Ep83: David Lee on Impact in Pharmaceuticals

Welcome to the long run. This is a podcast for biotech adventurers. I'm your host, Luke Timberman. Today's guest is David Lee. David is the CEO of Boston-based Servier Pharmaceuticals, the U.S. subsidiary of France-based Servier Group. Servier, for those unfamiliar, is something of a rare bird in the pharmaceutical world. It markets both branded drugs and generics. It is a truly global company with 21,000 employees in 148 countries, but it has only recently entered the world's biggest pharmaceutical market, the United States. There's more. It's governed by a nonprofit foundation. And as part of its mission as a nonprofit dedicated to improving health, it invests 25% of its annual revenue in R&D, quite a bit higher than the industry standard. Some of you may be scratching your heads. This is different. David explains. He comes to this challenge as an industry veteran, having been around the block as a consultant and a variety of business roles at pharma companies such as Novartis and Shire. He was at Shire prior to its acquisition by Takeda. He came over to Servier with some of the assets from Shire that were being divested as part of that acquisition. And those assets provided something of a foundation for Servier's U.S. expansion, which has included building out offices in Boston for both the commercial and R&D departments. David oversees all of that. Now, before we dive in, The Long Run Podcast has been around since 2017. Listeners tell me consistently they absolutely love this show, but it's been operating almost all of 2020 without any sponsorship. I do understand there are a gazillion other podcasts to listen to and plenty of other places to spend advertising and marketing dollars. I like doing this show, but I have been floating it financially all year. As a small businessman, I eventually do need to see some advertising support to justify continuing with this audio production. So, if you love listening to this show and your company would like to raise awareness by advertising in front of an absolutely first-rate biotech startup and investment audience, then ask me about advertising opportunities in 2021. [email protected]. Now, please join me and David Lee on the long run. David Lee, welcome to the long run.

So, David, to get started, I thought I'd share with the listeners the anecdote from when we first met, which would have been, I think, the J.P. Morgan Healthcare Conference from 2019. And as I recall, you were new in the job at Servier. And I really didn't know much about the company at all, but within the first few minutes, you started laying this on me about how Servier is a kind of a different company. It's got this social mission combined with the scientific effort to help patients. Putting those two things together really had my attention there. So I think maybe for a lot of listeners who are not super familiar with Servier, can you tell us what is different about this company?

Okay. I want to come back to all this. There's a lot to chew on here, but can you tell me a little bit about yourself? Where are you originally from?

And what did your mom and dad do there?

Do you have brothers and sisters?

Okay. So, now you say Orange County. Can you describe the scene for me a little bit? I think most people think of it as kind of a suburban area.

This is where teenagers go to hang out, get away from mom and dad.

Okay. So, what kind of student were you?

Wait, what was it that made you want to achieve? Where do you think that drive came from?

So this helped focus you and drive you in your studies. What kind of subjects were you most drawn to in those high school years?

Okay. Okay. And you're in this competitive public school environment, but it sounds like you're doing pretty well in math and sciences. You end up going off to Harvard. So were you head of your class, or how did that happen?

Wait, why did he have to stop his business for a while?

And as you say, your siblings were younger. I mean, maybe you would have been a little more independent, having your driver's license and that being very important in Southern California.

Okay. So you do well in school. You go off to Harvard, and what did you decide to study there?

Well, yeah. Okay. So now you get your bachelor's there. Then did you go to business school right after that, or what came next?

And what were you thinking that you would do with the MBA?

That is in keeping with the autonomy that your dad would have had as a small business owner, as a dentist, not pushing as much paperwork as they do at Harvard Medical School.

Okay. So where did you get your first job?

Well, what did you do there?

Yeah. We can actually learn a lot about people from their first jobs. But that wasn't really what I was meaning to get to. I was thinking more about after you've grown up, you've got your medical degree and your business degree. Then what professionally?

And how long did you do the consulting?

Okay. So did you get the classic experience from management consulting—a broad array of different clients and different issues? You're learning a lot about how the industry really works, but not necessarily in charge of owning or implementing the solutions.

Okay. So when did you decide to make the move into industry full-time in an operating role?

And what did you get to work on there at Novartis?

Were those antiviral medicines or vaccines?

Now with Novartis, were you at the mothership in Switzerland or somewhere else?

So you're getting kind of making the rounds. That's part of the beauty of working at a big company—it's international, you can get all these different kinds of experiences. How long were you there?

Let's just ask about this because this was your first pharmaceutical experience. Were there particular aspects of the business that appealed to you more than others? You started to imagine a longer-term career for yourself in pharma at this point?

So there's that autonomy that you keep coming back to. So what was your next stop? Was this Shire?

Right, that was not a long-term arrangement, but then you ended up at Shire. What was your job there?

Were you a general manager type, or something higher by then?

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So you're getting a pretty well-rounded view at that level of the whole enterprise. But then Shire gets acquired by Takeda. That would have been 2018, or I guess it was announced then and closed a little later. But what were you thinking was going to be your next move?

So what was the oncology business composed of at that time? You had a few marketed products and some others in the pipeline.

Okay. So you find a home for this portion of the divestiture with Servier. How did that come about?

I mean, everybody thinks of the United States as the biggest market for pharmaceuticals, but here you have a company concentrated in Europe with no US or Japan presence. The two biggest countries for Servier are China and Russia. What struck me was their focus on oncology. They said oncology is their future and they are resourcing it. They had partnerships in cell and gene therapy. Now what you were bringing were chemotherapy drugs that were approved. Is that correct?

So this is interesting strategically. A company with good oncology science but no US presence. If we plug in Shire's products and give them US exposure, that could create synergies.

But now you have to actually do it. A France-based company with no US operations. Were you part of the package to come in and make it work?

So they approached you. What was your initial reaction? What questions did you have?

So was he essentially recruiting you? 'I need you to set this up in the United States.'

Did he talk about the unusual structure and mission? Servier is governed by a nonprofit foundation and invests 25% of revenue into R&D, much higher than industry average. That's walking the talk – an enterprise that plows proceeds back into science for patients.

How do you do that as a manager? Do you have more freedom in this structure?

How has the pandemic affected your operations?

Your employees and mission attract a certain kind of person. You have 49 marketed products plus generics. Why does Servier do generics?

Peter Kolchinsky talks about the biotech social contract and contractual genericization. For you, with that north star of serving patients, there's room for both patented and generic medicines.

How does this work for cell therapies? You have partnerships with Algae and Selectus. These are expensive and risky. How will you provide broad access?

Having worked in traditional structures with shareholder mandates, is this a better way to run a pharma company?

Given the negative perception of pharma, especially during COVID, there needs to be a rebuilding of trust. Is there cross-fertilization of ideas from your organization to others?

Last thing, what's a good book you've read lately?

David Lee, thank you so much for joining me today on The Long Run.

Thanks for listening to The Long Run, a production of Timberman Report. Pedro Rado of Headstepper Media was sound editor. Music is from DA Wallik. See you next episode.