How Did Martin Shkreli Ever Become A Pharmaceutical CEO?

Former hedge fund manager and pharmaceutical chief executive officer (CEO) Martin Shkreli has become popular target of public scorn, wrath and mockery. He has certainly given social media and late-night comedians plenty of fodder, ranging from his alleged Ponzi-like schemes to massive medication price hikes to his costly Wu-Tang clan groupie-dom to his cocky Twitter banter. But what about the people who gave him the opportunity to become the CEO of not one but two pharmaceutical companies: Retrophin and then Turing? Who are the investors who said, "Yes, this is a good idea," or the employees who felt that "this is a man whom we could get behind"? With many talented biomedical, health, and public health scientists and experts searching for opportunities, how in the world did Shkreli get his opportunities? And what is to prevent other Shkrelis from becoming pharmaceutical CEOs and running pharmaceutical companies in a similar manner? After all, Shkreli had some glaring gaps such as...

He had no real experience in drug or disease research, caring for patients, drug development or any relevant field.

Did anyone ever carefully evaluate Shkreli's real knowledge and experience? As we have seen in the computer and Internet tech worlds, the most successful company CEOs have deep experience in and truly understand the products that they are selling. Just look at the direct experience that Bill Gates, Steve Jobs, Larry Page and Mark Zuckerberg had with computers before they started and led their respective companies, Microsoft, Apple, Google and Facebook. By contrast, the only "qualification" that Shkreli seemed to have was the ability to memorize and regurgitate facts from medical journals and textbooks. That ability may allow you to impress others at a cocktail party or on a date, win Jeopardy! or replace Cliff Clavin on the television show Cheers, but has absolutely nothing to do with actually understanding drugs and diseases. The analogy would be claiming that you could quarterback or coach a professional football team after winning your fantasy football league. True understanding can only come from doing.

He demonstrated little understanding of and interest in his customers.

What investors or employees thought, "Yes, he really seems to care"...unless you complete that sentence with the words "about himself" or "the Wu-Tang Clan"? As many successful entrepreneurs will tell you, making money cannot be your primary motivation to run a company well. (Otherwise, you may be better suited as...let's see...a hedge fund manager?) You have to have real interest in your company's mission, products and customers. Has Shkreli ever demonstrated any true interest in the patients that would receive his drugs? Not unless the Wu-Tang Clan suddenly needed the medications. True interest in patients would have prevented him from raising the price of Daraprim by over 3,700% beyond the means of HIV-infected patients who desperately need the medication. True understanding would have also helped him anticipate the ensuing backlash.

He never showed that he could lead people...or had any interest in doing so. 

Shkreli's managing fantasy characters in the video game League of Legends is not the same as leading real people in an organization...unless perhaps your organization consists of minotaurs, sad mummies, tricksters and women that walk around in metal bikinis. Shkreli has not exactly come across as an endearing or personable person in his interviews and Twitter rants such as the following:

http://t.co/co6Fmwk3XX
And it seems like the media immediately points a finger at me
So I point one back at em, but not the index or pinkie

— Martin Shkreli (@MartinShkreli) September 21, 2015

And second of all I can make the money back faster than anyone so the joke is on YOU if you think I even care.

— Martin Shkreli (@MartinShkreli) February 14, 2016

50-100 date solicitations a day for me, the world's most eligible bachelor. Sorry, but you have to be a shareholder to meet me.

— Martin Shkreli (@MartinShkreli) December 14, 2015

Within 10 years, more than half of all rap/hip-hop music will be made exclusively for me. Don't worry--I will share some of it.

— Martin Shkreli (@MartinShkreli) December 13, 2015

Yes, telling other people that you are much smarter than them and that everyone is stupid is a great way to motivate people. In fact, Shkreli seems to violate nearly every popular leadership book out there...unless Dale Carnegie surreptitiously penned a follow-up book called How to Make Everyone Hate You or Stephen Covey a book titled The 7 Habits of Highly Impulsive People, which brings us to next gap...

He never displayed the patience or long-term thinking important in running a pharmaceutical company.

Hedge fund managers work on different time horizons than pharmaceutical companies. A hedge fund manager can look for quick wins or arbitrage, capitalizing on market opportunities that open momentarily. By contrast, pharmaceutical CEOs must take a longer-term view. Drug development, approval, manufacturing and distribution take time and concerted efforts. Running pharmaceutical companies like hedge funds would result in chaos, with medications changing and disappearing overnight.

He did not prove that he can play with others in a system.

Even kids have run investment funds out of their parents' homes and dormitory rooms because investing does not necessarily require interacting with others. Running a pharmaceutical company is a different story. The pharmaceutical industry is nested in a complex system of regulatory bodies, insurers, healthcare facilities, research organizations, patients and many others. With so many major players, mutual understanding and agreements are necessary to keep the system operating. One of these understandings is drug patent protections to help pharmaceutical companies recoup research and development (R&D) costs and provide treatment for disease areas with small markets. Such patent protections essentially give a pharmaceutical company monopolies in certain product areas, which can extend even beyond the patent as the company has such a head start on other companies. Shkreli seemed to view this patent protection and relative monopoly as a "loophole" or an "arbitrage" to be exploited for profit. He could raise prices without competition to bring them back down. While this may work when you are running a hedge fund, such behavior threatens the whole system that the pharmaceutical industry has been enjoying. 

Perhaps it is time to take a closer look at how pharmaceutical leaders are being selected and funded. Shkreli had to have help to do what he did. Along the way, how many people offered him opportunities while overlooking the aforementioned warning signs and others who may have been able to make much more of such opportunities? Did they really think that Shkreli would grow a stable company or were they actually interested in a short term arbitrage investment opportunity? Physicians must clear many hurdles (e.g., testing, training, licensure, regulations, and growing mounds of paperwork, ) to practice medicine because their actions may affect the lives of patients. A pharmaceutical CEO not earnestly interested in developing and delivering quality medications can adversely affect many many more patients (and investors) than a single physician can . What will prevent Shkreli from becoming more the rule than the exception in the future?