1. What specific changes do you see as inevitable regarding how pharma companies must operate in the future?

Two come to mind. First, pharma companies must do a better job demonstrating to customers the value of our products on the customer’s own terms. The old model of telling customers why we believe they should use our products is less and less effective. Second, we must face the reality that no matter what changes occur externally, we will be operating with smaller margins in the future.

At sanofi-aventis, we saw the need some time ago to adapt both internally and externally to reflect these realities. What needed to change? First, we needed to shift from an internal focus to an external one. We spent too much time in meetings and on internal processes and not enough time listening to customers. Customers today increasingly want to interact with us on their own terms, so we also improved the quality and flexibility of our interactions through commercial innovation and new customer channels. A key example of this is an e-detailing, “detail on demand” approach we’ve employed.

Second, we had to improve operating effectiveness. This included not only simplifying our internal processes, which were quite heavy, but also simplifying our organization and making it more flexible. This also included reducing the numbers of layers in our organization and pushing decision making closer to the customer. We did this by, among other things, regionalizing our operations. Finally, we had to re-energize and re-engage our employee population. This includes driving a genuine performance culture as well as extending a new level of empowerment to our people — which includes holding them clearly accountable for results.

So, in sum, pharmaceutical companies need to focus more energy externally on understanding customers and on meeting their needs in ways that make sense to them. We also have to work more efficiently than ever before, which means being smarter about how we deploy our resources and talents. And finally, we need to engage and empower our employees, while ensuring that accountability (which is the flip side of empowerment) and performance are embedded in the culture. These aren’t brand new concepts, but the “change” is in how seriously and systematically we apply them.

2. What is the biggest issue you are facing now as the head of the U.S. division?

The biggest issue I’m tackling is the transformation of our company in the United States. That transformation is part of a worldwide initiative launched by our global CEO, Chris Viehbacher. Transformation is our response to key challenges like the overall slowing of the U.S. market, declining access to customers, and others. Globally, Chris has set sanofi-aventis on course to become a healthcare solutions company. Let me expand on a major aspect I’ve been driving here in the United States, which is transforming our commercial model.

As I said earlier, understanding and reaching our customers more effectively is crucial. The traditional pharmaceutical sales model — the so-called “reach and frequency” model — is less equipped to do that today. In an era when doctors are seeing more patients than ever, sales professionals’ access to them has steadily declined. You’ve really got to be prepared to make an interaction meaningful for a physician, and you’ve got to be prepared to do it on that physician’s terms.

So, at sanofi-aventis U.S., we’ve done two things — both are aligned with our larger, global transformation. First, we’ve changed our field sales structure. Second, we’ve tailored the information we deliver and the manner in which we deliver it.

As far as structure, we’ve instituted a new field organization that’s adapted to the local needs of our customers, accommodating their differences and unique traits. Healthcare varies widely throughout this country. You can’t send the same message and type of resources to New Mexico as you do to Minnesota. The payers, patients, physicians, and expectations are significantly different. So, we’ve created an area-based field structure that allows for a better understanding of local market conditions. Very importantly, it places more decision-making authority where it belongs — in the field itself, with those who interact with our customers day to day.

As far as tailoring information and the manner of delivery, as I said earlier, we’ve worked hard to deliver value based on our customers’ sense of what constitutes a “solution” to the clinical problems they face. To that end, we’ve adopted a more holistic approach, better integrating the perspectives of internal functions like medical and managed markets as well as sales.
We’ve also expanded our ability to reach customers when and where it makes sense to them. Approaches include e-detailing and some pending initiatives such as e-sampling that allow physicians to interact with us at times that are best for them and, in turn, allow us to make that information more tailored and effective.

The bottom line is, we’re there to partner with customers to help them achieve their clinical goals, and we’re transforming our U.S. operations to do that. If you do that, and your products are good, your products will sell themselves.

3. What are your thoughts on U.S. healthcare reform as it bears on the pharmaceutical industry?

There are many dimensions, but let me focus on one: Healthcare reform is an opportunity for our industry to work for positive change. For too long, there’s been an unfortunate perception among some that pharmaceuticals are somehow a negative factor in the healthcare equation. In fact, they have been a strong and positive force in healthcare.

Some of the negative perception has to do with the fact that the healthcare expense most people actually see is their out-of-pocket prescription drug cost. This produces a distorted perception that prescription medications are the major source of cost in the system, when in fact, they’re only about 11%. Prescription medications are actually a strong force for cost reduction. Historically, pharmaceutical innovations have saved lives and money through reduced hospitalizations and lost work time and increased economic productivity.

The tremendous life saving and life changing value of pharmaceuticals is often overshadowed by the cost debate. I could cite all kinds of increased longevity and quality of life statistics attributed to our industry. But the challenge is to ensure that the public and our representatives in Washington know them and understand the consequences of measures that reduce our potential for new breakthroughs.

The good news is, we’re part of the dialogue. Our trade organization PhRMA is actively engaging key stakeholders in Washington and is making it clear that we’re committed to positive change. But at the end of the day, we need change that protects patient health. That means change that does not diminish the incredible promise of this industry by reducing our ability to invest in future innovation, denying our ability to fairly protect the innovations we create or undermining physician and patient choice.

4. How are you changing your business model to create more sustainable growth?

This has become one of those “frequently asked questions” about the industry with the so-called pharma “patent cliff” looming for many companies. Fortunately, sanofi-aventis has a strong head start in many areas that are considered areas of sustainable growth, and we’re nicely diversified. This includes:

• the largest pharmaceutical footprint in emerging markets
• a robust presence in OTC and generics
• strong biotechnology involvement with vaccines, heparins (Lovenox), and insulins (Lantus) — Biotech products already make up 30% of our sales, and we’re expanding our biotech reach.
• a major presence in vaccines — Sanofi Pasteur, our vaccines division, is the largest company in the world devoted entirely to human vaccines.
• animal health — Our recent acquisition of animal health company Merial furthers our position in the $19 billion global animal health market.

Let me comment on a few of these points.

Vaccines continue to position us as a major force in public health. This year is a prime example, as we gear up to launch a vaccine to combat the A(H1N1) virus. This is obviously a major public health threat, and as a world leader in vaccines, sanofi-aventis has a pivotal role to play, which includes a commitment to donate 100 million doses of that vaccine to the World Health Organization.

In emerging markets where we’re already strong, we’re building an even deeper presence. There’s still incredible unmet medical need in the developing world. An estimated 75% of the growth in the pharmaceutical industry over the next 15 years will occur in emerging countries. We’ve been a major presence there for some time, and we’re growing that presence with new investments.

Our global CEO Chris Viehbacher is driving this forward. Since Chris came aboard last December, we’ve built out our generics and OTC businesses with acquisitions in Argentina, Brazil, the Czech Republic, and Mexico. And those purchases tell you that this growth strategy marries the dynamic of emerging markets with the growing strength of generics and OTC products.

In the United States we’re continuing to build on core franchises like diabetes and vaccines, while looking for diversification opportunities where they make sense, whether driven by the U.S. affiliate or the global group. Our recent partnership with Exelixis and our purchase of BiPar Sciences, two San Francisco-based biotechs with promising oncology therapies, are cases in point. 5.

5. It’s been predicted that partnerships (with pharma and bio companies) will play an even bigger role in the future of the pharma industry. Do you agree, and how (if at all) is your company adapting to this increased need for new partnerships?

Well, this is closely related to the question of our growth strategy and the notion of becoming a broader health solutions company. Sanofi-aventis has always believed in partnerships, and some of our most powerful products have emerged from them. Products like Actonel, Avapro, and Plavix, are founded on partnerships. We’re committed to the best science, whether generated through in-house innovation or partnerships.

Partnerships will grow in importance, though, as part of a complementary strategy that also includes acquisitions. Biotech and oncology are two recent examples (e.g. partnerships with Regeneron and Exelixis and our purchase of BiPar Sciences). Sanofi-aventis has a long and proud history in oncology, and we intend to take it even further. Biotech is a clear path forward.

But any sensible growth strategy builds on core strengths. Our tradition of discovery and innovation will continue. Our recent launch of Multaq is a case in point. Multaq is the first breakthrough in a decade in the area of Atrial Fibrillation, and it’s an original sanofi-aventis innovation. It sprang from our labs and our talent, and it brings a new, sorely needed option to patients suffering from this disease, which can be quite debilitating.

So growth is often about partnerships and new ventures, yes. But just as often, it’s about new ways to go with what you already know.

6. What resources and competencies have you identified thus far that will help you grow?

I mentioned e-detailing and other ways to better interact with customers on their own terms. We’re also exploring the potential for social media and other online forums that can help us better understand the needs of physicians, patients, and other stakeholders. There are great possibilities out there, even while observing the highest level of legal compliance.

That’s why, in the United States, we’ve created a whole new executive-level innovation group dedicated to exploring new ways of reaching out and, even more importantly, new ways of listening. That innovation group pursues not only virtual approaches, but real, “boots on the ground” solutions for physicians and patients. For example, about a year ago, we established a sanofi-aventis U.S. Community Health Partnership dedicated to making vital, unbranded medical information available in culturally appropriate ways to underserved communities in six major cities (thus far). Again, this is about listening to and responding to customers in all their diversity.

When it comes to employee competencies, we’re also taking leadership and performance to the next level at sanofi-aventis U.S. We’re cultivating managers who truly know how to manage — leaders who “get” the vision and can transmit it to their people. At the same time, we’re driving a deep and systematic understanding of the concept of “performance.” And we’re using a consistent methodology and tools to guide and develop our people in these areas.

Leadership and performance are critical, because the performance of a single team or leader can make a big difference. It happens all the time. And the more competitive our environment becomes — and the closer the race gets — the truer this is.

7. What qualities do you feel that pharmaceutical employees will need in order to adapt to the new demands and constraints of today’s industry?

The employees who will thrive in this industry will have two core qualities. First, they’ll have broad business acumen, not siloed skills. It’s important to have great sales reps and legal folks and medical people — these are critical roles. But these days, we need employees who have a command of multiple skills and mindsets which overlap and complement each other — employees who are knowledgeable about both the science and the business.

I would call these “hybrid professionals.” These are employees with an understanding of areas like pharmacoeconomics and evidence-based medicine, who are not just knowledgeable about a product, but knowledgeable about the business of medicine, of patient and payer issues, and of the science behind it all. These are the employees who can drive the understanding among customers that our company is a partner and a trusted resource. This is a complex and ever-changing industry, and we need employees who match.

These are also the kinds of employees who will ensure we get the right medicines to the right patients at the right times.
Second, successful pharmaceutical employees will be those who are willing to let go of the past and embrace the future — people who are excited and inspired by change. People with this attitude are the future of this industry.