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All things Pharma

The joys of independence

IT IS NOT ALWAYS REALISED that some of the big-name pharmaceutical companies such as Boehringer Ingelheim, Napp Pharmaceuticals and Servier are still privately-owned. This gives them a certain amount of freedom that companies driven by institutional shareholders do not have. Externally, this often translates into greater commercial flexibility whilst internally, it fosters a strong family culture in which personal development and career progression are supported and encouraged. In this article Chris Chugg, Human Resources Director for Boehringer Ingelheim UK offers his views on the differences between the private and public pharmaceutical companies from an employee perspective.

Several of the big names in the pharma industry are still in private ownership. At first glance these companies resemble the other big players in the field but, unlike the others, they have only a small number of private shareholders. They are committed to providing value for their stakeholders – the private shareholders and the employees. Moreover, as a result of private ownership, I believe that there are three critical factors that typically differentiate these companies from public, shareholder-driven companies. They are:

  • Freedom to take decisions quickly
  • Ability to plan long-term
  • Family environment and culture

Each of these factors has important implications for employees of these companies.

The freedom to take decisions quickly can be a decisive factor in any business. While no one would advocate hasty, ill-considered decision-making, there are sometimes situations in business where the ability to make a decision quickly enables an opportunity to be seized. A good example of this type of situation was when Genentech, the manufacturer of alteplase (Actilyse®) was looking for a European partner. This was not just a question of marketing but involved making a commitment to build a specialist biotechnology manufacturing plant in Europe for the production of alteplase. The owners of Boehringer Ingelheim were able to analyse the situation and make the commitment promptly. This astute decision gave Boehringer Ingelheim a valuable foothold in the (then) emerging marketplace for clot-busting drugs and the company is now recognised by world medical opinion as being a leader in this field. This is not to imply that all decision-making is centralised, for the same flexibility extends to managers throughout the company – everyone can make plans without the additional constraint of having to consider short-term “shareholder value”.

The second critical factor is the ability to plan long-term. A privately-owned company is not obliged to satisfy the short term needs of the equity markets and can make long-term investment plans with more certainty without compromising the need for success. There is a willingness to experiment and a premium on innovation over short-term commercial return. Moreover, they can afford to take a longer perspective on the investment in good ideas. Long-term planning makes good commercial sense and it gives these companies a greater feeling of stability. In most successful, privately-owned companies this is also linked with a strong ethos of independence and resistance to the idea of takeovers or mergers. These two things together have important implications for employees – a company that plans to survive and prosper, under the same ownership, over the long term, can offer attractive employment and development opportunities. The pharma industry has seen many mergers in recent years and the threat of redundancy or redeployment casts a long shadow over many careers.

The third critical factor is the family environment and culture. Family ownership stretching back over decades inevitably influences the way in which a company functions and the successful private companies have learned how to make this work in a very positive way. Typical features of a family culture are long-term employment – it is not unusual to find employees who have been with a company for 15-20 years or longer – and investment in individuals. This is usually underpinned by a real understanding of the fact that people work best in a stimulating environment that is psychologically healthy. In practical terms this boils down to a number of factors – the provision of a pleasant working environment, for example, Boehringer Ingelheim’s in-house coffeeshop has made a spectacular change to communication within the company – stimulating work challenges – and support and encouragement for self-improvement.

When it comes to field based sales staff, we work on the basis that they need to be able to bring an individual approach to their jobs, but also to know that they can rely on the company to provide all the support they need so that they do not work alone. The family approach often involves active mentoring of individuals to ensure that their skills are most effectively used. One long-standing employee recalls. “At one stage I was given a position in which I made a complete idiot of myself; I was hopeless at the job. The company took the view that I was a round peg in a square hole rather than a hopeless case. I was moved to another post – something we agreed I was good at – and I have never looked back. I was lucky that the atmosphere here allowed me to admit that I was no good in this particular role without talking myself out of a job altogether.”

Another aspect of the family approach is public recognition and rewards for innovation. It is often the people who are doing a job who can see how it could be done better and it is important to have an atmosphere in which people can suggest improvements and try them out. Recently a team at Boehringer Ingelheim came up with an innovative method for packaging. Another team devised a new approach to recruitment and resourcing that shortened the overall process considerably. Both teams were given awards in the annual “Value through innovation” day.

Privately-owned pharma companies can offer long-term job stability and a commitment to individual development coupled with nimble commercial tactics unconstrained by institutional shareholder demands. These are the very qualities that have put them where they are today.

Boehringer Ingelheim: More than100 years of private ownership.

The foundations for the present day pharmaceutical company were laid in 1885 when Albert Boehringer set up a chemical factory in Ingelheim. Albert Boehringer was the grandson of Christian Friedrich Boehringer who had started the family’s chemical business in Stuttgart in 1817. Initially, the main products were tartaric acid and lactic acid. In the early years of the 20th century, the company started to produce pharmaceuticals, first with pain relief, then cardiovascular products, bile products, a narcotic analgesic and respiratory sympathomimetics. Albert was a caring employer. He introduced a staff insurance scheme as early as 1902, and a few years later a foundation for old and infirm workers was established. In 1910 he took the then magnanimous step of granting a fortnights annual leave to all employees. A pension scheme available for employees with 20 years service was introduced in 1912. Later a staff canteen was provided where Boehringer Ingelheim employees enjoyed a free meal each day – a particularly valuable benefit when food became scarce in 1917.

When Albert died in 1939 the company employed 1,500 people. Over the next 20 years, under the stewardship of his two sons, Albert and Ernst, together with his son-in-law Julius Liebrecht, Boehringer Ingelheim grew into a modern, researchbased pharmaceutical company. In the late fifties new and highly effective drugs were introduced and these formed the basis of the established pillars of the company’s research programmes: agents for the treatment of respiratory, cardiovascular and gastrointestinal diseases.

In 1962 the UK company, Boehringer Ingelheim Limited, was set up in Isleworth. The product range and turnover continued to grow and in 1972 the company moved to its long-term home in Bracknell, Berkshire.

Today Boehringer Ingelheim is at the forefront of the pharmaceuticals business and produces a range of market leading products. It now has seven research and development centres worldwide and has moved beyond its traditional areas of specialisation – respiratory, cardiovascular and gastrointestinal disease – with a new focus on diseases of the immune and central nervous systems, cancer and viral diseases. The company also has businesses dedicated to consumer health care and veterinary medicine.

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