Recently Accenture’s own Arjun Bedi, managing director, had the opportunity to sit down with industry icon, Fred Hassan.
How did you get into the Life Sciences industry? And what’s kept you there?
It was partly by accident and partly by design. My undergraduate degree was in chemical engineering and I was fascinated by pharmaceuticals and newer medicines in terms of progress for mankind. I was fortunate while I was at Harvard Business School doing an MBA to be offered a position at Sandoz, which is now Novartis. It seemed like a great fit for me because life sciences offered me a chance to be in an industry that used chemistry in a time when there was no biotechnology.
You’ve been called the “Master of Change” for turning around companies. What would you consider your greatest turnaround story, and why?
I’ve had the opportunity to do many turnarounds. Perhaps the most profound story was the Schering-Plough turnaround from 2003 to 2009, with the actual turnaround declared in 2005. It was a very difficult turnaround because beside the classic challenges that people in the industry face such as sluggish sales and difficult morale, we had two external threats that were very serious. One was a threat to our cash flow, which is a very unusual threat in big pharma. We were burning $1 billion annually in cash, and we had problems with the balance sheet and issues with access to capital and credit. The second threat was that we were under close scrutiny by the FDA and the Department of Justice for marketing and manufacturing issues. And we were experiencing these kinds of pressures at the very moment when our largest product, Claritin, went off patent and our new product pipeline was not ideal. But we managed to turn things around convincingly, with the company going from losing cash flow at $1 billion a year to making $2 billion a year cash flow within four or five years. Ultimately, it turned out to be a very positive story.
What would you say were some of the biggest challenges you faced in turning around companies?
As with any new leader going in, I had to get grounded in reality and try to understand as much as I could about the real situation. I did my best to learn as much as I could, because if you don’t have insight into the real challenges, you could fool yourself into thinking you’re solving problems when you’re not. At the base of it all, there are really three issues to resolve, as I mention in my book, “Reinvent: A Leader’s Playbook for Serial Success.” There are issues with people, issues with culture and issues with execution. They’re primarily internal issues—you have to be strong on the inside in order to be strong on the outside.
What do you see as the biggest challenge facing the industry today?
The industry is an unusually long-cycle industry in terms of R&D; the risks are very high because the whole construct of biology is still not well understood and it’s very hard to explain to the general public why it’s so important that we invest in innovation. That’s a very difficult message to get across in life sciences compared to other industries where the cycles are much shorter. The industry has done a good job, but it needs to do an even better job. Even now, in what I believe to be the life sciences century, the industry is not getting the encouragement and appreciation it deserves. We have the opportunity now to really improve our length of life and quality of life because science has come together so beautifully. This is the very moment when the industry needs to encourage society to get behind it. If there’s no investment in basic research or the willingness to modernize regulatory science, it’s very hard to achieve breakthroughs. So the industry has to do more to convince people around the world, especially people in wealthy countries, that it’s worth the attention and the investment.
What breakthrough are you most excited about?
I think you can’t talk about breakthroughs without talking first about unmet needs. I think the biggest unmet need is Alzheimer’s. We’re all getting older, living longer and better, but we still haven’t cracked the code of brain science. Alzheimer’s is threatening to make the western societies bankrupt by 2050 if we don’t do something about it. Even a five-year delay could make an incredible difference in health economics. And so the industry really has to do more there. In terms of the biggest excitement in Alzheimer’s currently, there are some interesting molecules being studied with pretty interesting data. I think they’ll be at the leading edge of a whole bunch of new products that will be coming along. My hope is we’ll find things that really make a difference as opposed to just reducing the symptoms of the disease, which is where we are right now.
You’ve called yourself an unusual leader. Can you elaborate on that?
I guess you could say I’m unusual in the sense that I try to work through people as opposed to with people. My whole secret is to get people to understand what needs to be done and to make that their own personal mission, and share that mission with their colleagues and to also root for their success. As a leader, if I can succeed in getting people motivated and energized in that manner, I can get unusual results. So I’m unusual in the way I can harness the power of people working together.
How do you spend your free time? What do you do when you’re not turning around companies and writing books?
I enjoy working. To me, work is fun. I get rewarded for doing something that I really enjoy, so I don’t look at work as something I need to get away from in order to do something else. But if I do get some other time, I make as much time as I can for family, travel and reading. I also like to do fundraising for certain causes as well as spend time talking to audiences about many different issues. I’m not one of those ex-CEOs who is out playing golf or on a boat—that’s not what I do.
Fred Hassan is a Partner and Managing Director with the private equity firm, Warburg Pincus. He was Chairman of Bausch & Lomb until its sale in 2013 and is a board member of Time Warner and Amgen.
Fred Hassan is the former Chairman of the Board and Chief Executive Officer of Schering-Plough Corporation. Prior to joining Schering-Plough in April 2003, Hassan was Chairman and Chief Executive Officer of Pharmacia Corporation. Previously, Hassan was Executive Vice President of Wyeth, with responsibility for its pharmaceutical and medical products business.
Hassan received a B.S. degree in chemical engineering from the Imperial College of Science and Technology at the University of London and an M.B.A. from Harvard Business School. Hassan has chaired significant pharmaceutical industry organizations including The Pharmaceutical Research and Manufacturers of America (PhRMA) and The International Federation of Pharmaceutical Manufacturers Associations (IFPMA). Mr. Hassan is also a member of The Business Council.
Fred Hassan’s book, “Reinvent - A Leader’s Playbook for Serial Success,” was published in 2013 by Wiley and has been discussed in many global organizations including the World Bank. In 2014, a CNBC panel named Hassan to a list of those who have had the most profound impact on the world of business in the previous quarter century.