Dr. Pusey joined Omnicare in Oct 2009 from MDS Pharma Services, where he was able to turn around that business in his role as senior vice president and general manager of Global Clinical Development. Dr. Pusey was brought in to do the same for Omnicare CR. Revenues had been slipping in 2008-2009. In the past year however, they were able to turn things around and clear the balance sheets, clear out debt, and create assets for the company.
Dr. Pusey said, "I was approached by Omnicare because they've had troubles since 2008 and they needed someone to come in with a team and rethink how things should be done. We looked at the history of Omnicare CR, the client base, the market, and we came up with a strategic positioning that said, 'We've got excellent high tech individuals that need to be formed into specialized business units. We differentiated and did things in a different way during the last 18 months. We broke down the business into four units, so that we can better service clients.'"
By 2010 the parent company was under new leadership and the CR unit was encouraged to run independently. As a result, it became a strategic asset. According to Dr. Pusey, "About halfway through 2010 we were encouraged to run our balance sheet separate from Omnicare, Inc.'s to see what would happen financially. What we found is that we were cash cumulative, we had a large amount of cash relative to our working capital needs on a monthly basis, and we didn't have any debt. The reason for that is we are self-funding. For every contract, you receive cash upfront that can be anywhere from 5% to even 20% of the contract value. In the end, Omnicare, Inc. decided that it is a strategically different business. They run pharmacy distribution and warehouses, and deliver drugs."
He continued, "At that point, we looked at the options. One option would have been a strategic merger, but we didn't need to do that because we were differentiated and growing. We said, 'Let's see what private equity thinks.' We had three or four private equity companies competing; it wasn't the other way around. We ended up choosing Nautic because they have a long-term, very conservative reputation and have been involved in a number healthcare services."
Omnicare CR is now part of Nautic's $900,000 million fund, with half of that left to be invested. "We have sufficient firepower to make further investments," said Dr. Pusey. "Before we were not empowered. We did not have equity in Omnicare. We now have a significant level of equity involvement; 14 of our vice presidents have equity and are invested alongside Nautic."
With added support from Nautic, Omnicare CR has a plan to advance the company and grow its specialized business units including early phase, Phase II/III, late phase, medical device, technical services and pharmaceutics. Omnicare CR's growth plan entails adding personnel, making technology investments, strengthening its late-phase business, and continued geographic expansion.
"We have more than the two-year plan, said Dr. Pusey, we have a five-year strategic plan. We're making a talent investment and technology investments. The talent investment is the first thing. Right now we're in the process of recruiting about 60 full-time equivalents." With respect to technology, Dr. Pusey noted, "it had been difficult to get approval to keep up with technology. Now, the technology budgeting in our five-year strategic plan - not the two-year plan - is seven times higher than is was under Omnicare, Inc. That's a real number."
According to Dr. Pusey, there were some obstacles working under Omnicare, Inc., such as a lack of a merit system for employees, difficulty getting approval to keep up with technology, and inability to make fast decisions, all of which Dr. Pusey expects to overcome as a result of the acquisition.
"We are now empowered to grow the company and make faster decisions, along with a merit system to reward employees. Under Omnicare, Inc.'s prior leadership there were zero merit increases, which I immediately and aggressively addressed in 2010. Being independent, we put into place a global merit review and performance review program. This year for the first time, we formalized merit increases across the whole team. This is incredibly motivating for people. When you give people good project that may change medical practice, you want to provide benefits and incentives so people feel looked after," said Dr. Pusey.
Looking To Grow
Omnicare CR is recognized for its it early-phase leadership as well as its medical device unit, and technical services. It is not, however, associated with late-phase expertise, and the company is looking to change that. "Our most successful businesses are the early phase, first in-human, first-in-patient business, which is a fast-growing, specialized business unit. We also have a global, high tech medical device business unit that we run as a separate business within our organization; this is a fast-growing unit, too. In fact, it represents about 30% of our $160 million revenues. As with most things, being specialized actually makes you better and we've taken a different approach to our areas of expertise," said Dr. Pusey.
"With our smaller 'fledgling' late-phase unit, we are currently looking for senior business leaders to drive that part of the business. Don't get me wrong, we've got one of the largest late-phase diabetes trials running in Asia-Pacific at the moment, but we don't have a recognized leadership in the late-phase business," he noted.
The company is also looking to grow geographically. Its fastest growing areas are in Asia Pacific, and the company recently invested in facilities the far east, doubling the size of offices in Seoul, Korea and Bagalore, India. With the new merit program Dr. Pusey has implemented, Omnicare CR is better able to keep up in the talent pool market. He remarked, "There is a war for talent in the Asia-Pacific region. What we've been able to do under new leadership is to agree on much higher targets for overall increases that match the upward salary spiral in certain regions. For example, in China and India, where salary increases are 13% to 14% per year in China, and the increase for changing jobs is significantly higher at 25% to 30%, and in India, the wage spiral is even higher at 17% to 20% per year."
It was evident in speaking with Dr. Pusey that he is looking forward to leading the company's growth initiative and the freedom its new independence brings to Omnicare CR.
Kristin Brooks is associate editor at Contract Pharma. She can be reached at firstname.lastname@example.org.