By Joanne Payne, Outsourcing Editor
1 March 2013
Dennis Gillings is widely thought to be the main shaper of the modern CRO industry and certainly the driving force behind the colossal success of Quintiles. He talks to Jo Payne about 30 years in the business and his legacy for the next 30 and beyond.
“How the hell will Glaxo need you? You’ve only got a few people, they’ve got about 50,000!” Dr Dennis Gillings laughs as he recalls the reaction to his plans to start a pharmaceutical consultancy in the mid-1970s. If he had listened to the advice thrust upon him when he was first forming the company we know today as Quintiles, he never would have gone through with his plan. Everyone told him it was a stupid idea.
Of course, it must be easy for him to look back to this time with a knowing smile, over the past 30 years his gamble has definitely paid off. Today, Quintiles is the largest contract research organization (CRO) in the business; it made $3.7bn in net revenue in 2012 (in comparison, its largest competitor Covance made $2.2bn in the equivalent period), and it had a hand in developing or commercializing all of the top 50 best-selling drugs on the market in 2011.
Hindsight is a marvelous thing. The “incredible self-belief” you need to build your own company – to ignore the naysayers – can easily spill into arrogance, he tells me. One of the hardest things to achieve when laying the cornerstones of your business, which is often only an idea, is to know when to talk, and when to listen. “If you’re overly arrogant you will make mistakes. I think it’s that balance, when do you listen to someone and when do you plough ahead and tell everyone ‘no.’ Actually, you don’t necessarily say no, you just do it and ignore them,” he says with a smirk.
Ignoring his critics and developing his company in the way he wanted has become something of a forte for Dr Gillings. It is obvious when talking to him that he has made all the big decisions in Quintiles’ 30-year history based on his own intricate knowledge of the drug development industry. He bears responsibility for those choices, he says, and he “feels good” about putting a company in place that is built to last.
We meet on a rainy Thursday afternoon at the Institute of Directors (IoD) in London’s Pall Mall, the site of one of his biggest decisions. With the commencement of the EU looming in 1993, he decided to launch Quintiles in Europe. He joined the prestigious IoD in 1987 when he founded the European headquarters of Quintiles just down the street. Coming home to his British roots was a move that proved to be instrumental for the company to differentiate itself from the competition, and it used its global status as one of its biggest selling points.
However, it was taking the company into North America, Europe, Asia Pacific, and Japan that garnered Dr Gillings a lot of flak. “It was putting those in place and developing them from an early stage, building a lot of overhead, when I got criticized because building that infrastructure takes more money than you might think is valid.”
He also highlights the move to make the company private in 2003, having been a publically traded company since 1994, as a major milestone, but, again, it was a decision that he received criticism for. He describes how the CRO was working on a large number of similar molecules that were all canceled simultaneously, causing a “hiccup” for the company. “Actually, if you look at the revenues it didn’t change that much but there was a hiccup relative to expectations,” he says. “That came after the Internet boom and the stock market nosedived. I felt there was a vast undervaluation of us so I led a privatization which turned out to be very good, it was good financially but I don’t think that was really the point. It was good for the structure of the company.”
The early days
Born in a bomb-blasted London in 1944, Dennis Gillings moved to North Carolina after graduating from Exeter University with both a degree and a PhD in Mathematics, and a diploma in Mathematical Statistics from Cambridge University. He began providing statistical consulting and data management services to pharmaceutical clients in 1974 during his tenure as Professor of Biostatistics at the School of Public Health at the University of North Carolina (UNC) at Chapel Hill (named the Gillings School of Global Public Health following a $50m donation from Dr Gillings in 2008). He co-founded Quintiles with fellow professor Gary Koch in 1982 with only “modest aims.” He had started consulting in the industry and thought it would be “nice to have a little company on the side” that supplemented his income.
His first client was the German company Hoechst Pharmaceuticals, which asked the professor to research deaths thought to be linked to the diabetes drug DiaBeta. Every time he took on a new assignment, he would be approached by another 10 potential clients wanting project work to be done. He says that the unexpected, fast-paced growth took him aback, but that he started to get his “head around it” by the late 1980s. It was at this time that Dr Gillings gave up teaching to focus on the business full time.
Looking back, he highlights the holes in his own knowledge when he started the company from a trailer on the UNC campus. For such a hands-on leader, it seems he would have liked even more expertise in the day-to-day running of a business, especially as Quintiles grew larger and larger. He would have liked an MBA, he tells me. He describes himself as “pretty much a neophyte” when it came to the accounting and legal side of setting up Quintiles.
In those early days, the young Professor Gillings found himself with a surprising new focus – money. With interest rates at 23%, Dr Gillings says that he quickly learned that “there’s nothing like founding a company and being responsible for everything for focusing the mind on how important money is.” He explains that money was not his objective when he started the company, but it had to be his objective in order to pay his bills and be successful.
There can be no doubt in any industry observer’s mind that the Quintiles business is a success. A recent dalliance in the US stock market saw Quintiles enter a registration document with the US Securities and Exchange Commission to raise $600m to pay off debt and other corporate expenses. It showed that Dr Gillings still holds 23.7% of shares in the company.
In the registration document, Quintiles said it expects outsourced clinical development to CROs to grow by 5–8% annually to 2015. Overall, the company estimates that clinical development spending outsourced to CROs in Phases I–IV in 2011 was around $16bn, and will grow to $22bn by 2015.
This approximation shows just how reliant the pharmaceutical industry has become on the drug development engine that is the CRO industry. But it was not always that way. After the initial acknowledgement of the new consultancies that had sprung up in the industry (Parexel was formed in 1982 by Josef von Rickenbach, PPD 3 years later by Fred Eshelman), there was a view that the clinical services businesses would handle the less important parts of the drug development process.
Dr Gillings says this has never been his personal experience; as a professor he would get involved at a critical point in a product’s development. “I think the industry as a whole developed more in the 1990s with a group of people, purchase agents, who really changed the character to widget purchasing. And that reduced, I think, the opportunity and caliber of what the industry could be,” he says.
Yet again, the character of the industry has changed within the last 5 years. The widely assented forecasts for CRO industry growth show that it is appreciated in a way it has not been before. This is something that constantly surprises Dr Gillings, “that’s what I’ve been doing for the last 20 years!” he exclaims. “The fact that that wasn’t understood perhaps was a little surprising given, if you’re trying to do the logistics of large scale programs and one has a $300m contract, it would seem one had a fair capability,” he says with an amused shrug. Quintiles, with around 20,000 people in clinical research, is bigger than any pharmaceutical company and any government agency “by quite some margin.”
The services industry has been a huge beneficiary of the leveling off of pharmaceutical employment expansion. Last year, Quintiles received 366,000 applications to work at the company, something that Dr Gillings says pleases him after all the years battling for the very best people in the industry. He says this is something that is “very, very important and I’m proud of that,” as in the 1980s it was difficult to battle against a busy pharmaceutical development engine that had built up an enormous “head of steam,” making it nigh on impossible to compete on the basis of salaries and benefits.
Quintiles has been shaped in this self-made millionaire’s image, and it leaves a huge Dennis Gillings shaped-hole for new CEO Tom Pike to step into. Stepping aside, albeit to the position of executive chairman of the board, must be a huge challenge for this relaxed and confident 68-year-old. Dr Gillings believes his successor is extremely talented and he has “supreme confidence” in him. The transition so far has been rather good, he says, and he hopes he has been able to let go, and has tried not to interfere, but “it’s always in the eye of the beholder.”
“You must go out when you’re top of your game, it’s just the better way of doing things,” he says.
He describes the ability to have 3 or 6 months to take a very deep look into the industry for strategic purposes as a real luxury. “You can judge things from 60,000ft instead of 20,000ft,” he says, “you can think deeply about governance structures, and things that will make the company grow and last.”
Legacy is fundamental to Dr Gillings. Not only has he built a company – some might say created and shaped an entire industry – but an organization that continues to evolve and expand, and, most importantly, that will last for a very long time to come.