By Rich Soll, SVP of Research Service Division at WuXi AppTec (@richsollwx)
Over the last several years, the Japanese giant Takeda Pharmaceutical Company Limited (Takeda) has gutted its operations, installed new leadership, and invoked new ways of thinking. The company’s reinvigoration is intended to rebuild Takeda as a top leader in delivering transformative medicines to patients. For the company, 2015-2016 was a pivotal time as its leaders unveiled a blueprint that included refocusing on three key therapeutic areas – oncology, gastroenterology (GI) and Central Nervous System (CNS), plus vaccines, with concentrated R&D activities in Japan and the U.S. The organizational and financial changes were deemed necessary by Takeda to install flexibility and to drive innovation, to regain its competitive edge, to improve R&D productivity, and to deliver a superior pipeline with long-term, sustainable growth.
At the helm of the company’s new R&D charter is industry veteran Andy Plump, M.D., Ph.D., who envisions a more focused approach, building new capabilities, establishing fresh and exciting partnerships, and embracing new ways of working. Plump, who joined Takeda in 2015, has more than 25 years of experience in the pharmaceutical industry and academia, including positions at Merck and Sanofi.
I recently had the pleasure of talking with Plump, who is known as a true translational physician-scientist, with deep knowledge in biomedical research, experimental medicine, early development, genomics and biomarkers. He candidly talked about Takeda’s long and somewhat challenging journey in transforming its R&D organization and business model, and the strategy behind unifying cultures across a company.
Rich Soll: What attracted you to Takeda? And what’s different at Takeda compared to your previous experiences?
Andy Plump: Every company is unique. What attracted me to the company was (President and CEO) Christophe Weber. I was at Sanofi as head of research and I had just joined the company about two-and-a-half years prior. I was starting to feel that I was hitting my stride and we had just gone through some major changes, and I was trying to drive towards implementation, so I was not at all looking. I spent three months saying, ‘I’m not interested, I’m not interested.’ But finally I had a chance to meet with Christophe and we talked for an hour and a half. He’s an extremely authentic and good person, and he’s the exact same guy now as he was when we had that conversation three years prior. Our vision for what it meant to be a pharmaceutical company in delivering healthcare to patients in the time that we live in today, and how you drive that on the basis of innovation and R&D, was entirely aligned. I left that conversation thinking, oh my gosh, this could be interesting. So that was the attraction point.
Rich Soll: What were some of your top pain points when you took a deeper dive at Takeda?
Andy Plump: I started in February 2015, and spent the first three months meeting and listening to our people. What I found was that for everybody – from our scientists to our 30,000 employees to our executive committee to our board – the case for change was absolute. The question of where we went ultimately was incredibly well thought out and well detailed, but the reality is you could have taken it in a few different directions. We were able to propel the organization towards our vision and everybody understood, but not everybody ultimately agreed with it, which is one reason we ended up with dramatic change organizationally.
Rich Soll: How did Japan’s pharma market and Takeda’s deep history and culture propel or challenge that change?
Andy Plump: This is a 236-year-old company that was founded on an incredible legacy of history and resiliency over two centuries. It was founded as a Japanese company where the first CEO who didn’t have the last name Takeda, Yasu Hasegawa, was appointed only in the early 2000s. Takeda is a company that excelled in recent times in the Japanese business model, which was innovate in Japan, with first-in-class, best-in-class molecules and there was an exceptional skillset of Japanese R&D; Japan cornered 20% of the pharmaceutical market yet only had 1-2% of the world’s population. In that era, Takeda came out with four new amazing medicines: lupron, pioglitazone, candesartan, and lansoprazole which were all remarkable medicines for patients and were quite lucrative for the company. A lot of those profits were pumped back into building infrastructure and building our internal labs.
However, what that led to – and we’ve seen this across the industry – is a very inwardly facing mindset which ignored the fact that science was more outside than inside. Our focus at the time, was built entirely around our core capability, which was limited to our small molecule chemistry. Back then, we didn’t think so much about the translational relevance of a target; we thought about the druggability of a target. So we were doing a lot of stuff, not focused on any disease area, and we were really building on the ‘shots on goal’ model. That led to a period of an immense lack of productivity.
When Yasu took over, he saw this happening; he was committed to always building an innovative-driven pharmaceutical company, but realized we weren’t doing what we needed to do. He went out in the late 2000s and made some critical acquisitions for us. There were four that were bellwether events. We had two smaller ones: one was a company called Syrrx and the other was Paradigm, a target validation company in Cambridge, UK.
There were also two large acquisitions, which not only enhanced our R&D presence in the world, but also our commercial presence. One was Millennium, which is probably the thing that saved us and catapulted us. It also brought us into this exciting area of oncology.
The second was Nycomed, a strategic acquisition for its presence in emerging markets.
Rich Soll: What challenges did you see for the company?
Andy Plump: We are spending a lot of time improving productivity. In the decade before I came, we brought 21 new products to market, of which the vast majority (80%) were regional. We were developing drugs for individual countries, predominantly Japan, when it’s clear in our business that we can’t do that. With the cost to innovate –all the failure costs – you need to be thinking on a global scale. Of those 21, only four came from our internal labs, and of the other 17, most came from in-licensing and acquisition, primarily from Millennium. Thus, we were investing heavily in our internal labs — and when they failed to produce we went to the balance sheet to in-license, not as a primary strategy but as a recourse from the failures of the lab.
Rich Soll: So you were caught in a tough spot.
Andy Plump: Yes. And this has been the pharma cycle – we need to own everything, our scientists are telling us they can make the next blockbuster and we trust them and we invest billions in them (in ourselves), and then we say, wow we really haven’t done as well as we thought we were going to do. So then you have to fill some gaps, and you pay a lot of the in-licensing and it typically does not return investment. Now you’ve failed to produce internally, the in-licensing doesn’t meet the need, so then you acquire. Acquisition is a really disruptive thing for the industry. And then you go back and invest in your internal labs, and you go through that same cycle again. That’s the failed cycle that has existed in pharma until recently.
Rich Soll: How has Takeda tried to break that cycle?
Andy Plump: There were four areas we needed to address: focus, new capabilities, partnering mindset, and culture. First, we weren’t set up to be successful because we were so fragmented and we lacked critical skill sets. We essentially had four separate companies and four separate R&D organizations. We had Japan, Millennium, the European team at Nycomed, and some other activities in the U.S. We were so de-focused. Our strategy was, we’re really good at small molecules, so we’re going to go after any target and any disease. It’s clear in the world we live in today that the complexity around any given disease area is so great, and the depth of knowledge, experience, wisdom and intuition that you need to have in each disease area forces you to focus. So our first strategic decision was that we were going to focus on three disease areas – oncology, CNS and GI (plus vaccines). It was principally around patient need, alignment of the science with that patient need, and then some of our intrinsic capabilities and pipeline programs at Takeda.
Another aspect of focus had to do with de-emphasizing what we had done traditionally in Japan, and building extensively here in Boston. We had another eight or nine sites that were not just regional sites but were strategic global sites, and it just didn’t make sense for a company our size to fragment our global leadership across 10 places. So we really worked to consolidate. Over the last year, we’ve been going through an incredible journey of transforming the organization, both structurally in terms of talent, and most importantly, changing the culture.
The second point was aligning our capabilities to meet the needs of those disease areas. The biggest element there is what I refer to as modality diversification. If you’re in oncology today, but you say, I’m only going to use small molecules to treat cancer, you’re excluding two-thirds to three-quarters of the transformative opportunity in oncology. Perhaps the greatest chance of a cure in oncology is not coming from a small molecule. If you’re going to be disease area focused, you need to open yourself up to an array of modalities. We’ve never done cell-based therapies, we’ve never done complex biologics or gene therapy, and so then, by definition, we became an external organization embracing partnership. We had way too much fixed infrastructure, we didn’t have the right skill sets for those disease areas, we didn’t have the right culture, and our budget was not set up to allow us to do the partnering we needed to do.
Rich Soll: Did people agree with the therapeutic areas and the modalities?
Andy Plump: The answer to your question is absolutely not. We spent almost a year with this strategy until we started to drive major structural changes. We were able to put pieces in place that were fully aligned. We did this right away and we were able to get things going in terms of our partnerships. But to really hit that steep part of the curve it required changing the organization structurally. It required restructuring and bringing in new people and new energy and new thinking, and people who were not stuck in a legacy mindset. It was also about culture. How do you create a culture that creates performance and drives the strategy? That has been and continues to be the hardest part of this transformation and we can certainly talk more about that.
The third area we had to look at and build up is what we call externalization or a collaboratory R&D model. And, what that means is that we embrace the fact that there are others who may have deeper expertise or certain capabilities that we don’t have. And when that’s the case, we gladly step aside to let those partners take the lead, and we support. We’ve fully embraced external partnerships and collaboration as a way of operating and as a core value and today 51% of our pipeline is partnered.
Rich Soll: Can you give us some examples of those partnerships?
Andy Plump: Yes. One is T-CiRA. We’ve created with Shinya Yamanaka an institute within our labs outside of Tokyo called T-CiRA, a joint program between Takeda and the Center for Inducible Pluripotent Stem (iPS) Cell Research andApplication, Kyoto University. Shinya, who is at Kyoto University and at the University of California at San Francisco, won the Nobel Prize in 2012. T-CiRA is an institute meant to capitalize translationally on Shinya’s discovery of how to transform ordinary adult skin cells into cells that, like embryonic stem cells, are capable of developing into any cell in the human body. He has 10 projects within Takeda, staffed with ~100 scientists. We fund the lab and cover infrastructure costs. Our goal is to let him, along with our drug discovery experts, figure out how you apply iPS cells to become medicines for patients. It’s really incredible. We’re not trying to confine him to our strategy; it’s a new platform and a new science, so you should let it go where it should go. There will be areas like cardiovascular and diabetes that are not within our strategy, but in the world we live in, there is so much you can do outside your walls and still drive value. We’ll do spin-off companies with Shinya in those areas. Our goal is to create the right environment, the right incentive system, and the right structure to allow science to move forward in any way that’s right for that science.
Another example is GammaDelta Therapeutics. We’re very interested in regenerative medicine. We’re very interested in oncology, and we’ve been disciplined in entering that first wave of CAR-T. We think that GammaDelta has a really interesting strategy to harvest T cells from tissues that may have innate properties in tumors, and also potentially adaptive mechanisms. It’s just a different area that’s not as crowded. This is a partnership that is completely outside our walls, but we’re actually building a group in Boston to help support that company. We’re major owners in that company; if they’re successful, we have an option to buy them. Our goal is to make them better because the better they become the better we become.
And last but not least, is the fourth area we prioritized: culture. We spent 2015 re-working the strategy and the leadership in R&D, and then we spent a large part of 2016 working on what it would take to position Takeda so we could execute on that strategy. In July 2016, we rolled out a transformative organizational change that was incredibly emotional, and based on the case for change that everybody got – a vision and a strategy that made a lot of sense, and a set of organizational changes that I think people understood was hard. In the end I had to change about 50% of my leadership team. For us, the culture shift was about honoring our heritage and doing the right thing for patients, while also infusing a heightened sense of accountability and agility. It was about problem solving and removing legacy systems and legacy ways of working that were hierarchical and slow. These old ways of working were innovation killers. Once we had the right leadership in place, we focused on learning and development and created a Leadership Academy with MIT that many of our new and emerging leaders have gone through. We also made the topic of culture itself a core focus of my leadership team. We’re constantly challenging each another to make even the smallest of changes because it adds up. We aren’t there yet, but we’re making progress.
Rich Soll: You’ve accomplished a lot in already in 2017, including the acquisition of Ariad. Can you elaborate on what changes needed to happen in order to achieve some of your goals??
Andy Plump: First, let me provide some context for you. When we started to make these changes in an 18-month period, our organization almost came to a halt. Our research organization was highly mis-aligned with our strategy. We’ve had to rejuvenate and in many places entirely revamp 180 degrees our research organization. So not only was everybody anxious about the changes and what it would mean to them individually, we also didn’t have a research organization that was aligned with the strategy that we put in place. In 2016, we had zero first-in-humans from our research. Not only that, but in 2016 we advanced our pipeline through partnership and through Ariad, and we had zero phase transitions in our clinical pipeline with one exception, our Dengue vaccine moving to Phase 3. That’s unbelievable. The research piece is understandable given the major change in strategy; the pipeline piece was also understandable, as we changed our therapeutic area strategy we needed to repivot our pipeline. The other element was that we raised the innovation bar. We recognized that to make a medicine that was meaningful to patients, you had to have significant differentiation, and we felt that a lot of the molecules, even within our strategy, didn’t cut it.
So we spent much more effort cleaning the pipeline by reducing it and enriching it and by externalizing programs out of strategy. In parallel to raising the bar on our pipeline, we started to put our forward strategy in place. We had Ariad, we had several licensing deals in our pipeline that were aligned with our strategy, and we created 50-to-70 partnerships that are really the foundation now of the future of our research organization.
Rich Soll: Do you feel like you’re making progress with the changes you are making?
Andy Plump: It’s like building a house where it takes two-thirds of the time to get your permit and dig the foundation. I feel that foundationally, we’ve created something that’s real and we have a compelling strategy – we’ve really restructured ourselves, and we have top line growth in our company that allows us to build where we have a sense of urgency but don’t feel rushed. Now we’re starting to see the success. The talent we’ve been able to attract is incredible. When you get a few good people, more good people come. People see from the outside what we’re doing and when they come in they see the character in this organization and they’re excited about it. Our pipeline flow and our ability to make decisions are also getting better and better. I think the big thing over the next year for us will be to really capitalize on maximizing opportunities around performance and execution.
Rich Soll: What milestones do you want to achieve in the next couple of years?
Andy Plump: We need to get the organization feeling confident. The vast majority of partnerships that you’ve seen will take three years for people to start to see the value. In terms of milestones, there are three buckets – the first is the good news, which is we have a handful of interesting recently launched products that have extensive life-cycle management programs with really cool science. Every year, we have two-to-three significant clinical trials that should be very interesting. Those are established mechanisms that have a much higher probability of being effective. The first goal is executing on those programs.
The second, which is the hardest, is to move programs from early development to late development in our pipeline. Our bar for moving something into late development is high. Our goal over the next three years is to have at least six of those transitions as a bellwether for what we’re trying to do.
The third, which is the probably the most important, is building out this partnered, really exciting science in our research base and bringing that out into the clinic. Once that starts to come out that will be the real indicator to me that we’ve been successful. Some of those mechanisms will have really transformative potential for patients. Some of them, because of that, will go really quickly through development.
Rich Soll: What advice would you give to younger folks considering coming into the industry?
Andy Plump: We can do things today that were considered science fiction five years ago. We’re embarking on a new era that will be driven by digital and data – this intersection of what we can do with data and biology. That opportunity to me is so exciting. If you look at this next wave of brilliance that is coming through college and the young people in their 20s, it’s around computational biology and artificial intelligence and machine learning. All those kids are going to Wall Street or high tech or to car companies. I think what you’re going to see over the next three-to-five years is a trend for that brilliance to come into health care because the opportunity to apply that way of thinking is just immense.