will win EFPIA a greater degree of public and political goodwill. He recognizes that there is more than simple public relations at stake: "It is critically important that decision-makers listen to the industry and take advice on matters affecting innovation and access to medicines. This will only happen if there is trust," he wrote in this year's EFPIA annual report. Actions he has driven through since he took up his new post include an initiative to limit the provision of free medical samples, as well as implementation of new amendments to put more teeth behind EFPIA codes of conduct on promotion of medicines and on sponsorship of scientific conferences.

Bergström is also a vigorous advocate for greater transparency and accountability, and has pushed hard to open up clinical trials information, to assess public attitudes to the industry, and to actively seek out critics and opponents in discussions on sensitive subjects such as access to medicines in poorer countries or wider use of generics. "We used to avoid groups who don't like us, but now I go out and talk to them," he says.

His constant refrain is that "we need to sit around the table with others and figure out a sustainable way forward." One of his most evident frustrations is with the lack of dialogue and communication within the pharma industry itself. "Getting people inside the sector to talk to one another is not easy. Getting common understanding or consensus is even harder. Coordination within companies doesn't happen automatically. You get some agreement in one room, and expect it to permeate—but it doesn't. Research people don't talk to colleagues in marketing, government affairs don't talk to regulatory departments...or the French subsidiary doesn't know what's going on in the Germany subsidiary. I still come across pockets of people in this industry who will go on a rant against generics on the basis of quality—and I say 'Where have you been?' There's no longer any argument in Europe about the quality of generics!"

Start from the top, aim for the bottom

In his view, the industry CEOs are ready to take on these challenges. "It is at the lower levels that there is resistance. Better communications and coordination within the industry is vital. And here there is an obvious role for the associations, in helping local CEOs in their own mission to represent their companies and the industry in setting an example." Even within EFPIA, better communication is needed, he admits. "We need to update ourselves all the time," he insists, listing initiatives he has pioneered such as featuring CEOs in short video messages to allow people working in the industry to hear their leaders spelling out the new realities, and ramping up EFPIA's digital presence with YouTube clips "to get more of a buzz."

The desire to change extends to his own management style, which has been challenged at times for the constant travel and abruptness around decisions that can be seen as quick on the fly. Looking around his headquarters in Brussels, he adds: "I'd like to knock down the walls in this office and make it open plan, to replace the silo mentality with a better spirit of collaboration. I'm not happy yet, and I'm still working on internal communications and flow."

That said, Bergström has had some success in alliance building over the last year. He skillfully exploited new legislation requiring an upgrade of anti-counterfeit measures on medicines to create a broad coalition across the sector, engaging his member companies and associations with pharmacists, wholesalers, and—most remarkably—parallel traders in the design of a product verification system that can also serve the community's long-term interests in sophisticated acquisition and processing of product delivery and usage data. However, despite building new bridges to the generic sector on many matters, ranging from pricing to ethics, he has still not been able to persuade the European generic industry association to join the anti-counterfeit campaign, but he remains optimistic that he can do so.

His job would be easier—and the industry's destiny clearer—if there was more coherence among the authorities he has to deal with in the complex patchwork of the European Union. One of the many contortions in the EU policy context is that responsibility for pharmaceuticals is split across different departments—notably health, industry, and research—within the European Commission, the EU's central civil service.

Reluctantly, in light of his past enthusiasm for all those Commission industry reform panels, Bergström acknowledges this is a brake on policy progress. "The unfortunate consequence of having economics and health in different places is that it legitimizes silo thinking on health policy and industry policy for Europe," he says. "The people responsible for health can't talk about industry, and the ones responsible for industry can't talk about drug pricing."

Pending challenges

Next year Bergström must tackle the sensitive challenge of finding a new president for EFPIA. The term of office of Andrew Witty has been extended until 2013, and he will be a hard act to follow. Bergström observes that it is not uniquely his job to choose the next president, and that he is "in conversation" with several CEOs on the subject. Being president is, he recognizes, a demanding role, and he does not expect to be flooded with candidates. "The job of a president demands a degree of faith in the idea of Europe and the corporate culture from company to company dictates how far individuals are prepared to engage in European questions."

To prepare for the changeover, he is rejigging the 30-strong team he inherited in the EFPIA office, with some abrupt changes and reallocation of responsibilities that will likely require additional fine-tuning. He has established the equivalent of an inside kitchen cabinet, in which Thomas Cueni, the accomplished power broker with CEOs and long-standing head of the Swiss industry association, carries the title of 'special adviser to the EFPIA director-general.' Among staff, there is respect for his energy and ambition—many find it hard to keep up with him; it is even harder to get face time because of the incessant travel. Member company committee members find his direct, "why not?" approach refreshing, even if it occasionally provokes criticisms that he is too out in front of the process. It is accepted that his readiness to engage has created a positive impression among many of the groups that EFPIA deals with in the healthcare sector and beyond—the challenge is that, for them, access must have its deliverables.

In fact, although most of Bergström's areas of concern are familiar to those who know the industry, his approach can take a distinctly unconventional path. For instance, his determination to see resources for innovation maximized leads him to take a very distinctive position on IP protection. Patents have a role in stimulating development—but "we also face the fact that when they expire we are not going to make any more money." So, once products are off-patent "we should try to maximize the benefits of low prices of generics as quickly as possible and with as many products as possible." He adds, contentiously, "on that point, we don't say enough from my industry." Indeed, his focus on finding money for innovation by making bigger savings on off-patent medicines does not go down well with all the companies that EFPIA represents, many of whom operate in a business environment that still seeks a premium from branded off-patent drugs. It is just one example of the areas where his outspoken, "tell-it-like-it-is" approach can ruffle feathers rather than smooth them.

Bergström responds squarely: "I'm not a bullshit merchant. I know my facts and I speak directly to my audience rather than reading from a sheet of pre-fabricated principles." His impatience with outdated formulaic approaches to pharma policy is easily perceptible.

Put pricing first!

His priorities for next year include driving the science agenda, and winning greater support for innovation through flexible regulation (particularly a more transitional, evolutive approach to product authorizations) and better reimbursement based on good evidence and more sophisticated HTA. At the same time, he will keep delivering on his trust agenda and disclosure. And in hard business terms he wants to see a growth agenda for Europe based on developing conducive trade and industrial policies (and not, he insists, by convening more of the roundtables so beloved of EU officials). Above all, he wants "straight talk about the real issues on pricing"—which for him means recognition of the need for differential prices to protect the EU market as a whole from the impact of Greece and other countries with knockdown prices.

That's an ambitious agenda. Small wonder that he admits that he no longer has time for hobbies—although he runs as often as time permits. "I worship the sun, and fortunately so do my wife and my three daughters, so we try to get some every season." It will be a still bigger challenge for him to engineer the European operating context so that drug firms there get the chance of a bit more sunshine too.

Peter O'Donnell is a freelance journalist who specializes in European health affairs and is based in Brussels, Belgium.

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