PharmExec Blog

Conversation with Eisai’s Lonnel Coats

“The phones are ringing,” said Lonnel Coats, president of Eisai and a plenary speaker here at HBA’s Leadership Conference. “There’s a lot more opportunity, but also a lot more white noise.”

Coats is referring to the pressure that cash-strapped biotechs are feeling to sell out and says he gets no less than five calls a day from small companies desperate for suitors. “The VC guys are saying you better get another revenue stream or control the costs, because the money is just not coming in,” he says.

It’s an interesting vantage point for Eisai, which unlike some Big Pharma competitors doesn’t have to go through the massive reorganization and downsizing.

Part of that has to do with the more careful business planning on behalf of the Japanese companies, according to Elizabeth Evans, a senior specialty sales rep with Eisai. “The culture is different,” she said. “It’s the worst thing to fire someone, so they think very much about the long-term before making the hire.”

Coats notes that 21 percent of the company’s revenue now comes from specialty drugs—with more promising therapeutics on the way out of its new MGI Pharma acquisition. But Eisai has just 1,000 specialty reps. “Because we haven’t taken on the infrastructure, we don’t have to go through the pain that a lot of the other companies have,” he said.

Rather, the pharma company of the future will be built through partnerships instead of a lot of heavy M&A. “M&A and all the work you have to do on integration is a big distraction,” said Coats. “Look at Merck. There was a lot of pressure to do a merger. But they held the line until there were drugs coming out of the pipeline.”

Coats also notes that Jeff Kindler has made some right moves in this direction for Pfizer; he’s willing to take the hit now by holding out on a lot of the M&A that will just build up infrastructure and make the patent cliff steeper for as long as possible. Instead, the company is seeding projects throughout the rest of the industry that will bring it revenue streams in the future.

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