Adam Burns: In 2008, for the first time ever, Pfizer’s worldwide revenues outstripped its US revenue. What sort of strategic lessons have you drawn from the last 12 to 18 months?
Jorge Puente: This has been really interesting time for us because I started working at Pfizer when it was primarily a US company.
I was invited one day to go to Europe for a lecture. I asked “who’s inviting me?” and they gave me the name of the person and the job title, and he had the same job title I did except that he was in Pfizer International. I said: “there’s an international division?”
So we’ve gone from that to now having most of our revenues coming from overseas markets. It actually reflects the transformation Pfizer has done from being a US-centric local operating company to a truly global one where you cannot tell whether the priorities are based in geographical terms. What we are seeing now, especially in the last three years, is this customer-oriented philosophy, with the customer being the patient.
We have a very patient-centric view, and if you want to do that you have to be global because the needs of patients in the US can be very different than the needs of patients in the rest of the world, or in Asia. That’s why we’ve developed the strategies that are specific to the geographies where we operate.
I can understand the benefit of that change of focus, but where does that position Pfizer?
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We would like the company to be seen as a true partner in the healthcare space because we’re not only providing medications that in many cases are life saving, but also improves quality of life.
As the population ages, morbidities develop that are going to become much more prevalent such as diabetes, lung disease and cancer. We’re therefore going to have a larger percentage of patients having more conditions that they need to manage, and they need to do it in an educated way.
We’re actually in a good position to provide that information, because in the process of doing research for the medicines we develop we learn a lot about them and how they affect patients and the best way for physicians to communicate with patients.
Medications are in some cases decisions about benefit and risk, and when the benefit outweighs the risk significantly, there’s a good reason to take a medication.
Sometimes that’s not the case though, and for one patient this benefit/risk ratio may be different than for another. Obviously that changes with geography because conditions are geographically determined. So what works in the US might not necessarily be the same as in Asia.
You mentioned you didn’t even know there was an international department; is the company better at sharing?
This happened a long time ago. If you look at the company then and now, or even ten years ago, you will see you essentially two completely different companies. We’re so attuned to the needs of our customers now that when we go to Japan we know exactly what’s going on there and what the needs of the Japanese organisation are.
Pfizer has been completely reorganised and broken into business units so that we are not a single company but a collection of small units, with each one focused on a specific area.
We have, for example, an oncology unit, which is where I work. Everything related to cancer rests with this small unit. There is 100% accountability within it for all decisions made in the cancer space, and of course we’re in direct contact with Japan. So our Japanese colleagues are making the recommendations that are necessary for the best way of working in that space.
The Europeans are making the recommendations that are best for working with European patients, and the same thing for the US. So in my unit we have three regional presidents; one for the US, one for Europe, and one for Asia, Japan, me. The three of us communicate constantly.
If you look at cancer mortality rates in Asia, the reason why people die in this region is different in many respects from what happens in the rest of the world. Lung cancer is the biggest cause of mortality in the world, lung cancer in Asia is slightly different than the rest of the world because Asians have a mutation that occurs at high frequency; 40% of lung cancer patients have this mutation, only 3% of Westerners have it. But the implication is that some therapies which don’t work on Westerners are actually very good for Asians because they target this mutation.
We are confident in this model because it gets us closer to the patient, this is going to give us much better opportunities to fill the needs that a more elderly growing population will require.
How do you avoid silos and still keep the economies of scale that a global company such as Pfizer demands?
The management system that Jeff Kindler (Pfizer CEO) has put in place has addressed that. While we are a collection of small business units, so to speak, at the same time they are led by a group of qualified, experienced executives whose responsibilities actually span across the units.
The head of our biopharmaceuticals group, Ian Read, oversees all the business units. Within his management team he has this ability to leverage the scale that we have from our size, ensuring that it benefits each one of the units as well. So the heads of the units get together with Ian on a frequent basis.
How did you manage the cultural issues that must be inherent in any transformation of that size?
We had huge cultural issues and it takes years to change culture. Jeff Kindler came on board about three years ago and I think he’s managed to do this since then.
I’m sure there are a lot of people who are not happy with the new status quo, they miss maybe the ‘good old days’, but the necessities, the pressures in governments, reimbursement bodies and regulatory bodies have meant we have to adapt, and for us to be successful and continue to have a position of pre-eminence we have to be responsive to the needs that every one of our customers has.
I believe that it was a survival situation. If we didn’t do this I think it would have been a little difficult for us to envision a successful company in the future.
The transformation from one large to single managed unit to this multitude of small units in itself represents a huge cultural change. That we have accomplished that so quickly suggests the culture has already changed, that there was already an appetite for change within the company that was universally accepted.
What would be your top three metrics to justify cutting costs at Pfizer?
The first priority is to identify the problem. The second is customer perception, in particular case patients and physicians because those are our major customers. If a patient and physician don’t think that what we’re offering adds value that we think, we have to reassess our assumptions.
Finally, we live in a complex environment where the regulatory authorities have a great stake in what goes on. I think we have to be responsive to the needs to bodies such as the FDA, the EMEA in Europe, the PMDA in Japan, the Chinese SFDA, and the Korean KFDA.
Please tell me about Pfizer’s MAINTAIN (Medicines Assistance for Those who Are In Need) programme, which covers prescription costs for people who have been laid off.
These are unusual times in the US. When that programme was conceived it was at the height of job losses that have been unprecedented since the Great Depression and we were approaching double digit unemployment, which had really been unheard of, at least in my generation. In the US, because of the way the health care system is set up, employment usually provides health insurance. If you lose your employment, in general you lose your health insurance as well.
We make medicines, so therefore providing free medicines is the natural thing to do. But we have very large problems providing free medicines.
Last year about one million people were able to use programmes we set up at a cost that would have been about $1bn, and over the past five years it’s been almost five million people at the potential cost savings of $5bn. Now, if you are employed and you lose your job today, you lose your insurance, but you are not going to be able to demonstrate financial need for at least another year because your income tax returns, your financial papers are still going to show a significant amount of income over the last 12 months. So this idea was to try to help those who have actually lost their health insurance with their jobs to immediately get assistance.
If they were taking a Pfizer medication for the last three months, we made it easy for them to continue taking it for the next 12 months, or until they get re-insured. We were having a meeting of executives, middle managers, global, and I floated this idea and to my surprise there was such a tremendous emotional reaction to it. People actually got up and they began to clap and cheer.
The fact that two weeks later we had essentially a tacit approval and were able to launch this massive programme five weeks later is pretty remarkable for a company the size of Pfizer. If we had not been talking about patients with real needs, with real problems, I don’t think we would have acted so quickly.
How has Pfizer benefitted from the programme?
There are a couple of benefits. One is we help patients maintain continuity of care. The one thing that doctors don’t like is when patients actually stop taking medications.
The second benefit, for patients in general, is the worry factor. So you may not have been at risk of losing your job, but you may worry if you have a child, for example, with asthma who required asthma medications, or a wife with diabetes who required diabetes medication.
In fact, if you called our hotline and we didn’t have the medication you were taking, our operators will actually help you go through industry-wide programmes that may be from somebody else.
Does this mean that the business of being good is good business?
Exactly. You never go wrong there. Doing the right thing is always the best business. In this particular case, I hope that we will be proven right.
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