Why this major drugmaker no longer has an ‘IT department’

November 13, 2024 ndowd

When Gabriele Ricci became chief data and technology officer at Takeda Pharmaceutical, one of the biggest cultural changes he made was eliminating the term “information technology.”

“We don’t use the word IT anymore,” says Ricci, who was appointed to lead the data, digital, and technology function at the Japan-based pharmaceutical giant since 2022. “We truly believe our function is a business function.”

While that may seem mostly symbolic, Takeda, which develops treatments for oncology, rare diseases, and gastrointestinal and inflammation, has substantially reorganized the technology function under Ricci’s leadership. Ricci reports directly to CEO Christophe Weber, giving the technology division a prime position within the C-suite. His predecessor had reported to the chief financial officer.

Three years ago, 80% of the company’s technology needs were performed by external contractors. Ricci disliked relying so heavily on third parties, and Takeda hired thousands of engineers, data scientists, and architects. He put them in three major innovation centers, called “digital factories” internally, in India, Mexico, and Slovakia to co-develop technology with various business functions.

This structure represents a more federated approach, Ricci says, adding “we have a scientific pipeline and a digital pipeline managed together in symbiosis.”

Ricci has spent his entire technology career in the pharmaceutical industry, beginning at Bristol-Myers Squibb, then Johnson & Johnson, Novartis, and Shire. He joined Takeda after it acquired Shire for $62 billion in 2019.

In recent years, he says the environment for pharmaceutical companies has become more volatile. There are more macroeconomic tensions, greater pressure on costs, and higher expectations from customers. “If you are not investing now in digital and enabling a big transformation, we risk our existence,” warns Ricci.

Takeda has also gotten more aggressive about upskilling employees. More than half of the company’s workforce has taken virtual or in-person courses and training for new technologies, like AI. There are thousands of classes available in over 100 different languages.

The focus on upskilling has included new generative AI tools like a chatbot called “myAibou,”—aibou means “companion” in Japanese—that has been used by more than 24,000 Takeda employees for summarizing, content creation, and other repetitive tasks. Takeda says generative AI is being used across the company in functions ranging from R&D to supply chain to operations. All of Takeda’s AI and generative AI tools are built to be auditable, monitored for bias and discrimination, and adhere to the company’s ethical AI framework, Ricci says.

Takeda is both buying and building generative AI tools, using models from providers including Microsoft, OpenAI, Anthropic, and Amazon Web Services. In areas where Takeda wants to retain a more clear competitive advantage, like research, it will look to build more of its own models.

Ricci says the combination of multiple models is especially alluring. For writing about medical topics, as an example, one model may be very specialized in picking out scientific information, while another specializes in image processing, and yet another can interpret results from multiple data sets derived from research.

“There’s not a model that fits all,” says Ricci. “If you just rely on one, it will be less precise than actually orchestrating multiple models together.”

John Kell

Send thoughts or suggestions to CIO Intelligence here.

Earlier this week, Fortune hosted its Fortune Global Forum conference in New York, where some of the sessions focused on the intersection of technology and business. In one, the CEOs of Honeywell and Lumen talked about the critical importance of AI and creating a corporate culture that will embrace it. You can catch up with all that happened at the conference through this archive of articles about the individual sessions and video replays.

By the way, if you’d like to join us for an upcoming conference, Fortune’s Brainstorm AI, in San Francisco, from Dec. 9-10, you can find information and request an invitation here. It will feature top executives from across business and tech, including Rohit Prasad, Amazon’s senior vice president and head scientist, artificial general intelligence; Liz Reid, Google’s vice president, search; Christopher Young, Microsoft’s executive vice president of business development, strategy, and ventures; and former NFL quarterback Colin Kaepernick, who has his own AI startup.

NEWS PACKETS

CIOs prepare for change in Washington following Trump’s victory. The Wall Street Journal reports on the impacts of President-elect Donald Trump’s policy changes, including potential regulation of emerging technologies like AI and tariffs that could make foreign-made hardware more expensive. Chief information officers, therefore, may need bigger budgets. Trump has already said he will dismantle the Biden administration’s executive order on AI, which sought to manage some of the technology’s risks, while the New York Times speculates he will likely take a light touch on regulation in an effort to let innovation flourish.

Chip makers race to complete subsidy deals after the election. Bloomberg reports that companies trying to secure billions of dollars under the 2022 Chips and Science Act are racing to solidify their awards before partisan politics potentially causes the spigot to close. Meanwhile, in Washington, the U.S. told Taiwan Semiconductor Manufacturing Company to stop sending advanced chips to Chinese customers while a House panel sent letters to five semiconductor manufacturers to disclose details about their sales to China and other transaction information. Finally, Japan pledged $65 billion to support the semiconductor and AI sectors domestically, as the nation aims to keep up with spending sprees across the globe.

Salesforce will hire 1,000 to leverage AI’s ‘momentum.’ In 2024, tech giants including Apple, Google, and SAP have laid of thousands of employees, partly in an effort to reorganize their workforces with the right skill set in an AI-enabled world. Last week, business software giant Salesforce, which has cut jobs in recent years too, said it would hire more than 1,000 workers to sell the company’s new generative AI agent. The staffing boost comes after Salesforce focused its AI strategy on agents that can perform tasks such as customer support or sales development, often without human supervision.

ADOPTION CURVE

C-suite and lower-level executives aren’t aligned on gen AI’s potential. A study conducted on behalf of digital consultancy Publicis Sapient found that the C-suite and the V-suite—the latter including VPs, SVPs, and other executives one rung under top leadership—have different attitudes toward generative AI’s potential and risks. More than half of C-suite respondents ranked generative AI as “extremely important” to customer service, customer service, and sales, while the V-suite was less bullish. Conversely, the V-suite is far more optimistic about the impact to operations, HR, and finance than the C-suite is.

Meanwhile, 51% of the C-suite were more concerned about risk and ethics of generative AI than other emerging technologies, as opposed to just 23% of V-suite respondents.