THE MANAGEMENT INTERVIEW Healthcare’s Kim Campbell – He’s a tonic for the Aussie industry’s ills

The former South Auckland-based CEO of PSM Healthcare landed his new job and relocation across the Tasman around 18 months ago when, through complex series of buy-ups and mergers, Australian-listed healthcare products distributor Australian Pharmaceutical Industries (API), bought PSM and merged it with existing API subsidiary and Australian pharmaceutical manufacturing icon Soul Pattinson to form the new HMG company.
Soon after the acquisitions and Campbell’s appointment to the top slot, life in the Australian pharmaceutical world changed “forever”. It began with Pan Pharmaceuticals which, in addition to now facing an array of fraud charges, starkly revealed just how far the Australian pharmaceutical healthcare products industry had slipped in applying prescribed manufacturing standards. Now, the Australian industry is grappling with radically different and significantly more onerous regulatory regime. “The landscape has changed profoundly and for good,” says Campbell.
The downside for API from this turn of events is some significant initial financial pain and slower track to the profitability it expected from the PSM Healthcare purchase and the creation of HMG. The upside was the appointment of Campbell and the ability to wheel in his New Zealand management support team to help fix the problems in Australia.
The Pan Pharmaceuticals’ scandal had not broken when Campbell was offered the leadership of HMG. He had, however, already discovered that Australian healthcare and pharmaceutical manufacturers were less conscientious about complying with existing manufacturing regulations and disbelieving of their government’s intentions to enforce even stricter controls from August 2002. “Most of the industry simply did not believe the Therapeutic Goods Administration (TGA) would enforce the new convention for manufacturing pharmaceutical products because it was too onerous,” conceded Campbell.
New Zealand pharmaceutical companies, like PSM Healthcare, and Douglas and Pacific Pharmaceuticals, had, on the other hand, traditionally complied with New Zealand’s more rigorously enforced and Med-Safe audited manufacturing rules. And besides, Campbell is quality-management devotee and has been since his days at Trigon Packaging, Masport, and meeting with international quality guru W. Edwards Deming back in the 1980s.
Campbell and his team at PSM had, prior to the API purchase, always found it difficult to export drugs to Australia. “We found it hard to compete on price and when we started looking at buying businesses over there, we realised that they were complying with different [less rigid] standard than we were even though it was supposed to be common [international] standard,” he says. “Our plant here was much more compliant [with TGA standards] than most plants in Australia.” So today the New Zealand pharmaceutical manufacturing industry is well ahead of most plants in Australia.
Now Campbell heads business with almost 500 employees, with operations in New Zealand and Australia and with assets of around $30 million, producing annual sales of about $80 million. One half of that business, however, must be remodelled and refocused. That means new culture, better processes and commitment to quality. “But I’m impressed with the speed with which we have been able to get the things happening in Australia,” he says engaging one of his every-ready smiles.
Campbell’s approach to management is people-focused. He has, he says, slipped easily into his leadership role in Australia. “People are much the same everywhere. I take them at face value and, until they prove otherwise, accept that they will be an effective and contributing member of the team. I put lot of effort into surrounding myself with good people and then ensure that they have all the tools they need to get the job done. I believe in empowerment, goal setting and most of all attitude.”
Campbell has deployed his New Zealand management team by regularly dispatching them to Australia to offer advice, ideas and support to the businesses there. And notwithstanding the complex technical issues facing the Australian operations, the focus is still on achieving the original strategy that lay behind the API purchase of the New Zealand company.
The objective was to take New Zealand’s experience with manufacturing and marketing of branded healthcare and pharmaceutical products to Australia where the long-established Soul Pattinson business had focused on manufacturing for other brand marketers. “We saw that we could take this tremendous range of products, which were largely sold under other people’s brands, and turn it into proprietary-branded business and create both very large and very profitable branded business,” says Campbell.
The plan hasn’t changed, only the priorities and the timing. The short-term focus is on upgrading plant, recruiting more scientifically qualified people and radically improving processes to meet the demands of Australia’s suddenly more rigorous product development, testing and validation regimes.
So far Campbell has spent the thick end of $1 million on lab equipment, hired 35 new technical people and shipped his New Zealand ERP computer systems to Australia to ensure that everything now is effectively managed and fully validated. He hasn’t, to date, lost many of his Australian management team, but they have had to buy into very different management approach. “Most of our people have accepted that it is new world,” he adds. “The attitudes to quality and scientific work are now the same as they are here [in New Zealand] and there is an increasingly high level of uniformity across the group.
“The plan is still in the development stage as we move through all the technical and production hurdles that we have to deal with post Pan [Pharmaceuticals].” Consequently the healthcare market is now short of product as the industry spends time and money regearing for the new-world order of pharmaceutical and healthcare products manufacturing standards. “Service levels out of our wholesaling business used to be 99 percent. Now they are 85 percent,” says Campbell.
Campbell’s approach to management has, by his own admission, been tested by the Australian experience. “We have had some very dark moments,” he says reflectively. “But I have been around the block few times and the best toolkit any manager can have is packed with what you learn from the mistakes you make. I have the advantage of having made all the mistakes most people make so I have been able to cope with what has been trying time,” he says smiling again.
Campbell’s ability to clearly articulate outcomes is, he thinks, one of his most useful leadership attributes. “I can articulate the vision of what the business can do. And I make sure that even in our darkest moments, when people get close to despair, that they never lose sight of the fact there is great opportunity ahead. That is also, I suppose, one of the bene-fits of having big boring public company behind you to provide the resources to do what we are now doing,” he says convincingly. “I remind people of that when they decry being part of big public company. If we had been Kim and Reg Limited we might be turning the lights off in Australia now.”
The API board’s frustration with developments in Australia is no doubt being tempered by its ownership of profitable New Zealand business. As Campbell points out, this reality will help the enterprise “weather the storm quite well”. He also believes that the collective wisdom and expertise that the New Zealand management team has “brought to bear on the Australian situation” makes the recovery exercise entirely “doable”.
Campbell is, in sense, perfectly prescribed for the job in which he currently finds himself. He is committed to quality culture and, as he points out, quality management is mandatory in pharmaceutical manufacturing. The fact that Australia got away with lesser standards for so long is almost beside the point. It