Fireside Chat: ‘Communicating to investors through a crisis’ Chaired by Mary Clark (Optimum), with Kevin Mannix, IR at Teva, and Oliver Maier, IR at Bayer
Both Kevin and Oliver have been used to dealing with crises throughout their careers. When the Covid-19 pandemic hit, they knew it was important to communicate with investors even more. The big issue for the pharmaceutical industry was the supply chain – this was the one area that investors needed to know about and wanted some sense of the scale and impact of any interruptions along the chain. For IR, it was critical to assemble the internal team of people who could help provide the solutions to potential issues within the supply and facilities chain, including the supply of raw materials and any areas impacted by the geographical footprint.
Because the Covid-19 impact has been global, it has been a lesson learned in terms of estimating impacts in all sorts of areas and it has been important to think outside the box and look at everywhere your products are being used.
Refocusing IR Strategy
As we face a “Brave New World”, Teva’s Kevin Mannix assured us that there are a few golden rules of Investor Relations (IR) that are still – if not more – relevant today than at the start of the year.
The pandemic and the lack of travel has led to an opportunity to refocus internally on investor relations programs. Throughout the crisis, there are many questions that investors have which of course need to be answered. However it is important to focus on the long-term strategy and keep proactively engaging with your audience, (“pick up the phone and keep the analysts focused on the big picture and what you have said you are going to do”). Bayer’s Oliver Maier agreed that a company must have a vision of where it wants to go and keep telling people about it.
Digital Communications are here to stay
In this respect, whilst it is clear that nothing beats face-to-face meetings, relationships can’t stop being built when physical connection is not possible (both are planning for over 90% of investor meetings to be virtual throughout the first half of 2021), so digital communications take on a whole new level of importance. It has “freed up” executive time, corporate IR has more control over whom they talk to and, overall, everyone has had a positive experience with digital communications.
Talk about the contentious issues up front
Oliver and Kevin agree that it is really important to communicate the good and the bad. No matter how contentious the issues such as M&A, litigations, or redundancies, the key is to be upfront when communicating. Acknowledge the reality of the situation and deal with it, so everyone can focus on the bigger picture and the long term.
It requires constant efforts to keep shareholders, including potential future investors and those who influence them, engaged throughout the company’s journey. It is fundamental to talk about what the issues are, as that’s what people want to learn more about. If people leave an IR meeting with lingering questions, you (as an IR advisor) have failed. Kevin added that it is key to understand the people who are researching your company and help them think about aspects of the company’s story they might be missing, and not factoring into the company’s valuation.
Oliver addressed how more transparency does not necessarily lead to increased quality of information, sometimes it is just an increase in quantity of information and can make it harder to find the information that really matters. It is a role of IR to help guide the right information to the right audience in a timely manner. In the end, “investor relations is a service”.
Another key element is to manage internal expectations and to communicate to your colleagues on why the company’s stock is going up or down, remind them of the pushes and pulls of the capital markets and where their actions may have an influence.
ESG is very important
Both Teva and Bayer have recognised environmental, social and corporate governance (ESG) factors as an important part of a company’s narrative and have focused efforts on communicating with analysts and investors. It is of the utmost importance.
ESG was a topic that also came up at last year’s conference, in which the panel chaired by Lazard’s Managing Director, Dale Raine, discussed building better companies, saying that everyone is in a position to make a positive impact – not just on their company but on society more broadly. In the same discussion, Ilan Chaitowitz, global healthcare analyst at Nomura Asset Management, said: ‘sustainability means the ability of a company to carry on existing on its own’. This seems particularly relevant in today’s climate, as the ability to keep moving forward is critical to the future of a company coping with the pandemic. ESG demands a wide and disparate criterion of needs for a company to address, but good communication underpins all of them.
Listen, listen, listen …
The top tip for IR professionals is to listen. Your audience is so diverse (value, growth, short, long) you need to hear and understand what the drivers and issues are for investors. Carry out an annual investor perception study to really understand what drives investors.
Keep your focus, stick to the plan, and stay open and humble.
Optimum Strategic Communications is a leader in carrying out perception studies with investors focused on the pharma and healthcare sector. For more information on best practice investor communication and the best way to carry out perception studies with your investors, please contact Mary Clark at firstname.lastname@example.org