Novo Nordisk Turns Adversity Into Opportunity
By Rob Wright, Chief Editor, Life Science Leader
Follow Me On Twitter @RfwrightLSL
Less than two weeks into Jesper Høiland’s new role as president of Novo Nordisk Inc. USA, the unthinkable happened. “Four-thousand colleagues and I were in Denmark as part of a company celebration,” he recalls. “While on this trip, I learned that we [Novo Nordisk USA] had just lost access to the commercial plan of one of our most important U.S. business partners, Express Scripts [ESI].” A $104+ billion pharmacy benefit management (PBM) company covering nearly 45 million people in the U.S., Express Scripts had accounted for between 15 to 20 percent of sales for Novo Nordisk’s soon-to-be blockbuster, Victoza (a once daily injection to treat type-2 diabetes).
On Sept. 3, 2013, that all changed when the largest U.S. PBM decided to not only exclude Victoza from its formulary, but also Novo’s top-selling modern insulin, NovoRapid. Høiland had arrived in the U.S. with a tough task — grow a business unit already contributing 46 percent to Novo Nordisk’s annual global sales of $14.8 billion. Now, however, he faced a much more difficult prospect — preventing the Express Script decision from torpedoing Novo Nordisk’s flagship business. Under Høiland’s watch, not only has Novo Nordisk USA survived the Express Scripts debacle, it has thrived, accounting for 48.5 percent of the company’s global sales.
Finding New Ways To Grow In The Midst Of Crisis
Høiland was still in the very early phases of aligning team expectations when the company lost the ESI business. “I was so new that I had to figure out what ESI stood for, what a PBM was all about, and what market access meant to our business opportunities,” he says. “In situations like this, you have to get the lingo down. So, you have to be willing to slow down and ask what the various acronyms stand for, so everyone is on the same page.”
Finding his to-do list quickly getting larger, Høiland knew he had to place an immense amount of trust in his team to help navigate Novo Nordisk through this difficult time. Having been a management consultant, his first approach was to consider the typical cost-cutting measures (e.g., layoffs) that accompany such a loss in business. But he quickly realized that wasn’t the approach to take. “Instead of me determining where we should cut, we assembled a team to conduct a cost-saving exercise,” he explains. Since he was still new, he delegated the task of picking the people for this new team to U.S. senior leaders and members of the executive team. This was not only a practical decision, it also helped show that he had trust in his leadership team.
Twenty-five people were chosen for the new team, and each was assigned from five to seven tasks related to identifying how the company was spending money. Once areas of cost-savings and their corresponding amounts were determined, the team members were faced with another task. “We didn’t just ask them where to cut,” Høiland explains. “We asked them where they thought the money that was just saved could be better used. So, it was not a cost-cutting exercise. It was more about having an organization that continues to grow organically by finding new ways, in new circumstances, to do so.”
The Importance Of Fostering Internal Communications
Høiland says that one of the keys to getting through the ESI — and any business — crisis was not to let it shape him, but instead, to empower his team to shape the crisis itself. That’s just one of the leadership philosophies he’s discerned during his 26-year tenure at Novo Nordisk. Another one of his favorites is, “When your back is against the wall, it is tough to see the writing on the wall.” That’s why he’s not the type of executive who spends his days in long meetings or a lot of time sitting behind his desk. Instead, he’s often moving around the building instead of waiting for people to come find him. “When I come to the office on my bicycle, and I meet people in my sweaty outfit while walking the corridors, that can be one of the best ways to find out things,” he states. “If people are not afraid of you, they’ll be more willing to tell you what they think.”
Even during a crisis, Høiland allocates 30 to 40 percent of his time to being outside of his office, which includes working with sales representatives in the field. To get a real feel for what is happening in his organization, he believes in working with a broad cross section of field salespeople. When he goes to POAs (plans of action), he tries to meet as many of the sales team as possible so he can set up his own field ride-alongs, which he’s done in more than 60 countries.
My approach is to make sure that I’m not just known by the management team around me,” he says. “Leadership by walking around is probably in any Management 101 textbook. But it’s not so easy to apply if you’re stressed and nervous. For me, understanding what is happening on the front lines, figuring how we can improve, and what it is we need to do gives me the energy I need to energize and motivate the organization as a whole.”
Part of that understanding comes from another strategy Høiland has employed since taking over at the 1,500+ employee office in Plainsboro, NJ. He regularly invites employees to his office to talk about issues they are concerned about or topics he’s interested in. Sometimes the employees are chosen at random, and sometimes he hand-selects them if there is a particular topic he knows he wants to get their opinion on. "I tend to just shut up and listen to their views,” he states. “Not everything has to relate to a crisis. For example, one of the items high on my agenda is how we can make our employees healthier.” (See sidebar “Healthy Employees = Healthy Company.”)
Where To Focus Beyond Employees
Høiland obviously makes it a point to focus on employees. However, he credits having gone through the financial crisis caused by the loss of the Express Scripts contract for pushing him into the arms of the customer — the patient. Of course, most pharma companies these days are touting their patient-centricity programs or initiatives. Høiland acknowledges the importance of such initiatives, but cautions that “being patient-centric, for example, still means you should be smart about executing your patient-assistance programs.”
He explains that when he first arrived in his new position, he was frustrated when he looked at the numbers pertaining to the patient-assistance programs. “I found out that, although a lot of patients were being helped by getting our products for free, the distributor was taking millions of dollars for distributing these products.” In fact, two-thirds of executing the patient-assistance programs revolved around the cost of the drugs’ distribution. He was adamant they find a way to reduce that expense “not because I wanted to be stingy or didn’t understand the U.S. environment, but simply because I wanted to allocate the money to where it makes most sense — for even more patient-assistance programs,” he attests.
One of the initiatives Høiland worked on with the Danish government and foreign ministry was to find ways to eliminate the types of tenfold price increases that sometimes occur in countries like Africa. “It was called the base of the pyramid,” he recalls. “The idea came from a book I read, Fortune at the Bottom of the Pyramid, Eradicating Poverty Through Profits, by C.K. Prahlad. In a country like Kenya, we ended up making a deal with the government where we provided our product at a fixed price, so you couldn’t change the price offering that we made, and neither could the country’s middle-men. As a result, we ended up distributing a product for a very reasonable price.” To Høiland, this experience was not only a good example of what it means to be patient-centric, but served as the inspiration behind the decision to revamp the company’s U.S. patient-assistance programs to be more cost-efficient.
Høiland concluded our conversation by commenting on how businesses deal with crisis. “In these situations, you need to identify the issues and figure out how to challenge the company’s employees to transform the business into something new. That’s what leadership should be doing.”
How Exercise Can Help A Leader’s Mind
“I get a kick out of going to the office on my bicycle and enjoying that free ride,” says Jesper Høiland, in reference to his Princeton, NJ, commute. The president of Novo Nordisk Inc. USA says he gets ideas out of expelling energy. “That’s what I like about exercise,” he states. “It takes just a few minutes for you to stop thinking about your business. Then, as your endorphins start to kick in, you find yourself focusing on something else, and before you know it, you become more creative in your thinking.”
But Høiland doesn’t just bicycle as a means to exercise his mind; it also fulfills a purpose. This past October, Høiland and a group of other NJ area riders were training for the JDRF Ride To Cure Diabetes, in Death Valley, CA. “We rode 105 miles in the warmest place on earth to raise over $50,000 for JDRF,” he says. In preparing for this grueling test, Høiland really pushed hard to have the energy he thought he would need. “As soon as the sun was up, I was on the bike to the office,” he shares. Upon arrival, as well as at the end of the day before heading home, he would do some additional training. “Spending three or four hours a day exercising is not my normal routine,” he attests. “But my boss [CEO Lars Rebien Sørensen, a nine-year JDRF Death Valley Race participant] asked me to participate.” According to Høiland, riding in the Death Valley charitable race was on his bucket list of things he wanted to accomplish this year. “And when you commit yourself, you follow through, not come up with a bunch of bad excuses.”
Høiland’s approach to preparing for the JDRF race reminded me of his style as a leader. For example, when confronted with the Express Scripts decision to exclude Victoza and NovoRapid from its U.S. formulary back in 2013, Høiland didn’t go about assigning a bunch of cost-cutting busy work. Instead, his approach was to have the team conduct purpose-driven exercises. “It’s not just cost-cutting, but figuring out how we can reallocate the resources where we saw opportunities,” he states. “We stood together through the crisis, and this is why the organization is still here and growing.”
Healthy Employees = Healthy Company
NovoHealth is Novo Nordisk’s worldwide employee health program that seeks to create a workplace culture that promotes and supports healthy living. The idea is that healthy employees equal fewer people taking sick days and, in turn, a healthy company. Jesper Høiland recounts how, when he first came to the U.S. office, he noticed that it was expensive to buy a salad in the company cafeteria. “If you’re a healthcare company, truly focused on the health of your employees, doesn’t it make sense that all the healthy food on campus should be supported by the company and be almost free of charge?” he says. That experience led to the company reducing the pricing on all healthy food sold at the cafeteria. A similar change occurred at the on-site fitness center, which was underutilized when he first arrived. After getting feedback from employees as to how the facility could be better, the decision was made to sign an agreement with a hotel that is an integrated part of the Novo Nordisk building. Now, for $10 a month, employees have access to amenities such as training, an outdoor tennis court, and a swimming pool. For those who wonder why he didn’t just make it free of charge, Høiland says, “Because I want things to have a certain value; otherwise it’s not going to be appreciated.”