The Japan NewsMany foreign executives working in Japan have faced challenging situations amid natural disasters. Philippe Fauchet, the chairman of GlaxoSmithKline K.K. (see below), experienced the Great East Japan Earthquake, which highlighted for him the importance of continuity in the company’s operations. The Japan News recently spoke with Fauchet about a variety of subjects, including culture, education and business.
Q: A strong earthquake hit the Kansai region, mainly Osaka, in June. You also experienced the Great East Japan Earthquake in 2011.
Fauchet: We get regular reminders of nature in Japan. You mentioned earthquakes; there are sometimes typhoons, there are landslides, some of those climatic issues that are reported by the media. Actually, the earthquake in 2011 I was in the office [in Tokyo] with a few others and I really thought that something different was happening at that time.
I think like anybody else, I was afraid of the situation because I didn’t know what was happening around me. I couldn’t judge if it was in Tokyo or elsewhere in Japan. At that time my daughter was young and was at school, so you start thinking about all those things.
I’ve spent more than 20 years in Japan, but I have a certain desire to see Japan as a kind of second home for me or my family. Therefore, I thought my duty is to demonstrate that although we are a non-Japanese company, we can behave as well, or if possible even better than, Japanese companies in those circumstances.
So first, to recover our own team members, make sure that the lifeline continues. But because we are a drug company, we have to make sure that the drugs go to the patients, and in some cases, the patients using our drugs are depending on them to live. At that time, we had some of our products even go by helicopter because there was no access to the place where the patient was needing that product.
Q: Did you go to the affected region?
A: I went there the second weekend, actually. I was part of the team doing all of the emergency checks and supplies, and our factory also needed to be [examined] because there was some damage. We have a factory near Nikko [in Tochigi Prefecture], so they were able to continue production.
What was more important to me was not only what we did at the beginning, but that we would do something in continuity. For example, as you may remember in summer at that time, the authorities wanted to save electricity, and they continue to do so, but we were asked to be careful about electricity [use] because of the disruption created by the nuclear facility stopping.
We decided that we would save more than what the authorities were advising to do. At the beginning, it was a kind of compulsory target, but in the end it was kind of not compulsory. But we say we keep the target and we will do more, and we not only save electricity, which is good for Japan, but we save money because we will pay less for electricity, gas, etc.
And that money, we will use it to support the students in two universities — Tohoku University and Tohoku Medical and Pharmaceutical University. Some of them have lost their parents or their family support for their pharmacy studies, and we thought we should help those young students continue their studies so that they can support their country and their region afterwards. That should be our priority to do that.
Q: Let’s turn to the business field. You’ve been at the top level of your company since 2010. What do you think of the Japanese market and what challenges have you faced here?
A: I have been in leadership positions in Japan for quite a long time, so I have seen a lot of evolution. So I think in Japan there is evolution. Sometimes it’s not a revolution, so you don’t see it in one day, but there can be some drastic changes.
What I have seen recently is that while in the past we were able to better anticipate changes, recently our health care environment became less predictable. It’s clear that there is a need to support the budget, because there is such a burden created by health care costs that it’s unavoidable to have pressure on prices, especially prices of older products or pressure coming from generics, etc.
What I think came out from the last year — a very tough environment and conversations, which was materialized by the final pricing system implementation with rebounding of the system in April — is something which is not giving us, as members of the industry, Japanese or non-Japanese, doesn’t make a difference, the capacity to predict where the system is going.
I think the first consequence of the rules that have been taken and decisions made is that the market perspective is rather negative. So Japan is the only market among the top 14, 15 markets to have negative growth.
So the danger is that when we don’t know, we can guess, but when we don’t know it very clearly, then people go into a kind of a bearish mode. It’s not like bullish — we go, we do things. People wait and see. The danger is they wait and see. They don’t want to recruit. They don’t want to invest more.
They may want to wait a little bit before developing some products because the cost of simultaneously developing products in Japan, the U.S. and Europe, for example, the Japan portion is quite expensive usually because as you may know already, conducting clinical trials is a bit of a burden in Japan. So it is OK when you are in a predictable environment. But if it is not predictable, you can say, “OK, let’s do it elsewhere, and then when [we] know better, [we will] add Japan into the future.”
Q: How would you describe your business management style?
A: I guess every manager has their own style, so it’s difficult to say “I follow X or Y because this is my reference.” As a French, should I follow Napoleon [Bonaparte]? I don’t know.
I think everybody’s character has been created by their education, by the family, by the environment. My father was a doctor — he passed away — and he was a specialist of orthopedic diseases, including surgery. The kind of disease he was treating was sometimes kind of rare diseases. People had to sometimes stay in the clinic and hospital where he was practicing for a long time.
So as a result, when I was young it was just part of the family life. But on the weekends, on Sunday you like to have your family lunch and friends, for example, around the table. Very often we had patients having lunch with us because my father knew that they were coming from different parts of Europe actually to see him and those patients were staying two months or three months in the same facility.
So I thought that’s also something that inspired me in the end. Maybe my philosophy is usually ichigo ichie (treasure every meeting, for it will never recur). So let’s not waste the opportunity to discover somebody and to learn from him or her. We didn’t know each other before you came here, but after this meeting, you will know more about me than I will know about you, but we had eye contact and maybe I can start imagining what you do, and because you interact with some other people I know and I can relate to your work a little bit.
So I think if you have interest in people, then you should display that in your management style. So why not speak frankly to people and why not listen to them and have a direct conversation to understand what makes them tick as individuals?
Also what I think is that it’s very important to be visible to the team. So in my case I have been always traveling around Japan, meeting with people, not only when there is an earthquake, in any conditions, because I think I should know my partners, my stakeholders.
For the employees, I think they are always very pleased to have an opportunity to talk to their management.
Q: What is the biggest difference between the current situation and the past in terms of society or culture?
A: I think there is always a kind of dilemma about Japan. I’m wondering if I should write a book on those things one day, but I just try to assemble my thoughts.
I think it’s a mixture of culture and education — where to take it from. There are some things that are beautiful in the Japanese education system, and I see it at home, if I may say. But of course, young children learn to clean the classroom by rotation every week and they have special attire for that and they will clean.
You learn from your education system, so it’s not surprising that when you are in Russia and you have a soccer match, you clean also, and people admire it, and I think rightly so. I think some people copy you because Senegal is also doing so.
But on the other hand, you could say behind that there is a lot of uniformity and controls. I think it is built and it refers to education, but before education there is culture and in the culture you inherit from Confucius a lot of things, that moves into bushido. You have also Shintoism, which allows you maybe to be very calm if there is an earthquake. But you also, because of the same kind of tradition, you can be very passive in front of adversity or in front of events.
Nurture more links
Q: You’re in a unique position. You’re French working at a British company, and now working at a British company in Japan. Could you tell us about your ties with Britain and Japan?
A: Japan, like the U.K., like Britain, is an island or a collection of islands. That means there is a lot of common things, just because of the geographic situation of the two countries, although they are far away.
I believe there could be more links and they should not be exhaustive. Japan can have links with other countries, including my home country hopefully, because science has no borders. But I believe there is a way to inspire each other. We talked a bit before about start-ups and the system that exists between start-ups and the government. I think this is quite advanced in the U.K., and Japan maybe could observe and take some inspiration from that country and maybe some others to compare. But I believe there is this kind of easiness to exchange on this, which should be exploited. So that’s my feelings.
[British Prime Minister] Theresa May came in August last year and she had strong exchanges with Prime Minister [Shinzo] Abe and his ministers. I had the chance to be invited to some of the meetings and I could see that there is a big deployment of effort on both sides. So I think the two countries respect each other, want to do a lot of things together, and I wish them well in that direction.
This interview was conducted by Japan News Assitant Editor Takeshi Nagata.
Philippe Fauchet started his career in the pharmaceutical industry in 1984 at a company where he occupied, among others, various positions related to the Asia-Pacific region, including Japan and South Korea. He held top positions at different companies before joining GlaxoSmithKline K.K. as president in January 2010. He was appointed chairman in April last year.
Fauchet is vice chairman of the European Federation of Pharmaceutical Industries and Associations Japan, a position he took up in January 2014 after completing his two-year term as chairman.
He graduated from Hautes Etudes Commerciales in 1979 and obtained a bachelor of law from Paris University in 1980.
■ GlaxoSmithKline K.K.
The Japanese subsidiary of global health care company GlaxoSmithKline was established in 1953. Based in Tokyo, it had about 3,200 employees as of December 2017. Its factory is located in Nikko, Tochigi Prefecture. The core business sectors of the group are pharmaceuticals, vaccines and consumer health care. The London-based company employs 100,000 people in over 150 countries. Its sales in 2017 reached £30.1 billion.Speech