The acquisition of Altana Pharma has transformed Nycomed Pharma from a mid-sized company with a turnover of €800-900 million to a pan-European company with a turnover of €3.5 billion. In an interview with IMS in November 2007, CEO Hakan Bjorklund discussed some of the challenges facing the newly-merged company.
IMS: "What are the three biggest challenges for the merged company in the next three to five years?"
Hakan Bjorklund: "One of the three challenges is of course the patent expiration of pantoprazole, which is going to happen. It’s already started in some minor markets, but that will happen over the next three years. We need to get through that and we need to maintain as much as possible of our sales for as long as possible. But of course, long term, pantoprazole is going to be, if not history, at least a considerably less important product for us than it is today. That’s clearly one of the three key challenges. The other one is the products that we are currently launching, primarily TachoSil, Preotact, Circadin, Matrifen, and a couple of other products which are very close to launch, and to make them grow substantially. The third is of course the products that we have in the pipeline, where Daxas is the big hope. The challenge is to get these products through the final clinical stage, get them registered and at the same time also refill the pipeline, because you always need to do that."
IMS: "Nycomed recently agreed to acquire Bradley Pharmaceuticals. How will this acquisition strengthen Nycomed?"
HB: "Bradley is an interesting acquisition. To understand why we did it one needs to understand the business that we have in the United States, which is a company called Nycomed US Inc. This is in reality a dermatology company with a few other businesses, but predominantly dermatology. To a large extent topical generics but also a little bit of branded, and a very significant dermatology player in the US. The acquisition of Bradley, which is a pure US player, and again 80% dermatology, is to strengthen our US business. But it has no impact on the rest of Nycomed; it’s purely for the US market. You could say that our US businesses to some extent are standalone businesses.
"The strategy for Nycomed Inc. is to stay, at least for the time being, in the dermatology space. This means that the rest of the products that we have available for the US market, we expect to find an outside partner to out-licence. So in that respect you could say we have really two separate strategies in the US; one for Nycomed Inc. in dermatology, and then to find partners for TachoSil, Daxas, Alvesco and Omnaris – for both existing and future products."
Opportunities in Eastern Europe, CIS & Latin America
IMS: "What other growth opportunities are exciting?"
HB: "I think we have considerably better opportunities in Eastern Europe, the former Soviet Union where we see significant growth, and where we are already a major player today. The same thing in Latin America, where we are a significant player in the two biggest markets, Brazil and Mexico, and where we will probably expand into other markets. And also in Asia."
IMS: "How much investment do you plan to do in Russia, China and India, and the other emerging markets?"
HB: "In the CIS, former Soviet Union, we have a pure sales and marketing operation today. So the investment there has been, you could say, in people. We have approximately 1,000 employees; we’ll probably add another 150 to 200 next year. We’re building up separate, totally standalone entities in Kazakhstan and the Ukraine, but I would also expect that within the next couple of years we will think about establishing production in Russia in order to become more of a strong player in that market. If you look at Brazil and Mexico, both of these markets, apart from the sales and marketing operations, we also have production."
"Strong enough to launch any type of product"
IMS: "What's your strategy for the rest of Europe?"
HB: "Here we already have the infrastructure that we need. We are strong enough to launch any type of product that we would like, be it an over-the-counter product or be it a prescription product. So here it’s a question of adapting the organisation both for the internal changes with the loss of pantoprazole exclusivity, but also I think to the very rapid changes in the European marketplace, where it’s very obvious that you have a number of constituents that are very important today that really were not important 10-15 years ago. In reality those constituents are the payers in different shapes and forms and you need to adjust your sales and marketing organisation to that."
IMS: "In what way have you made those adjustments, with regards to reimbursement policies and pricing?"
HB: "First of all, we have a central department today that deals with market access, price and reimbursement, and looks at what you need in order to convince the authorities that the products are actually worthwhile paying for and reimbursing. The second thing you need to look at is your local sales organisation – do you have the right setup? Do you have people who are going to the right decision-makers? Historically you only went to the doctors. That’s no longer good enough, and in some markets it’s relatively difficult to get access to the doctors so there, maybe you need to shift your focus. Those, of course, are the things we’re looking at all the time. And I would say that today this is still a national decision because, although the trend is clear all through Europe, there’s a big difference between the situation in Scandinavia and Southern Europe."
Mitigating loss of earnings from pantoprazole
IMS: "What can Nycomed do to mitigate the loss of earnings from pantoprazole loss of exclusivity?"
HB: "You can do a few things. First of all you can try to maintain as much of the sales as possible post patent expiration, but equally important is, of course, to make sure that the other products that are going to be the future of Nycomed are growing. That is absolutely key for us; to continue to push these products."
IMS: "Gattex has been recently licensed in. Is this seen as the product taking over at pantoprazole loss of exclusivity?"
HB: "No. Gattex is a very exciting product, and it’s a product initially for patients with short bowel syndrome, who to a large extent are Crohn’s patients that have had a large part of the intestine resected. These patients have a very poor quality of life today, and we think this product can improve the quality of life significantly. But of course the patient group is relatively small, so this is a pure specialist product and in itself it cannot replace pantoprazole, although we think it can be a very interesting product for us."
Mexico & Canada key markets for Preotact
IMS: "Preotact was launched in a few European countries in 2006 – how has the rollout progressed across the rest of Europe?"
HB: "It’s basically in line with our expectations, but with relatively large geographical variations. It’s the same thing if you would look at Forteo, which is the direct competitor. In some markets we’ve had very significant uptake and clearly exceeded our expectations, in some other markets it’s been a little bit more difficult. It has a lot to do with the way the authorities looked at it, and the willingness to pay. In some markets the authorities realise the value of these types of drugs, the parathyroid hormones, and are willing to pay and allow patients to be treated. In some other markets you have a resistance to that, and I think it will take time before we see a use of these products which is equal in all countries, unfortunately."
IMS: "Does Preotact have any advantages over Forteo?"
HB: "I think we have a couple of advantages. One is that you don’t need to store our product in a refrigerator, which of course from a practical point of view is a significant advantage. And we have a syringe which is more user-friendly in that you push it in and not use a tab, which for many elderly patients is actually a major difference because they have relatively weak hands because of the disease and other issues."
IMS: "Nycomed now has rights to all ex-US territories – how will you be leveraging this drug in these territories?"
HB: "We intend of course to seek registration as soon as possible, and the key markets for us here are the large North American markets – Mexico, Canada – but of course also in South America and the rest of the world. This is a relatively recent development so we’re now in the process of evaluating the existing data to see how it fits the local authorities."
Optimistic about Daxas
IMS: "What do you consider to be the most interesting compound in the current pipeline, and why?"
HB: "The biggest opportunity is clearly Daxas, which is now in late-stage Phase III for chronic obstructive pulmonary disease or chronic bronchitis. And we’re very optimistic that the ongoing clinical trials will come out positively. If that happens, it will be the first oral anti-inflammatory treatment which has been developed specifically for COPD. And, as you know, the medical need is huge.”
IMS: "Pfizer pulled out of the development and the MAA was withdrawn last year but you remain confident about Daxas?"
HB: "We’re very optimistic, but it’s not a slam dunk, it’s not 100% certain – that's the name of the game. But when we look at the data and we look at the reasons for doing these clinical trials, we think there’s a very good probability that they will come out positive. But as I said, we’re also aware of the risk that it will be otherwise. But you know what, it's of course true that Pfizer pulled out but one should also remember that SmithKline Beecham once returned pantoprazole and Merck & Co returned budesonide. There are a lot of examples where products have been returned in late-stage development because the partner, for whatever reason, no longer believed in it. Of course we looked at it very carefully but the fact that Pfizer turned it down is not in itself an argument not to continue."
Future IPO a possibility
IMS: "Nycomed is currently private owned. Will the market see an IPO in the future?"
HB: "That’s possible. I don’t know. In reality of course, that's more of a question for the owners than it is for me but everybody knows that private equity owners are not permanent owners. Whether they’re long term or not depends on how you define long term. But it’s definitely conceivable that there will be an IPO.”
IMS: "The main challenge facing Nycomed in the coming years will most likely be the expiry of pantoprazole. Could you summarize what you expect to fill the gap in terms of products and programmes during this time?"
HB: "What we have today in the pipeline, the products which are in late-stage pipeline, they’re the only ones that really can have an impact during this period. That's for example Daxas, Venticute, intranasal fentanyl, Preotact, Matrifen and TachoSil. So that’s one thing. Another is to try to minimise the decline. There will be a decline – there is no question about that but rather than it being so steep, I’d like it to be less steep. The third thing that I think will be very important is to grow in some of our emerging markets where we have a relatively large portfolio of products. The three key markets here are clearly the CIS, Mexico and Brazil, where I think we will see very substantial growth over the next three years, which to some extent will also compensate the fall in pantoprazole. For example, in CIS we’re seeing this year in local currency (which is dollars) around 30-35% growth; it’s been nice. Unfortunately the dollar goes down, but now we’re invoicing in Euros, so it’s a little bit better."
The full transcript of this interview will be available in the February 2008 IMS Company Profile on Nycomed, where Hakan Bjorklund also discusses with IMS’ editor Dr Shehla Sheikh the integration of Altana into Nycomed, its strategies for the demise of pantoprazole, and the newer products coming up through Nycomed's pipeline.
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