Christophe Weber is not afraid of bold moves. He was the first foreigner to lead Japan's top pharmaceutical company, Takeda, when he was appointed in 2014. And he has since masterminded its largest takeover – the $62 billion (€55.2 billion) deal for Irish-domiciled Shire – in the face of some opposition from shareholders of the group's founding family.
It’s not the first resistance the soft-spoken Frenchman has encountered in his time at Takeda and, from the outset, he has invested time and energy in reassuring investors and employees of his commitments to the company’s culture even as he continues the process of transforming it into an international pharma powerhouse.
The weight of history seems to sit easily on him as we meet in the company's pristine new plant at Dublin's Grange Castle campus.
Takeda has been in Ireland since 1997 – even before it established an operation in the United States. Initially, it had a manufacturing facility in Bray before building what was its first active pharmaceutical ingredient (API) plant outside Japan at Grange Castle in 2002.
It was on the back of the success of those ventures, that Ireland was chosen for another landmark. Earlier this month, it opened a €40 million state-of-the-art plant that will manufacture global supplies of Ninlaro, an oral medicine that is used in combination therapy to treat multiple myeloma, a type of white blood cell cancer.
It’s a major vote of confidence, given the competition between sites for such investments.
Investment
“When we have a good experience with a site, the site tends to attract more investment,” says Weber, noting that the company has had a good experience in Ireland since that first investment in 1997.
“The plant has a really good record, an excellent record on quality, safety, process development skills. They continuously improve the processes, they attract new people and that’s what we looked for when we decided on the investment.”
Access to talent is a recurring theme and Weber notes the “close and excellent collaboration with the universities” that delivers the people Takeda and other companies in the pharma sector need, specifically for the new innovative products and technologies coming on stream.
Getting the right people in the first place is important and so is holding on to them. Weber notes the staff retention at its plants here is high. “People, once they are at Takeda, they stay as well, so that’s a very strong ecosystem,” he says.
Not that there are too many people involved in this latest investment. A team of just 40 will be involved in the cutting-edge plant with Takeda investing heavily in digital automation, which it sees as critical to the future of pharma manufacturing. The company says it has been piloting the technology: the new Grange Castle plant is in the vanguard in implementing it at the coalface.
The opening of the high-tech plant – which will house all steps of the production process from API, to making the drug and packaging it for supply to global markets – is testimony to how important Ireland has become in furthering Takeda’s global ambitions.
“It’s very critical,” says Weber, “because we are producing a very important product here in Ireland and this is our global manufacturing site so we are really depending on the site here, on this product.
“And these medicines are life-saving medicines as well. So, reliability is very critical.”
Making cutting-edge medicines is one thing, getting access to markets to sell them is another. It is increasingly a central issue for Takeda and all modern pharma companies. The cost of modern drugs has become a lightning rod for controversy even in the US, Europe and emerging markets.
Companies cite the escalating cost of research and development for modern small molecule biologic drugs, many addressing rare diseases where there is a smaller patient population from which to recoup the cost but where there have traditionally been few if any medicines available.
Weber acknowledges that medicine pricing and access to markets are a challenge that is defining for the company’s strategy.
“We are making great efforts to increase our R&D productivity. R&D is extremely costly; this is why also prices are very high. So if we increase R&D productivity, we will have more flexibility.
Committed
“And the other strategy that we have is that we only develop highly innovative medicines, which are life-saving or life-transforming medicines, so that these are more critical medicines to reimburse and to invest from a country point of view for government.
“We are extremely committed to access at Takeda so we want our medicine to be available everywhere,” he says.
With that in mind, Weber is among those pharma executives looking at new ways to price drugs rather than the traditional approach of hammering out as high a price as they can achieve for new drugs that have yet to confirm their potential in the market and then having that set in stone.
“We do more and more what we call value-based contracting, outcome-based contracting,” Weber says. “So, instead of defining a pricing per unit or per volume, we agree on the price based on patient outcome. I think this is a good way for the future to find this middle way with government and payers.
“We are at the beginning of this and we are seeing that some countries are more open than others.”
Critical to such an approach is the ability to measure outcomes. Many healthcare systems are not currently designed in a way that delivers the necessary data, he says. Though Weber doesn't cite Ireland, this is a recurring theme in talking to executives at the big Ireland-based multinational drug companies and their industry body, the Irish Pharmaceutical Healthcare Association.
“It requires a new way of working for the healthcare providers and payers,” says Weber. “So, we are seeing that it’s work in progress but I think there is a good interest from many parts of the world because you just create an agreement and for payers, for government, they pay based on the outcome and not based on the consumption.”
Compensation, especially for rare disease drugs, is a priority issue for Takeda following its takeover of Shire, which specialises in this area.
The acquisition of the Irish-domiciled, UK-listed and US-based business was contentious in Japan, not least as the target was valued at more than Takeda itself. In addition, much of the cost was met with the issue of Takeda shares. There were concerns about the debt burden being taken on and about the possibility of making the required cost savings.
In the event, after an eight-month campaign, Weber and his team persuaded almost 90 per cent of those voting at a shareholder meeting last December to back the plan, which catapults the 237-year-old Japanese company into the top 10 players in global pharmaceuticals.
The deal closed in January and the company is currently working hard on integration. In May, Takeda sold its eyecare business to Swiss group Novartis in a deal that could be worth $5.3 billion (€4.7 billion), though only $3.4 billion (€3 billion) of that is upfront.
Responsibility
Weber is comfortable with the decision to go for Shire and the work required to integrate the two businesses.
“We are looking forward to it. I think this scale is good because we are able to invest more in R&D but we will have more responsibility,” he says. “These are still early days. I mean we closed January 8th, so we are six months in the integration but it’s progressing very well and we are looking for how to be more competitive everywhere.”
Takeda has said it would sell about $10 billion (€8.9 billion) worth of assets in total to pay down debt and bring it back close to pre-Shire levels by 2023.
“We have committed to reduce our debt, to deliver it within three to five years for example, but the integration [of the two companies] will be much faster,” he says.
Despite reservations about the deal, Weber is convinced that, only by M&A, can companies in the sector become global players.
“I think it always has been there as an enduring signature of the industry. If you look at the top 10 pharmaceutical companies, every single one is there because of an M&A in the past,” he says. M&A tends to come in cycles but all the big pharma companies are jostling for size and for new drugs that can deliver growth in the future.
“I think it [M&A] is linked to the nature of the industry because of the cost of R&D,” Weber says. “Now there is more pricing pressure, as well as the patent cliff that happens once in a while, so I think that’s really the nature of the industry.”
The Takeda boss sees the Shire move as a logical step in what has been a concerted effort to globalise the business even under his predecessor, Yoshiaki Fujimori, who was the first non-family member to lead the company and remains its chairman.
"When I joined the company, the first step was to really globalise the company, define a global strategy and also create a global organisation," says Weber. "If you look at the executive team of Takeda, there are 11 nationalities in the executive team, so it's a truly global team and it's a team that is not only based in Tokyo but also in Boston and Zurich, so we are a truly global company."
And he thinks the particular nature of the Shire operation will make its integration easier than it might otherwise have been.
Disruption
“The beauty of the Shire acquisition is that it was not a huge R&D disruption because Shire research and development activities were also in Boston where Takeda has decided to invest a lot,” he says. “Before the Shire acquisition, we did a massive R&D transformation at Takeda. We decided to focus on a few diseases which was not the case before and we also decided to focus our research capability in Japan and the United States [in Boston]. And so that’s where we had our research centre.
“And so the level of disruption is minimal. And so that’s great. We are just adding the rare disease area to the three disease areas that we had selected at Takeda.”
Important as getting the integration of Shire right is to Takeda, and to Weber’s legacy, it’s not blinding his team to other opportunities.
“We are focusing on the integration but at the same time we are already looking,” he says. “I’m already looking at five-10 years and beyond because it’s only if you have this long-term perspective that you do the right thing, I think.”
And that’s good news for Ireland too. Even as P2, as the new Ninlaro production plant is called, opens, Takeda is already working on P3, a separate modular cell therapy expansion at the Grange Castle site.
The €25 million project will lead to a further 70 jobs serving the European market.
“It’s our first cell-therapy product so it’s the first in the world and perhaps even in the industry so they are very, very critical for us,” says Weber. Grange Castle won the investment because of its proximity to Dublin Airport. The nature of the work at the new plant – which involves bringing in cells from patients, adapting them and shipping them back to hospitals for the patients – means its products have a “shelf life” of just 48 hours.
It’s an exciting future. For now, Weber will be judged by both the markets and his investors by his ability to pay down the historically high debt and successfully integrate Shire into the Takeda family. But he clearly has further ambitions for the company and for its Irish operation.
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CV
Name: Christophe Weber
Age: 52
Position: Chief executive Takeda Pharmaceuticals
Lives: Osaka, Japan.
Family: Married with two children
Education: He is a doctor of pharmacy and also has a masters in pharmaceutical marketing from the University of Lyon.
Something you might expect: As he tries to reassure founding family shareholders and others in a country where foreign business leaders have often struggled to thrive or survive, Weber points to his commitment as a 20-year veteran with his previous company, GlaxoSmithKline
Something that might surprise: He is actively engaged in reducing the carbon footprint of an industry generally known for its energy consumption and hazardous waste production.
