Productivity, Reputation are Keys to Global Leadership

As CEO of Japan's largest pharmaceutical company and now serving a two-year term as chair of Keizai Doyukai, a powerful group representing Japan's corporate business community, Yasuchika Hasegawa has the platform to pursue a two-pronged agenda that artfully fuses global and domestic priorities. He is repositioning Takeda to compete successfully in markets beyond Japan while working as a leader to address the steep decline in industry reputation—a decline whose reversal will determine how successful Takeda will be in improving the innovation climate at home but also in creating a hospitable climate for the company's overseas ambitions. "It's time we ended the perception that our values are built around individual company greed and that we replace it with an industry-wide creed: that we do well only by doing good."

Yasuchika Hasegawa

Hasegawa contends his contribution to the transformation of the industry has been simple: to execute the vision of the company's non-executive Chairman, Kunio Takeda. "A key mentor, he exhibited a central characteristic of leadership, which is to act to change the status quo before it is absolutely necessary to do so. This willingness to step out in front has made my task much easier." That vision was to seek opportunities for the company outside Japan, to diversify senior management, and to build a broader reputation in Japan as a healthcare partner supportive of innovation. Each of these are "disruptive" changes that in hindsight have reversed the closeted position of Japanese drugmakers and made them prominent global competitors.

Since assuming management responsibilities in 2003, Hasegawa has clocked progress on all three objectives, initiating an aggressive series of acquisitions beginning in 2005 with the purchase of two small foreign-based biotech ventures, which was an unprecedented move for a Japanese drug maker at the time. This was followed by the $9 billion acquisition of Millennium Pharmaceuticals in 2008 and the purchase this year of Swiss drugmaker Nycomed, which ranks as the largest foreign buyout in the history of the Japanese industry. The company is now looking for opportunities in emerging markets, which Hasegawa says is critical to Takeda's long-term growth. "Right now the revenue base from the emerging countries is small, but the consensus is that at least half of our long-term growth will come from there."

The push to expand beyond Japan is also exemplified by the relocation of key business functions to other countries, including the move of drug development to North America. Hasegawa is also making this theme of "expanding the horizon" one of his priorities at Doyukai. "Operating successfully in emerging markets is even more important for the rest of Japanese industry than for us, as we expect more than 60 percent of future global growth in demand for Japanese products and technologies will come from there."

On diversification of management, Hasegawa has filled senior ranks with non-Japanese candidates, and has especially focused on the appointment of women, including Debra Dunsire, who heads US-based Millennium: The Takeda Oncology Co. Hasegawa has also established a Global Advisory Board to bring in insights from experts beyond Japan.

One additional area where Hasegawa can point to progress is reform of the Japanese drug reimbursement system, where after years of conflict an agreement was recently secured between industry and the government under his leadership. The changes include support for increased use of low-cost generics coupled with price cuts of long-listed (branded) generics that are profit mainstays for smaller local producers, as well as greater flexibility in the application of the NHI price adjustment mechanism, which allows innovative drugs to maintain their price during the patent term to further enhance drug development. "Our message is that we will not exploit the difficult fiscal situation for short-term gain. This has improved our image to that of a responsible social partner at a time when public sector influence over drug pricing is stronger than ever. There are lessons from this strategy for every market pharma operates in."

Looking ahead, Hasegawa believes that the key challenge for industry will come from relentless pressures to contain healthcare costs due to the global impact of aging societies, sluggish and uneven economic growth, and wider application of information technologies. R&D companies are vulnerable because there is scant data that can accurately measure their contribution to lowering healthcare costs overall. "Such technologies can track spending but not necessarily establish value, which is what we must do to survive," Hasegawa contends. – William Looney