Inspiration from Big Pharma

This is a positive story from an industry with a bad reputation.

Schering-Plough (SGP) is a major pharmaceutical company. In 2002, the FDA fined them $500 million for sloppily manufacturing Claritin and 124 other drugs (their revenue that year was $7 or $8 billion, so the fine was significant). In addition, the FDA called for $175 million to be put in escrow against expected future fines for too-slow compliance.

In 2003, SGP's board brought in a new CEO, Fred Hassan, and by extension a number of folks from Hassan's previous company, Pharmacia (and elsewhere, of course). This new team actually met with the FDA to discuss their compliance plan—an unprecedented step—and after five years had actually executed. Three weeks ago a federal court dissolved the so-called "consent decree" enforcing the FDA's regulations, with the FDA's blessing and with the $175 million in escrow untouched. This sort of transparency and compliance is unheard of in the pharmaceutical industry.

But I'm biased. My uncle is an executive for the Schering-Plough Research Institute, SGP's R&D arm. He came from Pharmacia with Hassan in 2003, as did his boss, and his boss's boss, who reports to Hassan.

My uncle is proud of their turn-around, and he has nothing but respect for Hassan and the SGP/Pharmacia team. When I asked him what makes Hassan such a good CEO, he answered quickly: you can trust him. He is honest with his stakeholders both when things go well and when they go badly. As a result, for example, Wall Street listens to him when he insists that he can turn the company around with only a 10% rebasing instead of the 15-20% that the Street was calling for in 2002. It also gives him leeway for some bold moves. Most importantly, though, it gives his vision teeth: "To earn trust, every day."

It's funny how a personal connection is powerful enough to make even a drug company's marketing doublespeak sound almost inspiring. Feed back to Chad Whitacre.