The right stuff: execs with the Midas touch
pharmafile | August 31, 2006 | Feature | Business Services, Research and Development |Â Â biotech, management, recruitmentÂ
Here's a challenge: find someone with PhD-level scientific knowledge, a strong management track record and entrepreneurial flair. If there are no Stephen Hawking-Richard Branson hybrids in your contacts book, it quickly becomes apparent that locating executives for growing biotech companies is a major task.
The wealth created by taking a firm from start-up to an initial public offering (IPO) is vast, but this challenge is something that a biotech inventor cannot do unaided, and there rapidly comes a point at which the enterprise is too large or complex for the founder-inventor to manage. What they need are business executives to help them grow.
Onward and upward
A bio-technology start-up is typically undergoing a transformation that is both profound and rapid, as it moves from the micro-business scale towards a public listing or similar coming-of-age ritual, and to ease this process, it's vital to identify the executives that can nurture this complex creature through its growing pains. It is rare to find examples where the inventor-founder has the broad business skills necessary to become the chief executive officer; but even if this is the case, that individual will still require other executives to provide support.
The lack of founder-owners remaining as chief executive officers throughout the organisation's growth to a more a mature stage is particularly noticeable in the biotech industry, and an example of a professional who has made many of the necessary changes associated with the growth of such an organisation is Henri Termeer at Genzyme, who has taken the company to an annual revenue of nearly $3 billion in his tenure, after replacing the founder.
In this transition and growth phase, a company will be switching from being a research organisation to becoming a fully functioning business, focused on marketing, and which is successful in the marketplace.
One very important precursor to success is that there must be very senior executives in place when the company is still in an early stage, and these will need to be talented, experienced people with a good track record. But it is essential when recruiting that there is an understanding by all concerned of the stage of development that a company is in, so the leadership profile can be matched to suit, and many start-ups suffer by waiting too long before drafting in outsiders to take on the main executive roles.
Hungry for success
So, where can this rare breed of executive be found? The most obvious places to look for such individuals are the established pharmaceutical companies, where there will be individuals who have taken a drug product from the development stage right through to marketing, and who also have a background in research, and an understanding of the science.
But they may not always fit. They may experience a culture shock when parachuted into a small firm; and they may be uncomfortable with risk, and be unprepared for it. They may also not be accustomed to ensuring business returns over a shorter period of time, as timescales in the large pharmaceutical firms can be quite long.
A company which recently faced this dilemma was AstraZeneca, following its acquisition of Cambridge Antibody Technology (CAT). As a way of avoiding uneccessary risk, it appointed one of its own senior managers, Dr Hamish Cameron, as chief executive of its new subsidiary a surefire way of continuing current company policy, coupled with an inside knowledge of the marketplace. But, of course, this is a tactic which may not always be available to the infant biotech company.
However, as with Dr Cameron, the ideal candidate should already have a proven track record; this could be hands-on knowledge of the whole process of developing a drug from discovery to launch, or it could be a strong ability in forging alliances, or, perhaps, experience of running a business at European or global level.
A prospective executive must be hungry for success, and they must be able to take risks, because in many respects, it is like living in another world and the rewards are uncertain. There may or may not be stock options; the enterprise is not guaranteed to reach an IPO, or other point of exit from the start-up phase, and recruits from, say, a large pharmaceutical company may have to make a number of adjustments to working in a small organisation, with less of an infrastructure.
One of the most attractive lures that can tempt someone away from their safe, corporate salary, in addition to the prospect of serious riches from a share of equity, is the quality of the management board that he or she would be working with; for example, there may be an opportunity to work with a renowned entrepreneur. For many, the appeal lies in precisely the areas that would deter others: they relish the excitement and uncertainty of being part of something new, and the prospect of bringing a new service and new chemical entities to the market.
All-round knowledge
But, the large pharmaceutical firm is not the only source of talent – the academic community may also be productive. Another good place to search would be other biotech companies particularly when looking for the biotech serial entrepreneur. This is seen as less risky than finding executives from other sources, but sometimes those individuals are ingrained with the ideas and attitudes of the previous success story, and although experience is important, so is adaptability, as the context of every individual company is going to be unique.
For the recruit sourced from the academic world, the main challenge is not, as might be expected, the task of managing people – in fact, they are often strong in this department with many academics having good team management experience – the challenge is more a lack of general business awareness, as this is something that can only develop with the fullness of time.
Academics can sometimes lack this wider commercial acumen; for example, the ability to work through the matrix; the ability to manage up and down; or to have a broader eye for career progression. They may also be unaccustomed to speaking to the investment community. However, conversely, the answer is not to simply flood the young enterprise with general business executives lacking knowledge of pharmaceuticals. The problem with this approach is that technological advancements can alter the business proposition radically and, indeed, are doing so.
For example, many biotech companies in recent years have been encouraged by business consultants and investors to dispose of units specialising in medical devices, in order to concentrate on drugs, where the margins are higher. The failings of that strategy are now becoming apparent as the two sectors are gradually converging, owing to modern scientific advances.
Good examples of this process would be the recent innovations of stents that heal the heart with their own cells, and that of a drug-emitting pacemaker which can also provide information to medical practitioners off-site as well as on-site. Are these products most accurately classified as drugs, or devices? Or do they form an entirely new category altogether?
All this means that the chief executive officer has to have an informed grasp of technology – and not only where it is at present, but also where it is likely to be in the future. Furthermore, another implication of these technological advances is that this convergence of devices and pharmaceuticals means that there may be scope for profitable mergers, which, in turn, implies merger skills are desirable in the putative biotech executive.
Unfortunately, however, such is the track record of failure in mergers and acquisitions that it is a fair bet that the more adept implementers of deals are going to be hard to find. Of course, much depends on the precise role that is being filled. The academic route is going to be trodden more heavily when trying to identify a chief scientific officer than when looking for a vice-president of business development, but the need for some overlapping knowledge in all roles is significant.
Irrespective of background, some common traits are required for most key posts. A prospective candidate should have an ability to work across wide networks, and be able to demonstrate defined examples of commercial outcomes, commercial track records in mergers and acquisitions, and/or scientific collaboration. They should also be comfortable talking with the investor community, as many start-ups are continually negotiating for extra funds, and they also need to have an understanding of drug licensing and of the laws surrounding intellectual property.
An ability to manage internal and external relationships is essential; in part, because of the joint ventures and other alliances that are likely to feature at some stage of the company's development – but are there any tests for this kind of ability? Psychometrics can give a good indication of decision-making styles, but the key measure to look at is just how successful the individuals have been in the past.
Adapting to change
But now, concerns over the availability of leadership talent is emerging as the bio-tech industry undergoes profound change. The shortening period of patent protection and increasing globalisation are two obvious trends; and there are many others.
The current rise of the BRIC countries (i.e. Brazil, Russia, India and China) is rapid – borne out by the fact that Goldman Sachs has projected that the three major economies in 2050 will be the USA, India and China.
This means that while biotechnology firms, and recruitment for them, currently remain focused in western Europe and the USA, there is no guarantee that this will continue in the future. Because of this trend, it is crucial for success that the biotech executive is able to think internationally – a company which is not internationally facing, will not be successful.
Such is the exacting nature of recruitment in this area, it can be wise to specialise in searching specific sectors and not to diversify into coaching or leadership assessment, as by doing this, a search can be closed more quickly. This focus also reflects the high and growing importance of recruitment in the modern economy.
But, ultimately, there is no doubt the polymath required for at least some of the roles in this exciting, rapidly evolving, part of the global economy is hard to find, but for those who fit the bill, and are placed in the right post at the right time, the rewards for themselves, their customers and the shareholders are considerable.
Christopher Coe and Alain Leclerc, partners in the life science practice of global search firm, Christian & Timbers. For details, visit www.ctnet.com
Related Content
Cellbyte raises $2.75m to fund pharma drug launch platform
Cellbyte has announced that it has raised $2.75m in seed funding for the streamlining of …
Lilly opens fourth US Gateway Labs site
Eli Lilly has opened its newest Lilly Gateway Labs (LGL) site in San Diego, California, …
LGC Group opens $100M Organic Chemistry Synthesis Centre of Excellence
LGC Group, a life sciences company, has opened its new Organic Chemistry Synthesis Centre of …
