The outgoing Roche Chairman of the Board of Directors, Christoph Franz, takes stock of the situation with media representatives. In the ten years of his presidency, the pharmaceutical company positioned itself more broadly. But she is finding it increasingly difficult to keep growing.
Christoph Franz (on the left) will hand over the presidency of the Roche Board of Directors to Severin Schwan in mid-March 2023.
Christoph Franz still has two months in office as Chairman of the Board of Directors of Roche, and his last major business trip will take him to Argentina and Uruguay. The 62-year-old German, who now also has a Swiss passport, has traveled frequently and happily ever since he was elected President of the Basel pharmaceutical giant. At what was probably his last media appearance as a Roche representative, he mentioned that he had repeatedly visited countries, particularly in Africa and Latin America.
“Seen much”
It was obviously very important to Franz that patients in poorer regions also have access to innovative medicines and modern diagnostic tests such as those offered by Roche. He was not above having some discussions with ministers who did not want to see immediately why it is worth prioritizing health care spending at the expense of other items in the state budget. For Franz, however, one thing is certain: “A healthier population can work more and thus make a larger contribution to national income.”
Franz, who will not stand for re-election at the AGM on March 14, 2023, has spent 12 years on the Roche Board of Directors, ten of which as Chairman. After such a period one has seen a lot, and a change is gradually becoming necessary. He added that even assuming he hadn’t decided to retire this year, the time left would have been “manageable”.
More time for the ICRC
Basically, Franz, who, as a former CEO of the Lufthansa aviation group and a former top manager of Deutsche Bahn, had joined the Roche supervisory board as a non-industry member, had no choice but to resign. His designated successor on the Executive Committee, Severin Schwan, was appointed CEO 15 years ago. This prompted a generational change in management.
And because it was the intention of the family that owns Roche, in the interest of continuity, to allow Schwan to move to the Executive Committee, there was no room left for Franz. The father of five, who moved to Zug with his family some time ago, will be traveling is, but will also have plenty of opportunity in the future. As a member of the Assembly and Council of the International Committee of the Red Cross (ICRC), he will increasingly visit crisis areas to get an idea of the situation, he announced. Franz will also remain on the board of directors of Zurich Insurance Group (as vice president) and rail vehicle manufacturer Stadler Rail, as well as Roche’s Japanese subsidiary Chugai.
Substitute for cancer drugs
Referring to his greatest achievements, Franz said that under his presidency Roche had managed to position itself more broadly. He pointed out that as of early 2014, over 40 percent of sales came from three cancer drugs, Avastin, Herceptin and Mabthera. In the meantime, their share has shrunk to 10 percent. Since all three are now exposed to competition from imitation products, Roche has had to overcome what is probably the biggest patent cliff in the pharmaceutical industry to date.
According to Franz, the company has done this brilliantly. He pointed out that Roche had nevertheless managed to grow year after year during his tenure thanks to the launch of new successful products for the treatment of multiple sclerosis and hemophilia, among other things. To be more correct, one would have to say, except for the first year of the pandemic, 2020, because at that time group revenue fell by 5 percent.
Overall, Roche’s sales increased from 47 to 63 billion francs between 2014 and 2021. The number of employees increased from 89,000 to 101,000 in the same period. However, skid marks have recently made themselves felt in the Group’s business development. According to estimates by financial analysts, sales last year should have remained at 63 billion francs. For 2023, the majority of industry observers expect further stagnation.
Will the harvest still follow?
In an interview with media representatives, Franz admitted that Roche would have to make an “enormous effort” in order to continue growing on the basis of sales of over 60 billion. Nevertheless, he trusts the group to do this. He left his successor a well-stocked pipeline. Roche has probably never had as many promising active ingredients in late development as it currently has.
Franz recalled that since he took office as Chairman of the Board of Directors, annual research spending has increased by more than half, from around CHF 9 billion to almost CHF 15 billion. Anyone who spends that much money developing new products should expect to be rewarded for it.