When Pretty Good Isn't Good Enough

Moncef Slaoui has a tough job ahead of him – restructuring GlaxoSmithKline’s R&D organization in order to ensure the company’s future. But will he succeed in keeping his team on top in these challenging times? Marie Shields investigates.

“We need to have people who are going to make the right guesses, coming not from out of the blue but from deep expertise”
-Moncef Slaoui, GlaxoSmithKline

Moncef Slaoui catches me off guard. I mention my Canadian background and he immediately asks if we can conduct our interview in French. It’s a joke; though if he wanted to, Slaoui could chat fluently in any of three languages: English, French or Arabic.

A citizen of both Morocco and Belgium, GSK’s Chairman of Research and Development has studied and worked in Europe and the US, in both a university setting and in industry. This experience of dealing with all kinds of people in many different situations should come in handy as he negotiates the tricky times that lie ahead for his R&D organization.

As part of a company-wide restructuring that began in October 2007, GSK recently announced it would shed 850 research jobs in Britain and the US, in an attempt to improve productivity and efficiency. In the current climate of financial uncertainty, such a move is sure to prompt speculation about the company’s future plans, and keeping staff morale high will be a challenge.

When asked about the job cuts, Slaoui doesn’t try to dodge the question, but instead approaches it as he appears to approach any challenge ­– by tackling it head on.

“It is difficult to tell people who have been working for you for a long time and doing their best to discover medicines that now they are going to lose their jobs, because we can’t continue doing things the same way we used to do them. That in order to stay at the top, we have to redesign our organization. It’s a very difficult message. It definitely impacts the morale of the organization and the motivation of those losing their jobs, and also their colleagues who have to see that happen. It’s one of the big challenges of changing an organization.

“Scientists are faithful to their projects and to their science. They do their best for their projects. It’s not because they fail individually that they lose their jobs. Globally there may be an element of failure, or at least of limited success, because we haven’t had enough blockbusters coming through, but on an individual basis and a small team basis, it’s very hard. I’m confident that this strategy and these changes will make us even more successful, but there is still a period of adjustment – of grieving, if you will.

Even though the major changes have now been made and the company is emerging into a period of consolidation, in such an atmosphere, it can still be difficult to keep people focused on their work. This is why Slaoui and his leadership team are spending a lot of time explaining the reasons behind the cuts.

“We know that we’re making changes that will make us stronger in four or five years. If we don’t make them now, we’re not going to be standing when it’s havoc in the industry. But it’s hard to relate that to an individual who may be losing his or her job today.”

According to Jo Pisani, Director of Pharma Advisory for PricewaterhouseCoopers, pharma companies do need to change to stay competitive in the current climate. “Companies will have to shift their business models, outsource more, be more entrepreneurial and nimble,” she says. “The pharma market is still strong, even with the recent financial turmoil. People are still getting older and they still need medicines. But that doesn’t mean there aren’t challenges to be faced. The things that GSK is doing are exactly the sorts of things companies should be doing.”

Passion and energy

Slaoui’s task will be made easier by his own participative management style. He says he likes to be challenged and to challenge, that he’s determined and has a lot of energy – and meeting him, you can see that it’s the truth. His obvious passion for his job shines through, but he also comes across as very down to earth, a view shared by Senior Vice President, Medicines Development, Allan Baxter.

“The challenge comes without criticism or disempowerment, the energetic determination and his passion comes from the urgency of the quest to find significant medicines,” Baxter says. “But at the base of everything Moncef does is careful deliberation and intuitive judgement.”

Slaoui himself summarizes his style with this anecdote: “A few months after I became Chairman of R&D, I had a meeting with the 60 most senior R&D leaders to discuss my vision and the strategy we’d be pursuing. One of the participants said at the end, ‘This is amazing because it’s such common sense. It’s not sexy and it’s not crazy, but it’s so pragmatic that we believe in it.’”

Before he joined GSK 17 years ago, Slaoui’s previous career was in academia, and he is acutely aware of the differences between the two. “In academia, partial success is still success,” he says. “You can publish a paper in one of the great journals – Nature, let’s say, or Science – and even if your paper is 95% right and 5% wrong, it will still be considered a success. In pharmaceuticals, either you’re 100% right and you have a medicine, or you’re one% wrong, and there’s no medicine. This makes a dramatic difference, because if your medicine has a safety problem, you cannot give it to a patient, even if in 99% of its features, it’s fine. That raises the bar so much higher.”

In industry, no matter how bright you are, a host of other factors need to fall into place before science leads to a treatment that can be given to patients. Slaoui points out that this makes you more pragmatic, and more wary of trends. In academia, by contrast, researchers will often publish numerous papers in each new publication that comes along, even if none of them is particularly transformative.

Another thing Slaoui learned from his time in the ivory tower was to seek out people with what he calls ‘educated intuition’. “Science and innovation are a mix, a kind of art that combines deep expertise and intuition. You can’t put your finger on it – some people have it and some people don’t. Some people are more often right than wrong, and others – unfortunately most – are most often wrong and rarely right.”

From anyone else, that might sound like an elitist comment, but it’s obvious that Slaoui is sincere in his approach to finding and retaining the best researchers. “As an organization, we have to acknowledge that we need these intuitive people and we need them in the right places. We don’t need thousands of them, but we need to have people who are going to make the right guesses, coming not from out of the blue but from deep expertise. I’m always looking out for them, and whenever I come across them, within our organization or outside, I jump on them.”

Meeting the challenges

One of the biggest hurdles Slaoui has had to overcome since taking on the Chairman’s role in 2006, he says, stemmed somewhat counter-intuitively from the fact that the performance of GSK’s R&D was already pretty good. He explains that applying a vision to strongly enhance performance is harder to do with an organization that is reasonably successful – it’s easier to drive change when you’re obviously on the verge of disaster.

“From a management and a leadership standpoint, that’s certainly where most of the challenge stems from, because you have to deliver a contradictory message between acknowledging and praising the current successes, and then pushing hard for change.

“Another related challenge is to introduce a different culture into the organization and make changes while continuing to deliver. It’s a bit like fixing the engine of a jumbo jet at 40,000 feet and making sure it doesn’t crash. That’s fascinating and very interesting.” (And most people would add, also more than a little dangerous!)

Of course, Slaoui’s job is not just about challenges; there are opportunities as well. He is full of praise for the talent that exists within his organization. “It’s extraordinary to see the amount of talent we have. There are 15,000 people in R&D, and there is such diversity and richness. One of my main focus areas is to make sure this talent is identified and recognized.”

Slaoui is a firm believer in taking opportunities where he finds them. “Great ideas happen everywhere, inside and outside of an organization, but primarily outside, and I’m aiming to externalize and maximally open our world to the outside. Challenging situations make the outside world more accessible to us and more available to interact and collaborate with us; and therefore, I see that as an opportunity.”

Surviving and thriving

No one can deny that the pharmaceutical industry is facing a time of significant change, with patents expiring and new blockbusters harder to come by. According to Slaoui, the move to generics stems partly from the fact that payers have realized they can be much more powerful; that they can use generic medicine and that they can make it harder for a new medicine to be paid for and to justify its value. Regulators have also substantially raised the bar in terms of the safety they expect from novel medicines.

“There will come a time when a significant number of players in the industry will disappear and only a few will remain around the table,” Slaoui says. “Those who remain will be those with a strong R&D pipeline and a strong R&D organization. GSK will be one of those, because our business model is based on innovation and the discovery of novel medicines. That’s the name of the game for those who will survive.

“For this reason, we have no choice but to organize our R&D organization for maximum success. And that’s what we’re doing. It’s why I’m pushing for quite significant and profound changes, despite the fact that our organization is already pretty successful. Because pretty good is not good enough; outstanding is what it’s going to take.”

The latest research from analysts PricewaterhouseCoopers confirms Slaoui’s view that change is essential. Their recent report, Pharma 2020: Virtual R&D, Which path will you take?, states: “Those that regard R&D as an integral part of their activities may also need to review the way in which they manage their R&D and remunerate their scientific staff. We now know that one-size medicines don’t fit all patients, and the same is true of the R&D process itself. The limitations of the approach on which the industry has relied for many years have become increasingly clear and, in future, each company will have to chart its own course – or, rather, different courses for each of the projects it undertakes.”

The changes Slaoui is pushing for go straight to the heart of what makes an R&D operation a success: first, put the best science at the helm of everything you do and never settle for less. Second, empower the talent and the people who have the expertise and the depth to do the work that needs to be done, versus telling them what they need to do.

“It is those who have the depth of expertise in the particular area of research they’re working on who are best equipped to make the right decisions,” he says. “This is versus having a few leaders in an office somewhere telling them what they should do, which is usually wrong.

“But at the same time, we should hold them accountable, because that’s one of the things we didn’t do well before. Set expectations very clearly, generate a culture and environment where people feel safe to make guesses, to have judgments, to make choices and take risks. We need to remember that this is not an academic center, and we do expect them more often than not to succeed.”

Slaoui hopes to achieve this by creating much smaller units to drive the engine of R&D. These new units – small groups of between 30 and 60 individuals – will be called discovery performance units (DPUs). Three- to five-year business plans will be judged by an investment board made up of venture capitalists, bankers and other experts, as well as scientists.

The units will have clear deliverables, and the deep scientific expertise they need to discover medicines, and, as Slaoui puts it, they will either deliver or they won’t. “When you’re in such a situation, you perform better; you have an opportunity to exert your passion better. You need to empower people and gives them the time and the resources to do what they need to do.

“We’re doing several things at once. First, we looked into the basic science and asked, ‘Where is fertile ground for discovery to happen?’ We didn’t look at the market. We didn’t say, ‘Where are we selling a lot of drugs?’ We said, ‘Where is the raw material for great discovery to happen?’ And we identified eight areas. Then we said to our teams, “If those are the areas in which there is fertile ground to discover, why don’t you use your creativity? Come to us with your plan, come with a budget request, and then you have a three-year period to exert your creativity.

“We won’t tell you in advance what we expect you to deliver; you tell us what you’re going deliver, but then we will hold you accountable for that. It will be our decision to invest in you or not, and we will invest in those who are most innovative and also those who are most pragmatic in delivering on their innovation.”

Slaoui says this new structure has transformed the way the discovery groups are working, because they moved from a culture where people had a sense of entitlement and never had to answer questions, with everybody hoping they would deliver something, to a culture where they have to earn what they have.

“The same principle is being driven across the organization. We have much smaller project teams, and individuals work on a single project or two and not on 10. In this way, we are re-personalizing R&D. What happened in the last two decades is that we, as an industry, thought we could industrialize R&D in the same way we industrialized manufacturing: ask people to be excellent in a very small task and do it on many different projects.

“But R&D doesn’t work that way. R&D is about insight, it’s about expertise, it’s about judgment; and that comes from depth of understanding and from spending time, a lot of time, in a given area – it’s about depth and not breadth. Breadth is important in a few places, but it’s not important that everybody has breadth; it’s very important that most people have depth in the area they are working on.”

Partnering up

Slaoui again stresses the need to open up GSK’s R&D to the outside world, because good ideas don’t occur in a vacuum. To this end, the company is ramping up its partnering efforts.

“Like others, we partner; but in contrast to others, when we partner we don’t tell our partners how they should do things, because what we value is diversity,” Slaoui explains. “We listen to how they do it and let them do it. We trust them.”

GSK recently announced two major partnerships with Harvard institutes, which Slaoui says are aimed at the onset of very basic science, an almost symbiotic relationship with discoverers and innovators at that level. This allows the company to do two things: keep its internal science cutting edge; and have its own scientists spend time in academia, and in exchange have university scientists spend time in industry.

“This works well, because they are usually fascinated and come to understand how valuable and rewarding the work we do in industry is. And many of them will, I hope, join us as great talent.

“We also have many partnerships with biotech companies here in the US, and in Europe, and farther afield in countries like India. We now have 60 programs in our pipeline that are completely run by biotech companies. Recently we signed a deal with a company in Switzerland for a revolutionary sleep medicine that’s in phase III; and also with Valiant for a schizophrenia medicine.

“Sometimes when we think there is a transforming platform technology or approach that will really change medicine, we acquire it. We’ve done that twice in the last year. We acquired a company called Domantis that has a technology that will transform the way we make antibodies.

We also acquired a company called Sirtris, which works on sirtuins, enzymes involved in longevity, diabetes and inflammation. If we can crack that nut – and I think the Sirtris people are the best placed to do it – and make medicines out of sirtuins, they will truly be transformative.”

Going global

For historical reasons, most pharma companies have based their R&D exclusively in the West, between the US and Europe, but as Slaoui rightly points out, two-thirds of the earth’s population lies outside of those regions.

With growth in healthcare costs in developed countries already showing signs of slowing, many pharma companies have developed a sudden interest in moving into new parts of the world, in terms of both sales and research. Pfizer, for example, recently announced that it will set up a unit focusing on emerging markets, and s anofi-aventis is pushing into eastern Europe with its purchase of Czech generic-drug maker Zentiva.

A cynic might say that this move is prompted less by a heartfelt desire on behalf of these companies to improve health conditions across the world, and more by the lure of untapped potential profits, or as a way of conducting clinical trials on the cheap. But Slaoui remains convinced that establishing research bases in these areas can only have a positive impact on the advancement of scientific research.

“Places like China or India or South Korea or even Latin America have great scientists and great ideas that are often neglected. We have a strategy to find the talent wherever it is. We opened a big center in China, not with the intent of sourcing low-cost research, but to access the best scientists and the best discoverers. Our motto is: ‘We’re going to move from Made in China to Discovered in China.’”

It’s clear that Slaoui is determined to keep GSK’s R&D at the top of its game, whatever the challenges. And after spending even a relatively short time in his company, you get the feeling that the fourth language he is fluent in is the language of success.

Moncef Slaoui is Chairman of Research and Development at GlaxoSmithKline. He is a member of the Corporate Executive team and the Board of GlaxoSmithKline plc. In his previous position as Senior Vice President, Worldwide Business Development and External Alliances, he spearheaded changes in R&D to enhance drug discovery and accelerate product development. Previously, in GSK Biologicals, he engineered the development of a robust vaccines pipeline.

WHO priority diseases

Moncef Slaoui, Chairman of R&D at GlaxoSmithKline, outlines the company’s work on the WHO priority diseases: HIV/AIDS, tuberculosis and malaria.

We are absolutely committed to fighting the diseases of the developing world. I spent my first 15 years in the pharmaceutical industry in vaccines; I was personally strongly involved with our malaria vaccine, for instance, and the HIV vaccine.

We have a dedicated pharmaceutical R&D center in Tres Cantos, just outside of Madrid, that’s focused on discovering medicines for malaria and tuberculosis. And we have substantial public-private partnerships with the Gates Foundation, with the Malaria Vaccine Initiative, with Medicines for Malaria, and others.

On the vaccine side, we have significant malaria vaccine programs that are currently in phase III trials in Africa; and also programs for tuberculosis and HIV. We have a strong rotavirus program, having just launched our Rotarix vaccine. A rotavirus is a virus that causes diarrhea in babies, and between 600,000 and 800,000 babies die every year in the developing world from rotavirus-induced diarrhea.