George Rathmann Interview (page: 7 / 9) Founding Chairman, Amgen	Print Interview

How do you structure a company so that it monitors its own performance, without doing it from the top down, as you said?

George Rathmann: Well, it could be quite informal. Ordinarily what you end up doing is having periodic reviews that are relatively formally done. But I'd say for the first seven or eight years at Amgen, it was done almost in the hallways. The culture was that we want to be the best we can be; we want to do the best science we can do. We want to make sure that we're moving along productive channels. Don't do your friend down in the lab a favor by not mentioning it to him when you think that he's probably gone beyond his data and he's not got the opportunity to do as much as he was hoping for. Just go ahead and have that discussion and upgrade the quality of everything everybody is doing.

So you're entrusting people. Everybody is empowered to make a difference in the company?

George Rathmann: Right, and some people view that as a terrible risk. "You're the boss and you're out of control!" You're putting a lot of confidence in what people are going to do. The modern world is empowering them. It really turns out that there's no other alternative that comes anywhere near close. Maybe, if there were an Einstein that was a businessman, maybe you could have done it with that brain power. But the rest of us mortals are better served by having the organization provide the brain power, because an 80-person organization is a lot more powerful than any brain that I know. And that's where the answer is. You get the people empowered to do the best they can, challenge each other. They understand the goals of the company, which is very important. The goals should be stated broadly and clearly and with a lot of flexibility. But it helps a lot for them to realize that there is that translation of the commercial dimension that will make it possible for them to have a job in the future. So it's easy to get the commitment, but it's hard to get the balance just right. Fortunately, it works out lots of times. It's hard to imagine why it works out as well as it does, where you get the right balance between sticking with good science and then translating it over into commercial success.

You have a great reputation for selling your companies and inspiring people to invest in them. Have there been periods when you've doubted yourself?

George Rathmann: Do you mean doubted whether I was saying the right thing to somebody, or doubted whether the company was going to be successful? We ran into some miserable experiences at both Amgen and ICOS, and we certainly can see them in the company I'm now with. Sometimes they relate to reversals that have nothing to do with the individuals and the science and the programs that you have. The business cycle just takes over and drives people away.

Get the Flash Player to see this video. There was a period in 1994 when the cycle was affected by the concept of national health care, and the possibility that there wouldn't be any profits, because in national health care there would be price controls. As investors began to worry about that -- and at that same time, a few major programs failed -- it became clear that this was a foolish place to invest, because on the one hand, you can fail and get nothing back, or you can succeed, then have price controls and have a very limited return. And as a result of that, stock prices --including the stock price of the second company I was with, ICOS -- dropped off by 82 percent in about an eight-month period. So you are at one point and you're 82 percent down. You have very tense investors, and you might question yourself. I never questioned myself. The science was good, we were doing good things, and I think it was an artificial factor that we're going to learn how to beat.

Now we didn't just sit by...

Get the Flash Player to see this video. The Industrial Biotechnology Association went ahead and started having programs, fly-ins, to try to convince congressmen that this was a devastating approach for the biotechnology industry, that we would scuttle the biotechnology industry if we destroyed investor confidence. The biotech industry was in the fortunate position that it could clearly demonstrate the close linkage between the financing of the company and the ability to do the research and development. Without the finance, you can't run the company. Whereas, a big pharmaceutical company, the possibility exists that they'd be able to continue their research and development, even if their prices were cut by ten percent or 15 percent. So what difference does it make? But when you scare investors so that they won't want to invest in the companies, that was the only source of money we had. We had no ongoing businesses, and so stocks went to nothing. And you could wonder whether this was going to be reversed in any way. I don't know. I don't think it was self-confidence. It was confidence in the system in this country, and the people in this country, and the Congress, that we were going to be able to convince them that this was a bad thing. We could convince them easier because the biotech equation was a beautiful equation. We were not doing "me too" things. We were not spending money on advertising and so on. Everything was going into research and development, and everything was beautiful science.

The fact that we were poor didn't mean we were bad. We hadn't gotten there yet, that was all. So the story was a very good story, and it went over very well.

Get the Flash Player to see this video. When I testified in Washington a number of times, I'd be side-by-side with the pharmaceutical industry, and we were both supposed to be under the gun. And even Dave Pryor, who was a demon on pricing of drugs, would look at me and say, "I don't even have to talk to you. You guys are doing it right." And then he'd go back after the pharmaceutical industry, and I would sit there, supposedly helping. But I didn't have much to say, because he was already convinced we were the guys in the white hats. So it was fun to have that opportunity, and it was certainly true that we had a much better profile of doing really innovative -- no one had ever figured out that there was a way to replace red blood cell transfusions. So that product is not something that has -- erythropoietin -- has no counterpart in history. And a white cell generator, people just wouldn't have thought there was any way to do that. Nature was doing it, but how do we capture what nature does? Well, that's what biotech is all about. They're making nature in its very most exquisite way. So it was a good story that we could do things that never had been done before, but we needed the research. We needed the confidence in this kind of an industry. And it meant that there had to be confidence that there would be a profitable return. So I'd say I never lost faith in the system, because it was the system that was making it really heard.

If, in fact, it's inevitable, because people say that's the direction things are moving -- that would be devastating for the industry. So I don't support any of those steps, including the first one. I don't think the President ever intended what was construed from what was said.

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