Remarks
by Fred Hassan
Chairman and Chief Executive Officer
Schering-Plough Corporation
Schering-Plough CEO Calls on President Bush For Courage
to Take Tough Actions in Reforming Health Care System
(Delivered at Global Cardiology Summit Sponsored by Schering-Plough in Advance of
American Heart Association's 2004 Annual Scientific Sessions)
New Orleans, Louisiana
November 5, 2004
It is a real pleasure for me to be able to speak with you today.
It is great to see so many familiar faces – and so many famous
faces!
We are honored to have you with us.
This morning I would like to spend a few minutes talking about
two things.
First, I would like to give you an update on the progress of our
Action Agenda to transform Schering-Plough into a high-performance
organization.
I believe it is very important that I communicate this directly
to you – because you are among our MOST important stakeholders.
Second, I would like to talk to you about our commitment to cardiovascular
care – and about our long-term commitment to you, and to your
patients.
And finally, I would like to talk to you about the recent presidential
election, and the future –
About the common ground we share – in our goal of continuing to
improve the health of patients through new innovations –
About the threats to achieving that goal –
About what we can do – together – to avert those threats,
and achieve that goal.
So let me begin with an update on our strategy to transform this
company – and about our progress so far.
As many of you know, when I began as the new CEO of Schering-Plough
in April of 2003, we found a company that faced exceptional challenges
– on many, many, fronts.
In fact, as I got inside the situation, I realized that it was
THE most challenging situation I had faced in my career.
Many observers doubted that this company could be saved.
But we saw strengths and opportunities beneath the challenges.
So 18 months ago, we launched our Five-Step Action Agenda to transform
the organization.
Today, I am pleased to report that we continue to make solid progress
on this Action Agenda.
Today, in many respects, Schering-Plough is THE fastest-changing
company in our peer group.
And we are determined to continue with positive change.
Our Action Agenda is a six- to eight-year plan.
This transformation road has five steps:
First: Stabilize.
Second: Repair.
Third: Turnaround.
Fourth: Build the Base for the Long Term.
And finally, Breakout – in other words, achieve a decisive,
sustainable leadership position with our customers, and in our peer
group of companies.
So, where are we today?
Currently, we are completing the first two phases: Stabilize and
Repair.
During these phases, we are working simultaneously on MANY fronts!
And I feel confident, as we approach the NEXT phase of our Action
Agenda – the anticipated Turnaround Phase – beginning
next year.
Let me tell you briefly about our progress on the MOST critical
fronts.
In the past 18 months, we have been installing an A-level team
at the top.
This team has been creating a new, globalized, A-level organization
– worldwide.
Our focus in every area is to create a company that becomes the
BEST in our industry at creating new medicines, and serving our
customers.
We still have a lot of work to do.
But we are making very good progress.
Front No. 2: Complete a uniquely challenging consent decree on
our manufacturing with the FDA, and build trust with the FDA.
I can report to you that we are making strong, steady progress
in this area.
This is costing us hundreds of millions of dollars.
The result will not simply be compliance with the FDA.
We believe that, in many areas, we will be setting a new benchmark
for assuring the safety and efficacy of medicines.
Meantime, we are completely re-engineering our organization and
reallocating resources.
One of our most important actions has been to reallocate more resources
to some of our most important and exciting R&D projects.
We are building a truly science-centric company.
We believe passionately in our science.
We know that great science, great R&D, is what creates great
new medicines.
For example, we are VERY proud that ZETIA came out of our own Schering-Plough
labs.
In our new organization, we are determined to keep the new treatments
coming.
We are investing wisely in science, so that we WILL keep the new
treatments coming!
Speaking of our culture: I am very proud that we are doing something
special when it comes to ethics and business integrity.
We are not just talking about it.
We are making quality, compliance, and business integrity the foundation
of how our people work.
This area is so important that the head of business integrity is
a member of our top management team. He reports directly to me.
The essence of this work is in our vision for the New Schering-Plough:
Earn trust, every day.
The message from the top is very simple. Obey the laws and regulations
– and do more.
Do what is RIGHT.
When I spoke to a meeting of our U.S. customer contact people this
summer, I said: “If you ever have to choose between doing
what is right and making a sale, let me tell you what I expect from
you – and from ALL of our people, as your CEO. ‘Do what
is right. Walk away from the sale.’”
This got an ovation.
I said a moment ago that we are making this a science-centered
company.
I am VERY excited about our science.
We have some important new treatments in the late stage pipeline
– for example posaconazole, our innovative new treatment for
serious fungal infections.
We also have one of the stronger early stage pipelines.
This includes a new AIDS treatment, with a new mode of action.
We also have a potentially important new treatment for hepatitis
C.
And in the cardiovascular area, we have a thrombin receptor antagonist
that we believe has a LOT of promise for improving the treatment
of deep vein thrombosis.
We are hopeful that, with this compound, we may be able to change
the paradigm of thrombosis treatment –
We are hopeful that we are creating a treatment that is more efficacious,
with fewer side effects, than anything available today.
So that is where we are today with our transformation of Schering-Plough.
We have done a lot.
We are continuing a fast pace of change.
And we are committed above all to doing the right thing, for our
customers, and for your patients.
This brings me to our special commitment to cardiovascular health.
We are very excited about the potential of VYTORIN, and of ZETIA,
to support your work.
We know that there is an enormous challenge in cardiac care because
so often it is a silent killer.
A very larger percentage of patients who have a problem don’t
go see their doctor.
And of those who go, a large number do not follow up, or stay with,
the appropriate treatment.
We believe that VYTORIN and ZETIA, and knowledge about these treatments,
can help with these problems.
We are also very committed to the long term in cardiovascular care.
The early compound for thrombosis that I mentioned is one element
of that commitment.
And we will be working very intensively to broaden the treatment
options we can make available to you and your colleagues.
We know that we need to earn your trust as a partner – for the
long term.
So that is where we are, as we build the New Schering-Plough.
Now, I would like to turn for a moment to talk about the common
ground we share regarding the future of health care in this country
– and around the world.
In today’s environment, there are a LOT of pressures that
are pushing politicians, and the social environment, toward short-term
fixes.
The presidential election has now given President Bush a second
term.
This, of course, has important implications on many, many fronts.
However, when it comes to health care issues, the enormous pressures
remain the same.
The pressures that face President Bush are the same pressures that
would have faced a President Kerry.
On one hand, we see government programs, and also certain aspects
of managed care, that are tending to reduce or constrain the role
of the physician –
Restrictions that make it harder – or sometimes impossible
– to do the best thing for the patient.
These restrictions and constraints are driven by a short-term goal
of saving costs by rationing health care, or by restricting access.
In our area of creating research-driven medicines, similar forces
are at work.
In the name of cost saving, politicians are pressing the case for
cost controls and other government interventions in the delivery
of medicines to you and your patients.
I believe we share common ground in understanding that we must
push back against these pressures.
For example, in our industry, we know that innovation is a fragile
flower.
If the billion-dollar risks that are taken to achieve new advances
in medicines are no longer rewarded, the result will be a reduction
in innovation.
We will see happen in the United States what has already happened
in Europe. Those of you here today from other countries know what
I mean.
In Europe, pharmaceutical innovation has suffered greatly.
It has suffered – a victim of government intervention, including
price controls.
I feel very strongly that we must find good ways to provide Americans
with effective insurance for medicines.
An important step in this direction was the Medicare reform legislation.
This is the first major new step since Medicare was introduced
in the mid-60s.
More needs to be done.
I am very proud to have been an early advocate of the kinds of
‘re-insurance’ programs for catastrophic health costs
that are now being described as the way of the future by experts
on both sides of the political aisle.
We will not be helping patients in the long run by following a
model of killing innovation.
Indeed, we have a larger obligation than our obligation to our
own citizens.
As the remaining center of pharmaceutical innovation in the world,
we have an obligation to patients around the globe.
Just as America today is the world’s Silicon Valley, we are
also the world’s Health Care Heartland.
We have a moral obligation to sustain the flow of new medicines
that will improve and save the lives of today’s patients and
of future generations.
I believe that on this front all of us here today truly share common
ground.
I look forward to continuing a dialogue, and a partnership, with
all of you on this important challenge.
Together, I believe we can, and must, call on President Bush to
exert the political courage that is required to reform the U.S.
health care system – to reform it the RIGHT way.
We need to get back to PATIENT-centered care – instead of
bureaucrat-centered care.
We need to move FORWARD to a Medicare system that treats the whole
patient, instead of looking at the patient as an array of separate,
competing cost centers.
We need to invest MORE of our GNP in health care because health
is becoming the biggest priority of our aging population.
We must invest efficiently to get the value we deserve.
And by doing all that, we will also find the resources to give
health care peace of mind to our seniors and other vulnerable citizens.
I believe all of us in this room today can share common ground
in demanding courage on the part of President Bush when it comes
to health care –
Courage to tell the American people what the real issues are –
Courage to take the tough actions that are needed, to truly improve
our health care system –
Courage to do what is RIGHT – in the face of many pressures for
easy fixes, for the short term.
Lastly, let me return to our new organization, and our work with
you.
I said earlier that we know that it is our task to earn your trust.
I believe we are now working very hard to do the right things,
to earn that trust.
We are building a company that is focused on the long term –
Focused on science, on innovation –
Focused on customers –
Focused on the needs of your patients.
We have more to do.
We need to listen and learn – from you, and through you, from
your patients.
We are ready and willing to do so –
Beginning with me!
And on that note—let’s turn now to a Q&A dialogue
together.
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