Takeda Shareholders Approve Weber As COO Setting Up Leadership Handover
This article was originally published in PharmAsia News
Executive Summary
Christophe Weber wins shareholder approval as chief operating officer at Takeda as expected, setting up a leadership change at Japan’s top, and oldest, drug company over the opposition of some family members.
SINGAPORE - Shareholders of Takeda Pharmaceutical Co. Ltd. approved the appointment Christophe Weber as chief operating officer, a June 27 press release said, placing him one step closer to the top job of CEO held by Yasuchika Hasegawa who is leading a drive to change the company to an outward focus.
Weber joined Takeda in April as chief operating officer and should succeed Hasegawa next year, making him one of less than a handful of international executives to lead a major Japanese company (Also see "Rearguard Battle At Takeda Unlikely To Derail Globalization Plans" - Scrip, 26 Jun, 2014.).
Weber was opposed by about 110 former employees and investors at the June 27 shareholder meeting, including some Takeda family members concerned about the culture of the company, but his confirmation was not in doubt for now as they had less than 2% of the outstanding equity.
But the protest raised not only questions about the direction of Takeda at a key juncture in the 233-year-old company’s history, but comes against a background of soul searching and reform for Japan, galvanized by the policies of Prime Minister Shinzo Abe (Also see "Takeda COO Weber Faces Opposition In Vote To Name Him President" - Scrip, 22 Jun, 2014.).
Globalization, Not Localization
The 68-year-old Hasegawa abandoned Takeda family doctrine after replacing the previous chief Kunio Takeda, in 2003, and represents change at the top (Also see "Takeda CEO Calls For A Paradigm Shift In Japanese R&D; BIO Japan Conference Takeaway Message, Head West...To China" - Scrip, 6 Oct, 2011.).As the architect of internationalization it is his reforms to make the company what he calls a “truly globally competitive company in every facet of its business” that have led to the old guard rebelling, calling the changes “wrong globalization.”
The rebels’ stated belief is that under Weber’s command – he is slated to take over the post of CEO in a year – he may sell the company to a foreign enterprise, transfer its technologies overseas, fail to make decisions from a long-term perspective and cause researchers to leave because of a failure to understand the company’s unique research and development methods.
Foreign CEOs Rare
Certainly it is tempting to view the elevation of Weber, a French national formerly with GlaxoSmithKline PLC as a break with the past for the company – which is not only Japan’s but Asia’s largest pharma – in a country that has faced criticism for its relatively traditional and insular approach to corporate governance.
There are currently just two foreign heads of large Japanese corporations with French-Lebanese businessman Carlos Ghosn at car manufacturer Nissan and Korean-born Han Chang-woo at leisure group Maruhan,
However, Michael Woodford, the former Olympus president and CEO who blew the lid on a US$1.7 billion accounting scandal at the company and wrote a book that is to be made into a film, told PharmAsia News in a phone call on June 25 that Takeda was probably “an exception to the rule and it will be business as usual in Japan.”
He described Takeda’s Hasegawa as an “atypical, modern-day samurai executive with an openness that is unusual in a Japanese business environment, which is often more like something you would expect to find in a place like North Korea and where there are bureaucrats rather than innovators who rise to the top. He is the nail that didn’t get nailed down.”
Woodford said the culture of secrecy, unwritten laws, blind obedience, resistance to change and appointment of only Japanese at global companies was a personal preference rather than a roadmap for successful international management in the 21st century. He said he hoped Weber would be given the “freedom to manage“ but was doubtful that it was a sign of change nationally.
“A rubicon has not been crossed. This is an exception to the rule, as you can see from the letter of protest from the old guard.”
Change In Japan, Actos Woes
Even so, premier Abe appears to be trying to transform corporate practices and on Tuesday announced that more foreigners and women should be employed at Japan Inc. This policy initiative was part of the “third-arrow” of a three-pronged “Abenomics” agenda that aims to boost growth to an annual rate of 2% – twice the anemic figure of the past 20 years.
The mission for Weber, if and when he does take over, is to keep Hasegawa’s reforms rolling, such as pouring money into overseas acquisitions, accelerating cancer treatment R&D and exploring emerging markets to make up for patent expirations, a process he has dubbed “gap filling.”
Additionally, there will likely be cost savings and staff reductions as the company places new bets and cuts back on others (Also see "Orteronel Leaves Hole In Millennium/Takeda Pipeline" - Scrip, 25 Jun, 2014.).
Takeda is Japan’s top ranked drug company with sales of nearly JPY1.7 trillion (US$16.7 billion) for the 2013-2014 financial year, an 8.6% rise on the previous year, though profits dipped by an alarming 28% to US$1 billion. In May, Takeda forecast that sales would rise 2%, while the operating profit would also nudge upwards to 7.7% or US$1.5 billion.
In the previous two years, sales of the market leading type 2 diabetes medicine Actos (pioglitazone) plunged 70% because of competition from generics and negatively affected overall sales for the company.
In addition to which, Takeda faced legal woes, along with marketing partner Eli Lilly & Co., for allegedly concealing the drug’s bladder cancer risks and were ordered to pay punitive damages of US$9 billion in April, though this is being challenged (Also see "Actos Record-breaking Personal Injury Verdict Tied To Drug Revenue" - Pink Sheet, 8 Apr, 2014.) and (Also see "Takeda Wins Fourth U.S. Suit Alleging It Hid Cancer Risks Of Actos Drug" - Scrip, 22 May, 2014.).
At least two-thirds of Takeda’s employees worldwide are not Japanese and Hasegawa said at the time of Weber’s introduction to the Osaka-based firm in December that it must recognize this fact, embrace diversity (a principle of Takeda-ism, the company’s core values) and select talent without regard to age, gender or nationality.