11 Capabilities a Biotech CEO Must Possess in 2024 and Beyond
Karl Simpson
Co-Founder @ BioDirector | Corporate Governance, Leadership, Organisational Culture in Healthcare
Ascending to a CEO position is an infrequent journey. While there can appear to be some entirely predictable paths to the top job, every individual experiences twists, turns and slices of good fortune to secure the corner office. Many executives keep pushing forward, accepting new jobs, adding responsibilities, and delivering projects and results until their name gets included in the conversations about CEO roles, prompting an approach to consider a CEO position.
In this article, I’ll explore the question of what makes a good CEO, which, it turns out, is remarkably more complicated to answer than seeking to describe why CEOs fail. Not least, predicting success is primarily a forward-looking exercise, and analysing failure is a more retrospective pursuit focused on reducing failure to a narrow choice of actions or behaviours.
The role of CEO carries a broad scope of responsibilities, demanding competencies which can be mapped out, thereby offering a window into the CEO role and, for those coveting the job, an opportunity to begin planning for it. Successful CEOs who endure a company's many cycles are rare in the biotech world. There remains more churn in the top job than many companies benefit from. Changing the CEO is a process that drains time and saps a company's energy, momentum and advantage, emphasising the preference for getting it right from the outset.
The appointment process is one of the primary challenges of hiring a CEO to lead a biotech company. The CEO’s appointment typically falls to the board of directors to manage, which in many emerging biotech companies mainly comprises investor directors. These are people with considerable experience in the sector and building companies. Investors often have broad and deep networks of executives that circle their orbit and are frequently viewed as known quantities, making them prime contenders for CEO selection.
However, such selection methods can prove wildly inconsistent. Instead, more time spent assessing the needs of the company and the requisite capabilities of the CEO would increase the effectiveness of recruitment and improve the probability of success once appointed. In the following chapters, I set out eleven critical areas of responsibility that a biotech CEO needs to cover, the core functions it requires them to interact with (if they exist), and the competencies a CEO needs to exhibit.
Strategic Vision and Agility
Biotech CEOs face great uncertainty and risk, mainly because science is unpredictable, especially at the front end of the curve. It is why biotech CEOs and investors focus so intently on reducing risk in all other areas. A biotech CEO needs to have a clear strategic vision based on the long-term but be equally ready to pivot when new information emerges that requires them to change.
At the heart of any biotech venture is a vision for making a significant change to the treatment of patients. Starting from such early and humble beginnings requires a vision that attracts the right capital and people to put around the science. But things happen, and in leading-edge discovery science, many factors can alter a company’s direction.
A CEO needs to be bold, analytical and decisive. The CEO has to be resilient and keep the team wedded to the vision even when dealing with setbacks and failure. Their strategic agility and adaptability will be vital to adjusting strategies quickly in response to change and more compelling alternatives. They must balance persistence, determination and fortitude with a willingness to switch direction in pursuit of a new vision when the need or opportunity arises. ?
Functions:
Competencies:
A critical thinker with an innovative mindset capable of embracing change. The CEO must create and fortify the company’s vision, communicating frequently and clearly with stakeholders inside and outside the company. They must be able to solve problems, devise strategic solutions in the face of challenges, and craft a new strategic vision when needed. ?
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Fund Raising and Efficient Capital Management
The recent downturn in the biotech sector highlighted one of the most critical capabilities the CEO of any biotech company must possess. While funding cycles come and go, pursuing capital is a constant focus for biotech CEOs. Over the past decade or two, the sources of capital have increased in terms of the number and geographic spread of allocators and the differing types of capital. However, persuading investors to invest money into a fledgling biotech company remains difficult. It commonly requires a blend of a compelling plan and vision, outstanding founders and team, and an accessible network of investors willing to come around your company and deploy the required capital to develop the science and technology that will fulfil the promise.
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Competencies:
Financial acumen is essential, including raising capital, managing budgets, and balancing short-term costs with long-term growth. Understanding financial models, investor relations, and financial reporting is also critical.
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Managing Decentralised Resources
Any CEO presiding over a biotech company in recent years will acutely understand the importance of establishing a mosaic of service partners who offer the range of intellectual capital necessary to undertake meaningful work central to achieving successful outcomes for the biotech company. These partnerships are frequently based on traditional vendor-client engagements but sometimes demand more creative arrangements and are integral to accessing the specialised human capital the company needs. Beyond financial incentives, these partners must be motivated to act and respond as an extension of the company. Traditional outsourcing provisions remain, but CEOs must successfully understand how to identify and engage the right collaborators and successfully leverage their intellectual resources to serve the mission.
Functions:
Competencies:
The CEO must be able to foresee needs and plan for resources that enable the company to advance unhindered. They should be an effective strategic planner who can analyse, select and secure crucial partnerships that augment the company's capabilities. ?
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Collaborative and Cross-Border Relationships
There have been many drivers for the growth and development of the biotechnology industry over recent decades, but unlocking and accessing the industry’s innovation has been a crucial feature for many large pharmaceutical companies. These companies have increasingly relied upon external innovation to fill gaps in revenue brought about by patent expirations and inadequate success from in-house R&D outputs. While concentrated clusters of activity have created notable ecosystems in places like Boston and San Francisco, the industry is now far more geographically diverse and international than it was, even ten years ago.
Therefore, a biotech CEO needs to be able to forge strategic partnerships, domestically and internationally, with companies that offer the jigsaw pieces to complete the puzzle. Collaborations can be with deep-pocketed pharma companies that can propel a company’s development goals or more comparable peers that provide a scientific or technology capability the company requires.
A CEO must find ways to select the right partners at the right time, under the terms which are advantageous to the company, while retaining sufficient incentives for the company’s employees and stakeholders. These collaborative partnerships can involve complex multi-party arrangements, and CEOs must lead a team capable of establishing and cultivating productive relationships over the long term, involving cross-functional interactions and often across borders and cultures.
Functions:
Competencies:
Strong negotiation skills, intellectual property (IP) law understanding, and business development expertise are essential. CEOs should be adept at forging mutually beneficial alliances and collaborations. Evident communication skills, a strong knowledge of international markets, and cultural awareness should underwrite this.
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Drug Discovery and Development while being Commercially Focused
With more experienced biotech company builders on both the operating side and among investors, more imaginative ways exist to test, validate and develop new and promising science. While the full potential of a new scientific approach can go unproven for many years, today’s savvy investors and entrepreneurs wish to quickly get to a place where they’re able to determine if a scientific approach is going to work or not, thereby avoiding lengthy and expensive lab or clinical programs that fail. Setting up experiments to kill the very thing you believe in can be a challenging paradox, but it makes commercial sense in many of these situations.
Furthermore, science, for its own sake, doesn’t often garner commercial success. CEOs need to ensure their team establishes a likely indication, patient populations, optimal development plans and the commercial viability of the drug or platform. Biotech CEOs are expected to preside over this highly analytical, expert-led, and information-rich calculus.
The challenge many biotech CEOs face is that they have often emanated from the science world and are suspected of having a predisposition to favour scientific exploration over commercial management. Operating in an environment of tighter funding and heightened emphasis on capital efficiency can place unfamiliar pressures upon them. ?Managing the tensions between the pursuit of science and what is commercially viable requires CEOs who can make the right decisions, often with imperfect or incomplete data and information.
This confluence of earlier and quicker assessment of risk to eliminate resource and capital inefficiency, alongside astute budgetary allocation for R&D-oriented programs, emphasises the delicate balance that biotech CEOs must strike. This innovation-led commercial management can be complicated, especially as the commercial landscape adjusts to pricing pressures, policy, regulation, competition, and many other influences.
Functions:
Competencies:
A solid understanding of biotechnology, life sciences, and the R&D process is necessary. The ability to collaborate with scientists, interpret technical data, and assess innovation potential is also crucial. They must be willing to make essential decisions about R&D programmes and be ready to deselect programmes in the face of emerging data or higher priorities.
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Global Payer Environments
Few topics dominate the biotech industry news flow more than the politics of drug pricing in markets across the world, especially in the US, where commercial success is often seen as mandatory for the viability of any aspiring biotech company.
However, drug pricing is inherently complex, and considerable system differences can exist across continents, country to country, and even within individual countries. For instance, Europe, considered a priority market by the industry, has a highly complex payer system. With governments worldwide wishing to find more efficient ways to manage growing healthcare budgets, the price of new treatments is under the microscope, and political pressure is being applied to the entire drug industry.
The biotech CEO of today needs to be exceptionally well-versed in all the dimensions of this matter: politically, strategically, tactically and commercially.
CEOs must understand how to create value through innovation, not just for shareholders but for stakeholders, too. They must work to establish early and viable pharmacoeconomic models for the products they hope to commercialise and closely monitor the changes across the payer landscape. While an internal team or advisors will be helpful in this task, the CEO themselves must understand and show leadership on this issue.
Furthermore, the payer environment is such a prominent area of risk to biotech companies with commercial ambitions that there is a solid argument for adding experienced ‘payer’ expertise to the board of directors in support of CEOs, especially in cases where the modality or drug is likely to encounter some access barriers.
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Competencies:
CEOs must exhibit their commercial acumen while being effective at stakeholder engagement and management. Pursuing commercial access in multiple markets demands a CEO with great versatility and adaptability. They must readily assimilate critical information to revise and optimise market strategies.
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Global Regulatory Affairs Knowledge
CEOs should be able to assimilate relevant regulatory requirements, including emerging regulations, that will determine the progress of the company’s clinical programs or the ultimate approval of products intended for commercial markets. Biotech CEOs need to be tuned into the requirements of regulators and, with proper guidance, lead the company’s efforts for optimal outcomes.
They must avoid consequences requiring the company to re-do clinical studies, face refuse-to-file letters or deliver clinical data packages that fail to achieve successful regulatory approvals. If companies have not been attentive to this work, valuable deals with prospective partners can be delayed, diminished or terminated during due diligence because of poor regulatory packages.
Among the companies with commercial interests, it will be important that CEOs have a sufficiently broad perspective of the global regulatory setting to navigate towards positive outcomes in developing markets beyond the early launch markets. With shifting global demographics and economic prosperity emerging in other parts of the world, the CEOs need to steer the ship to capture value in as many of these markets as is realistically viable. The second phase of international commercialisation can be difficult in many ways, and the regulatory strategy must be well-conceived.
Functions:
Competencies:
CEOs need a deep understanding of biotechnology regulatory processes, compliance, and ethical standards. Negotiation and communication skills are critical when interacting with regulatory agencies.
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Human Capital Value and Growth
There is an increasing focus on human capital as a valuable resource that needs the same diligent care as financial or natural resources. People make up a large part of a company’s costs, and CEOs who recognise how important it is to manage the growth and development of its people, as well as how they interact and engage with the company, community, and environment, should be an integral part of the CEO’s role. ?
CEOs are increasingly expected to give attention to human capital, a topic frequently finding its way onto board agendas. CEOs will need to understand the demographics of the workforce accurately; how productive the workforce is; the team composition in terms of skills and experience; workforce attrition and causes of instability; the workplace culture and its development; equity, diversity and inclusion, and how employees are incentivised and compensated. CEOs can seek support from effective CHRO or Chief People Officers but must also be across the issues themselves and not overly delegate. ?
The people in a company can contribute incredible value, but a workforce is also a source of risk. Negative events can affect workplace transformations, materially impacting employees and eroding human capital value. This requires CEOs to continually model good practices and reinforce company expectations, including those codified in policies. Successful CEOs have a talent vision for their companies and can introduce the right strategies. CEOs who sustainably manage the human capital value of their businesses are more likely to deliver successful outcomes in whatever circumstances they meet.
Functions:
Competencies:
Effective leadership that maximises the value of the workforce is an integral skill of the modern biotech CEO. The CEO will often lead a highly skilled and trained workforce and ensure that the workforce feels safe and engaged and is experiencing the personal development opportunities that will continually motivate and inspire them.
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Technology Convergence and Disruption
You don’t go far in the biotech world before someone talks about the transformational benefits of Artificial Intelligence. This technology is expected to speed up, reduce costs, and improve the outcomes of drug discovery and development. However, this is not the only emerging technology that offers great promise. The harnessing power of big data, telehealth, robotics, augmented reality and wearables all promise to impact the therapeutics value chain.
A range of opinions exist regarding the viability of these technologies, but unquestionably, there are many ways in which technology may introduce advantages to drug development. Some biotech companies are at the forefront of this progress; however, many are playing catch-up and remain traditional in their approach and organisational makeup. Over the coming years, CEOs will need to be explorative with emerging technologies, seeking to leverage their benefits. This convergence poses challenges, though, as the technology and biosciences skills have remained relatively separate. Given both talent environments' dynamics and competing interests, assembling the teams with the necessary skills and know-how will prove difficult.
CEOs should ensure that their operating teams and board of directors are conversant with these technologies. The CEOs will need to understand and employ the technologies to improve processes and outputs and acknowledge the competitive disruption that such technologies can introduce to the marketplace. Failure to identify, monitor and utilise suitable technologies will prove detrimental to a company.
Functions:
Competencies:
Accompanying a solid foundational understanding of AI, Machine Learning and or emerging technologies, the CEO should grasp data science and analytics. They should display an ability to develop innovation and technology strategies that advance the company’s mission and coordinate the multi-functional teams to deliver these transformations. ?Furthermore, they should develop an understanding of the regulatory and ethical considerations related to these technologies and accurately assess risks.
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Culture Building
Company culture can be challenging to describe. Most attempts hinge on espousing a list of ‘values’ or ‘behaviours’, which often prove inadequate in genuinely portraying a company’s culture, for good or bad. Anyone who has worked in a company with a strong company culture knows all too well that the intangible dimensions of culture are what define it most. You know it is invisible yet palpable when you experience it. Of course, the same is true when you experience a negative culture, too.
Very often, company culture is seeded by the board of directors, with an expectation that they set the ‘tone from the top’. Although the board is crucial in casting the cultural DNA, it is incumbent upon the CEO and her management team to promulgate this cultural identity through the organisation as it grows or contracts. The manifestation of a company’s cultural identity begins to enable it to build a reputation.
Company culture is complex. Because many things contribute to it, many things can also jeopardise it. Culture can be a source of value and competitive advantage, but it is also a significant source of risk. It can be hard to change and often outlives any executive team.
To what extent the CEO must be the architect of company culture is debatable. They must be a proponent of the cultural ethos to which they wish the broader organisation to align. What is certain is their role in nurturing and facilitating the culture necessary to bring sustainable success to the company, by whichever metric is defined.
Biotech companies grow in quite predictable patterns, emerging from scientific foundations to become more complex organisations with many high-skilled functions as the company transitions from discovery to clinical development and onward to commercial, bringing cultural evolutions. Successful CEOs will develop a culture which seamlessly evolves, deftly dampening the negative gyrations that destabilise employees and transmit to external stakeholders.
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Competencies:
Integrity, emotional intelligence, and a commitment to ethical practices are non-negotiable. CEOs need to create an inclusive, innovative, mission-driven and purpose-oriented workplace.
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Hiring and Managing Highly Diversified Teams
Putting together a team of leaders for a biotech company is not easy. A new company starting out suggests the company is subject to higher risks than more mature companies, although risk exists at many stages of company building. Risk impacts your ability to attract good talent. CEOs must assemble multidisciplinary teams with the skills, experience and competencies crucial to the business. In doing so, they often return to former colleagues, friends or close associates with whom they have an established relationship, trust and understanding. It is what drives much of the hiring from within personal networks.
In creating their team, the CEO will need to be placing an essential emphasis on diversity. Aside from the advantages of diversity, such as perspective, skills, market knowledge, risk awareness, and more, the demographic makeup of society is shifting, and companies need to include these talents to build highly diverse teams. CEOs will need to find new and innovative ways to identify and hire candidates from more diverse backgrounds, which will almost certainly require going outside their networks. It will require more considerable planning to afford the time necessary to acquire the right people and enrich the overall team composition.
Having put together the team, CEOs must manage this diversity inclusively. Such changes in how teams are built and led will introduce new challenges for many otherwise proven leaders. For example, recruitment processes will apply ‘inclusive leadership’ filters to their assessment criteria, meaning candidates need to exhibit inclusive behaviour in their leadership of teams and some track record of creating diversity. The elevation in the importance of building and managing diverse teams will shift hiring decision criteria and performance management metrics for CEOs.
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Competencies:
Strong leadership, talent management, and team-building skills are required. CEOs should also have emotional intelligence and the ability to mentor and inspire diverse leaders at every level.
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There are very many qualities that define a successful CEO. The company, colleagues, and work environment significantly contribute to their success. However, suppose we can better identify the CEO leaders more likely to produce good results. In that case, we must continually revisit our understanding and assumptions about what capabilities are of the most significant value. This article explores several prominent aspects of the CEO's role, but this is not an exhaustive list.
The biotech industry relies on curious, bold, ambitious, committed and passionate people to push the frontiers of science against challenging odds to help patients. Hopefully, openly discussing the CEO job will shape the career path of the next wave of CEOs to take the helm. ?
C-suite executive I Strategist I Leader and mentor I Global Regulatory Affairs, QA and PV I Life-cycle management
1 个月Excellent paper, thanks for sharing
Founder and CEO YAKUMED. Japanese Pharma & Cell/Gene Therapy Market
1 个月Great Article Karl! Thank you