Dr Karl Mahler spent 20 years at the helm of Swiss pharmaceuticals giant Roche, stepping down earlier this year. Garnet Roach hears how he has seen IR change during that time, his career highlights and what it takes to be a true success in investor relations
Karl Mahler, formerly of Roche
‘When I started in IR, I told my wife I would stay in the job for five years – no more,’ says Dr Karl Mahler, who not only stuck with the profession but led the investor relations program at pharmaceuticals giant Roche for 20 years before (semi) retiring this year. During that time, he has won multiple IR awards for his work, pioneered ESG reporting and nurtured a host of IR talent, with former members of his team going on to run IR programs everywhere from AstraZeneca to Twitter.
Like many, Mahler moved into IR after simply finding that his particular skillset in understanding the science and also having finance and business experience lent itself perfectly to the profession. But why did he stick with investor relations?
‘I stayed so long because it was a super-interesting job. IR is a permanent challenge where you get to work with incredibly intelligent people,’ he says.
He adds that those qualities of finance, business and – in his case, science – aren’t enough to ensure longevity in a profession where your job involves juggling geopolitics, regulation, government relations, internal and external stakeholders, a willingness to travel and an ability to keep your head in a crisis, where you are expected to be available any time, day or night.
‘Sometimes you have to have all the balls in the air at the same time, then you have to catch them and throw them again,’ Mahler says. ‘All while being in full control of the things you do. So you have to have the right personality and a certain level of expertise. But you also have to have belief.’
He equates IR to the role of a salesperson: if you don’t believe in what you’re selling, people can tell, both internally and externally. ‘When you’re dealing with the CEO and CFO of a company, or an $8 bn investor, those people are experts in your business – so you have to be, too,’ he explains.
Breaking the iceMahler has talked to IR Magazine before about his experience pulling off what remains the largest ever cash transaction: the $40 bn acquisition of Genentech in 2009, at the height of the bear market triggered by the fall of Lehman Brothers.
But how exactly did he and the Roche team – which at the time also included multi-award-winning Thomas Kudsk Larsen, head of communications and IR at Sobi and former head of IR at AstraZeneca – manage it? How did they find the money?
A naturally engaging storyteller, Mahler explains that Roche had, in fact, never been to the capital markets before. ‘We had never needed money at Roche, so we were a nobody in the capital markets,’ he says. But the team was lucky enough to meet with a fund manager from Pimco, ‘whose mother worked for Amgen. He asked her, Do you know Roche? and she said, Of course I know Roche! That was how we broke the ice.’
Talking about the difference between the debt and equity markets, with those on the debt side ‘working together and really co-operating’, Mahler says gaining the trust of one fund helps build trust with others. Once Pimco was on board, it was easier to pursue others.
Another key point in finding the financing was a meeting in San Francisco, where Mahler says the firm was willing to give Roche $250 mn. ‘I said, That’s very nice but we need $40 bn!’ he recounts.
He asked one of the women in the meeting what she would do in his situation. ‘She gave us really great advice,’ he says – including to cut out the banks as much as possible. Mahler explains that this made sense because the banks were often approaching hedge funds rather than long-term investors ‘because they could make more money with the hedge funds’.
In the end, Mahler and the team did the targeting themselves, focusing on a mix of investors and securing financing from long-only funds – something he says helped build relationships that lasted many years. ‘So how did we pull off the largest deal in history?’ he summarizes. ‘It was the fund manager's mother, the advice offered by the woman in the meeting and the determination of my boss at the time [then CFO Erich Hunziker].’
While Mahler mentions luck when telling this story, these sorts of ‘chance’ successes aren’t really about luck. They’re about being the sort of person who asks the right questions and builds the right relationships and connections – elements as crucial to any IR career as finance skills or an understanding of your firm and sector.
IR is a permanent challenge where you get to work with intelligent people
You’re part of societyWhen asked how he has seen the IR profession change during his tenure, Mahler describes this as a deep question. ‘Society changes and so your job in investor relations also changes – because you are part of society,’ he says philosophically. ‘If you don’t move with society, you will be out of business quite quickly.’
He talks about how the level of expertise on the buy side has increased as a result of market pressures. ‘You had to adjust your work to match that,’ he explains. And as buy-side expertise increased, reliance on the sell side decreased and greater demands were made on IR.
Another big shift has been the increased focus on ESG, which ties into this demand for more data but also the shifting expectations of wider society. ‘Sustainability wasn’t a big theme when I started this job,’ he says, though Mahler clearly saw the potential upside. Even before joining Roche, he began taking part in the Dow Jones Sustainability Index, with his then company Aventis becoming one of the first European firms to make it onto the index.
Mahler contrasts the attitudes of today – among young people in particular, who ‘have very different expectations from the companies they work for’ – with the ‘minimal’ interest about Aventis joining the Dow Jones Sustainability Index.
‘[Young people today] want to know what the company’s participation in society is, how many women are in leadership roles, what your CO2 footprint is,’ he notes. ‘These themes were not common even five or six years ago but today, you have to think about them from an IR perspective because they are important to society, so they are important to investors and thus also to the company.’
No other career would doSo having long surpassed those five years he expected to stay in IR, why did Mahler decide 2022 was the time to retire? Although Roche would have allowed him to stay until age 70, he says that ‘at some point you have to allow younger people to take over’. And what would he have done if he hadn’t gone into investor relations? ‘I never thought about it,’ he says. ‘This was just always right for me.’
Given that response, it’s perhaps no surprise that Mahler hasn’t fully retired – people like him rarely do. But what does he miss most about the fast-paced life leading IR at a multi-billion-dollar market cap company like Roche? It’s his interaction with market participants, though this is still part of his life to a lesser degree. ‘They are gifted, dynamic and responsible people,’ he says. And what about the things he enjoys most? ‘I can choose when I work,’ he adds. ‘I am the master of my diary now.’
The profession might have changed during his 20+ year IR career but Karl Mahler’s longevity proves his adaptability in the evolving world of IR. His advice for IROs today? Be authentic and be familiar – and comfortable – with what you’re selling.
‘I know everybody is talking about authenticity, but I really mean it,’ he says. ‘You have so many people in the market who are masks of themselves. They are advised on how to behave, they do prep to read out the Q&A and the cautionary statement. And before they give an answer, they have a one-minute break in order to discuss it. But that is not how communication should be and, in the end, people buy your stock because they believe in the people running the company.’
His other key piece of advice is to remember that mistakes will happen. ‘You have to accept that things will happen that you don’t like,’ he says. What matters is how you respond. Finally, he says, you need patience: ‘Our business can seem quite short term but success is about the longer term – and that requires patience.’
Bruno Eschli took over as head of IR at Basel, Switzerland-headquartered Roche in January 2022, though he had been part of the team under Karl Mahler since 2014. What elements of his past experience does he think made him best suited for the head of IR position?
‘I think it’s a mix of things,’ says Eschli. 'Actually, I would go back one further step in my career as the basis was laid with my training as a biochemist, doing basic research for six years, before joining a small boutique investment firm that focused on life sciences and healthcare investments. Both the narrow view as an expert scientist on a topic and the high-level view as an industry expert, which also included some work on corporate finance projects, were essential for successfully moving into the IRO role.
‘Working as a scientist teaches you a lot about how scientific progress is achieved only slowly over time through hard work in an extremely fast-moving and competitive environment. Working as a sell-side financial analyst teaches you something about how to manage risk and reward in innovation from a portfolio and company perspective. What is also very important is that you get to know first-hand what life feels like for analysts, fund managers and investors, and you gain a deep understanding of the rules of the game.’
Bruno Eschli, Roche
Click here to read our full interview with Bruno Eschli
Multi-award-winning IR professional Thomas Kudsk Larsen, head of communications and investor relations at Sobi, is just one of a number of seasoned IR professionals to have passed though the Roche investor relations team over the years, going on to enjoy challenging and exciting careers in IR around the world. Here, Kudsk Larsen shares some thoughts on his former boss.
‘Karl’s primary motto is, It is as it is. If you cannot change it, it’s best to just go with it and accept it. This still sits deep in me and helps me move on when things are not going in my direction.
‘Karl’s primary source of information is having lunch with people. Every day, he would have lunch with someone new and he would learn and get all the information he needed to do his job. He is also good at reading people: he knew who was important and would stay in a job and who was just passing through. This made him very efficient in getting the information needed, without spending too much time getting it.
‘When I got to know him in 2005, Karl was still smoking. He could get lost during investor conferences at hotels trying to find a way out to have a smoke: once or twice I even had to go looking for him. I think he felt a lot better after quitting!
‘When I started working for Karl in 2005, there were issues with my work permit in the US because I had changed companies. One day he phoned me and said they had good wine and cheese in Switzerland. In other words, You have to come over and work here for one year, Thomas, while we sort out your work permit. My wife and I still smile when we talk about it. Karl was right, but it was not easy moving with a new-born baby.
Karl could get lost during investor conferences at hotels trying to find a way out to have a smoke
‘Karl and I worked together on securing the privatization of Genentech back in 2008 and into 2009. We did everything ourselves, including cold-calling bond investors for meetings.
Instead of relying on bankers, we listened to bond investors ourselves and along with CFO Erich Hunziker and a couple of treasury colleagues, Andreas and Stephan, devised a different strategy for how to finance $45 bn-$50 bn by getting private loans from large Genentech shareholders, and going into both short and long-term maturities.
‘Even a pharmaceutical competitor was tapped for a large billion-dollar ticket in the financing. This was doing and learning debt IR as we went along.
‘When I left Roche for a job as head of investor relations at AstraZeneca in 2014, I felt bad for letting Karl down but we have stayed in touch ever since. Despite creating succession challenges for him, he always helped people to develop and was proud when his team members moved on and got other jobs.
‘Being proud about your team members and their careers outside the company is something I have taken with me to all subsequent employers.
‘Karl is one of two important mentors from my career and I know heads of IR in a number of companies – including ADC Therapeutics, AstraZeneca, GSK, Innate Pharma, Ipsen, Sanofi, Sobi and more – who can trace their IR DNA back to these two people. That is a pretty impressive legacy for Karl!’
