What Japan’s Top CEOs Will Take Away From the Pandemic

As Japan moved to fully lift Covid-19 restrictions at the end of March, the country’s top chief executives said the lessons from the pandemic will be longer-lasting.

“The ongoing threat of Covid-19 throughout 2021 reinforced for me the fact that improving human health around the world is an essential part of sustainable social development,” said Sunao Manabe, chief executive of Daiichi Sankyo. Manabe was the top-scoring chief executive in the biotech industry in Institutional Investor’s 2022 All-Japan Executive Team survey, as voted for by buy- and sell-side participants. 

Manabe says Japanese pharmaceutical companies have much to learn from early delays in the development and production of coronavirus vaccines in the country. Daiichi Sankyo was the first company to develop an mRNA vaccine in Japan, and the first in the world to use its proprietary cationic lipid, which it believes improves the safety of the shot. With support from the Japanese government, the company is developing a vaccine that targets a specific receptor binding domain of the novel coronavirus spike protein, which it hopes will be more effective and safer than other companies’ mRNA vaccines, which target the entire length of the spike protein. Daiichi Sankyo’s vaccine is being developed for general use by the end of 2022.

Manabe says that cross-sector collaboration will become increasingly commonplace, especially as companies leverage data to advance their work and enter into partnerships with tech companies. “This is an ecosystem where various stakeholders collaborate at deeper levels, including individual patients, medical institutions, data providers, [and] tech companies,” he said. Unprecedented availability of healthcare data has been particularly effective in developing new drugs to combat breast cancer at Daiichi Sankyo, he said.

It’s this potential for the innovation and collaboration forged during the pandemic to inform other areas of research that chief executives say is really exciting. “There have been many lessons learned throughout the Covid-19 pandemic, but in particular it is my hope that we can apply the same level of speed, precision, and industry-wide coordination to solve other global health crises, like climate change,” said Christophe Weber, president and chief executive of Takeda, who ranked second in the biotech and pharmaceuticals sector as voted for by sell-side participants. Weber said global health crises will become more frequent in an era of rising temperatures, and that companies, industries, and governments must work together to advance science and take collective action in order to tackle the climate crisis. “Climate change cannot be solved by one company alone,” he said.

In the meantime, companies still have to combat more mundane business challenges. At Shin-Etsu Chemical Corp., which has recently developed a liquid silicone rubber for use in electric vehicles, semiconductors, and other electronics, meeting customer demand amid supply chain disruptions is the key challenge for this year, according to chief executive Yasuhiko Saitoh, who ranked as the No. 2 CEO in the chemicals sector.

Shigenobu Nagamori, the founder, director, and chairman of Nidec and the top-ranking chief executive in the electronics sector, also pointed to supply chain risks as one among a plethora of challenges facing Japan’s chief executives this year. “Uncertainty of the business environment includes the spread of Covid-19, material price increase, supply chain disruption, and increase of geopolitical risk,” he said. Nidec is working on diversifying production sites and its customer base, while changing the design or materials used in products to combat rising prices for raw metals. “Nidec recognizes the supply of products [are essential to] meeting clients’ demand,” Nagamori said.

The ongoing threat of Covid-19 throughout 2021 reinforced for me the fact that improving human health around the world is an essential part of sustainable social development. The role of the pharmaceutical industry in achieving this goal is significant and reaffirms the importance of our purpose at Daiichi Sankyo – to contribute to the enrichment of quality of life around the world. Looking back at the delays in the development and production of novel coronavirus vaccines and therapeutics by the Japanese pharmaceutical industry, there are many reflections to be made. I believe these reflections and learnings will lead to important changes for pharmaceutical companies originating from Japan. In addition, with the digital transformation that is unfolding, it is necessary to work toward a new, ever-evolving healthcare environment in order to sustain human health. In addition to considering what kind of added value pharmaceutical companies can provide, it is necessary to drive toward an optimal and sustainable healthcare environment in cooperation not only with doctors, pharmacists, nurses, caregivers, and other healthcare professionals, but also with tech giants in the information industry, and various other industries.

This year we announced a plethora of new data that has brought tremendous hope to people with breast cancer. We always expected that the results from several studies in our DESTINY-Breast program would be positive given the strength of earlier data. But the unprecedented results showed us that one of our medicines has the potential to completely change the paradigm for breast cancer treatment, giving hope to patients who have not had many options in the past. While this is certainly an opportunity for our business and shows the superiority of our ADC technology [antibody-drug conjugates, a class of drugs for treating cancer], we are most proud of the potential opportunities we hope to offer to patients to live longer, better quality lives.

We continue to take on the challenge to maximize our ADC technology as the foundation for several products in development for other hard-to-treat cancers such as non-small cell lung cancer. As more studies are completed and their data revealed, we will hopefully confirm that our next phase of ADCs can address other genetic targets with just as much promise. 

Another challenge we have set for ourselves is the continued development of our mRNA coronavirus vaccine. The development and commercialization of this vaccine is being watched carefully by Japanese citizens and our government. With support from the Japanese government, we are working on the development and production system with a mission to deliver the vaccine to the public as soon as possible, aiming for commercialization in Japan by the end of calendar year 2022. If our mRNA technology can be established, we plan to build on this platform technology, applying it to other infectious diseases and therapeutic drugs.

We are confident in our drug discovery capabilities as an innovative company originating from Japan that has delivered many successful global products in cardiovascular disease and cancer.  Underlying these drug discovery capabilities are our core strengths in science and technology. Our science and technology are the direct result of the caliber of the talent we have at Daiichi Sankyo. Our scientists bring a wealth of experience, including a craftsmanship approach to refining drugs, and they ascribe to a culture in which researchers respect each other as scientific experts and freely and openly exchange opinions regardless of their position or career history. We also have created a wealth of next-generation modalities that successfully combine both small molecule drug discovery and biopharmaceutical drug discovery technologies. In addition, pharmaceutical CEOs must properly and effectively allocate management resources, looking not only at the current situation, but also five years down the road, a decade down the road, and more. We must also excel at discerning the value to patients and our business in any given project. I believe that a strength of Daiichi Sankyo lies in our judgment and discernment skills, which have been passed down from generation to generation by successive CEOs. It is my responsibility to inherit and refine these skills.

The greatest challenge has been how to cope with uncertainty of the business environment with a short-term and mid-long-term perspective. Uncertainty of the business environment includes the spread of Covid-19, material price increase, supply chain disruption, and increase of geopolitical risk. Regarding the material price increase, the price of main raw material Nidec uses such as steel, copper, aluminum, and magnet has increased on average by 50 percent since a year ago. In addition to requesting our price hike to clients in the short term, mid-long-term technical solutions like reduction of raw material by change of design or change of materials are essential. Diversification of production sites and clients are also mid-term challenges to cope with potential pandemic, supply chain disruption, and increase of geopolitical risk.

Nidec recognizes the supply of products meeting clients’ demand are essential. Providing the products meeting clients’ demand is the basis for Nidec’s long term growth. As a recent example, our machinery segment has developed the precision reducer with censors and this new product attracted big attention from robotics makers. This positive feedback from clients happened as the product matches the need for productivity improvement and automation at production sites. Not limited to this example, providing the products riding on long term global mega-trends like de-carbonization, labor shortage, or digitalization is Nidec’s mission and contributes to Nidec’s long term business expansion.

Electrification of cars has been accelerating much faster than anybody expected. At the Chinese EV market, where Nidec has been providing E-Axle (driving unit for EV) to clients, the number of battery electric vehicle sales has expanded to 2.91 million [at the end of ] 2021, around 2.6 times of the number at [the end of] 2020. Battery electric vehicle sales in China are expected to increase to 4-to-5 million at [the end of] 2022. Those expansions exceed the market’s previous forecasts. Nidec’s E-Axle order for full-year 2022 is more than triple full-year 2021, showing strong growth. In addition to China, the European EV market has expanded more than 65 percent over last year and is expected to grow more this year. Combined with EV market expansion in North America and emerging countries, Nidec’s business opportunity has been rapidly expanding.

The greatest challenge is execution of our mid- to long term plan toward 10 trillion sales at [the end of] 2030. Especially, execution of tasks at E-Axle business, such as cost reduction, expansion of production capacity, [and] addition of clients, are critical. Regarding cost reduction, Nidec will launch E-Axle model in the latter half of 2022. The new model is better in spec and costs less. The new model is expected to contribute to Nidec’s and clients’ profitability. For the production capacity, demand for E-Axle is estimated to exceed the current order backlog of 3.5 million [at the end of] 2025. To meet increasing demand for our E-Axle, 300 billion JPY is planned to be invested to prepare [to double our] production capacity. Acquiring new clients will happen soon. Besides the expansion of clients in China, the mass production at Stellantis JV starts in the latter half of 2022. In North America, Nidec is facing increasing inquiries from major [manufacturers] and EV ventures.

The key for Nidec’s consecutive growth has been creating new business. As a recent example, the small precision motor business unit has shifted its resources from to mini EV and mobility to enlarge business growth. Mini EV, which became famous for $5,000 electric vehicles in China, has the potential for hundreds of millions of car sales as the reduced car price cultivates new demand. For mobility, two-wheel vehicles face the wave of electrification as well. Nidec has already got orders and inquiries from Chinese and Indian top manufacturers, such as Yadea in China. Another example is the machine tool business. Nidec started its machine tool business by acquiring Mitsubishi Heavy Industry Machine Tool and OKK. Mitsubishi Heavy Industry Machine Tool’s profitability has sharply improved from a red figure before the merger to an operating profit margin of 10 percent.

Proliferation of digitization and electrification.

Volatility of various kinds.

Through cross divisional interactions, close-working relationships with key customers and various collaborations with innovative organizations, with mid-term and long-term focuses.

The impact of the Covid-19 pandemic and its emerging variants has continued to be a disruptive force for not only the pharmaceutical industry, but for all companies. Throughout this challenge, Takeda has maintained a “long-game” focus thanks to the resilience of our people who have continued to work in the best interest of patients while continuing to forge ahead with our plans for innovation. Additionally, with our plans around new expectations for ways of working in hybrid models, we recognize that it will be critical to find the balance of providing our people with the flexibility they need for their own well-being while reinforcing the power of human connection and in-person collaboration. 

There have been many lessons learned throughout the Covid-19 pandemic, but in particular it is my hope that we can apply the same level of speed, precision, and industry-wide coordination to solve other global health crises, like climate change. As temperatures continue to rise, catastrophic effects of climate change will continue to drive the spread of disease, and issues impacting human health will accelerate. Because the health of our planet and human health are integrally linked, we are committed to prioritizing our climate commitments. But climate change cannot be solved by one company alone, which underscores the importance of partnering with companies, industries, and governments on collaborative discovery and cutting-edge science to advance meaningful and collective action. 

The Covid-19 pandemic has been a catalyst for a new era of innovation, demonstrated by the remarkable speed of bringing life-saving vaccines and treatments to millions of people around the world. As we continue to establish new ways of working, we will accelerate the transformation of the workplace to increase flexibility while ensuring the office is a place of collaboration, innovation, and inspiration. This approach has the potential to better support employee well-being and to increase diversity. One area that has been particularly exciting is our digital efforts. In the coming years, we anticipate creating hundreds of new jobs in specialized roles in emerging data and digital fields, accessing new talent pools and upskilling thousands of existing employees to propel our data and digital capabilities. This will help us deliver transformative therapies and better experiences to patients, physicians, and payers faster than previously possible.

As we look to this upcoming year, in an uncertain and politically divided world, the geopolitical landscape could have significant impacts on market dynamics around the world. We will also continue to respond to the Covid-19 pandemic and its emerging variants, as we have seen that the global healthcare system is under strain. The pandemic exposed widening gaps in access to quality care and treatment, demonstrating the importance of pursuing policies for better access and reducing health inequities. For Takeda, our focused yet nimble mindset and commitment to patients have helped us navigate a complex global environment and deliver results contributing to both short- and long-term growth. 

Takeda is innovating in every part of the value chain, but there are three key areas to be highlighted. First, we have one of the most exciting and diverse pipelines in the industry – 90 percent of which didn’t exist less than a decade ago – driven by our strong internal research capabilities and more than 200 external partnerships. Second, we are embedding data and digital technologies into every aspect of our business, ensuring that this form of innovation is a key part of every employee’s role. And third, we will leverage our technology capabilities to fuel our hybrid working model so we can best deliver patients life-transforming medicines. Through these focus areas, I’m excited to continue to drive long-term growth in a highly competitive and dynamic global marketplace in the coming year.