Franz B. Humer
1946–



Chairman and chief executive officer, Roche Group

Nationality: Swiss, Austrian.

Born: July 1, 1946.

Education: University of Innsbruck, Doctor of Law; INSEAD, MBA.

Career: ICME Zurich, 1971–1973; Schering Plough Corporation, 1973–1981, assistant to the vice president (Europe, Africa, Middle East), general manager (Ecuador, UK, Portugal); Glaxo Wellcome, 1981–1995, area controller, head of group product licensing, director of marketing development and product licensing, managing director of Glaxo Pharmaceutical Limited, director of Glaxo Holding, chief operating director of Glaxo Holding; Roche Group, 1995–, member of the corporate executive committee, head of the pharmaceuticals division; 1996–1998, COO; 1998–, CEO; 2001–, chairman of the board of directors.

Awards: Recipient of the 2000 Oliver R. Grace Award for distinguished service in advancing cancer research.

Address: F. Hoffmann-La Roche Ltd., Grenzacherstrasse 124, CH-4070 Basel, Switzerland; http://www.roche.com

■ As chairman and chief executive officer (CEO) of Roche Group, Franz B. Humer led the Swiss pharmaceutical company through a number of financial ups and downs and a controversial price-fixing case. Through all of the changes, Humer never compromised the family-owned business's solidarity, refusing even to discuss the possibility of a merger with other large pharmaceutical companies. In 2001, in the midst of a significant economic and company downturn, Humer sold all nonpharmaceutical divisions. He strengthened the company's research-and-development arm and bolstered its new and core drug offerings. Humer always tried to balance his financial responsibilities to his shareholders with his ethical responsibilities to the millions of people who use Roche's drugs.

Franz B. Humer. © Reuters NewMedia Inc./Corbis.
Franz B. Humer. ©
Reuters NewMedia Inc./Corbis
.

EDUCATION AND EARLY CAREER

Humer received his doctorate in law from the University of Innsbruch in Austria, then went on to earn an MBA from INSEAD in Fontainbleau, France. He learned survival skills and developed an innate sense of human behavior while in his 20s, working as a tour guide for large groups. "There was no salary, only tips. Pretty soon, I could hone in on particular groups. Eventually, I could predict within 10% how much I could earn from any particular group," he told Harvard Business Review (September 1, 2000).

Humer began his career in 1971 with ICME International in Zurich, Switzerland. Two years later he entered the pharmaceutical industry, joining Schering Plough Corporation as assistant to the vice president for Europe, Africa, and the Middle East. After leaving Schering Plough, Humer held various managerial positions (including director) at Glaxo Holding. He was responsible for research, business development, manufacturing, commercial strategy, and all operations outside the United States.

MOVING TO ROCHE

Humer joined Roche in 1995 as a member of the board of directors of Roche Holding and as the head of its pharmaceuticals division. In 1998 he assumed the role of Roche's CEO. In the late 1990s, a time when several other pharmaceutical companies were merging, Roche remained staunchly independent. Humer said that, although he was not completely opposed to the idea of a merger, he was confident that his company could succeed alone by simply focusing on its internal products and by marketing new drugs.

One of the biggest new drugs Roche marketed was a weight-loss medication called Xenical, which gained approval from the U.S. Food and Drug Administration in 1999. Worldwide sales exceeded $350 million, and Xenical became one of the most profitable Roche products since Valium.

In 2001 Humer became chairman of Roche. He kept a tight rein on the company and its employees, according to industry insiders, which led to some disagreements with other Roche executives. In May 2001 Humer fired chief financial officer Anton Affentranger after just four months of service because of a reported personality clash.

HUMER VOWS TO KEEP ROCHE INDEPENDENT

In 2002 Roche lost $2.9 billion dollars, the greatest annual loss in the company's 108-year history. Humer blamed the drop on investment losses and on a multimillion dollar fine that stemmed from a 1990s vitamin price-fixing case. In 2001 rumors had begun to circulate that rival Swiss drug manufacturer Novartis was moving toward a merger with the family-owned Roche. Novartis purchased 20 percent of Roche's stock, and then steadily increased its stake. Humer quickly dismissed the idea, remaining firmly opposed to any such megamerger. "Large mergers, large acquisitions in this industry destroy value, destroy innovation," he said (MIT news release).

Even when Novartis increased its Roche holdings to 33.3 percent in 2004, just below the level that the Swiss law considers a formal bid, Humer was unfazed. He was so unconcerned, in fact, that even amid rumors that his company was about to be swallowed up by Novartis, Humer went skiing. He said he was secure in knowing that the two Roche owners (the Hoffmann and Oeris families) would never relinquish control over their company.

But Humer had no trouble drawing other companies under Roche's wing. In fact, he wanted to create additional value for Roche's shareholders by changing the company's focus through strategic acquisitions. In order for the company to focus on its diagnostics and pharmaceutical businesses, Humer bought a controlling stake in the Japanese pharmaceutical company Chugai in 2001, and he acquired diagnostics company Igen International for $1.4 billion in 2003. He then rid the company of its less profitable chemicals business and sold its vitamins division to the Dutch company DSM (although Roche was still responsible for all liabilities stemming from the price-fixing case). Roche also purchased a majority stake in the California-based biotech company Genentech.

PROFITS AND RESPONSIBILITIES

Humer said that one of his greatest challenges in running a large pharmaceutical company was balancing the company's fiscal and moral responsibilities. "The biggest challenge for us is how to cure the sick and run a profitable business at the same time," he told students at the Massachusetts Institute of Technology (MIT news release).

In mid-2003 the two goals seemed at odds. Controversy developed when Roche released its new AIDS drug, Fuzeon. The drug had a yearly price tag for users of $20,000, which was three times the cost of the most expensive AIDS drug then on the market. AIDS activists protested that the drug was too expensive for the average patient to afford. But Humer defended the company's pricing, saying that it needed to recoup its research-and-development costs on the breakthrough therapy. "We need to make a decent rate of return on our innovations…. I can't imagine a society that doesn't want that innovation to continue," he told the Associated Press (March 13, 2003). He promised that Roche would give discounts to government-run programs and even provide the drug free in some cases.

Humer committed Roche resources to the fight against AIDS. In October 2001 he met with the United Nations Secretary-General, Kofi Annan, and officials from several other drug companies to help poor countries get improved access to AIDS drugs. But, he said, supplying free medicine was not enough in countries that lacked the infrastructure to disseminate and use them properly. More training and governmental commitment would be needed before the drugs could be effective.

VISION FOR THE FUTURE

Humer said that he saw a "wave of innovation" in the pharmaceutical industry that one day would enable doctors to "identify the right patients for the right medication at the right dose at the right time" ( American Way , March 1, 2004). Under Humer's leadership, Roche has spent about $3 billion a year on research and development. "When you look at what drives the success of pharmaceutical companies, it's clearly driven by the ability to innovate and the capacity to create new products," he told BusinessWeek Online .

By 2004 Roche had bounced back from its financial troubles. Operating profits had increased by 28 percent, and the company went from a net loss of about $3 billion in 2002 to a net income of almost $2.5 billion the following year. The increase was due primarily to strong sales of the company's core drugs: Rituxan (a therapy for non-Hodgkin's lymphoma), CellCept (an immune-system suppressant used for organ transplantation), Herceptin (a drug used in the treatment of breast cancer), Tamiflu (a flu medication), and Pegasys (a therapy for Hepatitis C).

OTHER ROLES

In addition to his positions at Roche, Humer was vice president of the Swiss Business Federation and vice chairman of the European Federation of Pharmaceutical Industries and Associations. He was involved with a number of charitable organizations, including Project Hope and the Swiss American Chamber of Commerce, and he was active in the Paul Ehrlich Foundation, the European Round Table of Industrialists, and the World Business Council for Sustainable Development. Humer was on the board of candy manufacturer Cadbury Schweppes until he was appointed chairman of Roche in 2001.

See also entry on F. Hoffmann-La Roche & Co., A.G. in International Directory of Company Histories .

sources for further information

"Anxiety Over Cost of New AIDS Drug," Associated Press , March 13, 2003, http://www.cbsnews.com/stories/2003/03/13/health/main543887.shtml .

Arnst, Catherine, "Roche's Declaration of Independence," BusinessWeek Online , http://www.businessweek.com/bwdaily/dnflash/jan2003/nf20030130_7429.htm .

DuVergne Smith, Nancy, "Pharmaceutical Industry Balances Profits, Moral Responsibilities," MIT news release, http://web.mit.edu/newsoffice/tt/2002/dec18/humer.html .

Goffee, Robert, and Gareth Jones, "Why Should Anyone Be Led by You?" Harvard Business Review , September 1, 2000.

McGarvey, Robert, "Changing Medicine's DNA," American Way , March 1, 2004.

—Stephanie Watson



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