And welcome everyone to another Smart Money Circle episode. I'm Adam Sarhan. With me today is Terry Bernard, who's the CEO of Kaijen, which is ticker symbol QGEN. Terry, thank you so much for taking the time and welcome to the Smart Money Circle. Thanks for having me, Adam. Terry, I always like to begin. Can you please tell us your story and how you got to where you are today? Sure. Interestingly enough, PIRATS and Qiagen is a company dedicated to molecular biology.
I'm not a scientist myself, however, more than 20 years ago I discovered and I believe I had a call in for life science and biology and diagnostic. I was very intrigued and amazed by the power and the value of the combination between engineering, biology and chemistry and bioinformatics.
And therefore I've spent the last 20 years of my life in healthcare, life science and diagnostic, in different positions of different management scope, strategy, sales, a lot of marketing, investor relation. I was preparing myself to become ACEO and I've done that across many geographies. I've been working and living in Europe, in the US many times, but also in Asia Pacific, China.
And that broad perspective, that international perspective is really shaping also the way I lead Kaijin today by relying on many empowered people all over the world and making decision as close as possible to customers. I love that. So by the way, I also love biotech companies and anything, anyone or anything that's working to help humans live better and healthier. Please and thank you with a cherry on top. So thank you very much for the work you're doing. Let's talk about the business.
Please tell us what you do at Kaijin and and some of your competitive advantages. So for the last 40 years, Kaijin has been dedicated to develop solutions for research, academia, but also clinical laboratories, pharmaceutical companies based on molecular biology. So I don't want to get too technical today, but it's very worth highlighting that biology has been going through a revolution in the last 40 years, and this is called molecular
biology. The ability to target the DNA or RNA of any kind of Organism to develop a solution. And it's fair to say that in this field of molecular biology, Adam, there is really a before and after Keyogen. It sounds arrogant, but why do I say that? Because before Keyogen, any researcher, any laboratory wanting to do molecular biology had to go through a very tedious, complex workflow having many rooms because DNA flies, you see. So contaminations happen a lot
of the time. And then came chiogen with a very standardised way of extracting and isolating nucleic acid in your sample, whether it was a blood sample, a Schwab sample, any kind of sample. And we did that with a very simple device that was very standardised. And this was a revolution for any researcher, any clinical lab in the world. As a matter of fact, Adam, we are very proud of Qiagen that more than 35 Nobel Prize winners are using Qiagen solutions. That's fantastic.
Congratulations. That's really, really fantastic. So you were able to take molecular biology, use the RNA, help people basically to open source if I understand you properly, anyone doing work and use your technology to improve the DNA testing and help find solutions to problems through that, Is that correct? Absolutely. Three years ago I was invited to Cambridge in the UK to give a kind of presentation on the future of diagnostics.
And I had an audience of roughly 400 PhDs from all over the world. And I started the presentation with one single question. Simple. Who in this audience knows Sky Agent? I had 400 hands raised. This is amazing. You will never, never meet the PHDA researcher in biology telling you that they don't do Sky Agent because they all have used that fantastic product for sample technology.
Then obviously over the years we developed other solutions, but that ability to leverage our positioning in sample technology to then take market position in other molecular biology application is a fantastic leverage. I, I absolutely love that. Congratulations on that. That's super, super fantastic. So let's talk about a few things here. Let's talk about risk
management. How do you handle risk as being in the biotech space for 20 plus years, and what are some lessons you've learned about risk management that you'd like to share with the audience? So let's start by saying that Chiogen is the typically what I call a midcap company, very dedicated. I love focus. I love focus. We develop molecular tools for research, academia, clinical pharma, biotech, even law
enforcement authorities. And so when I say midcap, it's around 6000 employees all over the world, $2 billion revenues. We are listed in Europe, we are listed in the US, We are a member of the DAX index. And so since we are very global, obviously we do not live in a isolated island. We follow the economic evolutions, the political evolution, and so one of the first risk management for me is
focus. When you are a midcap, you need to invest especially your research and development effort into where you can take between the number one and the number three position on the market. If you cannot prove that you can get those position #1 to #3 it's going to be a tough batters. Why? Because below those position you will face bigger companies, those kind of fights, they end up in price war and the mid cap never wins a price war.
And one of the good thing with that focus is that we have a pricing power. The second is diversity. We cover a tremendous range of potential customers. In fact, we are talking about more than 500,000 customers every year. What I mean by this, it's research lab, academia, as I said before, pharma company, clinical, private or public laboratories, even law
enforcement. You would be surprised to know that in forensic in forensic activities, identification of body, identification of sexual assault, one Kyogen product is used every 24 seconds in the world. Wow, wow. That's that's big. That's very, very big. OK, So from a risk management standpoint, what you're saying is a lot of people get distracted. It's very easy to look at the next shiny object and Bing, Bing, Bing, Bing.
Your superpower is stay focused on the highest priority, the highest ROI activity, and then go down from there. You focus, you focus in a limited number of activities where you can take the leadership, you focus on profitable growth. Growing is nice, but you need to grow profitably. If you look at the PNL of Kalajan, it's one of the most, if not the most competitive among our peers. And as you said, you focus on
the ROIC as well. I mean, whether you invest into new merger and acquisition, whether you invest into organic development or even by acquiring your own shares, you need to be driven by that obsession with return on capital invested. Yeah, I absolutely love it. OK. Let's talk about the next question would be, let's talk about timeless lessons that you've learned that you'd like to share with the audience, please.
But I think I'm coming to an edge then that for me, the main lesson is always stay close to people. Humility, humility, the fact that you can be the CEO of the company, but when you have the courage to admit to your team, but I don't know it all, It's not because I'm the CEO that I
know it all. So humility, empathy, I know that empathy sometime is a very, it's not considered to be a business value for me. It's a business value because obviously we have different assets at Cajun, but one of our main assets is our people. And with all those people are in Mexico, in China, in Germany or in the USI want to be close to them. I want to have constant interaction to understand what are their daily challenges? Why are some process potentially in in the company in our company
do not work anymore? Why do we need to change them? There are many things that they see at that level that I will not see anymore. At the same time, there are many things that I see that they don't see and that combination by staying close to them is is really important. Last but not least, I tend to always tell my team we are #1 at Kya Gen. in many activities said it's good to be #1 but there are
two challenges coming. Being with being number one, you become very easily complacent and arrogant. I hate those. I hate those especially arrogance and complacency. So if you look at our company today, even where we are #1 we continue to invest in research in, in and development to keep that edge and to maintain that leadership position. Absolutely love it.
Yeah. I, I, I think that's really, really brilliant because a lot of people in your shoes or as they're growing the, the ladder, they kind of almost don't even pay attention because of that arrogance or that ego to where they were or other people supporting them. But the fact that you're at that 30,000 view foot, you can see things that they can't see and they can't can see things that you can't see. The fact that you get close there is, is brilliant. So absolutely.
Well, super, well done. So I'm like 2 people playing chess. The third person can see moves that those two can't see because they're they're in it. The other guy's not in it because I love. That absolutely Adam, but also for me, if I may, it's absolutely paramount to spend time on the shop floor, you know, people behind the manufacturing line, the
production line. So anytime I'm in Europe or in our sights in the US or in China, I make sure that I spend time or so on the shop, spending time on the on the field, you see with our people in the trenches fighting everyday is to provide our customers with solutions. So spending time with customers, that's why the worst you see is, is stop listening to customers. I know that there is a cliche of companies organising meeting when you have an empty share and
this is the customers. We are not doing that occasion. But I can tell you there is no single meeting of relevance where customers are not giving their input. I absolutely love it. OK, beautiful. So and that speaks to the humility part and I absolutely love it. OK. The other side of that question would be the mistakes. What are some timeless mistakes either you've made you see other people make, and how do you learn from them so you don't
keep repeating them? You know the drivers for Kyogen. The market drivers are incredible. The population in the world is aging so that we need more tests, more research. We are there. We are in a field where innovation creates new growth horizons. I would say on a yearly basis, just a few examples, who was talking 10 years ago about liquid biopsies? You see now it's becoming a
standard in oncology. We are there. 3 years ago, people starting to pay attention to what we call minimal residual diseases in oncology. We are there as well. What do I mean by this? When you are living in such a dynamic environment, one potential mistake once again is to spread the company to fin. You see the power of innovation. It's key to invest in innovation, but at the same
time, OK, it has to pay off. I can have hundreds of scientists at Kaizen going into different fields of innovation. At the end, it needs to create a very coherent Errandy, aiming at once again driving profitable growth. So the main mistake for me is spreading a company to Fin clearly and forgetting. Forgetting, as I said before, to
remain very close to people. I believe that companies that are very hierarchical, where the weight of the hierarchy is preventing people from taking initiative. Those companies are dinosaurs. They are dead. I'm not at the top of the pyramid, Adam. I am merely at the center of a circle and my role is to pass information at the speed of light. Absolutely love it, and that's nice to your earlier point too about being focused. Absolutely. Once again, you see here $2 billion revenues.
It's not small, but it's not huge. 6000 people. How do I see those two numbers? We have an obligation. We have an obligation to remain extremely agile. If a company of our size is not agile, it would be a disaster, especially in that volatile environment. You see wars in some geographic regions, hyperinflation at the time, economic uncertainties, financial incentives, discussion around funding for research. We need to be extremely agile. We need to be able to shift the direction in 1/4.
At the same time, we need to always keep sense of long term. We have a vision. We invest where we believe it creates value for our shareholders. And I believe, Adam, I fully respect we are listed. So I fully respect the market. But you do not assess the quality of a company on the yearly result, let you know, let alone on the quarterly result. However, Kaya Gen. will
celebrate now. I think it's our 25th or 26th quarter on guidance, both on the top line of our and on DPS and that sense of execution is key as well. Yeah, I absolutely love that. OK, that. And then by the way, that's a great point too about, about, OK, phenomenal. So next question, I'd like to talk to you about leadership. I love what you said about the hierarchy. I love what you said about not having it to top me, having circles instead.
What makes a great leader? What are some lessons about leadership that you'd like to share with the audience that we haven't already discussed? And anything else about the subject of leadership, please. It's very simple. A leader needs to remain approachable and I want to make it clearly known and fair at Kya Gen. that anybody in the company can approach me, can send me an e-mail, can send me a message. Challenging also, I'm not here to recruit yes men.
If I recruit yes men, it's the end of this company. I want also to surrender myself with people that are much better than me and what they do. So, so approachability is is clear this sense again of staying close to your people, making sure that you always make them see that you understand that challenge that you are not. You said before 30,000 feet, I might for some strategic views, obviously, but they need to feel that I understand that challenge and I can try to help them
fixing them as well. And last but not least, it's setting clear directions and then you empower your people. I believe in Empower. This is, by the way, an action plan and the program at Kyogen, which is now lasting for the last six years. And we constantly challenge ourselves whether we empower our people in. I prefer someone who is going to make a mistake once, not twice. Obviously then they know the consequence to someone that is not doing anything and that's clear for me.
Yeah, that is so, so powerful. OK, beautiful. And then next question, I guess I want to ask you about adversity. So becoming successful, you have to overcome adversity. How do you handle adversity and what are some obstacles you had to overcome along the way? You know, when I was asked to take over the Kyogen company was in a kind of term, it was at the end of 2019. It was a change of CEO. The previous CEO had been CEO for 15 years, you see. So people were used to him.
Obviously, I announced that we were dropping one of our massive research and development program because I think it was necessary to do so for the company because again, I believe in focus and so and COVID was starting. So, so basically it was a very teaching, but I believe you face adversity by being really transparent and straightforward with people. I think I always tell our kayageners, this is how we call our team, our Kayageners. We are far from being a perfect
company. And I explain why. I want them also to be savvy, to be knowledgeable. Different things like finance for non financial, it's a compulsory training at Kayagen. If you don't follow that training, you're not part of the team. For the people that are not scientists, biology for non biology, this is a compulsory because I want everybody from HR, from finance to understand what we are doing.
And last but not least, for example, in the last three years we created an artificial intelligence University of Kazan and everybody it's compulsory has to go there as well, including myself, including the executive committee. So you face adversity by recognizing your weakness and trying to address them one by one, by being transparent with people, with feeding them, with information.
How do you want them to take decision if they don't have the information, even information that hurts, I don't believe or we shouldn't share that. No, we share it. We share it because we gave them the knowledge to understand, to understand. So and last but not least, I come back to the same. Stick to your focus. When you are a vision, things are not necessarily going to
happen in three months sometime. I said we need to be agile, but sometimes it takes a bit more than to move the boat you see and to turn the ship around. But but as long as you have that vision and and focus and you are telling the truth, you can navigate and wither a lot of challenges. Absolutely love it. That is that's brilliant. So, OK, final question for you today Terry, is what is the best piece of advice you'd like to give the audience or your 30
year old self? The main one is is leave your ego in the courtroom you see and surround yourself with people that are much better than you in what they do.
Diversity is important. I absolutely insisted that my Executive committee, we are a German headquarter company and I have a deep respect for our roots in Germany, but I didn't want our Executive committee to be only Germans working from Germany. So we have people at the Executive committee based and located in the US, in Europe, in different countries in Europe, that diversity is very important. And last but not least,
curiosity, curiosity, curiosity. I think if there is something that I share a lot with our team, apart from the vision, the results and where we need to go next is a lot of of books to read, article to read. Because keeping our antennas wide open all the time is a key success factor and the condition for survival. I absolutely love it. Well, Terry, thank you so much for sharing all this wisdom with us. Congrats on all your success.
Hopefully next time we speak, you'll be a large cap company because you're right there and knocking that door. And this is absolutely, absolutely fantastic. Thank you so much for taking the time. Thank you, Adam. Thanks for the time.