Josef von Rickenbach: The Enterprising CRO

Parexel, an international contract research organization founded by Josef von Rickenbach, will mark its own 30th anniversary next year, a testament to the importance of contract research as a way for industry to streamline R&D costs.

Josef von Rickenbach

Von Rickenbach, chairman and CEO, continues to lead the company, which has morphed from functional service provider (in today's jargon) to full-service global organization. Parexel's guiding principle for three decades has been to create new efficiencies in R&D. "Eventually, the most efficient way forward for biopharmaceutical development will prevail," says von Rickenbach.

When von Rickenbach worked for Schering-Plough in its Switzerland offices, the word global didn't exist in the way it's used today. Schering-Plough had offices in the Middle East and Africa, but the organizational structure of the large pharmaceutical companies "was nationally based, meaning each nation had its own, full-fledged pharmaceutical business," says von Rickenbach. "If you think about drug development, this is obviously not efficient, because each of these countries had its own pockets of R&D ... it didn't take a lot of foresight to think about the eventual ability to pool data from these geographies." The problem was that pharmaceutical companies weren't good at thinking horizontally in terms of drug development; each country had its own interests, and commercial strategies focused on countries as separate verticals, according to von Rickenbach. Pooling data was difficult early on, since databases were not robust, and neither was management. "Almost from the beginning, the conduct of big, multinational, intercontinental and eventually global [clinical] studies resided with the leading CROs," says Rickenbach.

As such, Parexel was faced with the formidable task of convincing not just clients, but also regulators, that sensitive clinical research could be outsourced. At the time, no regulatory structures existed for CROs. "The most difficult challenge that we had to overcome was one of acceptance—we didn't really have any role models," says von Rickenbach. "There was nobody out there with a blueprint for a CRO." Making the case was difficult at times—von Rickenbach also had to persuade the venture capitalist community, which required a "painful" risk premium in return for investment—and when Parexel went public in 1995, von Rickenbach had to explain the CRO industry to the SEC. As CEO, the most critical skill was perseverance, he says. "Every time you reached a plateau, there was another mountain behind that you had to ... scale."

In addition to perseverance, von Rickenbach credits his colleagues' team approach with the company's success. "It would have been impossible to build a company like this with only one person's drive," he says. In terms of a contribution outside of profit generation, von Rickenbach offers the following statistic: "We have meaningfully contributed to every single one of the 50 top-selling drugs in the world today." In an area like HIV/AIDS, Parexel was at one time "the sole provider for the Inter-Company Collaboration for AIDS Drug Development," because the job required neutrality, since studies on drug cocktails had to be coordinated among competing drug companies.

On the changing role of the CEO, von Rickenbach says a "fast-paced, decision-making, leading-from-the-front" style has given way to "more of a lead-from-behind style, where you become effective through strong governance structures, and professional management. "Generally now, I probably make fewer decisions, but they have much more impact." As pharmaceutical companies have become more comfortable with "shedding what they would consider less than essential activities," they have become "leaner and more nimble in their approach." Does this approach facilitate future innovation? "Many people basically believe that innovation is a foe of cost. That's a complete fallacy," says von Rickenbach. "The biggest problem in healthcare right now is the lack of reform at the base ... Most healthcare institutions are unchanged from the 1920s and 1930s. We should protect innovation, and reform the bases of these systems from a cost point of view. It needs to be driven by rational capital allocation—institutions, hospitals, and provider organizations that are more efficient, ought to get more money." – Ben Comer