Can we really expect innovation from an industry stuck on white male former sales reps? Perhaps.

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  • "Sales rep" CEO's wrongly remove discovery, the most uncertain & difficult part of #pharmaceuticals, from their models

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It’s easy to muster a cynical response to Tuesday’s announcement that the world’s largest health products company, J&J, is replacing their current CEO William Weldon (athletic white male and former sales rep who rose through the commercial organization) with Alex Gorsky (athletic white male and former sales rep who rose through the commercial organization).  After all, he will be in good company, joining Novartis’s Joe Jimenez (athletic white male – see here — with a background in marketing) and AZ’s David Brennan (athletic while male and former sales rep), among others.  Indeed, of the major pharma companies, only Lilly’s John Lechleiter is a scientist (no word on whether he’s athletic; I’m told by Stephen Colbert that he is white).

Even the world of biotechs have fewer medical scientist leaders than you might think (and more white male athletes); true, Gilead, Vertex, and Seattle Genetics are led by scientists, as was Genentech prior to its acquisition by Roche.  Yet, many other distinguished large biotechs don’t have medical scientists at the helm – consider Amgen (Kevin Sharer, and his designated successor, Robert Bradway); Celgene (Robert Hugin), Biomarin (Jean-Jacques Bienaime), and Genezyme, prior to their acquisition (Henri Termeer), to name a few.  As detailed by Monica Higgins in “Career Imprints,” the development of the biotechnology industry owes much to “the Baxter Boys” – a group of mid-level Baxter-trained managers like Termeer who went off in search of new challenges.

"Characteristics of the successful biopharma CEO of the future won’t be her degrees... but rather the extent to which she will be able to successfully orchestrate innovation." -- David Shaywitz

As the pharmaceutical industry seems headed along the lines anticipated in 2010 by Morgan Stanley analyst Andrew Baum (now at Citi) and gradually moves from a “research and development” model towards a “search and development” model, it’s easy to attribute this change to senior leadership teams that never fundamentally understood research, and lacked appreciation for its unique challenges and culture.  In simple terms, it’s easy to see why someone more comfortable with the more traditional business processes of making and selling things would look for reasons to remove discovery — the most uncertain and difficult to manage part of the enterprise (even if it’s where, however inconveniently, value is initially created).

Yet, before we completely buy into this tidy narrative, let’s keep in mind two important facts:

     (1) Many medical scientist CEOs have struggled miserably with R&D productivity (to say nothing of the complexities of running a large organization); the medical products business is notoriously complicated, and a couple of letters after your name is neither a guarantee of competence nor a promise of success.   

     (2) Some of the industry’s greatest triumphs have been from leaders who were not medical scientists.  Consider not just Genzyme’s Termeer, but also Third Rock Ventures’ Mark Levin, the founding CEO of Tularik and later the chief architect and CEO of Millennium Pharmaceuticals – just a few examples of many.

The bottom line is that if you are in the business of delivering science-based innovations, you need leaders (as I’ve suggested before) who are comfortable with science, with uncertainty, and who have some facility for managing both – which includes not just creating an environment where science can grow and flourish, but also having the confidence to call “bullshit” when appropriate.

I suspect most big pharma CEOs really enjoy the intricacies of operating a business, yet have remarkably little feel for scientific discovery; given the inherent difficulties of medical research in general, it seems a lot to expect a CEO for whom science is so foreign to really figure out how to cultivate it in an imaginative way; thus, the decision of some big pharmas to shed research (e.g. AZ’s restructuring) seems more authentic and intelligent than those who soldier on without much insight.  After all, the first rule of holes is “stop digging.”

Of course, in stopping digging, pharmas may manage their downside risk, but may also limit their upside potential: the opportunity to create, develop, and deliver impactful new therapeutics.

The distinguishing characteristics of the successful biopharma CEO of the future won’t be her degrees, athletic prowess, or gender, but rather the extent to which she will be able to successfully orchestrate innovation – a skill that requires a feel and a passion for the messy uncomfortable glorious complexity of medical science, and an instinctive affinity for the bold innovators who would fearlessly, madly pursue it.

David Shaywitz is an adjunct scholar at AEI.

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