Face to Face with Sandoz's "growth guy" Jeff George
This article was originally published in Scrip
Jeff George took over as head of Sandoz, Novartis's generics business, in late 2008. With a big push in emerging markets, a leadership position in biosimilars and an expanded focus on injectables, he explained to Scrip's companies editor Eleanor Malone how he is drawing on Sandoz's assets and infusing the firm with a customer-focused, performance-driven ethos to boost the business.
Jeff George defines himself as a "growth guy". A tough, thrusting business attitude clearly lies behind the laid-back, welcoming exterior of this amiable American, who is in his third management position and fourth year at the Swiss pharmaceutical conglomerate Novartis. As he notes, his latest appointment, as CEO of Sandoz just over a year ago, heralded a major shake-up of the generics business's executive committee, and a new emphasis on business performance that has yielded positive results for the division's underlying financials and led to the division launching eight more new products in 2009 than in 2008 in the US.
Jeff George, CEO of Sandoz
Sandoz's revenues grew by 5% in local currencies to $7.5 billion in 2009, although adverse currency effects reduced the reported change to a 1% decline. Meanwhile, operating income absorbed a negative currency effect of 11 percentage points to decline by just 1% to $1.1 billion. Fourth-quarter results showed a 10% local currency rise in sales to $2.1 billion, helped by the acquisition of EBEWE Pharma, a third quarter of significant growth in US retail generics and biosimilars, and good expansion in emerging markets. Core fourth-quarter operating income excluding one-off charges grew by 20% to $356 million.
Mr George's background in retail and consumer goods – he was formerly head of strategic planning and business development in a division of Gap – and his experience in other industries, including private equity through his work at McKinsey, have informed his approach at Sandoz.
"Consumer goods and retail are both very fast businesses where a sense of urgency, a performance focus and a customer focus are deeply important," he said. "I think all of those are assets, a different lens from the scientific one if you will, that I bring to the table at Sandoz, which I think in some ways is not all that different from a fast-moving consumer business. In the US we launched 25 products this year. That's a great deal of work that you've got to do with your key accounts to drive those launches through."
Novartis has a history of putting its highly scientific operations in the hands of managers whose background is in consumer industries. Joe Jimenez, new CEO of the group and former head of pharmaceuticals, came from Heinz, while Thomas Ebeling, who consecutively headed Novartis's nutrition, pharma and consumer health divisions, came from Pepsi-Cola.
According to Mr George, who prior to Sandoz was head of emerging markets in the Middle East, Africa, southeast Asia and former Soviet countries for Novartis Pharma, "Sandoz had got a little sleepy" before he arrived.
He soon woke it up. Over the past year, nine new members have been appointed to its 18-strong executive committee, and five of the seven regional heads are new to the post. "And we've really made a lot of progress in creating a performance-driven, sense-of-urgency and customer-focused culture," he declared, noting that this brought it into line with the Novartis group as a whole – which "is one of the most if not the most high-performance-oriented companies that I've ever seen and operates with a very high sense of urgency".
In recruiting the new managers, Mr George picked out people "who really think 'customer first', are extremely performance-motivated but keep always in mind that the end goal is for patients and customers". Several of them Mr George brought over from Novartis Pharma, while others were external recruits. "What is important in bringing on people is having diversity," he added. So for example, contrasting with Christine Mundkur, Sandoz's US CEO – who was formerly CEO of Barr, giving her a "hardcore generic background" with technical expertise in regulatory affairs, legal and quality issues "which in the US are extremely important" – are Roger Bassoul, head of the Middle East, Turkey and Africa, and Peter Goldschmidt, head of central and eastern Europe, whose backgrounds are in branded sales and marketing for Novartis Pharma "because in many emerging markets the lines are quite blurred between originators and the generic companies and I needed people who could play in both markets", while in western Europe, which is "very much a pure generic market, driven by pricing, especially in the UK and the Netherlands" Sandoz hired Nick Haggar, formerly CEO of Ranbaxy Europe and a veteran of GlaxoSmithKline.
Apart from bringing in a new and diverse range of managers, Mr George has a clear idea of Sandoz's best growth prospects. "We have the undisputed global leadership position in biosimilars," he noted. Sandoz's biosimilar sales – from Zarzio (filgrastim), Binocrit (epoetin) and Omnitrope (human growth hormone) – grew by 73% in local currencies to $118 million. "We're the only company with three approved marketed biosimilars." Although Sandoz is not the world's largest generics firm – it is second to Teva – it is in a strong position to grow in the emerging market for biosimilars, not least because of its "symbiotic relationship" with its parent company, which gives it access to highly specialised technical, clinical and regulatory expertise, something that is crucial in an area such as biosimilars with very high barriers to entry.
Similarly, Sandoz is also well positioned to grow in the specialised, technical market of generic injectables through its $1.3 billion acquisition of Austrian EBEWE Pharma, a leading player in oncology injectables, last September. "Now we have more than a $1 billion injectables business, with very strong positions in anti-infectives and oncology as well as cardiovascular products," said Mr George. "Injectables represent about 25% of the global pharma industry, and are an important driver for growth, particularly in oncology. Sandoz had a smaller presence in oncology historically, which is one of the reasons we bought EBEWE." Again, the ability to draw upon the expertise of colleagues in Novartis Pharma represents a competitive advantage for Sandoz, according to the CEO.
In fact, being part of Novartis "is a big competitive advantage" full stop. "For example, if I have an immunogenicity assay issue with a particular product, our team can call up Tim Wright [head of translational science] at NIBR (Novartis Institutes for BioMedical Research) and say 'hey Tim, can you help us on this?', and he'll send 10 people over two days later. And that ability to call on that innovation and technical competence and expertise is huge," explained Mr George.
A second benefit of being part of the same group as an innovative pharma company is the "access to talent and leadership" that it provides. "As there are more and more large-molecule biologics and oncology injectables coming off patent, products that are not only difficult to develop and manufacture but also to market and sell, I think those capabilities on the talent and leadership front are really important," said Mr George, referring once again to the top executives he has 'poached' from Novartis Pharma.
Finally, being part of Novartis brings enhanced "access to capital" compared with a standalone generics group. "The board and Dan Vasella [Novartis's chairman and former CEO] were very quick to support our acquisition of EBEWE. If you look at a lot of the smaller competitors, they don't have the same access to capital and resources."
"For me, the advantages from an innovation perspective, from a people perspective and from a capital perspective really outweigh the noise that some of our competitors would look to create around the notion that Sandoz may be constrained by bureaucracy or by the patent situation with pharma," he concludes. "I see us as having a very symbiotic and collaborative relationship with pharma and I think that tone was set from the beginning by Joe Jimenez who looked at 'how do we maximise value for the Novartis group".
With this positive outlook and ambitious drive for results, does Mr George have any designs on the number one spot in the generics market? "I think that Teva is so big that for me to come out and state that we aspire to be the biggest would not be a correct statement," he admits. But in any case: "It's not about becoming the biggest; I think what we aspire to is to become the best generic company. In terms of talent attraction and development, in terms of providing life-saving affordable high-quality medicines for patients, and the best over time in terms of other metrics whether they be profitability or innovation metrics."
And where does Sandoz stand in the race to become the best? "We started out on our journey to turn the company around when I came on board in late 2008, and we're making good progress."