When Roche CEO Bill Anderson took the stage at the JP Morgan Healthcare Conference in San Francisco yesterday, he looked more like a Silicon Valley entrepreneur than the head of a 124-year-old Swiss drugmaker.
Clad in a t-shirt and what looked like jeans, Anderson’s sartorial taste lent him a casual air of authenticity. When speaking of “rejuvenating” the company, he didn’t sound like the typical corporate type.
“Cultural transformation is an overused word,” said Anderson, who’s 53. “Put it to the test. If someone says, ‘We’re doing a transformation next quarter,’ that’s not a transformation.”
Culture change has been a common refrain among a number of pharma chiefs over the first two days of the conference. Like Anderson, its main proponents are a relatively new crop of CEOs. Each has leveraged JPM to pitch the importance of having shared attitudes and values to investors.
This emphasis on culture parallels a renaissance in the caliber of pipelines and a sincerity about patient-centricity, observed Alexandra von Plato, CEO of Publicis Health. “There are a lot of new, energetic [pharma] CEOs coming at this from different disciplines.”
Indeed, Anderson moved up the ranks within Roche over a decade. He spent two years as CEO of Roche’s Genentech unit. This month marks his one-year point in the job. Others in this new class have been hired from outside the industry to inject a fresh perspective.
Emma Walmsley, 50, was appointed CEO of GlaxoSmithKline in March 2017. “At the time, for our company, having an insider/outsider to lead an aggressive change agenda was incredibly important,” said Walmsley during a Tuesday panel at JPM. “Although my diversity as an appointment is not my gender, in this case it was the background.”
Before arriving at GSK, Walmsley logged 17 years at consumer goods company L’Oreal, most recently heading one of its cosmetics business units in China. Once she made the switch to pharma, she decided that change in GSK’s culture must underlie all of her long-term priorities, she recalled.
Third-year Novartis CEO Vas Narasimhan, 44, called culture one of the most important elements of his firm’s transformation. “Investing in the culture for the long run will generate outsized returns,” said Narasimhan, who trained as an M.D. and headed up the company’s drug development efforts from 2016 to 2018. “The research clearly shows culture drives performance. Culture drives innovation.”
Novartis, he said, provides upward feedback for all 15,000 people managers, pulses associates quarterly on how they are perceiving the company and is using machine learning and analytics as part of a Microsoft collaboration to assess collaboration and the link between culture and performance.
Among the broad set of actions it’s taking to change the culture also include 14-week parental leave for all associates, access to free online learning programs, and what’s called an “unbossed” approach, which involves investing in and upgrading a company’s leadership capability.
The aspects that modern-day leaders are embracing were not staples among pharma companies even five years ago. At one time, Johnson & Johnson and Merck were the most-admired companies because they were research-driven and family friendly. Today, leaders are forging a new cultural identity centered on things like agility and speed of decision-making.
Paul Hudson, 51, was installed as CEO of Sanofi last September, following three years as one of Narasimhan’s top lieutenants at Novartis. Since then, Hudson has moved quickly to implement change at the Paris-based drug maker.
Among his actions thus far: simplifying the structure and walking back some deals or co-promotion responsibilities in the U.S. that, he said, increased the potential for “additional bureaucratic burden.”
He also sought to correct what he saw as a misperception. “An accusation leveled at us over the last years is we’ve been a little too into the late stage, a little too risk-averse, and perhaps we’ve changed the profile of the company to be a little bit conservative,” Hudson said Tuesday. “I can tell you based on the people I’m working alongside now, that’s not the case.”
It’s not that outgoing biopharma leaders lacked an appreciation for culture. But the new leaders, von Plato added, are seizing a “generational moment.” They also have a chance to start turning around pharma’s reputational issues and appeal to a new generation of talent.
Von Plato sees similarities with Big Tech. “We were competing with top tech for talent,” she said. “Now, the bloom is off the rose. [People are realizing that] they’re not the bastions of social good and honesty which some had thought they were.
“Even though pharma has reputational issues that we’re all aware of,” she said, “new leaders can make the connection between healthcare and a purpose-driven industry to this new generation of talent.”
In some cases, the CEOs’ culture rhetoric is backed up by real results. For instance, Anderson said Roche has transferred 80% of spending decisions to its product-development teams, as part of a larger pivot away from hierarchical processes. It’s also eliminated budgets around the world but increased accountability. The result: the drugmaker saw 50% more late-stage NMEs in 2019 vs. 2016 from just 4% more people.
“Transformation implies a deep searching for answers, doing things differently, questioning the status quo, and the same old boring, mediocre processes that large companies are typically engaged in,” he said. “If you have a formula for it — if you have a plan and a Gantt chart — it’s not a transformation. That’s called restructuring.”