Pharma Transformation Isn’t a Project. It’s the Job.

Episode Transcript

VALERIO DI FILIPPO: I’m Valerio di Filippo. We recently published a report that explores how a select group of European, mid-sized companies reshaped their portfolio and rewrote the rules of growth of this industry. This series is a conversation aimed to go beyond data, beyond analysis, and hear directly from the leaders that are behind this transformation to understand the decisions they made, the lessons they learned, and the challenges they faced during the journey.

For this episode, I’m delighted to be joined by Francesco Balestrieri, CEO of Alfasigma. Welcome, Francesco, and thanks for hosting us in your office.

Looking back over the past five years, Alfasigma went through a remarkable transformation. You moved from an Italy-centric company with an established portfolio to a global player with a multi-platform.

And we already see the US being at the center of your strategy.

And this happened also thanks to a lot of M&A activities. Recently, you announced the acquisition of linerixibat, a product from GSK, as well as Nordic Pharma from Sever Life Sciences.

Thinking about all of these, Francesco, what was the strategic trigger that convinced you that this was the right path to pursue? And what gave you the confidence and energy, knowing the history of the company, that this was the right moment to accelerate this path?

FRANCESCO BALESTRIERI: So first of all, welcome, Valerio, to our new offices in Milan. We actually

didn’t go through the transformation—we are going through the transformation. And it wasn’t me that actually triggered the transformation. Credit needs to be given to the shareholders, and their desire to start the transformation is what attracted me to Alfasigma in the first place.

They wanted the transformation because fundamentally they saw more potential in the company and from there the ambition to put the company back on a growth trajectory. The company was solid, stable, but didn’t have enough growth in it to really take it through the next decade. And from there, the mandate went to clearly start the transformation journey. It was really free from short-term cycle constraints.

The industry is changing, it’s consolidating. Standing still was not an option. Once you are clear about level of ambition—when I say clear, I mean really trying to concretely look at how big is big? How far is far? How fast is fast? And then once we had that clear, that the strategy needed to move on two levels, we started moving into action, you know, expanding the perimeter, strengthening the portfolio, looking at new geographies, but always making decisions keeping in mind three stakeholders, which were the patient, the employees, and the shareholders.

And I strongly believe we need to manage these three constituencies to really make the strategy sustainable. Because you cannot just speak to one group without taking into consideration, you know, the trade-offs among different groups of shareholders.

VALERIO DI FILIPPO: You mentioned the twofold objective on the strategy and the starting point in terms of ambition, and, as I said before, you have multiple platforms to manage now, from gen med to rare disease across different geographies, very different capabilities required, and characteristic business models. And knowing, again, to your point, the legacy and the relevance of the historical heritage of this company, I’m curious to hear how you have been able to run all this business together and, moreover, to keep everything consistent now with one ambition, one direction, and one strategy?

FRANCESCO BALESTRIERI: It’s true we have different businesses, some from the past, some that we acquired, integrated along the way, some that we have recently acquired, especially this year. As you know, we have done two transactions, which are very important for our future.

Now, while we have different businesses, we have one strategy. The strategy, again, how to put the company on a sustainable growth trajectory over a period of ten years. And it really plays on two fronts of managing successfully the existing business while building innovation within the company.

I mean, in our industry, innovation is the answer to the long-term success of a company. And today,

which doesn’t mean tomorrow, but today, innovation comes through M&A that allows us to push the boundaries of the business into new areas. Not all the pieces of the puzzle are clear. So clearly there are more visible now than there were four years ago. But the company is still changing its makeup and evolving as we progress through the agenda.

We have four businesses today—at least, that’s how we choose to look at the company. These four businesses are specialty, rare disease, consumer healthcare, and gen med. We are very clear that they are different. We are very clear that they have different capital requirements, different speeds, different

go-to-market models. What keeps them together is the overall strategic ordinance. So, even if we don’t use the same playbook, each one of them actually is going to progressively contribute to formulate the overall picture that you have in mind for the company down the road. That’s how we operate, right? And each business has a role and different needs, as long as it serves the overall strategy and the overall objective of the company.

VALERIO DI FILIPPO: It seems everything, as you described, it’s quite smooth and seems to be very well executed and everything.

FRANCESCO BALESTRIERI: It’s not smooth. In fact, I think what we’re discussing here is it’s not smooth. Things didn’t go according to plan. It has been very compressed. In four years, the company has changed tremendously.

VALERIO DI FILIPPO: So, exactly to your point, I was curious to hear what during this journey that has now been like five years proved to be harder than you expected initially or, on the other hand, easier than anticipated? And whether this was more into the strategy, the leadership style you mentioned before, the operations? Anything you want to share in this respect?

FRANCESCO BALESTRIERI: Well, I’ll tell you a story. Every time I hire somebody, I try to tell them that they are joining a company going through a transformation. Look, we’re not just changing, evolving, and everything else. We are transforming. Inevitably they come in and they’re surprised. Right?

And I tell you this because it gives you a sense of how much was done in this period of time.

In a way, most companies manage the business with a set perimeter. In our case, we are running the current business and also redrawing the playing field. And it’s a little bit like flying the plane when you are building it.

Coming to your question about what’s more difficult, less difficult, I would say that the less difficult,

I wouldn’t call it easy, still tough and demanding, is actually the hard stuff, right? Making business choices, implementing a plan, or executing post-merger integration. It’s easier because it’s manageable, tangible. It can be planned. As a management team, we really have to make sure that people understand the what, especially when change happens so quickly, but also the why. Especially when you have to make a difficult decision, which we also had to do, along the way. Sometimes they’re necessary to take the company to the next level and to make the step change you want to make.

The difficult part again is keeping the sense of direction as you are building the different parts of the agenda and also having the right people, because not everybody’s made for this journey, honestly.

VALERIO DI FILIPPO: Elements like direction, innovation, before the long-term view of this industry came up multiple times now during the discussion. Knowing you, I’m pretty sure you have already the next priority for Alfasigma?

FRANCESCO BALESTRIERI: We have a lot of next priorities. When we look at ten years, effectively, we also think of this evolution in three parts. Mostly the first part is done: to restart the base engine while we started expanding the perimeter. That’s [what the] Intercept and Jyseleca acquisitions allowed us to do, because in both cases we acquired access to new markets, new capabilities. We acquired

commercial products, but also pipeline. And now, as we move into the second phase, we are looking at scaling up these platforms. Right?

As I said earlier, we look at the companies as a four-legged stool. And each of these platforms will carry us into the next phase. And each of these platforms can be scaled up in different modalities. Each one of them has different business archetypes.

And next to it, still in the second phase, we are intentionally investing in our development and regulatory

capabilities, both in terms of processes, talent, and agenda, because as we look down the road, we want to be able to bring more innovation in-house. We acquire talent, we acquire culture, implicitly or explicitly. And we change, you know—while we’re rooted in Italy, we become more and more global.

As we progress the second phase, we move into a third phase where [we want] to deliver more for our own development engine, which we believe can become stronger and better over time. And also moving to new therapeutic areas and new spaces. Then basically continue to open up the playing field for the company going forward. And then we see what’s next.

VALERIO DI FILIPPO: I feel there are a lot things to be done.

FRANCESCO BALESTRIERI: Well, that’s the beauty if you want. That’s what’s exciting about this journey.

VALERIO DI FILIPPO: I think exactly to this point, this concept of always being in a transformation mode is something that was absolutely clear from this discussion.

FRANCESCO BALESTRIERI: And frankly, I cannot stress it enough. It takes certain kinds of people to go through this transformation. It’s very, very important. Because for some people it’s energizing, for some people it’s not. Sometimes people ask me, “Are we done now?” I say, “No, we’re not done!” I mean, clearly, we’re not done.

VALERIO DI FILIPPO: I can see the excitement and the challenge at the same time. But to your point, having the right long-term direction and strong commitment into that can then ensure the right people and culture and discipline.

So, Francesco, thanks a lot for your time and for being so open and honest with us. It has been, not surprisingly, a very interesting conversation. Thank you very much.

FRANCESCO BALESTRIERI: Thank you.