Wolfgang Wienand, Chief Executive Officer
How do you rate the 2019 financial year?
That’s a question which, for me, embraces rational and emotional elements. Concerning the latter, it’s certainly of significance that it was my first year in the role of CEO. During my tour of all Siegfried sites at the start of 2019, I outlined my CEO agenda and had many enlightening conversations in my contact with many employees in all corporate areas and at all levels. Regardless of whether a conversation partner seemed satisfied or made critical comments, the basic tenor always reflected pragmatic optimism, a sense of belonging and a connection echoing: “this is my company”. I sensed that our employees are ready for a next successful chapter in our long corporate history.
Rationally, in terms of hard facts, we have jointly achieved a great deal in the first year of working together. Obviously, there is a lot more that needs to be achieved. By means of investments we improved our technological skills, tied closer connections among the sites, and continued to strengthen our network. We extended our training and continued-education activities and pooled them in our newly established “Siegfried Academy”. The expertise and the capabilities existing in our team are decisive when it comes to the quality and success of our work. Moreover, there were numerous individual efforts and accomplishments at all of our nine sites which, together, resulted in recognizable and profitable growth for 2019.
Concerning the emotional aspects, how will they influence the next chapter?
We shouldn’t forget that while Siegfried Group will soon celebrate its 150th anniversary, our current corporate setup and the way we work together started only four years ago. We’ve successfully left behind the first phase of finding our way along an uncertain path, but the kind of continuous growth we showed in 2019 and which we aim for in the future involves continuous change and transformation. In order to cope with such a phase of progress, a company needs clear parameters that provide security and also point in the direction to be taken in the future. At Siegfried, our five ambitious and demanding corporate values, namely Excellence, Passion, Integrity, Quality and Sustainability, represent these parameters. My management team and I jointly identified and defined these values, and on which I based my CEO agenda. I was very pleased to receive broad approval and positive feedback from many colleagues at our different sites, which reinforced my view that this company not only enjoys great potential but also has the necessary mentality to transform its potential step by step into tangible success, and in 2019 we succeeded in taking such a step.
In your messages to employees and in media contacts you often not only mention the strongest team but also the most competitive network as being key components of your vision for Siegfried. Why is this so important for you?
True. While the team concept is, of course, underpinned by sport and dynamics – we in competition with other leading CDMOs – it also encourages emotional wellbeing and the solidarity experienced in “Team Siegfried”. My aim is that we work together well in an environment based on trust and with joy, supporting each other to our mutual benefit and to that of our customers.
Concerning the network issue, I’d like to first tell you something about drug substances. Each drug substance that we produce has its individual production process. Hardly any process matches another. Some require large capacity, others less, some drug substances require special technologies and skills that are not available at all production sites to the same extent. That is why bottlenecks occur frequently which cannot be resolved by one site alone or only with great effort. In a network of sites that cooperate and are complementary in terms of technology and capacity, better solutions can often be found and implemented at minimal cost. If we produce the individual stages of a process at the most suitable site, the result will always be superior in terms of feasibility and cost. At the same time, we will utilize our plant more evenly and avoid inefficiencies caused by bottlenecks or less suitable setups. In terms of new products, we not only consider where they can be produced most favorably but also look for better solutions in the network for the production of existing products, some of which have been produced at a site for years, and we will transfer them if the benefit is sufficiently evident. While the initial cost of such tech-transfers is considerable, our cross-site teams are consistently achieving better results. In 2019 we transferred more products within our network than ever before. This helps us free up capacity to handle more business or acquire new orders. Organic growth to the extent that we have shown in 2019 would otherwise not have been possible.
In how far is this true for the pharmaceutical part of Siegfried’s business, namely Drug Products?
Exchange among our three drug-product sites is currently still playing a secondary role. These sites enable us to cover the entire value chain concerning pharmaceutical production for our customers. In other words, we can supply chemistry and pharmaceuticals, from a simple chemical raw material to complex intermediates and from pharmaceutical drug substances to finished dosage forms fully packaged including package insert. Our customers appreciate this service even though the market is not quite ready in all countries to obtain everything from a single source, so, as a result, that part of our business in which we truly supply the entire added value for an individual product remains manageable. However, the advantages of pooling production in one hand are given. Therefore, I am convinced that this business model will gain significance in the future and give us a competitive edge. Siegfried has laid the ground and is ready to deal with growing demand.
In addition to strengthening the network, you invested heavily.
Correct, we don’t only invest in routine maintenance and replacement of existing facilities, but also in our technological competences within the parameters of the “Evolve” Strategy. I’m thinking of the construction of a micronization plant for chemical drug substances at our Evionnaz site and the new R&D laboratories in Hameln. In the future, they will allow us to offer services for biologically produced drug substances in addition to formulation development for smaller molecules. Moreover, in Zofingen we are currently building an additional multi-purpose plant in our drug substance operation in Building 425, which includes a rare hydration-technology installation that will supplement and further differentiate our technological offer.
You mentioned that Siegfried had grown steadily in recent years, last year even faster and at the upper end of general market growth, although there was no acquisition. Why not?
At the start of my time as CEO I said: the basis for sustainable success will be our ability to manage existing business as efficiently and successfully as possible and deliver stable organic growth. Although this alone is a challenging task, I expressed my opinion that this would not be sufficient. There are major opportunities for Siegfried beyond our daily business – in terms of acquiring other companies, sites, businesses and technologies. The ambition to grow by means of mergers & acquisitions is based on the recognition that in our business, corporate size can represent competitive advantage. While we can certainly afford to make acquisitions, our shareholders may rest assured that our acquisitions will be made with a cool head. In such a scenario, impatience is a poor adviser. We keep in mind our long-term goals and sustainable success and we, therefore, know that a potential acquisition must be a perfect fit. All our acquisitions since 2012 – which I was responsible for myself as Head Strategy and M&A – have been successful. As an integral part of Siegfried, they all developed very positively, and today they represent a cornerstone of our success. As always, we keep our eyes open in a proactive way, and we shall not hesitate to acquire a company or a business that will take our network forward and create value for our shareholders.
What are your goals for the current year?
In 2019, each one of us worked hard, and we delivered good results. And yet, primarily, I don’t look at what we achieved in the past, but on what we aim to achieve in the future, over and above last year’s result. It is clear to me that we at Siegfried are on the way toward unleashing our full potential. We are aware of our strengths and of the possibilities of implementing them to create value. However, we have some additional ideas of how we can and must improve – and of how we’ll go about it. We at Siegfried are fully determined to be successful also in the future.
In addition to financial success, what is most important to you as CEO of Siegfried?
Outstanding achievements have always inspired me, both in my previous life as a sportsman and then in science and in my career. In other words, those achievements, which represent the difference between the expected and the outstanding. And this is exactly what I consider to be the core of my task as CEO: to jointly organize and deliver top performance in cooperation with other qualified and motivated people and, thereby, unlocking Siegfried’s great potential. It is my wish that each one of us can enjoy this experience. And each one of us is required to participate. By means of our personal contribution, we can make a positive difference to the benefit of the entire Siegfried Group.
Dr. Reto Suter, Chief Financial Officer
In 2019, Siegfried again reported organic growth and higher profitability. From your point of view, what is more important?
Both are important. Profitable growth generates the financial means that can subsequently be invested to accelerate growth.
Should we have to decide between growth and margin expansion, we would probably choose growth. In our business environment, growth and size will in the medium-term lead to higher profitability.
Last year, Siegfried Group reinvested about 60 million Swiss francs. According to which criteria do you invest resources?
An essential part of these investments concern replacement investments. They serve to maintain and improve the efficiency and performance of our infrastructure. Moreover, we invest in internal growth initiatives and in new technologies and skills. Furthermore, we increase our network capacity by investing in expansion.
What is true for all investments is that our focus is on capital efficiency, in other words, on return on capital. Each Swiss franc must be allocated to the highest yield potential in the network. As a result, individual investment projects may compete against each other.
Sustainability is an omnipresent buzzword. How does a long-established company, such as Siegfried, deal with this issue?
As a production company and strategic partner of the pharmaceutical industry, sustainability has for decades been common practice. Thinking in terms of material cycles, increasing the efficiency of chemical processes, and the avoidance or reduction of waste has been an essential part of our daily work. From a commercial perspective, this makes sense to us and to our customers.
A few years ago, we began to systematically collect data concerning sustainability and to report them in a sustainability report by applying the GRI guidelines. This year, we progressed a step further and included the Sustainable Development Goals (SDG) issued by the United Nations, and we selected individual goals of relevance to us.
However, this is not the end of the journey. We have undertaken to continuously improve and constantly adjust our reporting to the latest findings.
Marianne Späne, Head Business Development, Marketing & Sales
How are the outsourcing market and the CDMO industry developing – and how is Siegfried reacting to the current challenges?
The CDMO industry is in a state of flux. While demand for outsourcing remains unbroken, the supplier field is strongly fragmented and thus attractive for M&A activities. Today, pharmaceutical companies worldwide are confronted with an enormous pressure on costs. Consequently, outsourcing is driven by the need to reduce costs and the avoidance of operational risks. CDMOs play an important role in this regard because they provide the capacity to minimize risks concerning supply shortages.
Today, outsourcing activities occur across the entire value chain. The relatively young CDMO industry is challenged to meet the changing requirements of the pharmaceutical industry and to develop new business models. By means of our development know-how, which we have in Switzerland, in China and in Germany, we offer the optimization of developed products along the entire value chain. In addition, we provide various specialized technologies such a spray drying, micronization, hydration (up to 40 bar), low-temperature reactions and the production of highly effective drug substances plus capsules, eye drops, ready-to-fill syringes in the field of finished dosage forms.
How is the Business Development organization structured in order to provide customers with the best possible services?
We are close to our customers and can offer them the required reliability of supply by means of our own network of sites. We achieve this by means of splitting long syntheses between two production sites or produce entire syntheses at several sites located in the USA, China and Europe. We are well-versed in chemical production, formulation and finished dosage forms.
Our teams enjoy sound knowledge in the chemical-pharmaceutical field and in the area of formulation. Technical experts and business-development teams work hand-in-hand and are often referred to as twins. Working across departments and production segments is a natural part of our activities, by means of which we successfully manage our strategic partnerships. Moreover, we place great importance on personal contact with our customers. Similar to a chemical process, the chemistry among participants must be right beyond project discussions.
Passion is one of Siegfried’s core values. What does it imply for you and for the employees in your field of responsibility?
Passion is connected with dedication and with heart and soul. It is the prerequisite for doing an excellent job and being successful. The passion for what we do must be reflected in all of our actions. Be it toward our customers, our colleagues, or in view of our patients and the entire society. Passion is the force that drives us every day, motivates us, puts meaning in our activity and gives us the strength to unperturbedly strive toward our goals. It’s important to continuously reawaken the passion for our business, so we can glow and radiate for our customers, employees and colleagues.
It is a management task to motivate others and to bring out the best in oneself. Not only does this provide deep satisfaction and fun – it also motivates. If we at Siegfried experience this passion and dedication toward our job, we will become the strongest team with the most competitive network.
Dr. René Imwinkelried, Head Technical Operations
Your aim is to increase Siegfried Group’s available capacity and technological capabilities by raising performance of the worldwide network of production sites. How do you proceed?
The behavior of our production network is similar to that of a living organism. It has to constantly remain in action and adjust to customer needs and requirements. At the same time, we put great emphasis on occupational safety, quality and efficiency. A comprehensive consideration of the entire production network is essential. Based on strategic demands made on the network, we plan the development of the individual sites in such a way that we achieve the best result for the whole network. To achieve this, we establish a plan for each site concerning its ongoing development of technological capabilities and capacity. Our management teams at the individual sites have great ambitions to continue the development of their site. This is the correct approach and a prerequisite to find the best solution for the network as a whole. It is essential that our approach is disciplined and sets the right priorities.
Siegfried operates in a heavily regulated environment. Customers, however, expect flexibility, and the improved utilization of our network asks for a certain amount of adaptability. How do you master this balancing act?
Indeed, that is demanding and, especially, when we shift production processes for products among sites, we have to observe strict regulations by the authorities as well as customer specifications. We plan each individual transfer meticulously and coordinate it in detail with the customer. No process transfer will be carried out without customer approval. Basically, a process transfer represents a transfer of knowledge between the experts at the different sites. In this kind of situation, good cooperation and mutual trust are essential prerequisites. Sometimes, the employees of a site are not really happy to relinquish a product. It is therefore important that we clearly and intelligibly explain the reason for undertaking such a step. By means of continuous optimization of our production network, we increase our competitiveness and provide our customers with flexibility and bigger reliability of supply for their product. In the year under review, our employees further improved the efficiency of our production network. And this I am very proud of.
“Excellence” is one of Siegfried’s core values. How do you implement it in your area of responsibility?
To me, achieving excellence implies constant striving to “become better” and never to be satisfied with mediocre performance. This is true for each individual, our teams, an for Siegfried as a whole. For each employee, constant striving to improve performance is the best means of achieving personal development, in both professional and private life. I am firmly convinced that improved performance also leads to more personal satisfaction.
Arnoud Middel, Head Human Resources
Arnoud Middel, the 2019 financial year must have been a very demanding period for Siegfried Group’s Head of Human Resources. A management change, shortage of specialists, development of advanced training, and high expectations concerning network flexibility characterized the year. In retrospect, what do you remember most vividly?
The individual has always been and will remain the decisive factor concerning the success of every organization. 2019 has confirmed the trend and the recognition of recent years that finding, developing and keeping good employees in a very competitive labor market enjoys high significance. Consequently, we focus our efforts on the development of corporate culture and the advanced training of our employees at all levels. It is our aim to provide a workplace at which our employees feel happy, enjoy perspectives for continued development and, consequently, perform with outstanding achievements.
In its search for the best talents, Siegfried attaches great importance to advanced training. From your perspective, what are the most important criteria of the training program, and how did Siegfried’s employees receive it?
In the past year, Siegfried Academy created a basis for the development of advanced training in the coming months and years. Initial activities were well received, and we aim to consistently advance the program. Our clear objective is to provide our employees with needs-oriented training options that will allow them to take on exciting professional opportunities and to constantly develop further.
You played a decisive role in the definition of Siegfried’s values which were introduced at all sites in 2019. As you are aware, many other companies promulgate similar values. From your point of view, is there one value or a combination of individual values that is of exceptional importance to Siegfried?
For me, the combination of our values, namely excellence, passion, integrity, quality and sustainability, in a compact way expresses our ambition of who we are, how we aim to be, and how we wish to be perceived. The value of integrity is very close to my heart as I believe it is of central importance to Siegfried. This single word exemplifies what is important to us in the cooperation and communication among ourselves, with customers and with the authorities.
Dr. Jürgen Roos, Chief Scientific Officer
What does R&D contribute toward Siegfried’s success, and to what extent is the network principle of significance?
At Siegfried, research & development covers a very broad spectrum of activities. It covers the entire field from the design of new synthesis routes, process development for new products to optimization of ongoing production processes and troubleshooting. Our aim is to develop and optimize efficient processes at a high scientific and technological standard. This is an important value contribution which our customers attach great importance to. It ensures their competitiveness and helps us continuing to grow.
Siegfried operates a global production network for drug substances and finished dosage forms. Our launch sites, Zofingen and Evionnaz, are particularly well-placed to pilot and introduce new APIs. We determine the most suitable production site in coordination with the customer and by taking into consideration the needs of the product. Our worldwide network allows us to produce product at several sites which provides customers additional reliability of supply. Our R&D is sufficiently flexible to support this concept. Development can therefore be carried out directly at the production site. This is managed and administered very efficiently thanks to our global project management.
With regard to innovation and technical skills, Siegfried has to be at eye level, at least, with the customer and the competition. How do you ensure this?
Key to success is the availability of highly qualified and committed employees. We attach great importance to the process of selecting our employees and on continued training. This includes the exchange of employees between sites, which strengthens our network. A well-equipped laboratory and pilot plant plus the use of state-of-the-art technology and methods of analysis represent essential elements of success. Zofingen and Evionnaz are two excellent research & development sites for APIs and Hameln and Zofingen for finished drugs..
Our Regulatory Affairs department is responsible for submission to the authorities. We use this service for our own products and offer them to our customers. In this connection it is essential to prepare data for the authorities in accordance with requirements of the individual countries. The high quality of our preparation and close coordination with the authorities allow for fast authorization and, therefore, a reduction in time to market.
Quality is one of Siegfried’s corporate values. What is your department’s contribution?
Quality plays a central role for us. It starts with research and process development. We aim to achieve precise results with the help of the most modern methods, which can then be reliably upgraded in a next step. High quality of work in the laboratory is essential for success in the pilot plant and, subsequently, in commercial production.
Excellent project and program management is an additional success factor. Experienced professionals manage projects and supervise products across the sites. This allows for the best possible use of skills and technological possibilities available across the entire corporate network. Strict quality approach at all levels and at all sites is absolutely essential in order to survive as a leading supplier organization, such as Siegfried, in a business environment governed by tough competition.