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The overseas prospect

Frenchman Christophe Weber, Takeda's first foreign CEO, is slowly transforming the Japanese pharmaceutical company into one with a global outlook.
Saturday, April 2, 2016 - 05:50

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'We don't do anything that would jeopardise our reputation or trust in us, with the society or patient. We hope that we can show that you can be a pharmaceutical company, make some profit at the end of the day and still do the right thing and reconcile the two.'

IT HAS been nearly a year since Christophe Weber took over the reins of Japanese drug maker Takeda Pharmaceutical Company Ltd, and if there's any message from the Frenchman as he marks the anniversary, it's one of assurance that he's still very much at the helm, thank you.

The 49-year-old is probably breathing easier these days, glad that increasingly, he no longer has to wave away market talk that he might be jumping ship.

In fact, the tall and stocky pharma man, who is the first foreign chief executive in Takeda's 235-year history, will tell you he is settling in just fine.

"I don't feel like I'm an outsider anymore. I think there is now a very clear understanding about what Takeda wants to be in the future and I'm not an outsider because I need to deal with the good news and the bad news," he says matter-of-factly.

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The history of foreign executives who ran Japanese companies such as Sony and Olympus gives a glimpse of why Mr Weber's appointment at Takeda last year sparked great interest - and concern.

These days, he is more preoccupied with moving the pharmaceutical company further along its transformation journey, something his 20 years at British drugmaker GlaxoSmithKline prior to Takeda, have trained him for.

Mr Weber, who took over from his predecessor Yasuchika Hasegawa last April, is seeing some bright spots in the group's metamorphosis, which will go some way in helping him answer to shareholders, even if the company's financials of late have not been too supportive.

Profits have been shrinking in the past few years, from 247.9 billion yen (S$3 billion) in 2011 to 106.7 billion yen in 2014 - the lowest in 15 years. For its fiscal year 2015, the company recorded a net loss of 145.8 billion yen, but Mr Weber will remind you it's an investment year.

Even as profits dwindled, the company managed to grow its revenue from 1.42 trillion yen in 2011 to 1.78 trillion yen in 2015.

"FY2015 is important because it's a turnaround year to grow our sales and profit, and we are on track to deliver that, so that's important because in the last few years, our profits declined mostly because of generic exposure and also because of the lack of new products."

Takeda, Asia's largest pharmaceutical company based in Osaka, is at a turning point. The company has been slowly revived by the international push set in motion by Mr Hasegawa, who was Takeda's first chief executive outside of the founding family.

Under Mr Hasegawa, who is now the company chairman, Takeda started restructuring. He acquired two foreign companies - Cambridge, Massachusetts-based Millennium Pharmaceuticals Inc in 2008 to expand its cancer therapies and Swiss drug maker Nycomed in 2011 - for some US$23 billion, changed the working language at boardroom level to English, and recruited a team of foreign executives to grow the drug company beyond its stagnant domestic market in Japan.

Last year, Takeda continued to redesign the organisational structure and globalised some functions.

Mr Weber, who first joined the company as chief operating officer in April 2014, cites one example: "We had three different manufacturing operations independent from each other and created one global manufacturing organisation. As soon as you do that, it changes the way the company is run in terms of talent development, diversity, operational excellence as well."

In the last two years, the group, valued at around 4.36 trillion yen, streamlined its businesses to focus on three therapeutic areas - oncology, gastroenterology, central nervous system diseases - as well as specific programmes in vaccines "in order to be the best in what we do", Mr Weber says.

And the morphing persists under his leadership.

There are now seven nationalities in his management team, with part of the team in the US, while the emerging markets division is based in Singapore.

Last June, Ramona Sequeira joined the group to head its US subsidiary, Takeda Pharmaceuticals USA, making her the first woman in his executive team - a development that pleases Mr Weber. "It's great," he says. "(We're only) starting off, but it's a good start."

He is as optimistic about Takeda's prospects, even as patent expiries and a flagging pipeline of new drugs bring up big question marks.

In the past two years, the firm launched about six products that Mr Weber says will help drive future growth.

One of the products is Entyvio, a new biologic treatment for inflammatory bowel diseases, launched in the US about 18 months ago. On a moving annual total basis, the drug has raked in sales of about US$800 million.

Another is Ninlaro, which is used to treat multiple myeloma. Mr Weber is sure this product will become the backbone of treatment for the condition. It was launched last December in the US and is under review in Europe.

But Takeda lacks significant late-stage experimental drugs in its pipeline. Apart from a dengue vaccine that it plans to initiate phase three trials at the end of 2016, its other vaccine to tackle norovirus will start human trials only in two years' time.

Still, Mr Weber believes the group has enough products to drive organic growth for the next five years, but patent expiries clearly weigh on his mind. The next such significant expiry will come at the end of 2017 in the US for Velcade, used to treat multiple myeloma.

"We have some patent expiries like everyone, but if anything, in the next five years it's less impactful than the previous five years," Mr Weber says, pointing out that many drugmakers also face similar experiences.

About 70 per cent of Takeda's current growth is driven by products launched in the past few years. The remaining growth is derived from emerging markets including Brazil, Russia and China.

Pressure on Takeda has intensified as governments around the world try to put a lid on healthcare costs, particularly as the Japanese government turn to generics to stretch its dollar.

Japan remains its biggest market, contributing about 35 per cent of group revenue, followed by the US, its fastest growing business.

"Very soon, the US (market) will become as big as our Japanese business. Eventually, we want to be balanced in our geographical contributions to our total business."

The need for diversification partly explains why Mr Weber insists on focusing on emerging markets, which make up more than 20 per cent of the business.

Mr Weber acts decisively and quickly. Under him, Takeda moved last year to agree to pay more than US$2 billion to settle thousands of lawsuits in the US that arose from claims that the company hid cancer risks of the blockbuster Actos diabetes medicine. Takeda believes the drug - still available in the US and other countries - is safe. Actos, once the world's best-selling diabetes medicine, had also faced generic competition in 2012.

To boost its research and development (R&D), Mr Weber hired Andrew Plump - formerly from French drug maker Sanofi - to develop a strategy to generate innovation, which is seen as the key to growth.

"We know that we need to be more eclectic in the way we conduct research, meaning that if you want to generate a pipeline in oncology, you need to be able to be active in the field of small molecules, what we call modalities. So we need to be more diverse in the types of modalities we are able to work with in order to bring innovation."

This big shift in its R&D strategy "translates into our willingness to do a lot of partnership, external innovation in the field of R&D", says Mr Weber, who has been tracking closely innovation coming from academia, biotech and startups.

It explains his fervour in external partnerships as he hunts for the next blockbusters - drugs with annual sales of over US$1 billion.

Last April saw the biggest tie-up between a pharma company and a university in Japan. Mr Weber and Kyoto University-based Nobel laureate Shinya Yamanaka agreed to a 10-year partnership to use cell technologies for conditions such as heart failure and diabetes, in a deal valued at about 20 billion yen.

Recently, the drugmaker unveiled several partnerships including one with Chicago-based Cour Pharmaceuticals - and more such tie-ups are in the pipeline.

And at a time when healthcare costs are under heavy scrutiny, the former head of Turing Pharmaceuticals Martin Shkreli's refusal to answer questions on the company's drug pricing policy at a US congressional hearing in February has inevitably drawn attention to and criticism of the industry's practices. Turing's 5,000 per cent price hike of Daraprim, a drug used by many Aids patients, came under probe by US lawmakers. Such cases cast a long shadow over the industry.

"Unfortunately, it's quite frustrating," says Mr Weber when asked about the case.

He adds that Takeda, a company deeply rooted in society, adheres to the "patient, trust, reputation, business" flow of thinking.

"This is the order. We don't do anything that would jeopardise our reputation or trust in us, with the society or patient. It seems simple like that but when you apply it, it forces people to ask themselves the right question.

"We hope that we can show that you can be a pharmaceutical company, make some profit at the end of the day and still do the right thing and reconcile the two."

For now, Mr Weber seems to have found his groove balancing the different parts of the equation in running a company that was created in 1781.

"The key for a job like mine is to be resilient and not to be emotional about things. I think we need to deal with bad news and good news. Of course, it's easier to deal with good news than bad news but that's life. Now, it's (also) important to have a strategy and motivate employees so that we drive our success and the first thing is for them to understand the strategy," he explains, pointing to the first few months of his CEO stint that he spent meeting employees from all parts of the world.

He has been excited to bring Takeda to the next level and is still fascinated by the challenge. In his own words: "How many chances do you have in your life to do that? Not many."

He adds: "My philosophy is that if I join a company, from Day One, I'm part of the company and of course, you need to connect with people and it takes some time but I'm not someone who says 'well, you know I was not there'. I deal with the issues."

This pragmatism is perhaps what helped him overcome the feeling of being an outlier in a traditional company that is moving gradually towards being global.

"In the pharmaceutical industry, it's a long cycle industry so the reality is that what we do now will impact (only) in five to 10 years . . . many things we're dealing with now (stem from) decisions made in the past. I just deal with it. My job is to make Takeda successful in the future."

So it looks like Mr Weber, now well settled in, is sticking around for some time to come.


CHRISTOPHE WEBER

President & CEO, Takeda Pharmaceutical Company Ltd

Education:

Doctorate in Pharmacy & Pharmacokinetics, University of Lyon, France

Master's degrees in Pharmaceutical Marketing and in Accounting and Finance, University of Lyon; Bachelor's degree in statistics, University of Lyon

July 2003: Chairman & CEO, GlaxoSmithKline France

May 2008: Senior vice-president & regional director, Asia Pacific, GlaxoSmithKline

January 2011: President & general manager designate, GlaxoSmithKline Vaccines

April 2012: President & general manager, GlaxoSmithKline Vaccines;
CEO, GlaxoSmithKline Biologicals;
Member of GlaxoSmithKline corporate executive team

April 2014: Chief operating officer, Takeda; Corporate officer, Takeda

June 2014: President and representative director, Takeda

Since April 2015: President & CEO and representative director, Takeda

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