The current biopharma clinical pipeline is substantial: The number of drugs in development increased from 3,200 in 2012 to 6,100 in 2022, but R&D productivity remains low. The United States is averaging 43 novel drug approvals per year, with the cost of developing a single novel asset estimated to be up to $2.8 billion.1 Finding success in this environment can be challenging.
McKinsey Senior Partner Jan Ascher sat down with Elcin Barker Ergun, CEO of Menarini Group, to discuss her approach to innovation and leadership at the pharmaceutical company. Menarini’s revenues have grown steadily the past several years from about €3.7 billion in 2020, Ergun’s first year with the company, to €4.4 billion in 2024, despite two major patent expirations that wiped out 10 percent of the group’s 2022–24 revenues.2 The group’s oncology business has struck five deals and launched three products in five years, including a novel breast cancer therapy and the first FDA-approved therapy for blastic plasmacytoid dendritic cell neoplasm, a rare but aggressive hematologic malignancy.
The following conversation explores how Ergun has spearheaded change, what she thinks it will take to unlock more innovation productivity in the industry, and her advice for young leaders looking to make an impact.
Jan Ascher: Within just five years at Menarini Group, you built a global innovative oncology business. How did you do it?
Elcin Barker Ergun: When I came to Menarini in 2019, the board had very clear priorities. The first was entering the United States. Our products are sold in 140 countries, and we are directly present in 70 countries. We were in the US with a small diagnostics division but not in pharma. The second was to enter oncology. The third was to add a strong innovation pillar to the company. We were and are very successful as a primary-care and specialty-care company, mainly through branded generics, and the board wanted to maintain that strength and add an innovation-based arm prioritizing oncology.
As a midsize pharma company, I did not think a typical big pharma R&D model would be the right way to achieve these goals. Just before joining Menarini, I was in an R&D role in the Boston biopharma innovation ecosystem, so I suggested to the board that we pursue a biotech model. And with that, we went for the Stemline Therapeutics acquisition. In January 2020, I met the Stemline leadership team at the J.P. Morgan Healthcare Conference, and in March, we made a bid. We pursued this transaction all the way through the COVID-19 lockdown, when the whole world stood still. Nobody was pursuing M&A; it was a hugely risky period. We couldn’t even do the normal due diligence—going to the premises, meeting with people. It was a completely virtual transaction, all based on trust.
Stemline was a small, 100-person company, but it created the perfect infrastructure for us. They were focused on hematology and had one orphan drug in the market for a rare blood cancer. Of course, with one orphan drug in a very niche area, we could not become an oncology company. We also needed assets targeting broader indications. This is when I proposed to the board to get the global licensing rights for a breast cancer drug. There was concern about how to succeed in an area where there were so many established top players, but eventually we made the deal. Out of all the trials going on, ours was the only one that was also targeting a certain mutation, which occurs in up to 50 percent of metastatic-breast-cancer patients. We believed the highest chance of success was actually the mutation setting, and this is exactly what happened. If it hadn’t succeeded, I would of course have been accountable for making that call.
In the end, we brought the first endocrine innovation in 20 years for a very important resistance in breast cancer, making that mutation druggable. We created a launch team from scratch, recruiting more than 200 people, and we launched the drug in 2023 in the US. It was the second-best launch in the US market that year of all products. So it was a very successful entry into oncology innovation and the US.
Jan Ascher: I think it’s fair to call Menarini a challenger in the innovative pharma space—you’re going into markets occupied by major incumbents, the largest oncology players. What’s the key to finding success in this approach?
Elcin Barker Ergun: The advantage of the model that we created is being nimble. We make fast decisions with much more accountability. We’ve replicated the biotech model of focusing on the success of a few assets. Also, our assets don’t always have the same peak-revenue expectations as bigger companies, which by definition aim much higher for peak sales based on their size, the next stage of growth they look to achieve, and the returns expected by their investors.
When I joined Menarini, we quickly reorganized how we approach business development, in terms of key new deals for our core specialty-care business as well as for oncology. For oncology, about three years ago, we finished some late-stage deals—because you need a few assets that are going to bring results fast—but then we also started looking at early deals to build the pipeline. The team brought some opportunities for cell and gene therapy and radioligands because at that time, many of these very exciting platforms were surfacing. I said to the team, “This is not for us.” To be successful, you have to know what you can do, but you also have to be disciplined and know what you cannot do. Cell and gene therapies and radioligands are showing the first signs of success and will be much more established in the future. But the complexity and the investment—the road to get there—was not in our bandwidth. Our focus is what allowed us to bring some strong small molecules, as well as certain biologics, into Menarini and the market.
Jan Ascher: You run what one could call a search-and-develop innovation model at Menarini with no in-house discovery. What makes this model successful, and what are some of the caveats around it?
Elcin Barker Ergun: Again, focus, focus, focus. Discovery can be very rewarding, but traditionally, it’s the longest and riskiest space. Some companies have really good discovery capabilities, but our company has everything after discovery, including preclinical, translational medicine, and clinical development.
We are a midsize company, so we have to compensate for that by doing deals with companies that we believe are strong in discovery. To find those, you have to have people who really understand good science. We have scientists looking into these deals and constantly watching for the next innovation.
Menarini Stemline is a cancer-dedicated company with a passion for having an impact on treatment paradigms and improving patients’ lives. We will bring only transformational products to patients.
Jan Ascher: I could not agree with you more. A target portfolio is so critical in innovation or else a company could end up just following their science, losing track of what’s happening in the full scientific ecosystem and what the company needs to succeed.
Elcin Barker Ergun: Absolutely.
Jan Ascher: Pivoting to the industry at large: This is a risky game, right? In pharmaceutical R&D, there are failures. And as you’ve seen, productivity in the industry has remained flat for the past several years. What will it take to reaccelerate global pharma innovation productivity and value creation in the industry?
Elcin Barker Ergun: We are in a renaissance in terms of the innovation capability of the industry. This will further accelerate, given that gen AI is finally being applied to drug discovery, cutting ten to 15 years of discovery down to a couple of years. So in the coming years, expect an explosion of new drugs tackling many previously unconquered disease areas—if the right conditions are present for the industry.
That said, we have yet to be able to convince governments that we’re a strategic industry. We are in a vicious cycle of pricing and intellectual property pressure. On the one hand, we absolutely need to increase agility and productivity in the industry’s R&D model. On the other hand, pharma needs to be viewed with a bigger lens, taking into account the enormous positive effect on human health our industry has enabled over the past 20 years. And if you consider overall health security, not forgetting the COVID-19 period and economic value generation from our sector, we have a lot to offer—if a higher percent of GDP is consistently allocated to healthcare, at least across developed nations.
Jan Ascher: As you say, the industry needs a better narrative and to better explain its societal value. I sometimes wonder whether the industry also needs to adjust what it innovates in. There are many unmet medical needs that may be expensive, complicated, and difficult to tackle, but doing so could have a real effect on society. What’s your perspective on this?
Elcin Barker Ergun: I agree with you, but there is also a dilemma here. In the orphan disease area, the industry has been very successful at launching many new products for these rare diseases in the past ten years—after the right incentives for the industry were established. This is a win–win.
However, very few companies invest in areas where such market conditions are not present, such as in AMR [antimicrobial resistance] anti-infectives, where prices are the same as any other antibiotic. We entered the AMR anti-infectives area some time ago and created a portfolio of products. We licensed products from a few mainly US biotechs that developed these AMR antibiotics. Unfortunately, most of these biotechs went bankrupt because there is no real incentive to commercialize products that serve a limited population. Despite that, for this population, it is a matter of life and death.
So if the market forces are in place, the industry will find transformative therapies for patients. Without them, everyone loses—most important, patients, who could end up in a position of surviving cancer and then succumbing to infection in hospital wards.
Jan Ascher: What advice do you have for young, ambitious women leaders who want to contribute to the pharma industry?
Elcin Barker Ergun: There are very few women leaders at CEO level in big pharma, so women in the industry may face certain difficulties or biases on the way to the top. At the same time, I have never felt myself to be different than any man.
Education is hugely important in terms of creating the same opportunities for everyone and inspiring women to get into different areas—for example, I started as a computer engineer. I have always been agile and had a huge appetite to learn. I love the opportunity. But if people had not opened doors for me and given me stretch assignments, then I wouldn’t be where I am today. So I encourage young leaders to seek and accept help from people—the right people who are really going to act on their behalf. That might be other women or it might not. But it’s all about finding sponsors and making the most of opportunities. I believe it’s a duty for women in my position to provide mentorship and to nurture more women, which I do enthusiastically.
Another thing I always say to women colleagues and leaders is to not overdo it. Insecurity can make young women leaders do too much. It’s important to deliver, absolutely, but it’s just as important to build relationships and have the right attitude. And if you really want to advance in your career, you have to have strong self-awareness and understand what could derail you.
In the end, it’s not a woman’s journey or a man’s journey. It’s a leadership journey. Past success does not guarantee future success in a new environment or new opportunity. If you move from commercial to R&D or become a CEO, that’s a completely different context with a different kind of stakeholder management, requiring different skills. So you always need to be prepared to bring the next best version of yourself.
Jan Ascher: What are you most grateful for in your career?
Elcin Barker Ergun: When you are in commercial for a long time, especially at the level of a chief commercial officer as I was, people don’t usually make a move to R&D. But I did, taking an external innovation role in R&D. It was possibly the most important move I’ve made in my career. Our industry today is hugely innovation-driven, and rightly so. Of course you have to be commercially strong, but a company’s success hinges on its ability to bring truly differentiated innovation. So taking that external innovation role in R&D was a crucial stepping stone to becoming a CEO, where I’ve had the opportunity to drive the company on the most critical success pillar, particularly in our case where the ambition was to build an innovation-led oncology arm almost from scratch.
This role is so gratifying because I have the power and resources to unlock innovation and bring transformational therapies to not only make our company succeed but also help patients.
I always say to my daughter: There is adversity, but there are also so many good people. You have to start your day thinking about doing great work with good people and not let obstacles get in your way. The possibilities are endless.
