Monday Manifesto: Jean-Pierre Garnier

Jean-Pierre Garnier is trying hard to keep grinning. The lanky Frenchman who runs GlaxoSmithKline is determined to be photographed with a smile on his face. His children complain that he looks too serious when caught on camera.

“I never smile in interviews. Why should I? We’re not cracking jokes here,” he says.

Spending an hour talking with Dr Garnier, it is clear that running one of the world’s largest pharmaceutical companies can be a profoundly serious business.

GSK’s top-selling products include drugs for HIV and diabetes, medicines for bipolar disorder and cervical cancer. Later this week, Dr Garnier will meet Margaret Chan, director-general of the World Health Organisation, to discuss how to improve access to GSK’s bird flu vaccines for people in the developing world. It is no exaggeration to say that the outcome could affect the lives of tens, perhaps hundreds, of millions of people.

Dr Garnier is the first to accept that his responsibilities at GSK, a global pharma juggernaut that last year generated £7.8 billion in profits on revenues of £23.2 billion, stretch well beyond the group’s bottom line.

“Healthcare is special — I truly believe that,” he says in GSK’s gleaming glass headquarters in Brentford, West London. “Beyond making money for our shareholders, we have to expand access for our drugs — even to people who can’t afford them.”

Dr Garnier, a combative veteran of the pharmaceutical industry who worked for Schering-Plough, the American drugs giant, before joining SmithKline Beecham in 1990, is keen to illustrate his point — and to confront the familiar argument that big drug companies are venal profiteers from disease.

GSK, he says, whose best-selling drugs include Advair for asthma and the antidepressants Wellbutrin and Paxil, supplies HIV drugs at no profit to African countries. “I don’t see the carmakers and the Microsofts doing that,” he says.

Furthermore, the company is involved in a programme to treat one billion people around the world at risk of lymphatic filarisis, a parasitic disease more commonly known as elephantiasis. It has also dedicated one of its drug discovery units in Spain to help to find new medicines for malaria and tuberculosis.

All of this is quite a change from just a few years ago, admits Dr Garnier, who at 60 is due to stand down in May 2008. He claims that attitudes both within GSK and across the industry have changed. “When I inherited this job [in 2001] we were suing Mandela — it doesn’t get much worse than that,” he says, referring to a bruising legal battle that GSK and other drug companies fought with the South African Government over access to HIV drugs. It descended into a public relations disaster.

“These days, I think we get it . . . There is a more widespread recognition that we can’t just hide in our labs and hope people will leave us alone. That was the attitude in the 60s and 70s. The industry has come out of its shell and has faced the geopolitical realities.

“We have to perform in a very transparent way and with the highest integrity possible. You can’t just view your company with a narrow, for-profit definition.”

With GSK’s market capitalisation nudging £80 billion and a $5.4 million (£2.7 million) salary, which has sparked outrage over fat cat pay, cynics say that Dr Garnier can afford to play the role of an expansive industry visionary.

Is there not sometimes a tension between the relentless demands of shareholders and this wider sense of responsibility as a source of life-saving medicines? Dr Garnier, who is based at GSK’s American headquarters in Philadelphia but who travels regularly to Britain, concedes that there can be and says that the industry must go further. Yet he makes no bones about his belief in the merits of capitalist competition as the foundation for an effective system of drug research.

“I don’t think competition is bad for society,” he says. “I think it makes us better, sharper, tougher and more cost-effective. If it were a gentleman’s club, I don’t think we would be as efficient in the way we spend our resources. It’s what creates drugs. We discover drugs because otherwise we die as a company.”

Back in 2000, when GSK was formed from the merger of Glaxo Wellcome and SmithKline Beecham, the group’s pipeline of new drugs was looking decidedly weak. In response, Dr Garnier reorganised its sprawling research operation, which costs £2.6 billion per year, into what are now known as Centres of Excellence in Drug Discovery (CEDDs), each of which focuses on a specific disease area and is run almost like an independent company. The principle was to foster a more entrepreneurial and competitive atmosphere, similar to the smaller biotechnology start-ups that continue to suck in much of the industry’s top scientific talent.

By most accounts, the new regime has been a success. The company, which controls 6 per cent of the global medicines market, has one of the fullest pipelines of new drugs in the industry. In five years’ time, about 23 per cent of its current revenues will need to be replaced because drugs have gone off patent. That compares with 38 per cent for Astra-Zeneca, GSK’s top British rival, 41 per cent for Pfizer, the world No 1, and 86 per cent for the troubled American group Forest Laboratories. The cost of developing a single block-buster drug — the products that form the lifeblood of the big pharma industry — now exceeds $1 billion and some of Dr Garnier’s less fortunate peers are locked in a raw battle for survival.

In contrast, GSK shareholders can thank Dr Garnier for steering the group to a position where he is able to worry about loftier goals and avoid the swingeing job cuts afflicting many other drug-makers.

This year, GSK, which employs more than 100,000 people globally, about a quarter of whom are in the UK, including 15,000 research scientists, is set to launch five products: Tykerb and Cervarix, for breast and cervical cancer, the allergy and heart medicines Allermist and Coreg, and Trexima, a drug to combat migraines. The group has an additional 32 projects “either in Phase III or awaiting approval” from regulators, according to Dr Garnier. “Not too many companies are this fortunate.”

It is a packed agenda for his final full year in the job that also dictates his strategy on mergers and acquisitions. “The way to produce shareholder value is to translate these late pipeline products into real and successful new products and in that context a major transaction wouldn’t help us at all,” he says.

While refusing to rule out the possibility of a mega-merger altogether, Dr Garnier sounded distinctly circumspect. “It would distract us and not necessarily bring us additional value . . . because if you look at the companies that are eager to do a deal, very often they are weak. They are running out of time. We don’t need to buy somebody else’s problem.”

Instead, he says that GSK is more likely to buy smaller companies with interesting technology or products. He cites the £230 million acquisition last year of Domantis, a Cambridge-based biotechnology company specialising in monoclonal antibodies, a promising new area of drug development, as a good example. “That’s the kind of acquisition that is very attractive to me. If this bet pays off, then we are going to have a significant pipeline right there.”

Dr Garnier is clearly proud of his achievements at GSK, but he ducks direct questions about his legacy: “It would sound arrogant and pompous.”

Ultimately, his key message for GSK and the industry is to keep on innovating and creating new products to keep pace with patient needs, the ceaseless pressure of patent expiries and pressure from generics.

“There are not too many companies who lose 95 per cent of their business every 12 years,” he says. “That’s a demanding business and that’s what we face.” And with that — and another brief grin for the camera — he is off.

C.V.

Name: Jean-Pierre Garnier

Born: 1947, Normandy, France

Education: PhD, Pharmacology, Université Louis Pasteur, Strasbourg; MBA, Stanford University, California as a Fulbright Scholar.

Career: 1983, director of US pharmaceutical division of Schering-Plough; 1995, chief executive of SmithKline Beecham; 2000, chief executive of SmithKline; 2001, chief executive of GlaxoSmithKline In January 1997, he was selected by President Chirac, of France, to receive the Chevalier de la Légion d’Honneur

Family: Married, with three daughters

Hobbies: Tennis, squash, reading

Lives: Philadelphia

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