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Leadership In Japan
In the face of new drug pricing reforms, the need to nurture strong leadership is imperative, but not without its challenges.
"Vision without action is daydream. Action without vision is nightmare."
So goes an old Japanese proverb. It’s something pharma companies operating in the land of the rising sun would do well to heed as they contemplate making their next steps in a market space currently beset by uncertainty.
The big talking point continues to be the Japanese government’s decision to roll out a new drug pricing policy. Response to the reform has been lukewarm, to put it mildly, with US and European companies arguing the measure won’t only damage their bottom lines, but competitiveness across the entire Japanese pharma sector.
Furthermore, the national industry is reported to have declined by 1% last year. According to research cited by European Federation of Pharmaceutical Industries and Associations Japan (EFPIA Japan), the sector could further shrink by as much as 7-8% in 2018 – even with the full scope of the price revision still yet to be revealed.
In order to weather the storm, companies need resilient and forward-thinking leaders at their helm, says Ludwig Kanzler, founder of Tokyo-based Hanegi Solutions.
“With the new pricing environment, leaders are required to not only be good problem solvers, but have good listening and observation skills,” he explains. “They also need to be able to anticipate what might happen as a result of these new restrictions. That, in turn, demands strategic thinking and an ability to mobilise internal resources in the right way.”
According to Kanzler, it has been self-evident for some time that pharma in Japan have struggled to nurture such leadership – both within home-grown and foreign players. He ascribes the latter to the fact that the products have traditionally been strong enough to engender company success.
“This has been the case for some time now,” he says. “When foreign companies first came to Japan, they had much stronger products that they were able to bring to the market. But that came at the expense of innovative leadership and the nurturing of internal talent.”
Pharma companies in Japan also have a tendency to reject in-house talent and recruit their leaders externally. This grass-is-greener approach has, says Kanzler, led to a poor hiring culture across the industry of “rotating the same people from company to company”.
“They are looking to outside talent to solve all their problems, but the sad reality is that this rarely happens,” he says. “Instead, they should be more systematic in nurturing internal talent.
“Only a few companies are making a real effort in terms of implementing feedback systems and coaching programmes. For most groups though, it’s on the backburner while most of their attention is instead focussed on the business issues.”
“The most important thing is developing leaders from within,” agrees Jason Hoffe, president, Sandoz Japan.
“Occasionally, you need to bring in leaders from the outside, but that brings with it a lot more uncertainty. Ideally, you develop leaders from within by having the right organisational culture in place.”
For Hoffe, pharma companies in Japan would do well to move away from leadership based around “top-down command and control” so as to empower the talent at their disposal. But in a society known for its hierarchical conventions, is this likely?
“I would say the hierarchical structures of some businesses might need to change,” says Hoffe. “With all the uncertainty around drug pricing reforms, leaders need to be better informed than ever before when it comes to making decisions. That’s why it’s important for leaders to develop and empower teams to help them choose the best course of action.”
Tony Alvarez, Interim Digital Lead, Senior Vice President, Global Human Health at Merck, spent the best part of his 11-year tenure in Japan from 2005-16 as the Japan President of Schering plough and MSD before returning to the US. From his vantage point, strong leadership is built on strong communication skills.
“During my time in Japan, there was one element that remained consistent, and that was the importance of having strong relationships with customer and key stakeholders – and then making that visible to your employees,” he explains. “Relationships are a foundation of Japanese culture.”
Alvarez mirrors Hoffe’s sentiment that decision-making should not be confined to the corner office. Instead, leaders need to communicate as clearly as possible with their staff – especially in the midst of uncertain market conditions.
“I think companies need to ensure there’s strong communication and alignment of the company vision in order to make sure employees are connected with changes in the market,” he says.
“With all the economic changes affecting the Japanese pharma market, which could result in a shifting workforce, you really need to keep employees in the loop so that they understand what these external changes might mean internally.”
“While senior leaders need to be able to take the initiative, they have to be team players too,” adds Kanzler, who has worked in Japan for over 20 years. “They shouldn’t look at the business as their fiefdom in which they can do as they please – which, unfortunately, is too often the case.”
Has the definition of what makes an exemplary leader changed much in Japan of late? Not much, believes Kanzler, but he has noticed a shift in the way global companies go about their operations, with integration now the watchword.
“In the old days, global companies would just delegate their business out to local organisations and partners,” he says. “That’s certainly changed. Now you need to work much more closely with your global colleagues.”
Today, most large foreign companies in Japan also choose to employ global leaders with prior exposure to Japanese business culture, as opposed to making local appointments.
“It’s interesting to see foreign companies opting for foreign presidents in Japan,” says Kanzler. “Ten years ago, there was a push to install local people as their leaders and presidents, but they clearly weren’t satisfied with the results. Companies struggle to find the type of leaders they find more easily in other countries.”
In Alvarez’s opinion, one of the main challenges for companies is ensuring they have “a pipeline of talent that is globally aware” while at the same time remaining attuned to the mores of the Japanese market.
“In business, if you’re not connected to the external environment, you fail,” he says. “So companies can learn a lot by looking at what’s happening in other parts of the world, then adapting these lessons to the Japanese realities.
“In the past, I think it’s been a struggle to develop global leaders in Japan, although I believe things are slowly improving.”
“Developing the right culture and leadership is a journey,” adds Hoffe. “Companies also need to look at how they support their leaders at different critical stages, because what leaders need to be good at in middle-management is different to what’s required in senior-management – which is also different from executive management.
“Leaders going through those transitions need to be supported better.”
Engage with the big issues affecting the region at eyeforpharma's Commercial Excellence Japan 2018 event in from the 16th to the 17th of May.
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