May 17, 2016 | Written by: Michael Wong
Categorized: Life Sciences
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Preface: While many corporate transformations are rightfully investing in new initiatives to grow top-line revenue, are there other strategic options that companies could pursue with assets that have been lying dormant? This Q&A is part of a series inspired by Fortune’s Most Admired Company rankings. The process includes interviewing executives and professors for their insights on the specific attributes that are measured to derive these rankings and their potential role in company transformation. As global companies strive to effectively compete, what strategies can help accelerate successful transformation? In this interview Vivek Ramaswamy, CEO of Roivant Sciences and CEO of Axovant Sciences, explains why C-Suite executives should consider leveraging untapped assets that could be right in front of them.
Q. For decades, business journals have praised C-Suite leaders who take decisive actions to stop funding certain programs and pivot to more attractive opportunities. So, what is your rationale for reexamining such discarded assets?
A. In my view, the most significant “silent problem” in the pharmaceutical industry today is that hundreds of molecules will never reach patients for reasons that have little to do with their underlying scientific rationale or clinical base of evidence. Roivant was founded with the mission of solving this problem and to share those benefits with patients and the healthcare system. Since Roivant was started two years ago, our team realized that abandoned or under-resourced drugs can actually be “attractive” when judged through the lens of their own clinical potential. In fact, many such drugs, including RVT-101 (the industry-leading, Phase 3 compound for the treatment of Alzheimer’s disease in our subsidiary company, Axovant Sciences), could play an important role in improving the quality-of-life of millions of patients, and the scientists who developed those drugs are as enthusiastic as we are about their ability to make a meaningful difference in the lives of patients.
Roivant acts as a responsible steward and “solutions provider” for the rapid development of new molecules. We have developed collaborations with institutions such as Duke University and Cincinnati Children’s Hospital and companies such as Eisai, GlaxoSmithKline, and Vertex that seek to unlock value in their R&D pipelines, but that may not have the time or resources to commit to a particular project among a range of competing priorities. Drawing an analogy to the world of transportation and logistics, Roivant is building an innovative development “superhighway” for drugs that have become stuck in an industry-wide R&D “traffic jam.”
The institutions that choose not to fund the future development of these molecules – which range from large pharmaceutical firms to small academic laboratories – are often making decisions that are understandable in light of their own finite resources. These institutions may reprioritize their therapeutic areas of strategic focus, or simply lack access to the capital required to take the drugs forward in late-stage clinical programs.
In such situations, Roivant is able to unlock hidden R&D value by efficiently identifying the best of these molecules and staffing a world-class development team to accelerate their path to regulatory approval. Our early track record has led to several examples of “win-win” partnerships with pharmaceutical partners already, and we intend to continue building upon these successes as we find even more innovative ways to bring new medicines to patients.
Q. Okay, so that might work for your company; but how about for others, be they in healthcare or even other industries such as consumer packaged goods, energy & utilities, financial services, and retail? Is there a similar blueprint for success?
A. When we look at companies we admire in other industries, the thing we admire most is a relentless focus on the needs of customers. In our case, this means attending to the full burden of disease and range of symptoms that affect our patients, and finding ways to improve the overall patient experience.
The pharmaceutical industry has its roots in academia, and consequently in our field there is special importance placed on advancing scientific knowledge for its own sake. At Roivant we take a different view: advance knowledge should quickly be put to the service of delivering new and beneficial medicines to patients as efficiently as possible. This ambition derives from our observation that every month of delay in developing a drug in our hands is another month that patients must go without a potentially life-saving new medicine. We hope that our approach goes a long way to improving the lives of patients today, rather than generating theoretical ideas that only accrue to the benefit of their creators.
Our company believes that addressing the needs of patients is a serious responsibility that will create sustainable value not only for our shareholders but also for the healthcare system as a whole. I believe this insight resonates across industries and geographies. Wherever you are, and whatever the nature of your business, you will be rewarded by focusing on what your customer really needs.
Q. What other guidance or insights can you offer to your peers in the pharmaceutical industry and beyond?
A. Our people are our greatest assets. One of our most valuable insights, which we are willing to share freely, is that you need to find and hire the right people to build the business you want to create. We have been fortunate to attract a high caliber of talent so far, as a result of hiring only the best of those individuals who share our culture of tireless commitment to excellence. Identifying and recruiting a higher caliber of talent requires a conscious effort and is not the result of random happenstance.
The pharmaceutical industry has historically taken a narrow approach by searching for talent from within the industry. At Roivant, we seek to tap into talent pools far outside the boundaries of our own industry. We look for high-caliber young graduates who might otherwise have considered intellectually-rigorous jobs in Silicon Valley or the financial sector. Yet, rather than ask them to develop the next matchmaking app or slide deck, we train them instead in the challenging and rewarding work of developing new, safe medicines that could meaningfully improve the lives of patients worldwide.
Seating talented generalists “shoulder-to-shoulder” with seasoned industry professionals has kindled a uniquely “catalytic combination” at the company, leading to better ideas than I believe either group could have generated alone.
We are open about the fact that we think it will be a long-term competitive advantage to access these new talent pools. Indeed, we hope that this model is replicated both within and outside our industry.
Q. Back in 2009, a Harvard Business School alumni event focused on the question of “Are Pharmaceutical Firms Slated to Follow the Big Three Auto Manufacturers?” Both industries had decades of continued financial success and yet their member companies have had various levels of turnaround performance. As such, what changes need to take place to create offerings that are valued by customers?
A. I described earlier our strategy of tapping into top talent pools from beyond our own industry, which is similar to Tesla’s approach of providing a new avenue for high-tech talent to enter the automotive space, where they might draft new car designs alongside experienced mechanical engineers. However, it is not enough merely to attract the best talent into the company. We also, as an industry, have to think carefully about how we align the incentives of employees to accelerate the delivery of innovative products to patients in a safe, rapid, and cost-efficient manner.
Similar to the “Big Three” in Detroit a half-decade ago, many large pharmaceutical players are finding that the pace of internal innovation has not been sufficient to maintain sales in the near- to mid-term. This has led to a spree of M&A and licensing activity in the sector as pharmaceutical companies have attempted to acquire rights to new compounds at least as fast as their own product lines fall off a patent cliff.
In our view, the innovation that a company sees internally is in large part modulated by the incentives of individual team members working on their programs. Indeed, one’s stature in several companies of our peer group is tied to the size of one’s budget or the number of projects in one’s pipeline, rather than to one’s ability to efficiently and successfully get new drugs approved – or realize that the data does not support further development and terminate the program quickly and cheaply. From our vantage point, these backwards incentives have prolonged the time and increased the cost of new drug development, leading the industry to take on average over $2Bn and nearly 12 years to develop a new medicine.
At Roivant, we run our development projects in the context of wholly-owned or majority-owned subsidiaries that tie the incentives of employees closely to the success of the very development programs on which they are working. An individual’s career progression in the long-run has more to do with moving projects quickly and inexpensively to a go/no-go decision than with ancillary determinants of “stature” within the organization. The structure of Roivant itself was designed to bring the best out of our people.
We look forward to building a faster path to bring new, safe drugs to patients by not just building a modern “superhighway” for late-stage clinical development, but just as importantly by unleashing the potential for innovation in each of our team members.
Vivek Ramaswamy is the founder of Roivant Sciences, the parent company of Axovant Sciences.
Besides being the CEO of Axovant Sciences, which recently completed its IPO in 2015, Mr. Ramaswamy is also CEO of Roivant Sciences and theChairman of Arbutus Biopharma, a company focused on developing a cure for chronic hepatitis B virus infection. Prior to founding Roivant Sciences, Mr. Ramaswamy was Partner at QVT Financial LP, where he was responsible for biotechnology investments. Mr. Ramaswamy was also the Founder and President of Campus Venture Network, a technology company acquired in 2009. He received his AB in Biology (summa cum laude) from Harvard College and JD from Yale Law School.
 Key attribute measurements for Fortune’s Most Admired Company rankings include: innovation, people management, use of corporate assets, social responsibility, quality of management, financial soundness, long-term investment value, quality of products and services, as well as global competitiveness. Per the most recent 2016 findings, Apple earned the top ranked Fortune Most Admired Company for an unprecedented nine consecutive years.