4 Essential Elements for Building a Multi-Billion Dollar Business
Entrepreneurs are forever being told how unlikely they are to build a multi-billion dollar business, fed statistics about the number of new companies that fail during their formative years of business. It doesn’t do any harm to have a reality check every now and again, but sometimes it pays to dream big.
There are plenty of stories out there to act as inspiration. Take Do Won Chang, founder of U.S. fashion brand Forever 21, who was forced to work three jobs when he first arrived in America in 1981. He and his wife opened their first clothing store in 1984; the Forever 21 brand now generates around $4 billion in sales a year.
Or there’s the well-known story of Oprah Winfrey, who famously ran away from her toxic family home at age 13, only to turn her life around. According to Forbes, she is now worth more than $3 billion.
Another inspirational business story is that of Robert Wessman, chairman and CEO of global pharma firm Alvogen. The financial crisis of 2008 cost him $250 million, leaving him with little in the way of savings to start his new project: Alvogen. He used the last of those savings to secure a product portfolio of generic drugs under development, and success depended on investors buying into his vision. Less than 10 years later, Alvogen has an estimated valuation of $5 billion.
Here, Wessman gives four essential elements for building a multi-billion dollar business, culled from his own experience.
1. Believe in the idea.
Sometimes a good idea can appear crazy when it’s first made public. That’s what Wessman was told when he announced to some close friends that he was going to try and sell his business idea to investors.
“At this point, no one was waiting for another startup company in the pharma industry,” he explains. “Industry colleagues looked at me as if I were mad.”
Thankfully, his investors had more faith in him.
Discussing the project at a restaurant in New York in June 2009, to illustrate his idea, Wessman grabbed the nearest writing material he had available to him: a paper napkin. After a series of scribbles, which included a strategy built around the “best-in-class business development” and the “best people, portfolio and team,” investors were in.
2. Invest in the best people.
Wessman always believed in his idea–but he knew he’d need great people on board to make it a success. His vision meant taking a 125-year-old manufacturing plant, owned by Norwich Pharmaceuticals, in New York, and using it as a platform for own-pipeline entry in the U.S. market. At the same time, he wanted to expand into emerging markets in APAC and CEE regions.
“The Alvogen project was bold because the Norwich contract manufacturing facility needed a $50 million upgrade to manufacture our portfolio,” he explains. “Plus, a consolidation in the pharma industry meant the largest 10 players controlled over 50 percent of world sales.”
While Norwich shareholders agreed to fund the $50 million upgrade and provide future support, the future was anything but certain.
Wessman’s first move was to get the “best people” like he promised investors he would do. He sought out a number of key former colleagues who quickly got on board the “exciting” new project. The small but experienced team set about making a name for Alvogen in the industry, “gobbling up” every product license available to them.
By the end of 2009, Alvogen had secured 50 products in its new portfolio. This prompted a recruitment drive, with Wessman and his team coming up with a strategy, targeted to specific products and markets, which they believed would set the company apart from existing market leaders.
3. Build a global culture.
To attract and retain the “best people,” companies need to build a culture that employees can thrive in and do their best work.
Wessman and his team put great effort into cultivating its “purpose-driven culture,” noting how “culture forms with or without you,” therefore organizations can’t afford to be anything but hands-on in shaping it.
“Our culture means that we operate as one company in 35 countries, rather than like 35 separate companies who happen to share the Alvogen name,” Wessman explains.
“Company culture should unite, inspire and guide decision making to enable your team to work as one towards future goals. That means you have to be prepared to continuously cultivate it, ensuring that it doesn’t become something you don’t want it to be.”
4. Grow internally while acquiring other companies.
In today’s climate, to scale and achieve high growth rates organically is rare. A rapid-growth strategy requires an organization to ramp up existing teams while acquiring mature companies to bring in new expertise and expand product offerings.
Wessman has long been an advocate of this approach. Within 12 months of Alvogen having been born, it had operations in 35 countries throughout its target regions, with growth in each region built around tactical acquisitions and quick market entry.
As a result, the company grew quickly. “We have 350 pharmaceutical products in markets around the globe, including a few of the biggest selling biosimilar drugs in Central and Eastern Europe,” he highlights.
He adds: “We now employ around 2,800 people, while our sister company, Alvotech, which I founded in 2013, has seven monoclonal antibodies in its biosimilar pipeline, which are expected to be launched after 2019.”
Alvogen is now a multi-billion dollar company that is primed for further growth. It’s some feat for a pharma company, considering how heavily regulated and contingent on the United States’ Food and Drug Administration the industry is.