With Weber’s push to acquire Shire, will Takeda be a Japanese company any more?

Takeda’s French CEO Christophe Weber is on another charm offensive ahead of the get-the-popcorn-out annual shareholders’ meeting on June 28th, with an interview in the Nikkei Business.

I found the interview very easy to follow, compared to other interviews with Japanese Presidents.  I suppose this is for the same reason that Prime Minister Abe’s speechwriter writes his speeches in English first, and then translates them back into Japanese.  The resulting Japanese is much clearer and more logical.  On the other hand, the interview is stuffed with Anglo Saxon finance concepts like EBITDA, EPS and scenario planning, which must be difficult for more traditional Japanese stakeholders to swallow.

I also get the impression the Japanese interviewer felt able to be more blunt in their questions.

Why did you buy Shire?

“We have already been focusing on R&D during our major reforms at Takeda, and this is going well.  So we didn’t need to make this acquisition, it was more a case of doing this in order to accelerate the reforms at Takeda, to make us even more competitive.”

The board did not all agree at first?

More than half of Takeda’s board are external directors.  “There were many questions.  We had several meetings before we reached a final decision…  Shire had R&D strengths in the same areas Takeda is focusing on, which is why we decided to buy them.  We did a lot of scenario planning and clarified the risks, thinking about what would help Takeda succeed  in the long run.”

So there are no big risks?

“It’s not zero, but f we have an appropriate buffer, we can avoid risks.  For example, selling off businesses which are not within the scope of our strategy”.  Presumably it’s this kind of approach that is worrying Takeda’s founding family shareholders.

How do you see the fall in Takeda’s share price on the news of the acquisition?

“Of course we weren’t happy.  We weren’t able to explain the decision in full, so I think if we can explain in more detail from now on, people will be persuaded.  We will maintain the dividend.  We will increase earnings per share.

Shire turned down your approach a few times.  What were your thoughts then?

“It would have been good to have progressed more quickly, but it is important to start negotiations from a point relative to the upper limit of a rational offer price.  I also wanted it to be a friendly not hostile approach.”

So was it the most appropriate price in the end?

“Yes. If not, we would not have gone ahead”

Shire is known as a company that is good at making money.  Why is this?

“It’s because they focus the business. 65% of turnover is in the US and profitability is also high.The organisation is lean and they focus their research.”

Something Takeda can learn from?

“Yes, very much so. I think there will be some great outcomes from the merger.  We can accelerate the improvement of Takeda.” (You can feel Takeda’s founding family wince at this point)

With this acquisition, Takeda will enter the world’s top 10 pharmaceutical companies.  Are you happy that Takeda will now have the scale to continue as an R&D led company, or do you want to expand further?

“I think we will be competitive enough.  We will have regional balance, sufficient funds for R&D, an appropriate strategy, excellent candidate drugs. I don’t see any weaknesses… We are not going to let the pursuit of M&A go to our heads.  We are very cautious in evaluating businesses.  We also use partnerships with universities and other companies in order to develop drugs and have over 180 such joint development projects.”

Takeda has just set up a Health Innovation Park in Shonan, Japan to encourage such partnerships.  Weber does not think this model is appropriate outside Japan, however.  In the US, venture capital is more readily available. It’s true that Japanese companies in the same supply chain, or who might even be competitors in other areas, are much more willing to cooperate in an ecosystem, for mutual benefit. It’s a strength of Japanese companies which I hope they hold on to, despite pressures from Western shareholder shareholder oriented capitalism.

More than half of top management are not Japanese.  Dublin, where Shire’s headquarters are, is a low tax base – will you shift Takeda’s headquarters outside of Japan?

“No No No No. Takeda is a Japanese company.  The headquarters inarguably are in Japan. The name will remain as Takeda. We are in the middle of building a new global headquarters in Tokyo, in Nihombashi.

So is there a meaning to being a Japanese company?

Being a leading Japanese company has meaning on the world stage.  When in 2017 we acquired ARIAD, they themselves were looking for a Japanese partner, because of Japan’s strengths in their area of research.

What were your feelings when you were approached to be CEO of Takeda?

I was really surprised.  I had never met Yasuchika Hasegawa, the then president of Takeda.

That’s amazing!  What made you take the job?

I was attracted by Takeda’s wish to be a global leader and their vision and values.  It is an industry where you need to have a strong sense of responsibility, and Takeda has that in their DNA.  Actually most people told me not to take the job.  There is the rumour that foreign CEOs don’t do well in Japan as there have been more cases of failure than success.

And how was it since you took the job?

For the first few months I was in listening mode.  More than 70% of employees are outside Japan and they need to be heard too.

Were there things that were difficult, because it was a Japanese company?

One thing I realised was that you cannot say “the Japanese company way” as every Japanese company is not the same. There are elements in common of course, but there are big differences.”

With the acquisition of Shire, the company will expand further – what are the priorities for management?

It is quite simple – to make sure employees feel motivated and happy, and that the company succeeds.  My responsibility is to ensure the environment is where diverse employees can give their best.  It’s important to take time to communicate.  I am conducting town hall meetings in each operation.  After a short explanation of trends, we have a Q&A.

Weber says he has been a manager for 25 years and made many mistakes, but his main philosophy is to never stop learning.

In 2016 Weber set up a Vision 2025, to encourage the development of highly innovative drugs to bring to the world and be a company that is trusted by all stakeholders.  “At Takeda, the patient is number one”.  He defines “Takedaism” as fair, sincere, honest and tenacious.

With this deal, you have become one of the most famous business people in the world.  Aren’t you getting invitations to join other companies?

My timeframe is the 2025 deadline for realising the vision. I have said repeatedly I will stay at Takeda until then.  I have not become president in order to become famous. I believe this acquisition is the right thing for Takeda to do. That is why we are doing it.

If you do leave Takeda before 2025, you owe me a dinner.

Of course, but I get to choose the restaurant.

 

Nikkei Asian Review has an interesting article on Weber’s impact on Takeda here (in English).

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