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  • Establishing a fresh stake in IO platform therapies, building additional indications in the four oncology products already on the US market, and exploring new specialization opportunities in CVD and women’s health form the centerpiece of Bayer’s US revenue growth plan. The company also views technology – including novel front-line applications around behavioral economics – as a game changer in extending customer and market reach.
  • So what? The long-term challenge: will a new US management team focused on novel, mostly externally-sourced science and data-rich, customer centric marketing be enough to lift the company’s US revenue base from the middling 20’s to the top 10? And will the US pharma business have the investment capital to spare despite a history of internal parent company distractions?

Long associated with that earliest staple of the consumer medicine chest –Aspirin Bayer AG's pharmaceutical unit is today seeking leadership of a different type: as a stand-out performer in shortening the time line to the best drug innovations of the future. Pursuit of this objective depends heavily on raising its therapeutic profile in the US market, the world’s largest, but where the company's drug sales remains mired in the mid-20’s ranks. Navigating what Bayer calls a“path to parity,” is Bayer Pharmaceuticals Americas President Carsten Brunn, who took the US helm a little more than a year ago after achieving a similar upside revenue-growth strategy for the drugs business in Japan.

In the following conversation with In Vivo, Brunn outlines plans for building the all-important oncology franchise beyond the four products already on the US market while pursuing a more customized approach to the company’s established cardiovascular disease and women’s health franchises, which remain integral to the business. He also tackles the always sensitive issue of transforming the work culture, which Brunn is pursuing in single minded fashion through initiatives as varied as seeking out non-traditional stakeholders in academia – the business insights to be had from behavioral economics is a favored topic – to changing the colleague seating plan at the company’s sprawling headquarters in Whippany, NJ.     

Q: A distinguishing characteristic of your career to date has been leading commercial operations for Bayer in the world’s top three biopharmaceutical markets – China, Japan and now the US. What have you learned from your exposure to this intensely competitive set – any general themes that you see as particularly relevant to industry success today?
A: Carsten Brunn:  What I draw from these three assignments is the sheer excitement of being center stage during an extraordinary period of progress in our understanding of the biological origins of disease. China, Japan and the US are destined to play a critical role in leveraging the fruits of this revolution in science because each, in its own way, will set the terms for our industry’s biggest long-term challenge: to demonstrate the value of our medicines to payers, patients and society. In China, value is linked closely to the question of affordability for a large aspiring middle-class with the discretionary income to spend on health improvement. In Japan, we have a rapidly aging population – 29% of the population is already over age 65– where the expectation is for value that helps the elderly maintain a high quality of life while making a smaller working age population healthier and more productive. And here in the US, the center of global medicines innovation, we must continue to convince the public that the classic self-funding model of innovation – risky up-front investments, selective rewards, followed by low-priced generics – is a social contract worth preserving.  

A: It’s also important to stress that success in these geographies demands an inclusive, globally aware management mindset.  There are no boundaries on information, which in turn requires us to make the future state the default position in decision-making:   the vast majority of the data in our hands today has been generated in the past two years.  The best long-term solution to health challenges is always going to be more and better innovation, advanced by healthy market competition.  And I now see these as universal truths relevant not just to the three countries where I have served, but to the entire biopharma ecosystem.

Q: The Japanese drug market is historically anemic. How did you achieve double-digit sales growth for Bayer in Japan?
A: I assumed leadership of the pharma portfolio in early 2013 and remained in Japan through 2016. It was an opportune time because I oversaw the launch of two key products: Xarelto(rivaroxaban), a global blockbuster therapy to prevent stroke and blood clots associated with atrial fibrillation, a very competitive market in Japan; andEylea(aflibercept), for age-related macular degeneration, where we partnered with a local leader in ophthalmology, Santen Pharmaceutical Co. Ltd.That proved to be a wise choice due to the deep roots Santen had in this therapy area, which allowed for extremely rapid uptake of the drug among physicians. 

A: Another factor behind our growth was the adept positioning of our local sales force. We knew we had two great products, so we focused on a select range of high-value customers, who we knew from our extensive clinical data would be receptive to a targeted message. By being selective, we achieved the highest share of voice in these two therapeutic segments, even though competitors like Pfizer Inc.and Bristol-Myers Squibb Co.had far more troops on the ground. So two good products, carefully launched with a consistently strong message around value, along with a well-deployed sales force, put us over the top in growing Bayer sales in Japan. The lesson I draw from the experience is if you don’t have the mass to confront the big players, beat them on smarts.

Q: What drew you to join Bayer with your first assignment in far-off China?
A: While I am German-born and was educated in my home country, I have chosen a career that is international in scope. My first job was at Eli Lilly & Co., where I spent nearly 10 years in the US on a mix of assignments in science development and the commercial businesses. After that, I joined Novartis AG to get some launch experience and had the opportunity to lead the introduction of the blockbuster drugLucentis(ranibizumab) in markets outside North America for indications involving diseases of the eye. This in turn led to realization of a dream of mine to work in private equity investment in Asia, when the investment banking firm Warburg-Pincus acquired the ailing eye care company Bausch & Lomb in 2007, and subsequently hired me to run its Asia-Pacific operations.

A: After I developed and executed a strategy to help that business, I began thinking about local opportunities in a large pharma business with a work culture that was as global in orientation as I was. I talked to several senior executives at Bayer. I was impressed by the company’s efforts to break with traditional German work culture and put a more global stamp on the company’s mission and mandate. What sealed the deal for me was then-Bayer CEO Marijn Dekker’s global growth strategy to relocate various business segments from HQ in Germany to regions where these businesses had the greatest revenue potential. He moved two units to China – consumer health, which at the time was a €5 billion business; and materials science, where the polycarbonates business was transferred to a global office in Shanghai. I was offered the global head of primary care post, and I orchestrated the move of the management team from Berlin to Shanghai. It was a bold step and it proved difficult for some, especially back in Germany – you can imagine the challenges of having an iconic brand like Bayer Aspirin managed from China. But I enjoyed the opportunity because it addressed so many cultural touchpoints. It is when I understood that companies do have cultures; it’s a tangible thing and can work for you if you embrace it. 

Q: Your current US assignment, which began in January 2017, has you leading the largest pharmaceutical business in the Bayer family. What was your plan for the first 100 days, which many management experts say is a defining moment that, for better or worse, puts your stamp on the business going forward. Do you agree with that?  
A: Although I think it’s important to leave a positive first impression, pharmaceuticals is a long-term business. It’s over time that you see the results of your efforts. That is why I valued the four years I spent in Japan; I was head of the business long enough to assess the outcomes from the initiatives I put in place. On arriving in the US, I literally had to rewire myself, given that I had spent the previous nine years in Asia, working in a completely different culture. I realized immediately that what contributed to my success there would not necessarily work here. So I took a step back, walked in and set myself up with the task of relearning the US market fundamentals rather than trading on old assumptions about the US. I found out quickly what had changed in the past decade, assessed the unique position that Bayer held in the marketplace and put together a couple of quick wins, where my presence could be felt by colleagues in short order.

Q: Can you identify one of those quick wins?
A: An example is the work I initiated first off with the leadership team to transform Bayer Pharma’s culture here in the US. It’s an issue I’ve tagged as a necessity if we are to win the race to market. Transitioning to a more collaborative workplace never occurs overnight – but the long-term impact is profound. Bayer has a legacy as a decentralized company with a variety of distinct businesses. How do we abandon those organizational silos, to recognize that the function you perform is less important than what you do for the customer? To answer that question, I’ve looked at how we deploy on various operational mandates at Bayer US Pharmaceuticals, such as the review and approval of product promotional materials. Here we created a team drawn from many disciplines to determine whether the current approach served the needs of our customers – the providers, payers and patients who actually use our medicines. It’s led to a sea change in which promotion review begins with an understanding of the external state of play, rather than addressing that perspective later, after all the internal politics are resolved.

A: I have also pursued the collaboration message through the people I appoint and promote, and in internal communications to colleagues. I have a monthly video blog where I showcase examples of silo-busting behaviors. It takes grit and discipline to stay on message, but I see it as essential to my role. I don’t want the standard scenario to play out, where a new boss arrives and puts everyone on a new diet but three months later the boss is back to eating sweets. People won’t follow you if they see the narrative as weak and inconsistent.  

A: In addition, I am taking to heart some of the things I have seen in visits to our research partners, which tend to have offices that are flexible and informal. At our New Jersey headquarters, we already work in an “open office” environment, without doors and walls. But this still doesn’t reflect the way we work every day, whether it’s working quietly on a desktop, making calls, reading or attending meetings in person. So now we are implementing two projects to test the merits of the “neighborhooding” concept, where people have no assigned desk but shift back and forth depending on the type of task at hand. I am part of this myself, along with our commercial operations and research development teams. Today, I might go work in the quiet zone; another day you will find me in one of our network/collaboration rooms; for a couple of months, we might designate a single team room for an upcoming product launch and insist that all members of the team leave their assigned desks and congregate there. Despite some pushback, the “neighborhooding” model is important to try out, because it astounded me that in the open office structure, people still related only to their “tribe.” People often had no idea who else sat with them in the very same row of desks. Even without barriers, this is not the kind of synergistic collaboration every manager wants to see happen, as a way to keep things fresh.  

Q: You have also targeted digital transformation as a vehicle to change the culture in focusing on customers and to promote more collaboration.
A:Yes. Technology in biopharma is a game changer. I am passionate about it. I don’t see any biopharma being successful in the future without a strategy for digital engagement, where we can interact directly with patients and providers rather than through traditional third-party intermediaries.  I have created a cross-functional team within Bayer, led by one of our commercial business leaders, to set up a series of digital experiments – pilot projects – across the organization. I have purposely made this effort very visible and hands on: we don’t just talk about it on stage. It’s more than words; it's tangible actions. One of our early conclusions is that predictive analytics needs to be fully integrated into the way we manage our key accounts. I am also a strong believer in behavioral economics and the pioneering work of academics like Richard Thaler of the University of Chicago. I am often seeking ways to put his theories into practice.

Q: Where is Bayer today as a recognized competitor and brand identity in the US?
A: Bayer is closely associated with Aspirin, an iconic medicine that brings with it nearly 100% name recognition. In Japan, I succeeded in pushing our sales ranking from 18 to eight – putting us in the top 10 players in medicine– and I also had high visibility as the head of the EFPIA-linked association of innovative European drug companies in Japan. The US presents a different story. We rank in the mid-20’s in sales among innovative drug producers in the US, making Bayer only a mid-size player in this highly competitive market. At the same time, you have that iconic status for Bayer Aspirin, on the consumer side of our business, which has a big impact on our image and especially our reputation with patients. It’s a challenge to manage it all. For Bayer, the US is the ultimate emerging market. Our prospects depend on being able to hold fast or move up in the domestic rankings, just as we did in Japan. It’s Bayer’s global priority to establish the reputation and presence that makes us competitive with the largest US-based pharma in their home market – still the world’s largest, and likely to remain so for some time to come. 



'It’s Bayer’s global priority to establish the reputation and presence that makes us competitive with the larger-US-based pharma in their home market.  Our US prospects depend on being able to move up in the domestic sales rankings, just as we did in Japan' - Carsten Brunn



Q: Do you share the view that smaller pharma companies based in Japan or Europe tend to be held back in realizing their global ambitions due to a difficult pricing environment and less overall support for innovation than what exists here in the US?
A: There is a basis for this argument. The way that Europe has evolved on the pricing front means the incentive to invest in innovation has been moving steadily westward – to the US. This is true for Bayer, where we believe the greatest potential value in our product pipeline is sitting right here.  There is significant scope for revenue growth: whereas for most pharma companies, the US market accounts for 40% to 60% of revenues, Bayer derives a bit more than 20%.  Hence there is a lot of upside for us – what we call the path to parity. Our strategy in navigating this path consists of two fundamentals: an attractive value proposition and flawless execution on strategy. The ability to execute – and do it with discipline – is a key learning I brought from Japan. It’s a simple premise of good management but it’s surprising still how often you find when moving from one market to the next that those basics are either presumed or neglected.

Q: Given the challenges in binding strategy to execution, what have you set as top priorities for Bayer’s US pharma business this year? 
A: The first, overriding priority is expanding our oncology franchise. Bayer has made a global decision to strive for a stronger leadership position in selected therapy areas and last year we established a strategic business unit (SBU) dedicated to this objective. It’s based here in the US and is headed by Robert LaCaze, an industry veteran who spent many years at BMS. I’ve also recruited a new SVP for the US oncology business, Bhavesh Ashar, who comes to us from Sanofi and, among other things, has the assignment to establish a seamless, “hand in glove” relationship with the global team – both groups sit on the same floor at our US HQ in Whippany, NJ. The end game, of course, is to strengthen our oncology portfolio, building on the four marketed products –Nexavar (sorafenib) for primary cancers of the kidney, liver and thyroid; Stivarga(regorafenib) for metastatic colorectal and advanced gastrointestinal stromal tumors; Xofigo, (radium Ra223) for advanced prostate cancer; and Aliqopa(copanlisib), approved just last September for relapsed follicular lymphoma – that currently serve more than 150,000 patients throughout the US. 
A: With regard to the pipeline, we hit our stride very quickly with the development and US commercial co-promotion partnership we struck late last year with Loxo Oncology Inc. focused on patients with genetically defined cancers and led by Loxo’s TRK inhibitor candidate, larotrectinib. There were other big pharma contenders for the rights to this promising compound, yet it was Bayer – admittedly a mid-size player in the field – that prevailed in bringing home the deal. I attribute this to two factors. First, is the time we devoted to scanning the horizon for compounds that play to our therapeutic focus on precision medicines that work across multiple indications. When the early data on larotrectinib came out at ASCO in 2017, we were already prepped to engage. Second, is the cooperative internal culture we have created within Bayer, characterized by the close alignment between the SBU and our US oncology team. The organization maximized our global scale and expertise while retaining the accessibility – and trust – that comes from being more flexible and less bureaucratic than the bigger players. From the start of negotiations, we expressed our readiness to work with Loxo management to ensure that the distribution of development and commercial rights would still give the company the space it needed to innovate and thrive as an independent company.
Q: Might you conclude that the pact with Loxo Oncology is an example of cultural “fit” and good people management? 
A: Getting the right talent in place to facilitate this partnership was certainly a prerequisite. I also thought we needed to create a relatable story to demonstrate the importance of this disease and our commitment to innovative solutions for cancer patients. It was essential to get our people on the research side and commercialization side excited about what we could do for these patients – and to show the world outside Bayer that oncology is a key driver of our future as an enterprise. R&D in the cancer space is an expensive proposition so you must be serious about justifying that investment. The vision behind it has to be explained well and presented up front.
A: I think we’ve done that. Stakeholders now understand our strategy, of which the larotrectinib asset is the latest example, is to find specialty niches in rarer, hard-to-treat cancers for which there are few existing treatment alternatives. It’s a challenging remit, with a premium to be paid on finding the right patients, recruiting them for clinical trials, cultivating KOLs from the clinic and provider community, and securing access for all those eligible for the drug, post approval. Most importantly, there is a need for speed in processing these compounds through registration. Many advanced cancer products are still tested in the same manner as traditional small molecule drugs, with trials that test drugs against specific cancer types. Taking this approach can lead to long trial delays due to the many indications linked to tumor type and location, in contrast to the so-called “basket” trial where the approach is to test against a specific gene mutation, regardless of tumor type.
A: The regulatory system is evolving in this direction but the momentum must continue– consider that Loxo’s rolling FDA submission for larotrectinib includes Phase I and Phase II data covering 17 unique tumor types. That said, we are preparing for a decision by the FDA on market authorization for larotrectinib later this year and a potential launch very soon after that.
Q: What about the rest of the product portfolio – is cardiovascular still a priority for Bayer in the US, given that numerous companies have chosen to exit this therapy class?
A: It is. But we are redefining our objectives in the cardiovascular space to focus on specialty drugs that address CVD in the context of larger life-threatening conditions, the resolution of which address a significant unmet medical need. Instead of pursuing primary care treatments for hypertension we are looking at therapies to combat cardiovascular events that accompany diabetes-induced chronic kidney disease. For example, we have finerenone, a novel, oral, non-steroidal mineralocorticoid receptor antagonist (MRA) in  Phase-III clinical development for the treatment of patients with diabetic kidney disease. Success for this new indication is a priority for Bayer in the US. It’s symbolic of our continued commitment to CVD, beyond the scheduled loss of exclusivity for Xarelto early in the next decade. True, it’s a bit different than the single-indication CVD blockbuster model of the past. In fact, our strategy of providing options for patients with few alternatives is similar to what we are doing in oncology – in both instances, long-term survival rates are today still too low. There is a huge clinical and social dividend if we can improve on that.  

Q: Is the franchise around women’s health a strategic fit for the Bayer US business going forward?
A: Bayer is a leader in this therapeutic category. We have no intention of ceding our position. In pregnancy prevention, we have strong products across the board, from oral to long-acting reversible contraception. The unwanted pregnancy rate here in the US is about 50% of the total, which is an important public health indicator that government and advocacy groups must address. A lot needs to be done and we are partnering with a number of women’s health advocates to focus more attention to empowering women to take their own reproductive health more seriously.
A: In addition, Bayer’s R&D investments in this area are increasingly centered on gynecological interventions; we have a very promising compound, vilaprisan, a selective progesterone receptor modulator, which is now in a Phase III trial for long-term treatment of uterine fibroids. This is a debilitating condition that can be life-threatening and is rarely discussed for personal reasons – a workable treatment would help us address another major unmet medical need. Assuming approval by the FDA, we intend to make vilaprisan the anchor of our women’s health program going forward.
Q: How does Bayer’s global LEAPS program fit into these priorities?
A: LEAPS focuses on external collaborations to advance true breakthroughs in science, so it is an essential component of our biopharma business model– especially here in the US, the global locus for medicines innovation. I learned the value of such relationships in Japan, where Bayer built a very productive relationship with Kyoto University professor Shinya Yamanaka, who won the Nobel Prize in 2012 for his discovery of induced pluripotent stem cells (iPS) as a potential treatment pathway for disease. Due to the relationship we established with his lab, Bayer was able to license some of his research to help structure our oncology R&D programs.
A: I am pleased that, with LEAPS, the same kind of synergistic engagement is happening here in the US. In fact, Yamanaka’s discoveries produced the intellectual property that now underpins the financing and research partnership we forged in December 2017 with BlueRock Therapeutics, an early-stage company based in Cambridge, MA, developing stem cell replacement therapies to treat CVD and CNS disorders. This supportive – but largely hands off – relationship is a good example of how LEAPS is helping Bayer to differentiate itself from the competition. We can apply our in-house expertise in areas ranging from the biology of peptides to manufacturing complex therapies while ensuring our partners at BlueRock can carry their own novel science forward without all those big pharma processes and bureaucracy. 
A: LEAPS demonstrates we are willing to put money and take risks around a radical concept in pharma today: to disrupt ourselves first, rather than being disrupted by someone else. Bayer’s partnership with BlueRock is not burdened by endless milestones and procedural legalese.  Expectations are long-term. We don’t demand results around the next few operating cycles – it’s understood that the payoffs from a transformative therapy are often measured in years.

Looking ahead to the start of the next decade, how would you define success for your leadership at Bayer US Pharmaceuticals? What will you expect to have accomplished by then?
A: Clearly, it begins with the oncology franchise. The US market will by and large determine whether Bayer realizes its potential as a major innovative player against what is becoming the world’s number one killer. It is important to execute well: to launch larotrectanib and to secure its competitive position with an effective strategy on market access. We will need to build on this launch to support growth for our four current oncology product offerings, to secure additional indications and to engage the provider community by effectively communicating the strengths of our pipeline.  I also want to see Bayer solidify its reputation as a trusted partner with key oncology research institutions like Dana-Farber and Mount Sinai. And I’d like to be able to prove we have that trust with real metrics rather than just anecdotes.
A: As noted, more internal collaboration is an objective I intend to pursue as well. I look at our market access strategy as a key enabler, a cross-functional center of expertise where we can test out different ways to price, demonstrate value and share risks. I think we have a good team in place to achieve those closer connections to payers as well as other stakeholders who help shape their decisions. Following on that, I intend to see that our commercial people and the early discovery and development teams are fully integrated as working partners that stand behind our products. I want both groups to feel they are in the same ecosystem. Recently, I took my management team to spend a day at the Broad Institute at MIT and Harvard, with which we have several research collaborations. We met their chief technology officer, who spent a great deal of time describing the way the Institute makes decisions. We brought some of our learnings that day back to our office, and over time I expect it will re-shape the way we seize opportunities and solve problems.  If it does, I will have accomplished something real.
Finally, it’s a personal goal of mine to improve our ties to the US patient community. It bothers me that surveys of patients indicate that we as an industry have some problems. Some of that is due to the absence of regular, institutionalized interface. I am working to change that with a commitment here at Bayer to have that voice of the patient woven throughout all our business strategies and processes. The door is always open at Bayer Pharmaceuticals, as far as patient input is concerned.

[CORRECTION: Finerenone is in development for diabetic kidney disease, and heart failureis not included as an indication in Bayer's trial plan.]

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