[INTERVIEW] Takeda Korea breaks conventions

Mahender Nayak, president and general manager of Takeda Pharmaceuticals Korea, speaks during an interview with The Korea Times at the company headquarters in southern Seoul, Sept. 5. / Courtesy of Takeda Pharmaceuticals Korea

Japan's pharmaceutical giant does away with seniority, promotes open communication

By Lee Hyo-sik

Seniority-based personnel management, a rigid corporate culture and a homogenous workforce have been cited by many pundits as some of the attributes that define Japan Inc.

But Takeda Pharmaceuticals, Japan's largest drug company, refuses to be characterized as a typical corporate giant, according to the head of its Korean unit, who said it has embraced a multiracial workforce, a down-to-top decision making process, open communication and other elements that make a business globally successful.

In an interview with The Korea Times, Mahender Nayak, president and general manager of Takeda Pharmaceuticals Korea, said his company is agile, culturally-diverse and market-oriented so that it can quickly adapt to the rapidly-changing market environment of the 21st century.

"Takeda is a global pharmaceutical company that always promotes workforce diversity, open communication and a horizontal decision-making process," Nayak said. "I am from India and report to the Scottish manager in Singapore who runs the Asia business. The CEO of our global operations is French. This shows how diverse Takeda's top management has become."

He said the firm has been trying to create an ethnically and culturally diverse workforce, a key to doing away with seniority-based personnel management and the organizational hierarchy.

"In addition to our diverse top management, we try to have employees be exposed to other cultures. For instance, Takeda Korea currently has four employees working at its affiliates across the globe, interacting with people from different backgrounds," Nayak said. "So when they come back, they will share those experiences with their colleagues here and inspire them to do the same, making the company more vibrant and open minded."

Takeda, which has set up a presence in 70 countries and employs 31,000 people, established its Korean subsidiary in April 2011 to capitalize on a growing number of patients who need a wide range of medicines for diabetes, cancer and other illnesses.

Prior to the setup, the company had signed supply contracts with CJ and other domestic firms for the distribution of its medicines to hospitals and other medical institutions. For many Koreans, cold medicine Whituben and multivitamin tablet Actinum are some of the best known Takeda products.

In 2016, Takeda Korea earned 189.6 billion won ($166 million) in sales, up 10.3 percent from 2015, while its operating profit reached 10.3 billion won, compared with a 25.6 billion won loss a year earlier.

Promoting internal communication

Nayak said Takeda Korea created a smartphone app through which employees can express their concerns and opinions anonymously, as soon as he took the company helm in January 2016.

"Although Takeda is a global pharmaceutical company, there was a hierarchical organization due to the local culture. I thought a venue was necessary where all employees could communicate openly and freely so suggested various open communication programs myself," the general manager said.

"The program that I care about the most is the monthly town hall meeting with all employees. Employees can ask questions anonymously in real time using application Slido and then I give an answer. Korean staff tend not to ask questions, but thanks to the anonymity of the application many questions are raised."

The Indian national said employees' perception has begun to change and the meeting has become an outlet for them to share constructive ideas and opinions for company growth.

"When the meeting was first organized, I wanted to earn more confidence and trust from my staff as a new CEO and build stronger solidarity. I think these goals have been achieved to a certain extent. But I will not remain complacent and continue to do my best to promote open communication," Nayak said.

He added that Korea is an important market for Takeda, stressing Asia's fourth-largest economy is a place where all multinational pharmaceutical companies should be operating.

"Some may think Korea is not a big market in terms of population. But it is the world's 13th-largest pharmaceutical market," he said. "For Takeda, it is the fourth-largest emerging market after South America, Singapore and Russia. Given Korea's rapid population aging and rising income, its pharmaceutical market has a greater potential to grow."

An increasing number of Koreans are suffering from chronic diseases such as diabetes and high blood pressure in line with Western dietary habits, sedentary lifestyle and worsening environmental pollution, demanding more effective and safer treatment options from Takeda, Nayak said.

To expand its presence here, the Japanese drug firm has been partnering with many of its domestic counterparts.

In August, it signed an agreement with Samsung Bioepis for new biologics development. First, they plan to develop a more effective and safer pancreatitis therapy.

"The risk-sharing partnership brings together Samsung Bioepis' agile biologics development platform with Takeda's best-in-class experts in drug development to jointly fund and develop innovative therapies representing meaningful value to patients who need them," he said.

"We decided to work with Samsung because we believe it has world-class expertise and knowhow in new biologics development."

‘Moon Jae-in care' poses challenge

Nayak said it is too early to say what effects the so-called Moon Jae-in care will bring about for Takeda and other multinational drug firms, adding he will wait and see what the administration puts into action.

"I very much agree with the intention behind the Moon administration's policy of extending insurance coverage. Percentage of household out-of-pocket expenditure on health in Korea, among OECD nations, is high at 36.8 percent," the chief said.

"That is the reason why national health insurance coverage expansion can be a good option for people who have to spend more on medical costs, including those who are affected by serious illness."

However, there is no concrete roadmap to implement the policy from the government, he said, adding it is too early to discuss any positive or negative effects Moon Jae-In care would have on the overall pharmaceutical industry.

"Once more detailed guidelines are announced we can have an in-depth discussion. Predictability of government policy change is one of the key elements in running a company. That said, I hope a more detailed government roadmap is announced soon," Nayak said.

The Moon administration has vowed to cover a wider range of illnesses under the National Health Insurance in the coming years to lessen patients' medical expenses. But this would only be possible at the expense of pharmaceutical firms and hospitals unless the government collects more insurance premiums from taxpayers.

Policymakers are expected to place greater pressure on multinational pharmaceutical companies to reduce drug prices. If they do not agree, the government may choose not to cover their medicines under the state health insurance.

"Korea's universal health care is envied even by many advanced nations. But it also means the government is under constant financial burden so that it tends to less appreciate the value of new drugs," he said. "But developing one new innovative medicine takes an astronomical amount of R&D investment and time. So it should be valued more."