The Monday Interview

December 9, 2012 7:47 pm

Lessons from corporate America

Kevin Sharer©Bryce Vickmark

Changing course: Kevin Sharer likens his current immersion in business school case studies to being plunged into learning biology when he led biotechnology company Amgen

On a frosty November afternoon in Cambridge, Massachusetts, Kevin Sharer, chairman of Amgen, is poring over a notepad as he tries to work out a cost analysis of FedEx.

After more than a decade as chief executive of the world’s largest biotechnology company – Amgen became an anomaly in an industry known for being small and scrappy – Mr Sharer has traded the boardroom for the classroom.

As a professor of corporate strategy at Harvard Business School, worries over patent cliffs – when intellectual property rights for blockbuster drugs expire, causing revenues to collapse – and even US government fiscal cliffs are being replaced by the pressure of facing questions from bright young minds.

“It’s really bracing at this stage in your life to be a complete raw rookie,” says Mr Sharer, who retired as chief executive of Amgen this year and steps down as chairman at the end of December.

It is indeed a big shift for Mr Sharer. Under his leadership, Amgen’s annual sales grew from $3bn when he took the helm in 2000 to $16bn when he step­ped down, with profits multiplying and its focus widening from drugs that fight anaemia to the treatment of osteoporosis and soon, potentially, obesity.

The CV

Born: 1948 in Clinton, Iowa
Education: Studies aeronautical engineering at US Naval Academy, Naval postgraduate school. Studies for MBA at University of Pittsburgh
Career: 1970-78 US Navy nuclear attack submarines
1979 Joins Long Lines division of AT&T
1982 Joins McKinsey
1984 Joins GE as general manager of software and satellites
1989 Joins MCI Communications as president of business markets
1992 Joins Amgen as chief operating officer; appointed CEO, 2000; appointed chairman, 2012
Family: Married, two children
Interests: Cycling, skiing, golf

Founded in 1980, the California up­start that made a business out of the new science of recombinant DNA now rivals many “Big Pharma” companies in terms of its resources and reach. By harnessing molecular biology and gene splicing technology, Amgen helped to define the biotech sector.

It was the breadth of Mr Sharer’s corporate experience and his background that appealed to Harvard, which often draws on former executives. His new job is the capstone to a career that has been a classic climb to the top of corporate America.

Mr Sharer attributes his successes to good luck, taking risks and an ability to change course if needed. “Seizing the opportunity always involves risk. You’ve got to have courage,” he says.

He learnt about courage during his training at the US Naval Academy. After graduating in 1971 with a degree in engineering, Mr Sharer served on a nuclear attack submarine as the cold war intensified.

Although he enjoyed the discipline and adventure, Mr Sharer wanted new challenges and different kinds of pressures, so he changed tack in the early 1980s to immerse himself in management consultancy at McKinsey. Two years later he moved to General Electric, learning the nuts and bolts of corporate operations by running business units under Jack Welch, its long-serving chief executive.

Looking back, Mr Sharer says, he was plagued with impatience to rise quickly in his career. In 1989, he left GE to run sales and marketing at MCI, the telecommunications company. But he clashed with the culture and felt his career languished after he gave the CEO un­solicited advice on how to structure the business units.

“Their culture was a culture that I couldn’t really learn how to manoeuvre in,” says Mr Sharer. “I was young, I was arrogant and so things didn’t go well for me there.”

But in 1992, Amgen came calling with the offer of a job to run sales, marketing and government relations. This turned out to be a corporate home where Mr Sharer, now 64, would remain for 20 years.

After eight years, he took over as chief executive – the third person in the company’s 12-year history to hold the position.

Mr Sharer quickly shook things up, recruiting a new leadership team and moving much of the company’s manufacturing operations to Puerto Rico. “That was a big risk,” he says. “A good way to lose a biotech company is to have manufacturing [fail].”

Within two years, he had led Am­gen’s 2002 acquisition of Seattle-based Immunex, which manufactured Enbrel, the strong-selling arthritis drug, for $16bn. He also led the development of Denosumab, the blockbuster osteoporosis drug.

However, as Amgen grew in size, critics contended that it had lost sight of its roots as a nimble, fast-growing biotech company and became more like any lumbering pharmaceutical group with a stagnant stock price. It was an issue that he acknowledged in 2006, as he noted Amgen’s need to stay “small and hungry in feel and behaviour as we grow larger”.

In some ways, Mr Sharer says, Amgen transcends easy definitions. “We are – I think – an example of the potential of a biotech company,” he says. “We are what other people in many ways would want to be – a big, successful company.”

But Amgen has also had its struggles with drug safety concerns and investor frustration. Mr Sharer has been criticised by shareholders for being overpaid – before the recent trend for decrying excessive pay – and for investing heavily in research that failed to yield commensurate results.

“We certainly had our crises, we had our surprises, I had nights when I couldn’t go to sleep,” says Mr Sharer. “But I was not a guy who spent a lot of time on what I would call unproductive, unconstructive worry.”

Mr Sharer has handed the reins to Robert Bradway, whom he recruited from Morgan Stanley to be chief operating officer, and the company continues to ramp up its res­earch spending in hopes of developing drugs to lower cholesterol levels and combat obesity.

As Mr Sharer starts his new professorial role at Harvard, the challenge is not unlike when he started at Amgen and plunged into biology after a lifetime as an engineer and businessman.

It was critical for him as a non-scientist CEO to make sure he learnt enough about the science of the biotech industry to be credible, while also maintaining the mindset of a manager. It required tutors, textbooks and years of perseverance to learn to think differently so that he could make decisions about in­vestment and research and earn the respect of the company’s scientists.

“One of the things that you have to do to be certified as a chief engineer in the American Submarine Force is have comprehensive knowledge of the reactor plant – everything from theory of every dimension and chemical, electrical, nuclear, metallurgy,” he explains. “I’d had to master taking apart in [my] head a very complex system and I thought biology’s kind of like that.”

The experience helped Mr Sharer leave behind much of his earlier impatience and arrogance and develop as a leader, he says, as he learnt to trust colleagues with deeper experience in drug development. Finally at the top, he became a better listener and ceased trying to be the smartest person in a room.

“I realised that being in the moment meant giving the person you were with your full attention and that’s the best way to convey respect, and listen for comprehension,” he says. “As I became more comfortable as chief executive, I didn’t have to worry that I was going to impress.”

The same skills are helping him now, as he wrestles with complex case studies across a range of industries and prepares for life as a professor. The challenge could be as tough as learning biology.

“You can’t wing it by power of position or authority or presumed competence,” he says. “When you’re the CEO, if you say something, prob­ably people are going to believe you. This is a completely different environment.”

The pace will be different too. Gone is the focus on quarterly earnings and the constant travel. Mr Sharer’s cadre of assistants has been replaced with one and instead of meetings with bankers and investors, Prof Shar­er sees students seeking advice.

“Probably the biggest transition I’ve made here is the move from the CEO emergency room doctor-triage mindset to one of a more thoughtful, reflective, penetrating mindset.”

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