BI Korea to bring five new drugs for by 2017
Boehringer Ingelheim Korea Chief Executive Dirk van Niekerk serves his employees during a barbecue party at an open-air restaurant in Yangpyeong, east of Seoul in September. He plans to hold the party, dubbed “captain’s table,” every other month by inviting several of employees and their family members for better communications. / Courtesy of Boehringer Ingelheim Korea
The following is the extracts of an interview with Boehringer Ingelheim Korea CEO Dirk van Niekerk. ― ED.
Q: How has your life been for the past half year in Korea?
A: I have had the most wonderful experience in Korea so far. The first six months have been wonderfully inviting. I have made some nice friends already. It has been a really pleasant experience. Seoul is a wonderful city to live in. I am always impressed that Seoul is very well-organized compared to other cities with a similar population size. To answer your question, I had a very good start.
Q: Any downsides?
A: No. I cannot say that there are any downsides. Maybe….traffic on the weekends? If I go to Gangnam on a Saturday morning, I can definitely feel the traffic. But other than that, there are no downsides.
Q: What’s your strategy in staying in Korea? Your predecessor, Guenter Reinke, he stayed here as long as he could. And you want to do that too?
A: Absolutely. Everybody asks me, how long are you going to stay? I said “as long as I possibly can.” And I think that is important. It would only be fair to the Korean staff and our company to know that their CEO has a long-term vision. I think it is very important not only for our staff but also for our customers to know that there is somebody here who is serious about the business in Korea, and serious about long-term sustainable business in Korea.
Q: I think that is your trademark not only Boehringer Ingelheim (BI) Korea, but also Boehringer Ingelheim. I mean long-term staff and long-term sustainability.
A: Absolutely. Boehringer Ingelheim makes decisions that have a long-term sustainable impact over short-term strategies. I would like to live by that.
Q: BI Korea is doing well. However, all the other companies are struggling to find their feet. What’s different?
A: With a clever and smart planning done by our headquarters and adequate investment in research development as a base, we have established a very strong pipeline. For BI Korea, the timing has been absolutely fantastic as well. Wonderful and unique products that are innovatively different are being launched in our therapeutic areas at a good time. However, a good product alone is not what is going to make it a successful one. It is also the time, good staff, good team work, and real passion that make products successful. These have been shown through the Trajenta’s launch. I would like to congratulate my team on achieving that. I am very happy with the results.
Q: During the first half of this year, I understand you chalked up more than 16 percent growth from a year ago. Even after the reduction of drug prices, which was conducted earlier this year. This means that you did well enough to cancel out the losses from the price cut. Is this correct?
A: Your understanding is correct. Some of our products will face price cuts, some have already this year, and some will next year when they come off patents. If there were not a very strong pipeline and a very dedicated team, we would have been falling on. Luckily, we have capitalized on these products and made up for the losses caused by price cuts. This is what innovative pharmaceutical companies are about. You need to have a pipeline and new products to make up for patent-expired products. It is as simple as that.
Q: Let’s talk about your drugs. I understand there are two main cash cows of Twynsta and Spiriva. Are they really doing well?
A: A lot of hard work and investment have gone into both Twynsta and Spiriva over the years. Not only into marketing program for doctors, but also into disease awareness programs for patients. Some smart, strategic decisions were made in the past by utilizing and partnering with local companies in Korea that have the knowledge and strength in certain sectors of the market. The results are being shown, and I am very grateful. It puts us in a strong position for the future and allows us to reinvest our money into other therapeutic areas.
Q: Is Trajenta living up to your expectations so far?
A: Trajenta has been a great success. And I am ecstatic about the first results that we have seen. It involved a lot of preparation, a lot of hard work before the launch, and very smart decisions in terms of partnering. We are the first pharmaceutical company who does co-promotion with three partners, Lilly, Yuhan, and ourselves. Given the size of this therapeutic market, I think that was the right thing to do.
Q: Any big hit in the making? I heard that five new drugs will be launched here over the next five years. What would they be?
A: Our first new drug that we anticipate to launch soon is Pradaxa, a very novel and new anticoagulant. The drug is indicated for patients suffering from atrial fibrillation who are in need of something new and special care. By taking Pradaxa, we will be able to prevent patients with AF (atrial fibrillation) from getting stroke. The important aspect of Pradaxa is that for the last 50 years there has been no new orm improved therapies available for the prevention of strokes in patients suffering from AF. Pradaxa will fill that gap.
Oncology is also a big interest area for us. Together with hepatitis C, we will be bringing some drugs in that area. We will continue our research in respiratory products as well and will bring new products and line extensions to the market. Diabetes remains as a big focus for us as well, and we will continue to invest in that area.
Q: Do you have any plan to develop drugs in Korea or build a factory here?
A: Building a factory for manufacturing and building a facility for product development are two different things. At the moment, there are no immediate plans to invest in a factory or a research site in Korea from a global point of view. However, we are investing a lot of money in research in Korea, together with very prominent universities and professors in the universities doing clinical research. We are conscious of the fact that we need to have a representative number of Korean patients in our clinical trials in order to be able to register our products. In the process of doing so, we have built up our medical infrastructure to such an extent that we are investing around about 20 billion Korean won in clinical research, which is 14 percent of our total sales. It is big money, and I am hoping to continue that in the future.
Q: Would you say something about your CSR efforts in Korea?
A: First, CSR is very important. Companies are aware that they need to keep CSR on top of their mind. I think for Koreans, and in line with Korean culture, it is important to make CSR efforts. But more than that, it makes me feel good to be able to say that we are investing in these programs.
Our biggest corporate social responsibility program is Wunsch Medical Award. It underlines our seriousness in which we take good research and academic achievements. This award has been around for over 20 years, and I am very proud of what BI Korea has done with Wunsch Award. Not only how big it has become and the interest it generated, but also the credibility that is attached to it. Next month, we will be having our Wunsch ceremony, and I am very much looking forward to it.
How we involve our staff in projects that are socially meaningful is important as well. Our staff has been involved in traditional musical therapy for the physically and mentally challenged people who have underprivileged spectrum. The concert was very impressive.
At the end of the year, we have programs where we donate gifts and food to the underprivileged neighbors near our office building. These projects are not just important, but essential.
Q: You already talked about the R&D. I understand that BI is about R&D, and BI Korea is also about R&D. Please say something more about R&D.
A: Research and development is what our company is about. Our vision statement is “ Value through Innovation.” I think that says it all. We want to create value for patients in Korea through giving them access to our innovations. We cannot do that if we do not invest heavily into research and development. On a global basis, we invest more than 20 percent of our sales into research and development. And if you consider that it takes about 10 to 13 years for a new drug to reach the market since discovery, it is a long investment. It can cost up to 1 to 2 billion euros for one drug to see the market. The investment is high, and that is the foundation of BI’s sustainability to the future. We take R&D very seriously, and we intend to stay that way.
We invest about 20 billion won in clinical research in Korea. We will maintain this into the future, and if it were up to me, I would like to increase that because research & development in Korea has a very high standard. I have been continuously impressed with the high level of academic expertise in in Korea, and also the willingness and passion that our scientists in Korea have for participating in these clinical trials.
Q: Do you see any similarity between BI, family-owned company, and Korean style conglomerates? Both of them don’t care that much about short-term gains, they put long-term sustainability and long-term profits on the front burner. Did you see that they are alike?
A: Yes, I think there are a lot of similarities. One, we are a very proud company. One of our ambitions is to remain a family-owned self-sustained company. I believe that many of the big Korean family-owned companies have a similar pride, and have shown that they can sustain into the future. There are also some very impressive Korean local pharmaceutical companies. However, to me the secret is sustained investment. There is always pressure on family-owned companies to generate their own money to reinvest into research and development. That makes it slightly challenging to be a family-owned company. However, the upside is that it affords you the opportunity to prioritize decisions that will have a long term effect on the business relative to short term gains.
Q: Any difference between BI and Korean style family-owned conglomerates?
A: Well, apart from the obvious cultural differences, I do not think there are any big differences. It is a question of pride, a question of passion, and a question of seeing the big picture. I have no doubt that many of the same principles have been employed by Korean companies to have a history of over 100 years.
Q: Does BI family member participate in the management, or are they just behind the scene?
A: Our Company is governed by a shareholders committee chaired by Mr. Christian Boehringer. The operational board of managing directors report directly to shareholders comittee. On our board of managing directors, we have one shareholder Mr. Hubertus von Baumbach. So we have shareholders directly involved in the operational management of our company
Q: Most of your competitors, not only in Korea, but also in other countries, seem to care more about their size. So their No. 1 strategy is M&A. I don’t think BI is crazy about M&A. right?
A: I have to qualify that. As I’ve mentioned, as a family-owned company, we have to take the view on a long-term. It is not that BI will never acquire a business or a company. But the decision to make that acquisition should be well-thought through and has to have a long-term impact on business. In the past we have seen some acquisitions of research & development firms, and certain technology companies which will increase our ability to do long-term research development. From that point of view, the company has shown its willingness to acquire technologies or business that can have long-term sustainable impact on the company. It is very unlikely for us to get involved in M&A’s with a purpose of boosting short term financial goals.
Q: It’s not about short-term. That means, BI Korea can also take over technology companies in Korea.
A: If it makes a sense to our company on a worldwide basis and it can improve our ability to sustain the business into the future, then it could be a possibility. Our board is open to looking at new opportunities not only in Korea, but also worldwide. As far as I know we do not have anything in our scope specifically for Korea at the moment, but it is not to say that it cannot happen.
Q: Would you say something about Korean pharmaceutical market? Is it different from the global market? Any unique characteristics or features you have felt for the past six months?
A: First, it is exciting and dynamic. That is my first impression. It is a market that is big enough to have the attention of the world. What we do in Korea is very important for our corporation as a whole. I think the Korean pharmaceutical market has similar challenges as other markets in the world, which have aging population. People live longer, and with that comes the challenge of providing sustained healthcare and generating a need for more chronic disease treatments, and somebody needs to pay for it. Like most countries, in Korea the burden to fund these treatments is on the government. Provision of health care is not just important, but emotional. We have to live within that emotional market. The government is under pressure to balance the quality health care provision and ensuring sufficient amount of budget that can sustain quality health care provision. Pharmaceutical industry, as a role player and a stakeholder, has a very important task; to supply quality medicines at fair prices, in order to be able to bring innovations to Korean patients. When the government cut prices of patent-off products, our multinational industry has not complained about it. We have seen it as a natural progression. The prices of patent-off products will erode either through competition or through mandatory price cuts. What we ask for the government is to look upon our innovations that involved years and years of research and a lot of investment, through a scientific eye, identify the innovation, and give us a fair price for that innovation.
Q: In that sense, are you happy with the Korean government?
A: I think the Korean government has all the intention to honor and respect innovation. They look at the pharmaceutical industry as a growth and innovation sector. It seems like they would like to do everything in their power to make it easier for the industry to be able to invest in research and development, and bring new products to the market that is on the cutting edge of science. I think over the next years, innovations will be rewarded and respected by the government.
Q: Your remarks are very impressive since all the other guys are busy complaining.
A: There are many stakeholders in making an industry successful. I firmly believe in team work and discussion. One thing that is very important to me is that stakeholders talk to each other.
Q: Which stakeholder is the most important to you?
A: We have many stakeholders that play important roles. It is difficult to single out one stakeholder over the other. But clearly, the government is one of the important stakeholders. The government needs to talk to the industry. And the industry needs to talk to the government. We need to have a relationship that is transparent and trustworthy. There are also many customers, including pharmacies, hospitals, academics, and wholesalers. I believe all stakeholders have a role to play to make our industry sustainable, to make our industry as something that Koreans can be proud of.
Q: And you have no problem in communicating with Korean employees in this company?
A: In my company? Not at all. We are trying to get open communication going on many fronts. As I said my Korean is not so good, but luckily I have many people who are well versed in English. We also try to create opportunities to meet our staff through official feedback meetings, unofficial feedback meetings. I am trying to have many dinners with different departments as well. We have also created a campaign called “captain’s table.” We select our staff members who have done something special in the last two months and bring them and their families together for a barbecue or a dinner. I was actually the cook on the last one. I did a barbecue and served my staff. I think that created an atmosphere of trust and belonging.
Q: Anything else you want to say?
A: As I mentioned before, it is important for me to show to my staff and stakeholders in Korea that our company takes this industry seriously, and we intend to be successful and contribute to the industry on long-term. In order for us to do that, we need to set ourselves long-term goals and objectives. What I have agreed with my senior executives is that we want to double our market share by the year 2020. Our vision for BI Korea is two by 2020. We had many strategic meetings to decide how we are going to achieve it, and I am happy to report that everyone in our company is aware of our long-term vision of two by 2020. If you look at our office, we have two by 2020 everywhere. It shows our seriousness about doubling our market share by the year 2020. From my executives to the lowest level of member in my company, everybody is behind our vision and strategy. There is no doubt in achieving this by the year 2020.