Brent Saunders, the CEO and president of Allergan, frequently talks about “growth pharma” and the need to be “bold.” Outside of emerging markets, those are strong turns of phrase for a man in his position.
The pharmaceutical industry is coping with regulatory pressure to reign in drug prices and dealing with the expiration of profitable patents. But despite slower growth in mature markets, pharma is still a high-margin business that can save lives. Saunders is orienting Allergan around opportunities and hope rather than retreat and pessimism.
In his two-decade career in the industry, Saunders has gained a reputation as both a deal maker and an operator. Whether he is dealing or operating, Saunders is a passionate and driven executive with an unrelenting focus on customers.
Saunders sat down with Grant Freeland, a BCG senior partner and managing director, for a wide-ranging discussion. Excerpts follow.
Brent, thank you very much for joining us today. At Allergan, you talk about “growth pharma,” and you have rallied the company around a single word for how you want people to behave and the corporate culture you want. “Bold” is the word you’re using. What do those two terms mean? How do they translate into behavior?
We have a high-margin business, and it’s dependent on innovation for long term-success. The best way we can invest in our people and in our innovation and R&D is by growing the top line. Cutting costs and being efficient are certainly characteristics of our business. But we’d rather be growers than cutters. With respect to bold, that’s probably one of my favorite words to describe our company. For me, what bold really means is pushing myself every day to get out of my comfort zone, to do something, perhaps, that’s a little less routine, to try something new and not to be afraid to fail.
Where do you see Allergan heading?
We’re in seven therapeutic areas today in health care. Our goal is obviously to be number one or, realistically, one or two, in all of them. We’re close, but what we need to do is keep that edge. It’s not just good enough to get there at a moment in time. We want to sustain our leadership. It’s about exquisite execution at the customer level and finding those breakthrough medicines, those breakthrough opportunities to solve unmet need.
How does your leadership team function? What are your expectations of them?
At the leadership team level—at my direct-reports level—we are incentivized to do what’s best for Allergan first. For everyone else in the organization, their bonus, goals, and focus are based on executing within their division or business unit or geography first. What that does is to create a sense of teamwork.
You often talk about the value and importance of customers. You’ve asked your senior-leadership team to spend time with customers, even during rep ride-arounds. Why do you do that?
Obviously, the people in the business units always spend time with their customers. We’re in a high-touch customer business. What about your general counsel, your CFO, or your head of business development? In most traditional companies, they tend to spend most of their time in headquarters and do not really understand the business at the customer level. Instead of running a fancy program, we decided to just lead by example. Let’s make sure that all of our business leaders, whether in a function or running a business, are out regularly with clients.
As a CEO, what’s your thinking about the questions, When do you buy? When do you sell? When do you transform?
I think it all starts with a really strong strategy. Every deal that I’ve been involved in always starts with the first fundamental threshold question, “Does the deal itself—whether you’re buying or selling—strengthen your strategic goals?” Once you have that checked off, then you can look at the financials, the returns, the price you have to pay, the integration, and all the other stuff that goes with it.
If a senior-leadership team were about to embark on a transformation of the business, would you have any thoughts for them?
If you really want to use that word transformation, you’re going to make really tough decisions. You’re going to do things that push you to be a bit uncomfortable. You have to be open to new ways of doing things. You may have run your business, your sales organization, or your department one way and thought it was good but not great. That means you may have to shake it up and do something different.
What are the big challenges facing the industry in the next five years?
As long as I’ve been in the industry—a little over 20 years—we’ve always had a headwind of price. Recently, that’s gotten a lot more attention because of some really egregious actions by a few. Clearly, we have to be responsible and look for ways to value our innovations for society and to act responsibly.
We have to continue to look for ways to solve some of the tougher disease states that we don’t truly understand today—like Alzheimer’s and maybe a spectrum disorder. How do you create a drug for what could be the biggest epidemic this country faces when you don’t really understand the disease? We have to get back to working with academia, the NIH (US National Institutes of Health), and others to really understand some of these problems so that we can create medicines and cures for these big diseases.