THE MT INTERVIEW: JP Garnier, CEO of GlaxoSmithKline

The French-born CEO of GlaxoSmithKline has been pilloried for his huge salary demands, but he's not sorry.

by Andrew Davidson
Last Updated: 31 Aug 2010

The French-born CEO of GlaxoSmithKline has been pilloried for his huge salary demands, but he's not sorry. He and his executives will have earned their high rewards, he insists, if they deliver vital medicines to a world in dire need. Rebuilding its drugs pipeline is 'make or break' for his firm.

Jean-Pierre Garnier comes with a reputation: grumpy, grudging, Gallic.The GlaxoSmithKline chief executive made an immediate impact in British investment circles last year with his response to having an $18 million pay and options package voted out by shareholders. 'I am not Mother Teresa,' he shrugged, before jetting back to his base in Philadelphia. By then a plethora of newspaper pieces had appeared, allowing ex-colleagues to sink the knife into Garnier's back and explain just how much the French-born, American-naturalised GSK boss hated Britain and its petty obsession with how much people earn.

Blimey, what a start. Anyway, the world is full of ironies and JP - as Garnier likes to be known - is now on a mission to mend a few fences before his latest salary package is voted on in May. But it's not just about money. The creation of GlaxoSmithKline, forged out of the merger of Glaxo Wellcome and SmithKline Beecham three and a bit years ago, gives him the chance to make a transformational change to a business that is, at the time of writing, the world's second-biggest pharmaceutical company by sales. And he's not going to let that be undermined by a bit of jingoistic needling.

So here he is, in GSK's anonymous townhouse base in London's Berkeley Square, striding into his office with a slightly sceptical smile. A tall man, aged 57, with penetrating dark eyes and a serious manner, he is dressed in a grey check, Continental-cut suit, with the French Legion d'Honneur, a discreet ribbon, pinned to a lapel. He gestures to a meeting table in front of his large antique desk. With Garnier, you suspect, formalities are brief and an urge to get-on-with-it takes precedence.

And once he starts, it's hard not to get pushed back a bit. His intensity, compared with most bosses, is extraordinary, such is the aggressive drive and speed with which he discourses in his French-inflected American. Only afterwards does he lighten up, recounting a funny anecdote about waiting in line to receive his ribbon from President Chirac. But all the time you get the impression of a ferocious intellect bubbling away like a pressure cooker fit to burst. He avoids no questions nor does he pull any punches, whether telling stories for the guys or rebutting media misinformation.

'Lies, all lies,' he says, sweeping away the conjecture around his huge salary demands and super-executive lifestyle. 'I am just a regular guy, yunno?' He is still baffled by the row over his salary. European by nature - note that Legion d'Honneur - he doesn't see himself as caught up in the average American CEO's obsession with money and 'props', as he puts it - private jets, exclusive golf clubs, super-rich lifestyle. Yet that is exactly what he was accused of in the British media.

It clearly pains him. 'I really don't like seeing my name in the press,' says Garnier, 'and a lot of the things that were said about me were obviously not true, but that's the price you have to pay if you have a passion, and that's the thing that defines me - the passion. That explains my personality more than anything else.'

The problem is that his 'passion' can make him seem aggressively insensitive to many. 'JP likes to call a spade a spade,' sighs Sir Christopher Hogg, GSK's chairman. Hogg, who has spent the past year picking up the pieces of the salary package debacle, is now closer than ever to GSK's major investors and thinks he has convinced them why Garnier has to spend so much time in America (because over half its global sales are there). Yet Hogg admits freely that it goes further than that.

Put simply, his chief executive just has a lot on his plate at the moment: running a £20 billion-sales leviathon after a merger that has left many executives aggrieved and willing to whisper to the press; trying to find a new batch of wonderdrug successes to replace the current top earners, now under assault from copycat products; persuading backers to stick with GSK while it faces short-term earnings decline. No wonder he's aggressive. It's a huge task.

'Rebuilding our pipeline is make-or-break for this company,' says Garnier, who studied pharmacology before entering management. 'We think we have a solution for how to do this. It's a fantastic opportunity for us to come up with the products that society wants and provide a significant improvement in disease management. If we do that right, we can do pretty much everything else wrong.'

The solution he refers to is a complete overhaul of the R&D process, designed to revive the flow of new drugs to replace GSK's current big earners such as Seroxat (used in treatment of depression), Seretide (asthma), Avandia (diabetes), Welbutrin (depression), Augmentin (infections), Imigran (migraine), Zofran (nausea) and Lamictal (epilepsy).

Low R&D productivity across the industry as a whole, plus the onslaught of generic drugs becoming available as patents expire, has affected every major pharmaceutical player. Just getting bigger is not going to help any more, says Garnier. That's one of the reasons why he says he is not interested in riding into the takeover battle for Aventis, the Franco-German pharmaceuticals business. It would simply be a distraction from what should be the company's sole focus: producing new drugs.

He talks passionately about the new structure he has pinned his success on. 'At Smith-Kline and Glaxo, we had two very traditional pyramids. From that, we have created an R&D system that doesn't exist anywhere else. If you're a scientist working on a new drug, you have one boss and your boss has one CEO and that's it, and the CEO is god. So we have a very light structure in the centre of R&D where creation takes place, while upstream and downstream size still matters, and there you need brute force. But I love small companies, and we are running this as small companies ...'

So why bother to be big?

'Good question. You have to start with size: big automated labs - you need that or you can't play. Then you go into small, nimble entrepreneurialism, then big again to study the drug in 5,000 patients worldwide and to market it. Otherwise, you are just an independent studio, you come and go, one hit and you disappear. If you want to be a big player in pharmaceuticals, there is a critical size you have to be; but there is no point in being bigger, it's not going to help.

'In fact, size can be dangerous. It can slow you down, make you self-centred - you look inside too much and not outside. I am very conscious of that and we are trying very hard not to develop the arteriosclerosis that goes with size ...'

When Garnier is on a roll like this, it's hard to cut in - the words flow out. Part of the criticism directed against him is that he has just this steamroller effect on those around him, including Hogg, who has been accused of being 'captivated' by his CEO's forceful management style to the extent that he's blinded to his faults. At the time that the CEO's 70% leap in salary was pushed forward, then withdrawn - a strategy that itself smacked of the Garnier steamroller approach - there was no shortage of ex-GSK colleagues lining up to suggest exactly what those faults were.

'He doggedly pursues micromanagement. He won't let senior executives get on with their jobs. What he has created is an atmosphere that is not a lot of fun,' one former executive told the Financial Times. Another, a 'board member', accused Garnier of surrounding himself with sycophants.

An adviser said: 'The basic problem is: he doesn't listen.'

More damaging still was the accusation that the general ill-feeling over his leadership meant that the company was haemorrhaging valuable talent, especially from R&D.

When I put it to Garnier, he puffs out his cheeks. 'Oh, that thing was a joke,' he says, waving it away dismissively. 'We have lost less than 1% of our R&D staff in the first year or so, and for a big company that merges this is a miracle. But I will tell you who isn't happy. If you take a big pyramid that used to be bureaucratic and was made up of six layers of people who used to be good scientists, and you break it down completely and take off the roof - the people who used to have those jobs, like head of pharmacology worldwide, or head of chemistry, they don't have a job any more, it's over.'

Doesn't he worry about the bad press and its effect on the company? No.

'It's Disraeli, yunno? Don't explain and don't complain.'

But as head of a public company with shareholders who have valid interests, doesn't he have to be responsive to their needs too? Interestingly, Garnier, with forceful logic, develops an argument that appeals to a higher human imperative: the power of drug companies to do good. He has a track record on this, having been a key driver of initiatives to get drugs to Third World countries at lower prices, and it's this higher imperative that he brandishes in response to British shareholder grumblings.

'You have to be very focused on the end goal, and the end goal is to make a huge difference in the lives of millions and millions of people. When you discover a new drug or vaccine, it makes a huge impact. I was telling Gordon Brown yesterday that in the 10 minutes I was talking to him, over 200,000 children will be protected for life, thanks to vaccine from GSK. Two hundred thousand. That's huge. The point is, you cannot have maximum profits as the single goal; you have to do something society wants and you'll be paid off.'

That's why he has given his life to working in pharmaceuticals, because, as he puts it, it has an end point beyond 'Let's sell a few more cases of Coca Cola'. 'I don't need to work. Financially, I am OK. I work for the ends I want to achieve ... And if I believed I couldn't affect things, then I would retire. The irony is that, actually, I don't enjoy the day-to-day, it's a very tough life. But there is enormous satisfaction in the fact that I can make a difference.'

He gives an example. His scientists told him that they might, with sufficient investment, develop a vaccine for malaria. 'That would have a huge impact on the two million people who die of malaria every year,' he says. The problem: it would cost hundreds of millions of dollars, no government was going to pay for it and there was little chance of making the money back. So what should GSK do?

'We would have to swallow a big loss, so that's where we have to be creative. So I called the richest man on earth and begged.'

Bill Gates? 'And he said yes, so be thankful.'

Actually, the thought of Garnier begging seems pretty unlikely. Hectoring, I suspect, would be the verb of choice ...

But he gets things done. Perhaps the most extraordinary thing is that he spent the start of his working life in academia. Born the eldest son of an advertising executive in France, he went from university in Europe to university in America, studying for a PhD in pharmacology, fully intending to stretch himself out in research. 'But in America I realised I could do something interesting in the private sector. I woke up to the opportunities available. And one thing I didn't want was some job in Paris. I liked the idea of moving around and learning through experience.'

That, he thinks, was engrained into him by watching his father at work.

'He had this speciality for Havas, the advertising group. He was a turnaround artist. They sent him anywhere where something had gone wrong. They always had an office in trouble and that's where we would go, then off to another place.'

Born in Normandy, Garnier was shifted around France with each new posting his father received. 'We moved a lot and that's where I picked up the bug. Life for me was not always staying in the same village.'

'And in my first 10 years in pharmaceuticals, we moved seven times to different countries. I was comfortable with that, I always thought of what you gain, not what you lose. And I tell my kids that: this is a new adventure, don't look back and say you're losing all your friends.'

It is this approach that defines the Garnier style and has made him seem somewhat distant to colleagues, who have noted that he keeps his home and social life very separate from work, almost as if it's easier that way to pull up and move. And it's true; Garnier doesn't like looking back much. You can ask him about what he has learnt at the companies he worked for on the way up, the responsibilities he had at SmithKline Beecham before the merger with Glaxo, and he'll rush you through it so he can get to now and what he wants to achieve next, running one of the world's biggest companies.

But he is captivating when he sketches out the bigger picture: the mistrust that pharmaceutical companies attract and how that can change. Big multinationals, he says, have got to do more for the common good. 'Governments were supposed to solve the problems of the world and have proved incapable of doing so, and big business, in the minds of many people, should have done more too. That is why I believe in paying back in terms of solving problems. If GSK can make a disease go away, imagine what Microsoft or GE could do. And many do, by the way. This is developing big time in the US.'

Companies, he adds, have to give more of their profits away. 'Incidentally, GSK is the most generous company in the UK, but it is also one of the most generous in the world. We give away 4.6% of our profits and I don't think that is enough.'

So how can he square that with the salary farrago that just made everyone think he was greedy? 'OK, let's talk about it. This company is based in Britain, but global in nature. I don't set my salary, you'll have to talk to Chris (Hogg) and others. My role is to make recommendations to the board about compensation philosophy and how it's applied to 600 key executives, who operate in a global environment, not all here. And we need to maintain a competitive framework that is attractive to those people; otherwise, they will go and work for Pfizer and Merck and Novartis.

'That's the equilibrium we have to reach, maintaining our competitiveness while pleasing investors, who happen to be 65% British- based, with their own views on compensation. It would have been easy for us to be popular here, but that would have undermined the company and, ironically, the institutions that criticised us would have suffered from it.'

In short, he has to pay a lot to attract the others. As he puts it: 'You don't hire David Beckman (sic) at the price of a second-league player; you have to be realistic and find a balance between what you think is right and the market mechanism.'

And the reports that he dislikes the old Glaxo British roots and is pulling work away from here? 'That's absolutely not true and anybody who works for me will tell you that,' he says emphatically.

Most bosses would have left the denial there. Garnier, of course, then weighs in with a qualification. 'But I am a very international person and that does make some people in the UK uncomfortable. I have lived in many countries, and I can compare best practices and take a perspective on that. What makes people uncomfortable is that they feel their country is the best on all counts. But I am not French, I am not British, I am not American, I am all of them, and I have a genuine liking for all of those countries. Check my travelling schedule if you don't think I am in the UK enough.'

He does admit, though, that the travelling is the toughest part of his executive lifestyle. 'What distinguishes me from the average person is that I am constantly travelling. Not many people travel 80% of the time. It requires a different energy and resilience. You can't be jetlagged or too tired to make a speech, and you can't look too grumpy, which happens.'

How does he cope? 'I get grumpy! No, the anchor of my life is home, yunno?' He makes sure, wherever he is in the world, he is at home for the weekend.

And he takes his holidays, three weeks in the summer, at his retreat in the Alps and a trip somewhere interesting every Christmas with the wife and kids. Last year, it was to the jungle in Belize.

'Success is not just about success in your job,' he says, 'it's also about success in every bit of life.' But what he needs most of all, he adds, is resilience. 'It's the number one quality you need today to be a CEO. I have a lot of smart people who couldn't last in this job. It's about being hit and being able to stand up again, because the job of CEO is mostly bad news coming across your desk.'

But it also takes sensitivity, and on a corporate level, he seems to bludgeon that aside. All very odd, as when he gets chatting after the interview on his way down to have his picture taken, he is full of humour.

He's telling Harry Borden a funny story about a tussle he had with the Duchess of York over the front seat in Concorde. Harry explains the shots he wants to take, coaxes him into position.

And then Garnier just says no. In fact, he says no three times, before defining how he will have his photo taken. Then he is shaking hands and off on his way to the airport, on to another plane. He is, it seems, just a man who is used to getting his own way, no compromise.

THREE TOUGH CHALLENGES FACING JP GARNIER

1: Rebuilding the R&D pipeline to replace GSK's current big sellers as patents expire and generic competition eats into profits.

2: Explaining to the people who pay for the drugs - governments, health insurance companies, consumers - that they must pay for innovation, and that it offers a good deal in healthcare.

3: Fighting back against those waging war on the patent system that funds research costs. 'Attempts to attack patents by Third World countries like Brazil have nothing to do with poverty, saving more patients or doing good,' says Garnier. 'They simply want to develop their own generic industry and conquer the world. It will kill innovation and kill new drugs.'

GARNIER IN A MINUTE

1947 Born 31 October at Le Mans, France. Educated Lycee Kleber,

Strasbourg; University Louis Pasteur (PhD); Stanford University (MBA)

1978-80 Director of marketing, Belgian subsidiary of Schering-Plough

Corporation, pharmaceutical division

1980-82 General manager, Danish subsidiary

1982-83 General manager, Portuguese subsidiary

1983-85 Senior director, then vice president, marketing, US domestic

division

1985-88 Senior vice president & general manager, US domestic division

1989-90 President, US pharmaceuticals products division

1990-93 President, America (US & Canada), SmithKline Beecham

1993-94 Executive vice president, pharmaceuticals, SKB

1994-96 Chairman, pharmaceuticals, SKB

1996-2000 Chief operating officer, SKB

2000 (Apr-Dec) Chief executive, SKB

Jan 2001 Appointed CEO, GlaxoSmithKline

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