Magazine Article | August 1, 2016

One-On-One With Celgene's CEO

Source: Life Science Leader

By Rob Wright, Chief Editor, Life Science Leader
Follow Me On Twitter @RfwrightLSL

When working as a newly minted pharmaceutical sales representative, a director of purchasing at a local hospital looked at my shoes and then glanced up saying, “Those don’t look like size 13s.” As I was replacing someone who had been in the position for over 30 years, the hospital employee felt compelled to point out that my predecessor’s success and longevity had saddled me with having some “pretty big shoes to fill.” I imagine Mark Alles, Celgene’s newest CEO can probably relate. Tabbed this past January to replace Bob Hugin, Alles is following in the footsteps of one pretty successful CEO. Under Hugin’s watch, Celgene’s revenues have grown by over 250 percent, and its stock market share price graph looks more like a Mount Everest elevation chart — only steeper!

At the 2016 BIO International Convention, Alles agreed to sit down and speak with me. And while our plans were to talk about Celgene and it being “committed to a cure,” I was more curious about Alles as a person and a leader, and he did not disappoint. For example, when asked about his plans for building on the work of his predecessor, he responds, “Bob’s record as CEO is outstanding, and while I’m not a legacy builder, continuity is important.” Further, Alles made it clear he wasn’t interested in a typical interview. “My style is to have a discussion, why don’t we do that?” he shares. “When I interview with people, whether it’s an investor, an attorney, or a member of the media, I expect to have a dialogue.” I agree that approach is what I prefer, and so our two-way discussion begins.

After quickly identifying that we were both from Pennsylvania and had each attended state universities there, Alles elaborates how he was the first in his family (he is the third-oldest of seven boys) to go to college. “I wanted to go to medical school, but I grew up in a very blue-collar setting. College was expensive, and the idea of higher education as a path to what you wanted to do in life was, quite frankly, strange,” he says. Nevertheless, he pursued his long-standing passion for science and, after college, became a high school teacher. That job didn’t last long, though. That’s because another one of his goals — to serve as an officer in the Marine Corps — drove him to go to officer candidate school at age 23.

I noted that back in 2012 when I had interviewed Hugin, he too had mentioned that he was a former Marine. “Our former CEO John Jackson also served as a Marine Corps officer,” Alles adds. “I suppose there’s a bit of that Marine flavor at Celgene – but not by design.”

At this point, the conversation stays focused on his military service as I pepper him with questions about his experiences back then as well as what he learned as a Marine that he still uses today as an executive. His responses — respect for people, intensity, and clarity of purpose for achieving goals — don’t come as a surprise. Neither does his statement about the leadership structure of the Marine Corps being very similar to the leadership structure required to run a successful business. But I am intrigued when he says having the right leadership at every level of an organization isn’t a solution in and of itself. “You have to nurture those people and be leaders in kind,” he explains. “Respect is a big part of that. For example, if somebody’s job is to clean the bathrooms at night so the building is ready for the next day, well, that’s an important job. If that doesn’t happen, you can waste time and lose opportunities. This idea that you must stay focused on developing and establishing the best people at all levels of the organization is something I learned very early as a Marine.” Alles admits that though the application of these same principles in business is not as dramatic as being ready to fight in combat, the consequences from an investor, shareholder, or patient’s point of view can be similarly significant. “If you don’t have a great sense of responsibility, then your organization probably doesn’t have a great, sustainable culture,” he states. “While corporate cultures can evolve, when placed under stress, they also can fall apart.”

Almost effortlessly, this non-interview shifts to the next logical milestone in Alles’ career timeline — his entrance into the pharmaceutical industry. Again, I’m intrigued by the story, especially since it starts with his explaining that he had decided to resign from his Marine Corps commission at the same time his wife was pregnant with their first child.

His last Marine Corps assignment involved running the recruiting station in Boston, which he says had a bit of a sales type environment. “My wife actually showed me newspaper ads for pharmaceutical sales representative positions located throughout the northeastern United States,” he recalls. “She knew my love for science and had already put together that joining the pharmaceutical industry should be my next move. She handed me the paper and told me I should answer the ad. But being the egotist I was at the time, I said, ‘I’m a captain in the Marine Corps. Why would I go into sales?’” But Alles admits that she was right.

Soon thereafter, he took a field sales job with Miles, a division of Bayer. Over the years, he branched out beyond the commercial and marketing sides of the business. At Centocor, long before it was acquired by J&J, he was a clinical research associate, helping to manage clinical trials. At Rhône-Poulenc Rorer, he worked closely with cancer chemotherapeutic agents. Recently, he’s been in front of regulatory agencies with scientists all over the world, including China’s FDA (cFDA), NICE (the National Institute for Health and Care Excellence), as well as regulatory officials from Brazil and Mexico.

“When I joined Celgene, my wife said that if this company ended up being successful, that I could eventually become the CEO. I told her that she was crazy. I didn’t join Celgene with ambitions of becoming CEO. The fact that I am CEO is coincidental to the personal passion that I have for making a difference, which at Celgene means trying to create the world’s greatest cancer and immune-inflammatory company.”

Alles admits he’s been fortunate to have worked with a lot of hematologists, oncologists, and infectious disease experts over the years. It’s through those interactions that he developed his strong opinion that the industry is first and foremost about scientific innovation. “Sure, the world expects incremental therapies that add value, but what the world is willing to pay for is true innovation, which only can come from great science.”

Today, Celgene has 50 molecules in development, 20 trials in Phase 3, and a market cap of about $80 billion. When I ask Alles what he feels are the factors that have contributed to that success, he gives me a list of what you would expect — passion for finding cures, a risk-taking mentality, a scientific orientation, and of course, great people. That topic then morphs into a dialogue about leadership and, in particular, how Celgene has evolved. “We have intentionally had an overlap of senior leadership for more than 15 years,” he explains. “There’s been a thoughtful approach to having separate, yet complementary, personality traits, such as the way people think about leadership, focus on science, etc.”

While many companies focus on having innovation incubators, Alles attests that the Celgene approach to innovation is best supported by having a leadership incubator. “We’ve built a very strong, sustainable leadership profile in the company,” he shares. Here is what Alles means by sustainable and overlap of senior leadership. When John Jackson retired as CEO in 2006, a position he had held since 1996, he was replaced by Sol Barer, Ph.D., who had been serving as Celgene’s president since 1993. When Jackson retired, he continued serving Celgene as a member of its board of directors, while Hugin took over Barer’s position as president. Hugin was serving as president when Barer announced that Hugin would succeed him as CEO in 2010. Similarly, Alles was serving as president in 2016, when he was announced as Celgene’s CEO. Unlike many companies where the titles of president, CEO, and chairman of the board often go hand-in-hand and tend to be held by one person, Celgene has, at times, separated these responsibilities among other members of its leadership team, a trend continued with Hugin and Alles. “I’m looking forward to continuing with Bob [Hugin] as executive chairman of the board and myself as CEO,” he states. “Our board is very connected to our company and includes Jackie Fouse, former Celgene CFO who is now president and COO. This incubator of leadership and clarity of purpose [i.e., committed to a cure] keeps us very much in a virtuous cycle of focusing on what’s working, and avoiding distractions,” Alles concludes.

The Importance Of Simplifying The Message

When speaking with many other CEOs, a consistent theme is that you can rarely over-communicate a company’s vision and mission. That being said, employee understanding is often benefited by simplification of messaging. This was Celgene’s approach in verbalizing its goal of being “committed to a cure.”

“It is simplistic, in that it sets an ambition,” shares Celgene CEO Mark Alles. “When we say we’re committed to a cure, we not only think we are communicating all of what we are trying to achieve in a very straightforward and understandable way, but are asking the question, ‘How ambitious are you?’ In some cases, Celgene is offering therapeutic alternatives that are better for patients and not necessarily cures. Let’s be clear, incremental benefit for large groups of patients is still very valuable.” While incremental innovation is significant, Alles believes that if employees approach every day asking themselves what they have done to advance human health, Celgene will continue to get closer to creating cures. “Being committed to a cure galvanizes and energizes an organization across different functions,” he concludes. “Sure, less than a cure can be very valuable, but that’s not what we’re here for.”

How To Pay For Cures Is A Worthy Discussion

It should come as no surprise that when faced with the opportunity to sit down with the CEO of one of our industry’s hottest companies, Celgene, that the topic of drug pricing would be discussed. When broaching the subject with Celgene’s Mark Alles, he states, “We are in the midst of a medical biological revolution. Thanks to the advances of science and technology, as a global society we are more advantaged today to unlock the causes and find treatments for diseases unlike any time in our history. But this also creates more pressure on a worldwide health economic system that’s already heavily burdened. When you weigh the reality of world economics against the possibilities of being able to cure a cancer, or in the case of our friends at Gilead, cure hepatitis C, and then ask the system to pay, it creates a convergence of a lot of different variables and public debate.” Alles believes constructive debate to be important. But patients seeking treatments, combined with the existing tensions among multiple stakeholder groups (i.e., governments, PBMs [pharmacy benefit managers], patient advocacy, and industry) make it difficult for constructive debate to happen. “Personally, I’m glad we have cures for hepatitis C, as the discussions that have taken place around the drug pricing of these products will hopefully serve as prototypes for a lot of future debates that result from future innovations. Talking about how to pay for cures is something certainly worth focusing on.”

When Is Innovation Innovation?

Prior to meeting with Mark Alles during the 2016 BIO International Convention in San Francisco, I had the opportunity to meet with several members of the Life Science Leader magazine editorial advisory board. During the discussion (which I shared with Celgene’s CEO), we debated as to when an innovation is an actual innovation. One person argued that if you don’t have a commercializable product, then you probably haven’t innovated anything. But if having a commercialized drug was the only criteria, would FDA-approved products (e.g., inhalable insulins) that ended up being commercial flops still be considered innovations? “These are important debates to have,” Alles states. “Going back to the word commercialization – what does that mean? For Celgene it means that a therapeutic has clinical value that is recognized by regulatory agencies around the world. It also means that a market for the product probably already exists. Though we [Celgene] solve for high unmet medical need, or create an alternative to the existing standard of care, before we ever decide to go speak with a physician and try to sell the product, the need should already be there.” Beyond that, in the pharmaceutical industry, drug discovery and development innovation require a threshold of evidence worthy of peer review. “For example, research on REVLIMID for multiple myeloma has been published in the New England Journal of Medicine [NEJM] 11 times,” Alles attests. “While we can debate what commercialization means, to me, for innovation to be innovation, a product has to meet a value proposition that is waiting to be filled.”