Monday interview: Christophe Weber, Takeda CEO

When Christophe Weber became president of Takeda, Japan's biggest drugs company, last year he must have wondered what he had let himself in for. The company was going through a rough patch, to put it mildly.

Profits had been dwindling. Patents on its best-selling Actos diabetes medicine were running out, meaning potential losses of $4bn in annual revenue.

That was before Takeda was hit by a $6bn fine, later substantially reduced, when a US court judged that it had concealed a link between Actos and bladder cancer. The prospect of sliding revenues had necessitated painful multiyear cost cuts.

Mr Weber had an added burden: he was not Japanese. A Frenchman who had spent two decades with Anglo-American GlaxoSmithKline, he is the first foreigner to run the venerable Japanese company since it was founded in 1781.

Last week he added the title of chief executive to that of president. Before him, in Takeda's 230 years, the only person from outside the immediate Takeda family to be in charge was Yasuchika Hasegawa, Mr Weber's predecessor, who remains chairman.

Concerned about over-reliance on a stagnant domestic market, Mr Hase­gawa set the company on a spirited international push, acquiring two foreign companies for a total of $23bn. He sought to widen Takeda's international shareholder base, and even changed the working language at boardroom level to English.

For doubters, Mr Weber's arrival last April was the final straw. A group of dissident shareholders wrote to the board complaining bitterly that Takeda had been hijacked by foreign interests.

"Some shareholders were very concerned," Mr Weber, 48, concedes, in an interview conducted in the company's wood-panelled headquarters in the old Nihonbashi district of Tokyo.

"They were concerned by two dimensions. One is the globalisation of Takeda. Are we taking too much risk? Was it right to buy Nycomed?" he says, referring to the Swiss generics company Takeda acquired for $13.7bn in 2011. "And then there was the concern of the unknown - because a foreigner was taking over."

The record of foreign executives running Japanese companies has not been encouraging. Sir Howard Stringer had a tempestuous stint in charge of Sony. Michael Woodford's spell at Olympus ended with him fleeing the country, apparently in fear for his life, after he exposed accounting fraud.

So nervous was Mr Weber about the challenge awaiting him that he planned his first several months at Takeda with almost military precision. For each day, sometimes down to the hour, he says, he charted where he would be and who he would meet among the 30,000 employees.

He adds: "Takeda is a very old company with very old values." He needed to prove to sceptics he could build something new on existing foundations.

It has not been easy. "I deal with rumour after rumour," he complains. Six months after joining, he sent out an email denying that he was about to abscond to Sanofi, a French rival. At one point, there was what he calls the "un­believable rumour" that he wanted to relocate Takeda to Paris.

His status as outsider is just an added irritant. More fundamentally, he has to grapple with problems brought on by patent expiries and concerns over the earnings potential of new medicines. "It's been tough. Profitability has been declining for a few years. We know our profit margin is low compared with the industry."

Part of the turnround strategy in­volves a corporate restructuring that began under Mr Hasegawa. "It was a very fragmented business," says Mr Weber, who adds that the company has been rebuilt "almost entirely from scratch".

The new structure, while preserving what he calls the ability to act locally, revolves around four main therapeutic areas: oncology, gastroenterology, diseases of the central nervous system, and cardiovascular and metabolic diseases. Takeda is also putting more effort into generics, especially in emerging markets, and into vaccines. <

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Part of the rationale is to cut costs, although Mr Weber insists Takeda is already "lean". Still, instead of having four manufacturing units, as it had before, it now has one. It is also integrating its acquisitions more methodically. Millennium, the Boston-based biotechnology company it bought in 2008, is finally to be renamed Takeda Oncology.

He is also instituting what he calls "global talent development", something he says Takeda lacked. The company is global, he says, with two-thirds of its employees outside Japan in 70 countries. The executive team is one-third American, one-third European and one-third Japanese. "Regarding nationalities, it's very diverse. Regarding gender, it's not diverse at all," he says dejectedly. "I don't have a single woman on my team, so I'm working on that."

Evidence that the new global structure is working, he says, has come with the launch of Entyvio, a drug for Crohn's disease. This has been rolled out in 10 countries so far, including the US, though not yet in Japan, where he admits Takeda was slow to seek regulatory approval. Still, "for the first time we are beginning to launch global products".

He professes confidence that from now on new drug launches will more than offset lost revenue, meaning that Takeda is on the verge of "organic growth".

Still he does not rule out bolt-on acquisitions if they fit the therapeutic focus. Among new launches he mentions Ixazomib, a potentially $3bn-plus medicine for the treatment of multiple myeloma. Then there is diabetes drug Trelagliptin and two vaccines, one for dengue fever and another for norovirus.

Strong sales of Entyvio, which could rise to $2bn a year, plus hopes for the global strategy have lifted Takeda shares by nearly 40 per cent over the past five months, partly reversing the near-halving of their value over the previous seven years.

In October, Takeda's market value, now $39bn, briefly dipped below its domestic rival Astellas, drawing an un­usually sharp reaction from the soft-spoken Mr Weber. "I'm quite a competitive guy. I don't like . . . Astellas to have a higher market cap."

Mr Weber has worked hard to win over shareholders, with appearances at Takeda's first investor relations event in New York to pitch Entyvio and at a JPMorgan healthcare conference. However, analysts say he still has to prove his mettle. "The challenge for Mr Weber is to develop more drugs, invest in growth areas and to control costs in Japan," says Atsushi Seki, a Barclays analyst.

Mr Weber insists he will stay the course. He has a message for those who imagine he will jump ship at the first lucrative offer. "People have a certain visualisation of foreigners," he says. "But I'm not the sort to jump around a lot. I was almost 20 years at my previous company. I'm very committed to Takeda - for the long term."

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