Agile leadership in the pharmaceutical industry: Insights from AmerisourceBergen’s Executive Vice President Robert Mauch

In this podcast, Heidrick & Struggles’ Rich Rosen speaks with Robert Mauch, executive vice president and business group president of AmerisourceBergen Corporation, an American drug wholesale company that provides drug distribution and related services. Mauch shares his experiences in leading AmerisourceBergen through the COVID-19 crisis by focusing on purpose-driven change management. He also shares his perspectives on corporate diversity and inclusion as well as the public perception of the pharmaceutical industry and innovations within the healthcare sector.

• (1:02) Where was AmerisourceBergen at the beginning of the COVID-19 crisis, and where is it now?
• (7:07) How have recent nationwide conversations around systemic racism challenged the company culture, and how has the culture been able to adapt and embrace diversity and inclusion even more fully?
• (11:45) When you think about your career, are there any pivotal points where you began to develop your agility?
• (14:00) How has the public perception of the pharmaceutical industry shifted, and what has that meant overall and also to AmerisourceBergen?
• (17:54) Behind innovation is the complexity of distribution and the supply chain that AmerisourceBergen really enables and built. How did you keep that running during the crisis?

Below is a full transcript of the episode, which has been edited for clarity.

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Rich Rosen: Hi, I’m Rich Rosen, partner at Heidrick & Struggles and a member of Heidrick Consulting. In today’s podcast, I’m speaking to Robert (Bob) Mauch, executive vice president and business group president of AmerisourceBergen Corporation, an American drug wholesale company that provides drug distribution and related services and is ranked number 10 on the Fortune 500 list. Bob, welcome, and thank you for taking the time to speak with us today.

Bob Mauch: Thanks Rich. I’m happy to be here, and I look forward to having a good conversation with you.

Rich Rosen: Bob, can you start by talking about AmerisourceBergen’s journey through the COVID-19 crisis? Where was the company at the beginning of the crisis, and where is it now?

Bob Mauch: Yes, happy to. Just a little context: AmerisourceBergen is critical within the healthcare supply chain, and we provide daily access to pharmaceuticals for about 30% of the entire market in the United States and, in some areas, for example, community oncology clinics, where it’s actually more than 50%. We take what we do very seriously, and providers and patients count on us in a significant way.

So, as the COVID-19 pandemic hit, it was really important we didn’t have any missteps. And, in hindsight, I can say we’ve done pretty well. There are some real reasons for our success that I can share, and it really starts with our purpose at AmerisourceBergen. We’re definitely a purpose-driven organization, and our purpose is that we’re united in our responsibility to create healthier futures.

If you think about being responsible for creating healthier futures amid the COVID-19 pandemic, it really created some clarity for us in terms of what we needed to do, and immediately we knew that we needed to do two things. One was to protect our associates—that’s the right thing to do, obviously. We also needed to protect our associates because we needed to protect the integrity of the supply chain for pharmaceuticals and make sure we could continue to provide our services while healthcare itself was being disrupted in many different ways. We were able to use our purpose as a guide. We focused on our frontline workers, we focused on making sure our associates were safe, and we’ve been able to continue doing that since mid-March, when everyone who could work remotely or work from home did so, and those who are on the front lines of AmerisourceBergen, primarily those who are in our distribution centers, were able to continue doing their work.

Rich Rosen: Are there any specific things you can talk about in terms of getting operations online and approaching the leadership?

Bob Mauch: One practical point—and this was a big learning experience for me, personally—was taking 13,000 or so people who are used to working in an office environment and transitioning them to a remote environment or a work-from-home environment. There’s a people side to change management, and I was confident that because of our culture, it was going to go well. We’re committed to patients and we’re committed to creating healthier futures, so I knew people would be committed and engaged.

What was a good surprise and a good learning experience was that the technology really stood the test of a rapid transition. We’ve—like many companies—been through a technology journey over the last several years, updating our systems and becoming more digitally enabled. And, as an executive in any company, large or small, making those types of investments, you’re expecting longer-term payoffs. Sometimes you don’t know exactly what they’ll be, but you know your company needs to be state of the art, and in this case, one of the big lessons or reminders for me was that those technology investments that we made that didn’t have an obvious, immediate short-term payoff were critical as we all went to a work-from-home environment. And again, with the investments that we make in our culture and our people, I knew that that part would stand up well, but the technology investments and the commitment to that transition on an ongoing basis was really reinforced through this process.

Rich Rosen: What have been some of the challenges for you as one of the key leaders at AmerisourceBergen?

Bob Mauch: I think the biggest challenge that I’ve had is, with the change in our working rhythm and working environment, the connectivity to our associates. We do have a very strong culture, and seeing people in the office, staying connected to them both professionally and personally, is part of what allows us to drive the business forward. Many times, we’re able to have quick conversations in the hallway or pop into someone’s office or someone pops into your office. You have a five-minute conversation, you come to a decision, and then you can move on. While I think there’s universal praise out there for how well the technology has advanced, what has gotten lost and has gotten harder in the remote environment are the more informal conversations. So, on the solutions side of that, what I’ve done—and again, did from the very beginning in March—is to make sure that I have scheduled time with people beyond my direct reports, whether that’s virtual or on the phone or in the office. But for the informal conversations, the people who I would tend to count on for information or guidance or quick, shared decision making, I reached out to almost immediately and set up short video conferences or phone calls with them to make sure we stay connected. It’s a bit more forced, a little less organic, but it was really important to keep those connections. So, that’s one way I worked around that challenge, and I continue to do that today, several months into the pandemic.

Rich Rosen: I know AmerisourceBergen has a strong diversity and inclusion process and support system. As conversations about social justice and institutional systemic racism were amplified by the Black Lives Matter movement, how has that become part of your journey? How did that challenge the company culture, or how was the culture able to adapt and embrace diversity and inclusion even more fully?

Bob Mauch: We talked a lot about leadership during the pandemic, and I’ve talked a lot about culture, and certainly the systemic racism and social inequities that have been very publicly exposed are a big part of what we’re focused on and what we’re working on.

I talked about our strong, purpose-driven culture and our responsibility to create healthier futures. And that includes our associates, it includes all of our stakeholders, but it also includes the communities that we work in and the communities that we serve. It was a wake-up call for a lot of people individually, a lot of leaders individually. I’ll speak for myself first and then for AmerisourceBergen. I have a real comfort in being an ally, always being an ally to our African American colleagues, but it really got my attention that the narrative being communicated on social media and other places was basically that being an ally is not enough. You have to be an ally, but you also have to take action; you have to do something to make things better. So, that’s how I’ve personally tried to react, and I’m proud to say it’s how AmerisourceBergen has as well.

Very publicly within the organization, Steve Collis, our CEO, quickly put out a communication to the organization talking about how we would not tolerate racism of any kind at AmerisourceBergen—which is obvious—but also that we were committed to taking action. I did a video along those same lines for the associate base, and since then, we’ve been in active conversations, listening sessions, tactics building, and strategy building along with our African American colleagues to deliver on the commitment that we made, which is to do something about racism.

We haven’t figured that out yet, frankly. We don’t have all the answers, but we’ve been through a very deliberate, open, and honest process in which everyone has committed to get uncomfortable—to have uncomfortable conversations. In that way, we learn, we get the perspective of diversity, that diversity of experiences, diversity of thought, to help us get to the right decisions.

On diversity and inclusion in general, we do have a commitment, we do have a process and a program, but I think it’s also been accelerated, forcing us to be more specific about what our goals and objectives are. I’ll close with an example of a conversation that I was able to listen to and participate in. Back in February, I was at a conference, and Mellody Hobson was one of the speakers. Mellody Hobson is a well-known Black executive in the United States. She’s on the board of Starbucks and JP Morgan and other corporations. In the panel discussion, she was asked why it is that we haven’t made more progress with diversity at the highest levels, and she had a simple and accurate response (from my perspective): it’s that diversity and inclusion is the only thing executives get credit for by saying we’re trying, we’re trying hard, and we have a process. In no other part of our business does just trying count. You have to have specific goals, they have to be measurable, and you have to meet them. But, unfortunately, with diversity and inclusion, we’re still in a position where trying hard counts.

Rich Rosen: You’re quite an agile leader in terms of what you’ve been able to adapt to. When you think about your career, are there any pivotal points where you began to develop that ability to be able to see things differently?

Bob Mauch: I’m a pharmacist, so I went to pharmacy school and got a Doctor of Pharmacy degree, and after that I got a PhD that was focused on health economics with an emphasis on the cost-effectiveness of pharmaceuticals. Right after school is when I started the company that AmerisourceBergen acquired in 2007, Xcenda. In terms of leadership agility, I was 27 years old at that time, so you learn how to adapt quickly or you fail, frankly.

If you’re in a small business and you’re trying to grow a business, agility is not a skill; agility is just a fact of life. And as a business is growing and as the market is changing, you have no choice but to be strategically agile, in terms of your associate employees, development strategy, your financial strategy—all of that has to be agile and fluid. I think that’s a part of the very earliest parts of my career, that agility is just how it works. Secondly, that business was a consulting business. What we did is we worked with clients to solve problems and develop strategies and do sophisticated analytics around the value proposition of pharmaceuticals in the marketplace. You can’t be a good consultant if you’re not agile. You’ve got to be able to adapt to the clients’ needs, you’ve got to be able to adapt to the changes throughout an engagement, and if you do that well, you’re going to get to a good outcome. At this point in my career, agility is core to how I operate, but I think it goes back to the very beginnings, and it has served me well throughout my career in healthcare and in pharmaceuticals, which are incredibly dynamic. That agility is very important right now.

Rich Rosen: You’ve had a 30-plus-year career in the pharmaceutical environment and enterprise. They are center stage right now with the COVID-19 fight, and, as a positive consequence, the whole pharmaceutical industry has seen positive growth in the stock market and in a new burst of innovation. How has the public perception of the industry shifted, and what has that meant overall and also to AmerisourceBergen?

Bob Mauch: It has really created an opportunity to remind multiple stakeholders of the amazing innovation that happens. Vaccines and COVID-19 treatments beginning to emerge are good examples of life-changing and lifesaving treatments that come out of the pharmaceutical industry every day and have for the last 50 years or so.

I answer it that way, Rich, because I’m really not sure that public perception has changed. I think it’s helped because the challenge that the pharmaceutical industry has is associated with that level of innovation. To put COVID-19 aside for a minute, the tremendous innovation that comes out of the pharmaceutical industry is also associated with a perceived and real high cost of innovative products, and that hasn’t changed. As we look forward to the presidential election and congressional elections, there is bipartisan support, driven by public demand, that work needs to be done on the cost of pharmaceuticals for the public in the United States.

I think the COVID-19 pandemic has allowed a new channel for the narrative. Again, I think it’s a good opportunity to remind stakeholders, whether that’s the consumer or a healthcare provider or a government payer or a commercial payer, of the innovation and the amazing science that goes on within the industry. At the same time, we do have a very real challenge with patients not being able to afford their medication, and I’ll add to that the fact that pharmaceuticals are about 12% of overall healthcare costs. They’ve been around 10%, plus or minus, for decades. That’s not changing dramatically, even with the level of innovation and the most cost-effective medical interventions.

The second piece around the cost of pharmaceuticals is the patient’s out-of-pocket costs, and for an individual patient—and this changes depending on what kind of reimbursement or insurance they have—in almost every case, the out-of-pocket cost for pharmaceuticals as a percentage of the total is double what that would be for medical care. You hear of people not being able to afford their medications, but you generally don’t hear of people not being able to afford a surgery or something like that. And it’s not because surgeries are less—in fact, they’re more—it’s because the insurance scheme, the reimbursement program, covers more of medical expenses than it does of pharmaceutical expenses. So, there’s a solution in that somewhere, in making sure that there’s a balance of the out-of-pocket cost for pharmaceuticals as we go forward.

But to your question, Rich, that’s maybe a little off topic, but I do think it’s important. I think it’s important in the overall narrative. But certainly, the COVID-19 pandemic has been a great opportunity to remind the public and other stakeholders of the innovation that occurs within the pharmaceutical industry.

Rich Rosen: Behind all that is the complexity of distribution and the supply chain that AmerisourceBergen really enables and built. How did you keep that running during the crisis?

Bob Mauch: It has been impacted, certainly. We just spent some time talking about the innovation within the pharmaceutical industry, and I would say that in the pharmaceutical distributors in general as well as at AmerisourceBergen specifically, there’s a layer of innovation within that industry that’s a part of the overall pharmaceutical supply chain that is also really being highlighted right now. We have very sophisticated automated warehouses that have the ability for orders to come in in the evening and be delivered anywhere in the United States the next morning. We have systems and automation and people, teams of people that we’re able to flex to volume increases that were nearly 50% above normal in mid- to late-March. You can remember when it was hard to find paper towels and other kinds of household goods because people were hoarding. Well, the very same thing happened in medical care. As it became clear to everyone and to healthcare providers in particular that this pandemic was going to have a big impact, they began buying pharmaceuticals ahead of the demand. So, we had significant volume increases at the end of March, and those investments and the technology and the amazing teams of people we have were able to withstand that volume. Literally, I would say that everyone who needed a medication that was available got those medications through the distribution portion of the supply chain.

It’s another example of being able to demonstrate the value and efficiency of our industry, even with the spikes of infections that we’re having in certain parts of the country (and I would say we’re going to continue to have them). I think the healthcare system has learned that we’re going to have to figure out a way to continue to provide care to patients while there are spikes going on. I think the providers, the hospitals, are getting better at that, so we’re seeing demand is more steady, even with the spikes that we’re seeing.

Rich Rosen: Any last thoughts on looking forward?

Bob Mauch: You hit on an important theme. We’re in the middle of a pandemic; healthcare and access to healthcare is critical, as is the ability of the healthcare system to withstand demand surges, whether that’s caused by a pandemic or something else. I think it’s been made clear that we have to be prepared and, in some cases, be better prepared for the future. So, as a leader in the industry and as a leader at AmerisourceBergen, I’d like to just share that we as an industry and we at AmerisourceBergen are focused on doing as well as we have through this pandemic, but are also learning from it and working to be even more prepared should something arise in the future.

Rich Rosen: Thanks for taking the time to speak with us today.

Bob Mauch: Thank you, Rich.

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