A "crazy" and "untidy" CEO has become the best CEO in the hearts of employees. In the selection activities for the best CEO and employer on Wall Street, Arthur Levinson and his led Genentech ranked high. In 2008, in the online anonymous voting held by Glassdoor.com website to select the 2008 "Best and Worst CEOs," Levinson topped the list of the best CEOs with a support rate as high as 93%, even surpassing Jobs.
Arthur Levinson spent 15 years transforming Genentech from a bankrupt small company into a giant in the biotechnology field with an annual revenue of $13.4 billion and a market value of about $100 billion, creating a typical Wall Street myth that turns decay into magic. This is a mouth-watering myth. Just as Arthur Levinson was steadily leading Genentech towards becoming the "biotech company with the highest global sales revenue in 2010" with full idealistic passion, news came that Swiss giant Roche Holding wanted to acquire Genentech.
After eight months of negotiations, Genentech finally agreed to Roche's cash acquisition offer of $46.8 billion. For Roche, which is good at marketing and focuses on market benefits, will it respect and maintain Genentech's former free and independent scientific research spirit after the acquisition? What conflicts between reality and Arthur Levinson's scientific ideals will arise?
"Unconventional" Innovation Concept
In 1995, when Arthur Levinson took over as CEO of Genentech, the company was in poor condition: the previous CEO had been ousted due to financial problems; the major shareholder, Swiss Roche, had opportunistically sold off its 42% stake to accumulate wealth; Arthur Levinson, who was appointed in a time of crisis, was not favored by many people within the company; employee morale was low, and many did not have much confidence in this scientist-founded Genentech company.
For Genentech, this was certainly not a moment of glory. However, for Arthur Levinson, who has always pursued freedom, this was a great development opportunity: the company's misfortune set the upper and lower limits for its stock price within the next five years, allowing him to focus on product development without worrying about stock prices. He had extraordinary freedom to restructure the company's product line. For a CEO with a scientific background, this was a joy hard to experience.
"We developed immunity to pressure," he said casually to The Wall Street Journal. Regardless of external evaluations, he increased the company's R&D investment ratio to 50% of its revenue. While giving unprecedented attention and investment to Genentech's R&D sector, he also greatly released the research philosophy and freedom of the scientific research team composed of scientists: not driven by commercial interests, but taking the efficacy of the disease as the fundamental driving force, conducting drug research and innovation, and not caring about how small the market demand proportion for the researched drugs is. He drastically reduced the original 75 projects that burdened the scientific research team to 25, so that the existing scientific research team could concentrate fully on research. As a result, the innovation enthusiasm of the scientific research team was greatly stimulated.
In the usual business concept, this was a unconventional move against the tide. Arthur Levinson's approach was initially not understood by others. But Levinson firmly proved the success of his innovative concept with extraordinary perseverance and calmness.
Under the guidance of this innovative concept, Genentech successfully developed a series of products. A typical successful case was Herceptin. This is a drug specifically developed for breast cancer patients with excessive production of HER2 genes. HER2 gene breast cancer patients account for only one-quarter of the total number of breast cancer patients. The market for Herceptin was not promising from the beginning. However, after it was launched, its efficacy was quite significant. In 2003 alone, Herceptin's sales reached $425 million.
"Many companies are simply unwilling to develop such drugs because the market share is too small, and they do not want to see that 75% of the population is unsuitable for the drugs they have developed. Often, the result in such situations may be unprofitable. We are not afraid of this," Arthur Levinson said firmly. "All things are equal, I am not pretending that we are going to fight the majority of patients with a minority. If we can find an effective treatment plan, and this plan can bring blessings to many patients, even if the market opportunity is extremely small, we will invest in research."
Levinson's scientific nature determined that he would adhere to the "unconventional" free attitude and research spirit, always respecting the essence of science and believing that science is the key to success. It was this concept that allowed him to lead Genentech through the fog and dispel the gloom, paving the way for vigorous development. His business concept was highly respected and admired by Steve Jobs, the president of Apple, and Levinson was thus regarded by Jobs as a mentor and friend.
Born Scientist + Later Business Elite
After Arthur Levinson became CEO, on the one hand, he increased investment in R&D, and on the other hand, he tried to lower the price of drugs as much as possible (the price of cancer drugs has always been astonishingly expensive). Between the increasing R&D investment and the thinning commercial profit, how does Arthur Levinson find a balance?
"Since the establishment of the company in 1976, the biotechnology industry as a whole has lost $90 billion. Personally, I think this is a money-losing industry, and many companies are in a 'heavy bleeding' state. But you can also look at this industry in another way: how much effort has the whole society invested in cancer treatment research? Because of neglecting health conditions, 42% of people have the possibility of getting cancer. Half of these 42% may die from cancer. In the United States, among people under the age of 85, cancer is the main cause of death. We have a GDP of trillions, and we only spend $15 billion on cancer drug research. If calculated this way, the insignificant 1/800 R&D investment is the main reason for cancer deaths. Many people say that cancer drugs almost make America go bankrupt, but if you analyze, you will know whether this statement is true or not." Arthur Levinson analyzed with this "nerdy" yet penetrating insight, using only data to speak.
Under Levinson's leadership, Genentech successfully developed and launched a series of targeted treatment drugs to the market, including Herceptin, Avastin (colorectal cancer drug), Lucentis injection, Rituxan (B-cell monoclonal antibody), and Erlotinib hydrochloride tablets. Among them, Herceptin and Avastin, two anti-cancer drugs, were both technical breakthroughs where Levinson himself played a major role. On February 26, 2004, Avastin was approved by the FDA (U.S. Food and Drug Administration), becoming the first approved drug in the U.S. to inhibit tumor angiogenesis. Avastin is produced through the Chinese hamster ovary cell system and has been proven by in vivo and in vitro detection systems that IgG1 antibodies can bind to human vascular endothelial growth factor (VEGF) and block its biological activity.