Belén Garijo (Almansa, 1960) is the Spanish woman with the most responsibility in a foreign company. Since May of last year, she has been the CEO of Merck, the German pharmaceutical company that defines itself as the oldest in the world. Created in 1668, its largest shareholder is still the Merck family.
Ask. They say in Germany that she is one of the most powerful women in the country, the only one who runs a company listed on the Dax, what do you think?
Response. My goal is not to have power, it is to have impact. I am not interested in power as such, I am interested in the impact that I can leave both in my organization and in the environment where I can have some influence.
P. And how is that impact noticeable after your first year at the helm of Merck?
R. One of the strategic priorities of my first year in office is the transformation of our company culture. Culture is more important than ever at this stage we live in, in an extremely volatile macroeconomic environment, tremendous organizational fatigue after the pandemic, the terrible war in Ukraine… It is particularly important in what I call covid CEOs, and I am the first promotion. I am obsessed with establishing an agile, collaborative and diverse environment that fosters innovation.
P. The financial results have accompanied him, with a turnover of 19,700 million euros and a profit of more than 3,000 million.
R. The results of 2021 have been absolutely spectacular. We have grown by 14%, which is double what we did in the last 5 years. There is clearly an aspect associated with our contribution to the manufacture of vaccines, the life sciences business has been the main driver. Our margin has also grown by 17% and has done so in a very hostile environment.
P. They have been very active in buying companies.
R. It has also been a year of progress in strategic priorities: culture, redesign of the innovation model and progress in sustainability. We have continued with this long-term orientation in an acquisition strategy to reinforce our growth in practically all sectors, but with priority in the life sciences business to position ourselves in the mRNA offer [molécula de laboratorio para enseñar a las células a producir proteínas frente a amenazas como la covid]. We think that it will continue to progress not only around infectious diseases, but also in other areas such as chronic diseases, especially cancer. We acquired Exelead in the US, which gives us access to a more complete offer in the field of mRNA coverage to manufacture the vaccine. We also bought AmpTec for raw materials for mRNA and Chord, which gives us access to a molecule that will be developed in certain diseases of the central nervous system.
P. Do you think about new acquisitions?
R. The growth that I have mentioned, which has led to the launch of 7,000 products in the last year, comes from three pillars: the division of life science process solutions, healthcareY semiconductors. From these pillars comes 90% of the growth in the first quarter of this year. We are well positioned to compete and continue to generate profitable growth organically. However, we can accelerate this growth. For example, in life sciences, where we have a large presence in dual-use bioreactors, membranes and filtration mechanisms that are used to manufacture biologicals. Exelead, Chord and AmpTec are small acquisitions of capabilities. Accelerating growth goes through more transformative options. They depend on opportunities because the markets are very volatile, the capitalization of life sciences companies has increased a lot in recent months due to covid, but also our debt has been reduced and we have availability of cash.
P. Only in the area of life sciences or in others?
R. It depends on the opportunities. We are going to continue in this dynamic of investing in molecules that complement our portfolio, as we recently did with Xevinapant, which we are developing for head and neck tumors. And the semiconductor market and the progress of digitization are leading us to rethink strategic questions, complementary businesses, not only of materials, but also of services that we can offer our clients to contribute either to their sustainability strategy or to their own efficiency in the chip manufacturing process.
P. They have deployed a strategic plan to 2025 to reach a turnover of 25,000 million on that date, how will they do it and with how much investment?
R. Those 25,000 million are derived from our organic growth and 80% will be directed by the three pillars that receive 70% of the investment. Any inorganic transaction would accelerate this growth. Our investment in the next five years is going to double compared to the previous five. We are going to invest €3bn in semiconductors up to 2025 and we have just announced a very important investment in Ireland. We have said that we are going to generate 1,000 million per year from 19,700 million in 2021 and in the first quarter we are above forecasts.
P. The area of development of components for vaccines has been one of the areas that has contributed the most growth. Would it have been possible to grow without covid?
R. It has been possible. In the first quarter of 2022, life sciences grew by 10% without any contribution from covid. This is a very clear illustration of the strength of our core business. During the pandemic, covid has brought 50% of growth and our core business the other half. We have never depended exclusively on covid.
P. The covid is not over and you have said that at any moment we could have another pandemic…
R. At any time we can have new strains that are resistant to existing treatments. Vaccine manufacturers are investigating possible variants, they have already announced that by the end of this year there will be vaccines that may contemplate either multivariates or new variants that have already been identified. Do not lower your guard, this is the most important thing. Continue protecting ourselves and monitoring the evolution in the different countries and, at the same time, we have to keep moving and recover a certain dynamism that promotes the economy because we are at a time when the macroeconomic data are chilling, and also dealing with an increase in material and distribution costs.
P. How much have your costs increased? Are they or will they affect prices?
R. The increase is significant, in double digits, and greatly affects margins. In healthcare We are not going to pass on the increase. In life sciences, we have a very innovative offering and we haven’t fully compensated for it with our pricing policy, but we have mitigated the impact and in electronics it is more complicated for us, we are tightening our belts.
P. Pharmaceutical companies have been the most beloved companies during the covid for vaccines and also the most hated for the unequal distribution of these and for their great benefits. What do you think of this double reading?
R. The pharmaceutical sector has traditionally assumed that the value it contributed to society would be recognized and logically this is not true. For me there has not been a more illustrative moment of the value of this scientific and technological sector. That negative view seems tremendously unfair to me because companies have really initially scaled up our capacity to produce critical materials to manufacture biological products and vaccines at the same time. Bypassing that first stage, we have increased our ability to make lipids for mRNA vaccines dramatically rapidly. We have programmed all our investments to earn months and be able to supply. There has not been a demand problem with the vaccines. In fact, the supply was greater than the demand and an alert was launched so that no more vaccines were sent because they could no longer be managed. It is necessary to have a factual vision of the realities. I am willing to listen to the critical voices, which remind us that we have to raise the bar, and value our financial objectives, which are very legitimate. We must continue to improve the reputation of industries in general.
P. Is a strengthened health system coming out of covid or, as in Spain, have governments not taken the opportunity to strengthen public health?
R. There is a much higher awareness of infectious diseases that is going to prevail. The political environment is also being part of this dynamic change. From talking about investments in health we have moved on to talking about investments in defense very quickly. I trust that we do not forget that health infrastructures must be reinforced to avoid the consequences of possible global health crises such as the pandemic. The sensitivity is there. Funding has to accompany sensitivity.
P. How is the war in Ukraine affecting them?
R. I considered myself a covid CEO, but I never thought I would also be a war CEO. This has marked a tremendous turning point in something that we have assumed could not happen. Our business exposure in Ukraine and Russia is very small, but we have been very active in humanitarian aid to Ukraine and our employees in Russia (we don’t have any in Ukraine). We have donated 4 million euros. We have reoriented our activity in Russia to ensure compliance with sanctions. At first, we considered leaving, but we have decided that a responsible company like ours has to continue to supply critical medicines because patients continue to need us.
P. He has recently been to the Davos Forum. What do you think of the political polarization we are experiencing?
R. It is the great debate. Geopolitics is taking a brutal dimension in our management. It is time to unify criteria. The war has achieved something that was not seen for years: unite positions in Europe, which is a step forward; foster collaboration between Europe and the US, but the polarization between China and the US remains to be resolved. Another thing is what is happening with supply chains. During the pandemic we have seen limitations, fundamentally in the US, that are very alarming and that will guide our future reflection on continuing to expand our regional presence. It is essential to mitigate a possible future risk.