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EISAI in France

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  1. EISAI in France Best in France Project May 2006 - By: BUFFIERE Anne-Sophie, HUYNH Julie, RICHARD Pierre, ROUSSET Laure, RUGET Marion Specialized Master in Project Management (HEC/SUPAERO)

  2. Presentation summary • Introduction : EISAI presentation • Why did EISAI come to France ? • EISAI French subsidiary presentation • How did EISAI develop in France ? • The values of the parent company • Constraints of the French subsidiary • Adaptation to France • Assertion of a French management style • Conclusion : advice to Japanese companies coming to France and their subsidiaries

  3. EISAI • Created in Japan in 1936 by Toyoji NAITO • An international pharmaceutical company (listed on Tokyo Stock Exchange since 1961) • International expansion was initiated in the 70s, starting with Asia (11 subsidiaries), then the USA (1981) • European expansion began in the late 80s: UK (1989), France and Germany (1996), Spain (2001)… Toyoji Naito, founder of EISAI • Many affiliates conducting Sales & Marketing overseas • A multi-polar R&D network with research facilities in Japan, UK, and the USA

  4. EISAI Key figures • 26th pharmaceutical group in the world • 4th Japanese pharmaceutical company • World consolidated revenues (2005): 5.6 billion € • R&D Investments (2005): 784 million € • More than 7000 employees worldwide

  5. EISAI Europe  European Headquarters in London  A production site located in the Netherlands  R&D facility in London  Main Sales & Marketing offices: France, Germany, Spain

  6. Why did EISAI come to France ? • The development strategy of EISAI included coming to Europe for its good market potential • After opening the British subsidiary, EISAI turned to the two biggest European markets for pharmaceuticals: France & Germany (From“Groupes Pharmaceutiques dans le monde” – Xerfi 700, Nov 2005) • French market advantages : • National insurance benefits • French consumption • The French subsidiary opened for the launch of Aricept, a drug used in Alzheimer treatment

  7. Europe attractiveness Europe is a bigger market than Japan, with higher sales volume and growth rate A worldwide picture of the pharmaceutical market in 2004 (Xerfi)

  8. France attractiveness France is the most attractive market in Europe considering the combination of sales and growth rate The European pharmaceutical market in 2004 (Xerfi)

  9. EISAI in France • Sales & Marketing office, located in Paris La Défense • Main therapeutic area : the Central Nervous System (Alzheimer, Parkinson, chronic pain, …) • Leader in Alzheimer’s treatment with its star product: Aricept • Leader among all the European subsidiaries: 2-figure growth • Key figures (Worldwide & France):

  10. A progressive setting up • 1996-97 : • Opening to prepare Aricept’s launch, while waiting for marketing authorizations from European authorities • EISAI France began with a small team (4 people). • A tremendous communication campaign: • The goal was to make people realize that Alzheimer’s disease is a real public health issue. This work took place through meetings with politicians, institutions, scientific experts, doctors, families of illness persons… • Recruitment and training of the salespeople • 1998 : Aricept’s official launch

  11. A progressive setting up • The agreement with Pfizer • Pfizer has a contract with every subsidiary in Europe in regard to logistics and sales. However, Public Relations are EISAI's entire responsibility. • Logistics: EISAI drugs are produced in the Netherlands for the European market. Once produced, they are sent to Pfizer, which is in charge of the packaging. • Sales: Pfizer’smedical representativescontribute to EISAI sales • Why Pfizer? • Pfizer was not a direct competitor for ESAI as it was not present on Alzheimer’s market. EISAI could benefit from its good reputation and its worldwide network. In 1996, EISAI was unknown in France. Today, experts such as geriatrician, neurologists, psychiatrists identify EISAI as a very reliable Japanese drug company. Today, EISAI has developed a strong sales forceand hardly needs Pfizer’s contribution for sales activities.

  12. EISAI Products • Japan : • Drugs, as well as consumer health care products (vitamins, tooth paste…) • The Japanese Public mostly know Eisai for its health care products, rather than its drugs. • France : • EISAI’s subsidiaries are free to commercialize the products of their choice among EISAI’s product portfolio. •  Clear choice to focus on the Central Nervous System drugs. • No consumer health care portfolio. It is a different market, with different key success factors Drugs sold in France usually have a higher dosage than in Japan. For instance, Aricept’s dosage in France is either 5 or 10 milligrams, whereas it does not exceed 3 milligrams in Japan. This is partly due to differences in morphology and metabolism between the two populations.

  13. Cultural Analysis Hofstede cultural dimensions : There are two main gaps : • Japan society is far more masculine • French people are much more individualist

  14. The Company Values • Good fit with French values  • The hhc philosophy and the respect for the individual • Some discordances with French values  • - Extreme honesty • Compliance • Women • Lifetime employment

  15. The hhc Philosophy A core value integrated by EISAI France • The philosophy : Human Health Care is the company’s goal, which means that its first priorities are patients and their families. • The applications in France : • - Employees are encouraged to be active in charities • EISAI Foundation: carries public-oriented actions (e.g.: exposition on the brain). A foundation has a better image than a company when it comes to communicating on health issues. It is clearly separated from EISAI itself, with a different address. However, it is 100% funded by EISAI as it cannot get any donation so far. • - Alzheimer institute: provides training to clinicians and nurses on Alzheimer’s disease and ensures information spreading. • Thehhc price: The price is awarded each year by the parent company to the subsidiary who best applied the hhc philosophy. EISAI France received the price twice.

  16. Discordance – Extreme Honesty …at the expense of their products 正直 Japanese tend to be extremely honest even if it can have negative impacts on business. In March 2006, Aricept was tested in 9 countries on people suffering from vascular dementia. Such patients are generally over 90 years old and suffer from multiple diseases. They can therefore be considered as a "risk population". 11 out of the 974 people registered for this clinical trial died. Among them, 7 actually died before even taking the drug. However, the Japanese top-management organized a press conference, in a will of transparency, despite the warning from EISAI France on the unjustified harm it could make to the product.

  17. Discordance – Compliance …or denouncement? The Compliance System In Japan, it is current to have a hotlineto give the name of any doubtful employee or to tell any information that one may see as a threat for the company. EISAI tried to develop this system in Europe. It was accepted in Germany and UK, but France stood against such practice. Indeed, the chairman of the French subsidiary totally rejected the compliance system which was clearly perceived as a denouncement system rather than a compliance one. Japanese understood French position and did not insist to set up this system.

  18. Discordance – Working women Japan and France have different ways of thinking towards working women. Japanese women are usually taking care of their home and children while their husbands are working very hard. EISAI Japan: In Japan, there is no woman in the top management. The highest position women can occupy is Product Manager, but they have to fight very hard for it. EISAI France: In France, there are several women in the Executive Committee (General direction and Medical direction). Moreover, most of the Product Managers are women. Some of them are less than 30 years old, while their alter ego in Japan are mostly above 50 years old. This major cultural difference can negatively affect communication between the two countries. Indeed, when Japanese managers visit the French office, they only greet women with high titles whereas they consider all male employees.

  19. Discordance – Lifetime Employment • The Japanese labor market is characterized by a very distinctive feature, which is “lifetime employment” . Large Japanese firms usually hire workers directly out of school and retain them until retirement. The lifetime guarantee is implicit (no written contracts) but real nevertheless and estimated to cover about a third of all workers. • Labor practices differ in France. French are more individualist than Japanese (cf. Hofstede dimensions). Personal advancement usually prevail over the benefit of the company .Therefore people may change of companies several time during their career. On the other side, firms can lay off their employees if their work is not satisfactory. • Indeed several dismissals have occurred since the creation of the French subsidiaries. The parent company has always asked for justifications, or even sent a delegation to try to avoid dismissal. Japanese particularly fear demotivation from the team that witnesses the dismissal.

  20. Constraints in France • Costs Higher wages (50% less purchasing power in Japan). The subsidiary had to explain to the parent company that they had to align themselves with the French wage levels in order to attract and retain employees. • Resistance to cultural intrusion Japanese wanted to export their management structure in all subsidiaries. For example, they managed to implement their compliance system in the UK or in Germany. However, the French chairman refused a lot of these ideas because they were too much far from the French values. He developed his own French style strategy, which was backed by the good results of the subsidiary. This is why there is only one Japanese in the French organization, whereas there are often several of them elsewhere.

  21. Adaptation to France • Preliminary analysis before expanding in Europe • Japanese concluded that it was more appropriate to name a person from the target country as chairman, as networking is very important in this field. The French chairman, Paul Cadre, was indeed headhunted. • Appointment of a Japanese to help the chairman during the subsidiary creation as Director of Planning and Coordination in this initial stage. • Permanent communication ensured through a Japanese in the top management in France There has always been a Japanese manager in the Paris office to keep a strong interface between the two countries. Such presence can bring insights on the Japanese culture and thus facilitate communication with the parent company. However, without a good understanding of the French culture by this key actor, misunderstandings can still occur and cause damages. It did happen at EISAI a few years ago. The Japanese manager at that time gave incorrect feedback to the Japanese board. This had negative impacts on the subsidiary activities. The first Japanese manager who had participated in the subsidiary creation, was then called back to replace him, and now occupies the Vice-President position.

  22. Assertion of the French Management style • Ethical charter, a French alternative to the Japanese compliance system A reflection on fundamental questions: What is the code of ethics of a pharmaceutical company? What should employees bring to their company? What should the company bring to its employees? What should the company bring to its host country? This charter may actually be exported to other EISAI subsidiaries. • Human Resources The French subsidiary manages its recruitment process. Japanese have a right to know but don’t have the right to decide. • Product portfolio • The French subsidiary has a specific portfolio strategy focused on the elderly and the Central Nervous System. In order to apply such strategy, they got the permission from Japan: • - tosellan EISAI gastroenterology drug to Janssen-Cilag • to buy a drug developed by a French laboratory against buccal dryness, called Aequasyal, to complete its products line for the elderly, • by-passing London HQ, which usually provides subsidiaries with new products to sale.

  23. Essential Advice Here are some advice to ensure business success by carrying out a good balance between French and Japanese cultures. • Advice to the Japanese parent company • Appoint a French chairman to ensure powerful networking, • Be opened to the foreign management style, • Be aware that sending too many Japanese to subsidiaries can affect their integration and consequently communication. • Advice to the French subsidiary • Benefit from the philosophy of the parent company, • Listen to the suggested management model, • But do not hesitate to adapt this model to your corporate culture, • Never break the tie with the Japanese culture, • And do not forget that nothing is never ever completely ratified!

  24. We Thank Martine Seror Assistante du Présidentmartine_seror@eisai.netTél : +33(0) : +33(0) Laboratoire ESAI Tour Manhattan 5/6 place de l’Iris 92095 Paris La Défense Cedex 2

  25. Bibliography • http://www.eisai.fr/ • http://www.eisai.com/ • http://www.fondation-eisai.org/ • http://www.industrie.gouv.fr/biblioth/docu/dossiers/sect/sb_pharma.htm (dossier du Ministère de l’Économie, des Finances et de l’Industrie - “Les grands groupes pharmaceutiques Japonais”. Oct.1999) • “Groupes Pharmaceutiques dans le monde” – Xerfi 700, Nov 2005, 5X-CHE-12/X700 • “Is Lifetime Employment on the Way Out?” by Edward J. Lincoln. The Brookings Review. Fall 1999, Vol.17 No.4, pp.44-45.