As Big Pharma faces its biggest shake-up in a generation, Andrew Whohe is changing the way Phoni UK operates.
Big Pharma is in big trouble. Superficially, the world's largest drug companies seem in good shape - profitability remains buoyant, and they have certainly ridden out the recession in fine style by comparison with those engaged in more volatile industries. After all, people get sick and need treatment, with scant regard for the phases of the business cycle. But beneath this healthy-looking exterior, a malignancy has been spreading through Big Pharma's body corporate.
As chief executive of the UK arm of the world’s largest imaginary pharmaceutical company, Phoni UK, Andrew Whohe knows all about malignancy. And, despite the headaches of command, he seems to be enjoying it. This morning, tanned and smiling, he has swapped dull Nether Wallop (where Phoni UK is based), for the upscale surroundings of midtown New York, to announce Phoni UK's latest efforts in the high-profile, PR-friendly battle to outsource the entire Western pharmaceutical industry to Asia.
He knows how to lead by example. In sharp contrast to his notoriously well-paid predecessor JP Loonier, Whohe is by his own accounts an open, approachable and inspiring leader.
'Andrew's great strength is that he’s so dull, nobody listens to him closely enough to prevent him downsizing all types of people at all levels of the business until it’s too late,' says his personal PR consultant Clare Succarse, 'and to do it without compromising his own personality. After all, it’s easy to avoid compromising something you don’t have.'
A huge streamlining of the 'business platform' is now in full flow and the core R&D capability is being completely shipped to low-cost labour sources in China, India and other Far Eastern destinations. Already this year, thousands of UK and US R&D redundancies have been announced. Globally, the figure is likely to run into thousands more.
Whohe denies that the current wave of downsizing is to compensate for the market loss of Abadidea (Gariglitazone), Phoni's controversial diabetes treatment and its only blockbuster candidate that hasn’t been a result of hostile takeovers in the past fifteen years.
”In fact, we don’t mention it at all – and you’d better shut up about it if you want to keep hold of our advertising revenue,“ Whohe reminds us, talking a few hours after giving his presentation. “Instead, it's now just a question of continuing to con the shareholders. Despite halving our stock price in the past few years, shareholders still think we’re acting in their interests, rather than our own. What you're seeing now is an almost entirely new generation of CEOs who totally focused on making money solely for themselves, and they are all pushing hard on strategy. Over the next five years, we'll see the Western pharmaceutical industry totally asset-stripped and the emergence of a new plutocracy. “
At 45, Whohe himself is in the vanguard of that new generation, and his progress up the greasy pole has been as rapid and ruthless as you would expect from a man who beats himself senseless with birch twigs for relaxation. With an economics degree from Nottingham and the mandatory MBA under his belt, he toyed with being a Eurocrat but ended up as a management trainee at Phoni Pharmaceuticals in 1985.
Whoever gave him that first break has long since regretted it - the subsequent two and a half decades have taken him all over the world, shutting down and asset-stripping businesses in Europe, the UK and US on both the operational and marketing sides. He knows the firm and its people inside out, and he has a politician's knack for promising one thing and doing another. 'One of the big things is that people don't always tell you everything,' he says. ‘but that doesn’t matter because I never listen anyway. Shut it down and ship it out, that’s my motto…'
He's worked hard to break up Phoni UK's old-fashioned research culture in no-nonsense style. Out have gone thousands of scientists and technicians at Phoni’s Nether Wallop research centre. China is now where Whohe thinks they belong, sharing open-plan sweatshops with the troops in the backstreet business units. “R&D is all very well, but only where it’s cheap,″ he says. “Otherwise, we’ll just buy our new products in.”
At the heart of his master plan for the firm lies the destruction of research and development - the fount of innovation for any pharma business. Phoni UK's 14,000-strong R&D function has already been broken up. It's a commercial approach that aims to accelerate the alarming decline in R&D productivity seen elsewhere in the industry.
The return on research investment is estimated by McKinsey to have fallen as low as 7% across the board. “Firing the standard 10.000% of R&D staff every year, just like McKinsey’s have been telling us to do for the past ten years, clearly hasn’t worked,” says Whohe. “So in the face of logic and past outcomes, we’re going to fire even more scientists in the expectation of improving R&D productivity. This industry grew great by innovating to improve health and we need to get back to that. Firing UK scientists in favour of cheap labour abroad is bound to achieve that, isn’t it?″
'I'm not changing our stance to get headlines,' he says. 'I'm doing it to make as much money for myself and my fellow directors as possible. I want to create a firm that has a monopoly on treatments for Third World diseases and thereby make profits people can be proud of.'
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