Rebuilding Business Development For Bayer HealthCare’s Changing Worldview

In an interview with IN VIVO, Bayer HealthCare BD&L chief Nigel Sheail discusses his group’s reorganization, one that both reflects the conglomerate’s philosophical shift toward integrated care and helps enable its strategic health care ambitions.

It helps to have experience. And Bayer HealthCare AG head of global business development and licensing Nigel Sheail has helped rebuild a pharmaceutical business development group before.

Sheail joined Bayer AG in November 2011, after spending 18 years at Roche, where he held a variety of research, finance, and BD positions, helped launch Roche’s China business, and was, most recently, head of M&A and licensing for its pharma group. At the turn of the century, Roche, amidst significant changes in its business model, was on the hunt for drugs. (See “Roche: Exit Equities, Enter Drugs” – IN VIVO Europe Rx, April 2003.) “We set up a partnering organization within research at the time when there was a significant downsizing, so we then relied more heavily on external innovation,” says Sheail. Eventually Sheail and another Roche executive (Bradley Bolzon, PhD, now a Versant Ventures managing director) took that model and applied it to business development across the entire pharma organization. Sheail stayed in that group in various roles and functions over the next 12 years, then moved on to lead Roche’s corporate M&A team.

At Bayer HealthCare, Sheail’s mandate is rather different. To better reflect the company’s ambitions to offer more integrated solutions for patients and physicians, the group’s health care business has pulled together its various BD groups into one large team.

“What we want to do is bring together the BD organization across the health care sector,” says Sheail. “Within Bayer HealthCare we have pharma, but also consumer care, animal health, and medical care,” the last of which includes Bayer HealthCare’s blood glucose monitoring and radiology portfolios of products. “Up until I joined, these groups were running separate BD organizations. What we decided to do was to bring those BD functions together in one group, running projects across the health care division.” That significant structural change in BD is just part of a philosophy that Bayer HealthCare chairman and CEO Jörg Reinhardt, MD, has implemented across various business functions since joining the conglomerate in early 2010. “Manufacturing, research across pharma and animal health, and support functions like communications and accounting have been consolidated. BD&L was one of the latter functions to go through that process,” says Sheail.

“The group’s pretty excited about it,” Sheail says. “For us in BD&L, what we realize is when you put the people from pharma together with the people from consumer care and medical care, they have really different backgrounds and bring different expertise to the table. Certainly for me, coming from what was a heavily Rx background, the exposure to the OTC business and the others is a great personal learning opportunity.”

At the same time Bayer HealthCare is leveraging that broad business base, Sheail wants to bring a different kind of specialization into the business development and licensing group. Moving from groups of mostly five to 10 people working individually across the entire process – “before everyone was really soup-to-nuts,” he says – into a global team of close to 100, will allow the group to bring in or develop expertise in functions like alliance management and evaluation, and “allow people with particular skill sets to really focus in those areas,” he says. “That’s a big change in working but it’s really important to us; it will allow us to have consistency in quality across all of the deals that we do.”

The restructuring of Bayer HealthCare’s BD organization reflects a shift within the company away from siloed interventions and toward integrated solutions to health care problems. Sheail points to Bayer HealthCare’s cardiovascular business – and in particular its probable blockbuster anticoagulant Xarelto (rivaroxaban), marketed with Johnson & Johnson, and interest in interventional cardiology more generally. “Obviously we have Xarelto, which is a very significant launch for us; we have heritage products like Adalat [nifedipine], part of a very strong pharma, Rx-driven heritage,” he explains. “But you go into the cardiologist’s clinic, what are they actually interested in? They’re interested in diagnostics, they’re interested in different kinds of treatment regimes, as well as pharma therapeutics. We think that’s an area where we can really provide a meaningful service.” Providing not just a prescription pharmaceutical product, but a broader cardiovascular offering as companies such as Endo International PLC and Sanofi aim to do in pelvic health and diabetes, respectively, is specific example of the broader Bayer HealthCare philosophy. Another is in women’s health, where the company is looking at the use of devices in its oral contraceptives offerings to increase compliance and real-world effectiveness. “I think [that philosophy] distinguishes us from other companies in the industry,” says Sheail. “It’s our belief that health care is going to become more consumerized. Patients are going to have a bigger role both in paying and also in the prescribing decision.” And so bringing together the experience it has with OTC, with medical care, and even to an extent with animal health, he says, is a different sort of expertise that perhaps some of the more focused pharmaceutical companies don’t have. Bayer can build on, for example, its capabilities in franchise brand management, consumer advertising, and different kinds of distribution channels to give it a strategic advantage, he notes.

“We very much believe that there will be this underlying theme of consumerization permeating health care, but at the same time the reality will be that it will actually affect itself in very different ways in individual markets,” Sheail says. A decade ago, industry went through “a period of globalization where things were tending toward more consistency and a common approach, and now I think we’re moving into a period where we’ll see much more diversification market by market,” he says. “What you see in Bayer HealthCare is strong local market and regional focus, and a real ability to respond to the local mix in a very decentralized and efficient way.”

Sustaining Innovation Through Deal Structures

Success in business development lies in identifying the right opportunity and getting access to it, but like many BD organizations, Bayer HealthCare’s is increasingly flexible when it comes to deal structure. That said, Sheail laments that innovation isn’t able to blossom within biotechs that currently must rely on pharmaceutical buyers. “I think it’s a shame that M&A has become so much the preferred exit route,” he says. “It’s hard to build sustainable innovation if your short-term objective is to sell the company.” There’s a real benefit to working and doing multiple deals with a biotech over a longer period of time, Sheail says, pointing to the pharma’s experiences with companies like Micromet, which was acquired by Amgen Inc. for $1 billion in January 2012. [See Deal] That Bayer, in the final stages of a licensing deal with Micromet when its acquisition was announced, was able to complete that deal with Amgen speaks to how industry has evolved over the past 10 or 15 years, he says. But the ability of Micromet to supply all of industry with its bispecific antibody technology is reduced in the new context, Sheail notes. “It would be good if we could find ways for biotech companies to thrive as independent companies,” he says.

Sheail points out that the company takes a practical view of the challenges that come with its diversified approach. “Being diversified and flexible is not the same thing as being unfocused and chaotic – you need to get that balance right. We spend a disproportionate amount of time at Bayer HealthCare really looking at that strategy,” he says. While the company is open to implementing that strategy differently in different parts of the world, “at the same time you need to put more effort into managing that strategy and making sure that there’s value behind it.”