David Loew arrived as the new CEO of mid-sized French biopharmaceutical company Ipsen at a fraught time in the company’s history. The share price had recently dropped by almost 70% after palovarotene – a drug developed to treat fibrodysplasia ossificans progressiva, a rare bone disease – was placed on clinical hold by the FDA.
This inflicted a hefty financial loss on Ipsen, against a backdrop of broader threats to its business. The company’s flagship drug, Somatuline, which accounted for around 50% of Ipsen’s sales and 60% of its profits, was starting to face competition from a newly approved generic, and the company’s R&D pipeline was skewed towards late-stage assets.
Loew, whose professional experience included leading the vaccines unit of French pharma Sanofi, stepped up to get Ipsen back on track. He brought a fresh perspective to the company, encapsulated by the strategy tagline: “Focus. Together. For Patients and Society.” So, how did the new strategy refocus the business after a challenging period?
The success of the new strategy relied on the foundation of a detailed diagnosis of Ipsen’s current condition. Loew’s first act on taking up the CEO position was to initiate a rigorous internal review of the business. He gave himself and the senior leadership team three months to assess Ipsen’s strengths, weaknesses, and key differentiators, as well as identify the challenges and opportunities it faced.
From analyzing the results of this process, Loew decided that while the company had valuable drugs in its portfolio across its three focus areas of specialty care – oncology, rare diseases, and neuroscience – the R&D pipeline was markedly unbalanced, with a bias towards late-stage assets.
The company had to become more precise in terms of targeting which drugs it wanted to license-in externally, in order to secure a strong pipeline and capitalize on its resources.
In relation to cancer drugs, for example, Loew decided that, as a mid-size company, Ipsen should target assets whose valuations were between 300 and 800 million to avoid competing with pharmaceutical giants such as Roche and Pfizer.
These efforts to balance Ipsen’s pipeline resulted in the acquisition or “in-licensing” of 20 targets across the three focus areas up to 2022. In addition, Ipsen acquired Epizyme, a biotechnology company that specialized in next-generation cancer treatments, expanding the former’s oncology capabilities.
Loew and his senior leadership team also doubled down on rare diseases as a critical area that Ipsen could further expand. He recognized that Ipsen’s size meant that it was more agile than larger companies, and therefore better placed to liaise with patient groups and healthcare providers to introduce new treatments for rare diseases. Ipsen also expanded its expertise in this area through the acquisition of Albireo, an innovator in the treatment of rare liver diseases.
Loew understood that, as a mid-sized company, Ipsen had limited resources and, consequently, if some areas of the business required greater focus, energy, and funding, it would have to offset this with efficiencies in others.
As part of the initial diagnosis, Loew decided that Ipsen was spreading itself too thinly across too many therapeutic fields. As a result, the strategic decision was to narrow Ipsen’s focus to oncology, rare diseases and neuroscience, and step away from its consumer healthcare division, which, although it had been the core of Ipsen’s original offering, was no longer considered a good fit going forward.
As well as stepping away from the customer healthcare part of the business, the internal review suggested operational expenses as a target for efficiencies. Ipsen’s operational expenses were five points higher than the average for companies of a similar size. A key issue was a lack of joined-up initiatives across territories. In response, the company launched the Efficiency for Growth initiative with the intention of lowering operating expenses. In 2021, the business successfully reduced its selling, general, and administrative expenses (SG&A) ratio by 3.5%.
Recognizing that culture was essential to positioning these efficiencies and that the company’s staff was highly purpose-driven and motivated by delivering treatments that would have a positive impact on patients, Loew engaged in a company-wide effort to create a high-performing culture that would continue to emphasize the centrality of patients and how succeeding in the market would make more resources available for R&D for new and better treatments.
“By 2022, the company had received 39 certifications across 23 countries, the board had achieved gender parity, and just over half of the global leadership team was female.”
Loew also carefully revised the way the leadership team managed new initiatives, ensuring end-to-end ownership through individual accountability. While it was clear that key priorities required collaboration across the business, from regulatory to marketing, he ensured that a different member of the executive team held single accountability for each priority, helping to keep strategy focused and directed.
Ipsen also recognized that promoting a strong purpose would boost talent acquisition, but that it had to back this up with a coherent, evolving corporate culture in order to keep employees engaged.
The company put in place initiatives and KPIs centered around maintaining gender balance in the leadership team, achieving “best place to work” certifications in over three-quarters of country sites, as well as positive environmental measures such as reducing greenhouse gas emissions and water consumption. By 2022, the company had received 39 certifications across 23 countries, the board had achieved gender parity, and just over half of the global leadership team was female.
Through discipline, focus, honest assessment, and a strong sense of purpose, Ipsen’s transformation achieved great results. Here are some valuable lessons from Ipsen’s recent journey:
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