Disrupting from Within: Allergan’s Digital Journey

The pharmaceutical industry is undergoing wholesale change, beset by challenges that show no signs of letting up: takeovers and acquisitions, the constant pressure to innovate, and heavy regulation.

In the arc of his career in the industry, Brent Saunders has not shied away from tackling major challenges head on. He has made bold moves at the helm of some of the world’s major consumer and pharmaceutical companies. In the past decade, his deal-making acumen resulted in his being named CEO of Actavis Generics. After Actavis took over Allergan, he became CEO of the newly formed company.

These days, Saunders spends his time just as preoccupied with transforming Allergan from the inside out as dealing with the external forces that are reshaping the industry.

He recently sat down with Christine Barton, a BCG senior partner who has a wealth of experience in consumer products.

Brent, thanks for talking with us again today. What got you thinking that you might need to change your traditional business model, which had been based on relationships with doctors, and include more conversations directly with consumers?

It was a combination of two facts. First, the penetration of medical aesthetics: we have been at roughly 10% penetration of the addressable market for several years. Second, the fastest-growing customer segment is the millennial.

The medical-aesthetic provider is still the absolute centerpiece of how we think about this business, but if we can expand the market by talking directly to the millennial or to the consumer, boy, maybe we can change the whole dynamic and make that penetration rate go from 10 to 12 or 12 to 15 and ultimately get to where we should be, which is somewhere in the 20s.

I’m wondering whether there was a particular moment when you thought, We need to do something truly new.

I’ve always been a fan of looking at how market leaders get disrupted. I was the CEO of Bausch + Lomb, so I lived and worked in Rochester, New York, for a while. I was there to watch the classic example: Kodak missing digital. It’s fresh in my mind all the time. As a leader in medical aesthetics, I said to our team, How would someone disrupt us? Let’s all get together, take a couple of days off, and really brainstorm. If we were going to disrupt ourselves, how would we do it?

A lot of ideas came from that, but probably the most important was digital transformation. We said, All right, let’s try to disrupt our own business ourselves. Let’s set up a new group and use that group to disrupt our existing group. And then we’ll bring both groups together to be collaborators and colleagues.

What has been your personal role in the digital transformation?

I think a CEO has to lead by example. Regardless of the type of initiative you’re undertaking. I believe it’s my responsibility to educate myself. To understand how these tools work—the benefits, the risks, the opportunities.

What is the role of digital in your overall strategy?

We’re using the digitization of our medical aesthetics as a learning laboratory for our other businesses. As we get smarter and stronger and build our capabilities and our talent, we’ll be able to apply advances across all of Allergan.

In what other ways are your digital endeavors different from what other pharma companies may be doing?

We sourced amazing talent from outside the biopharmaceutical industry. We got people who had been in digital startups and digital retail businesses and had worked in very consumer-oriented brands. We got digital engineers. And data engineers.

We put them in their own offices in their own cities, and we asked them to come up with these disruptive platforms.

What results has your digital strategy achieved so far?

What we’re seeing is that when we speak to our customers directly through digital platforms, they respond. They react. They want to look for information about treatments, our products, and the providers on these platforms. It’s almost like, if we weren’t there, we wouldn’t be at the party.