Biopharmaceuticals: Creating the New and the Different by Patrick Mooney and Jan Campbell

Biopharmaceuticals: creating the new and the different By Patrick Mooney and Jan Campbell

January 2012 At a time when much of the pharma industry seems

This article, republished from to be beating a retreat, with uninspiring pipelines, Pharmaceutical Executive compliance contraventions, cost pressures and Global Digest, explores the shrinking workforces, as well as many major multi- challenges and rewards for nationals teetering on the edge of a $250 billion biopharmaceutical companies going global. patent cliff, optimism abounds in one corner of the industry—the biopharmaceutical field.

Often addressing rare diseases in which patients have little in the way of meaningful treatment options, these companies put innovation at their core to develop next-generation therapeutics. It is also some measure of the attractiveness of the biopharmaceutical arena (and with Alexion’s hematology drug Soliris costing a reputed $400,000 per patient why wouldn’t it be?), that Big Pharma companies such as GlaxoSmithKline, Sanofi and Pfizer are themselves keen to get in on the act and have set up Rare Disease Units. Novartis is already selling its biological drug Ilaris for the treatment of cryopyrin-associated periodic syndrome (CAPS), a rare and lifelong debilitating auto-inflammatory disease, which is ringing the tills to the tune of $90,000 to 100,000 a year per patient, and Bristol-Myers Squibb’s melanoma treatment Yervoy is a cool $120,000 for a course of therapy.

While there are some fairly well established global biopharmaceutical companies such as Celgene, Biomarin and ViroPharma (alongside the likes of Biogen Idec, Gilead and Amgen), the last 18 months has seen a steady increase in the number of companies setting up international operations—either from a US HQ to Europe or vice-versa—as the precur- sor to the commercialisation of therapeutics. Companies including InterMune, Human Genome Sciences, Clovis Oncology, Ipsen, Algeta and Onyx Pharmaceuticals have all developed international capabilities through 2010-2011 and are at various stages (and through varying business models) of bringing their drugs to market. But what are the rationales for these biopharmaceutical companies to go global rather than take a potentially less burdensome route and fully out-license their innovative assets? What challenges do they face in establishing international operations and what sort of people does it take to actually make it all happen? Just as importantly, are there lessons learned for other companies looking to follow in their footsteps?

Why go global?

Steve Aselage, Executive Vice President and Chief Business Officer at Novato, Calif.-headquartered BioMarin, says of their decision to go global: “Our original intent was to outlicense Naglazyme [an enzyme replacement therapy for the rare genetic disease MPS VI)], ex-USA. We set up our own operation in the EU when it became clear that we were not going to get a deal done that fairly valued the product. Interestingly, we went through the exact same process before expanding into Latin America. It was not clear-cut at the time but it is very clear now that we made the right decision.”

Conversely for Gillian Ivers-Read, who was one of the founding executives of Pharmion (acquired by Celgene in 2007 for $2.9 billion), and who with former Pharmion CEO Pat Mahaffy is part of the leadership team at Clovis Oncology (she is Executive Vice President, Technical Operations and Chief Regulatory Officer), the decision to develop an international footprint at Pharmion and second time around at Clovis—was a no- brainer. “We were clear from the outset that we wanted to commercialise in the US and Europe. It’s quite simple—we want to be in control of our products and the community of physicians/KOLs we need to engage with is of such a size that we know from past experience that we can establish EU operations in a cost-efficient and effective way.”

It made sense financially of course but there was Dr. Thierry Darcis, the Vice Presi- something more. We felt that we could bring the dent and General Manager of ViroPharma’s European opera- passion to the patient. It is the difference between tions, (which he helped create in another product that a distributor or partner adds to 2007), echoes the ‘value’ argu- their portfolio and something into which all of our ment and goes further: “It made sense financially of course but collective energies are channelled. there was something more. We felt that we could bring the passion to the patient. It is the difference between another product that a distributor or partner adds to their portfolio and something into which all of our collective energies are channelled.”

Barry Labinger, Chief Commercial Officer at Human Genome Sciences which partnered GlaxoSmithKline in developing and launching Benlysta (the first new treatment for Lupus in 50 years) offers a slightly different

2 slant on global expansion: “We have set up a European organisation, but one which through our 50:50 co-commercialisation agreement operates in tandem with counterparts from GlaxoSmithKline to maximise Benlysta’s performance as well as create a platform for future indepen- dent product launches.”

Expanding from a European HQ to the US, Andrew Kay—CEO of Oslo- based Algeta says, “Selecting the US as our geography of choice for Alpharadin, (a compound being developed for bone metastases in cancer patients in partnership with Bayer), was the foundation for everything. Retaining the US rights and licensing them Rest of World enables Algeta to commercialise other products independently and to build a full scale oncology company in the US. In a deal you can always take royalties. If you have the confidence to do a 50 percent profit share, you can take advantage of delivering strong cash flow and more value to the company and to shareholders as well as the ability to fund and commercialise future products.”

The building blocks

Ipsen’s objective was to establish a full commercial presence in America. Says its US President, Sean McKercher: “We worked out the timing and cost implications of greenfield entry and realised it would be expensive and long term so was not the right approach. This drove the recognition that the best way to enter the US was through acquisition.” In early 2008 Ipsen bought Tercica as its endocrinology platform. “At that time we also had Dysport (our neurology product) going to the FDA for approval. We bought Vernalis as a means to establish a US based commercial organisation in neurology and then we merged the two businesses.”

At a structural level, Thierry Darcis makes the point that “the task of setting up a biopharmaceutical company is bigger than anyone can anticipate; just because we are specialty doesn’t mean we get to The task of setting up a biopharmaceutical company make compromises on how or when we do things and the rules is bigger than anyone can anticipate; just because we that apply to big pharma apply are specialty doesn’t mean we get to make compro- equally to us, be that pharmaco- mises on how or when we do things and the rules vigilance, compliance or medical that apply to big pharma apply equally to us. information.”

Working in a partnership of course requires a certain type of organisation model Barry Labinger contends: “Once we had made our strategic intent clear, we worked closely with GlaxoSmithKline to work out how to structure our European organisation in order to complement their set up and take advantage of what they already had in place, leveraging to the best possible extent our mutual as well as separate skills and knowledge.”

3 The talent

In some cases the first hires are people known to executives in the ‘parent’ organisation, like Thierry Darcis who had worked with Viro- Pharma’s COO Daniel Soland at Chiron in the 1990s. Regardless of this however, some common characteristics stand out.

Steve Aselage says Biomarin looked for individuals that had the capabil- ity of taking on broad organisational roles: “Individuals that had spent some time in smaller companies tended to fit in well while people whose experience may have been deep but narrow had more trouble adapting.”

Giacomo di Nepi joined InterMune as SVP and Managing Director Europe in November 2009 to build the organisation and lead the launch of Esbriet in Idiopathic Pulmonary Fibrosis: “In a big organisation you can afford to bring in the person with high-potential but little experience because you have the resources and set up in which they can learn and grow…we don’t have that luxury, so we need people who are accom- plished in their respective fields but at the same time are very driven— who aren’t used to ‘wearing white gloves’ and can get things done.”

Dr. Helen Torley, who recently joined Onyx Pharmaceuticals as Chief Commercial Officer from Amgen, is in the process of building a Euro- pean leadership team to lead the commercialisation of Carfilzomib in multiple myeloma. Torley says that fundamental to their selection criteria was finding “individuals who all had deep experience and track records both in building organisations and navigating the landscape in Europe. The need to unlock and communicate the value of our offerings and products has never been higher and our new recruits therefore had to have deep experience and be passionate about doing this.”

Barry Labinger says that finding candidates with the relevant CV and track record was to some extent straightforward, but people with the right values and fit to the Human Genome Sciences culture? Another matter entirely. “We were seeking people with the capabilities to run or be part of a fairly autonomous European organisation, who didn’t let their ego get in the way of doing the right thing for the business and who would embrace ways to stay connected to the Global HQ in the US. Bridge-building was critical.”

Thierry Darcis adds that “a can-do attitude at all levels is critical so every new recruit counts; he or she will man the front line pretty much alone from the start and for a A can-do attitude at all levels is critical so every new while, so each hire has to have recruit counts. the same energy, the mindset of bringing true innovation to the patient and an ability to build trust with his/her peers quickly. At ViroPharma, the answer ‘it is impossible because it has never been done before’ is banned.”

4 Challenges

Building a global biopharmaceutical company is, unsurprisingly, not a task for the faint-hearted and there are numerous challenges to over- come.

Giacomo di Nepi reflects on his experience with InterMune, a company “simultaneously undertaking two very important organisational trans- formations” in bringing Esbriet to the market. “The first is the transi- tion from a research and development organisation to a commercial one. This means moving from an approach of science and precision, with relatively long times to one encompassing different skills, judgment, prioritisation and more compressed timescales. Secondly, we are going from a solely US company to having an international structure. To be successful this has to assimilate different cultures, approaches, regula- tions, market practices, and so on.”

For Philippe van Holle, President EMEA at Celgene, demonstrating We try to ensure that throughout the development the added value of a therapy— of our products we are demonstrating both clinical particularly in the current and economic benefit and have frequent interaction economic climate—remains with both regulators and HTAs, particularly using critical. “We try to ensure that throughout the development of biomarkers to identify those patient segments for our products we are demonstrat- which the therapy has the greatest impact. ing both clinical and economic benefit and have frequent interaction with both regulators and HTAs, particularly using biomarkers to identify those patient segments for which the therapy has the greatest impact.”

Regarding the obstacles Biomarin faced, Steve Aselage says, “It was hard to understand the employment and benefits issues in the various coun- tries to insure that our offer letters, benefits packages and employments contracts were appropriate to meet the varying requirements across the EU.” The learning process, Aselage adds, was more on the operational side than on the commercialisation side where the marketing and medical support issues have been fairly straightforward, “but we always anticipated some bumps in the road.”

ViroPharma felt these ‘bumps’ all too tangibly in 2009 when the company’s then lead product Maribavir did not achieve the primary end- point in a Phase III trial and was discontinued. As well as a 50 percent overnight plunge in the stock price, Thierry Darcis had to take immedi- ate measures to safeguard the long-term future of the European business. “We are not afraid of taking tough decisions. After Maribavir’s failure we needed to let go a significant part of the business [from twenty-five people down to ten]. These were all friends and it was very painful. But at the same time the process was quick, clean and transpar- ent. The courage, energy and resilience people demonstrated then has

5 enabled us to get to where we are now.” As of November 2011, ViroPhar- ma Europe employs more than seventy people and is in the process of launching three products across Europe over the next twelve months.

Lessons for the future

For Tuomo Patsi, VP Europe at Human Genome Sciences, the structural basics of setting up the organisation are fundamental and he points out that it is optimal to bring in dedicated functional resources as early on as possible. Wearing a multitude The structural basics of setting up the organisation of hats was always going to be are fundamental and he points out that it is optimal part of his job, but Patsi concedes that at the outset a significant to bring in dedicated functional resources as early amount of his time was taken up on as possible. addressing HR, Finance and IT aspects, “when my contributions would probably have been more valuable and my energies better utilised on the product side.”

Philippe van Holle takes the view that challenging the talent you hire and giving them opportunities for growth is critical. “Having people sitting in comfortable seats is not the way to generate success in an organisation. You have to stretch these people, particularly high fliers.”

Gillian Ivers-Read is very tangibly taking the lessons learnt during her Pharmion days to what she and her colleagues are now doing within Clovis—and it seems that visibility is key. “As a leadership team, we would rotate the EU management meetings through each of the major office sites, so that everyone at all levels of the organisation knew who we were, and just as importantly we knew who they were.”

Sean McKercher reflects unflinchingly on what Ipsen might have done differently. “We did not prepare the US market as well as we could have prior to our entry. Dysport was If you have a major product launch you should ide- launched very shortly after we ally make your entry investment decision two years made the acquisitions, so we had limited time to prepare the prior to approach to have adequate time to prepare. market which meant more work once we launched the product. If you have a major product launch you should ideally make your entry investment decision two years prior to approach to have adequate time to prepare… Things don’t happen over night in terms of KOL relationships, launch plans and hiring a team.”

McKercher also believes it is helpful to build key relationships with the FDA in advance of setting up a commercial enterprise, possibly by first establishing a regulatory presence. He offers an important side note, however, for those companies thinking more broadly about North

6 America: “Don’t assume Canada and the US are the same—make sure the organisation is focused on the US and succeeds there before trying to tackle the Canadian market.”

Finally, Steve Aselage of Biomarin says that in future he would definite- ly have more lead time in an optimal situation. “Because our original plan was to outlicense, the decision to do it ourselves put us in an extreme bind on time,” he explains. “The day we received European approval, our folks were working out of an internet café because we didn’t have phone or computers in the office yet. In retrospect, it was a great experience but next time I’d try to start early.”

Biomarin would still, however, have made decision to go it alone. Says Aselage “For us, that decision helped drive our revenue growth, has given us a global footprint that is pretty unique for a company our size and we believe gives us some great opportunities for partnering.”

Conclusion

There is little doubt that while There is little doubt that while Big Pharma contin- Big Pharma continues to evolve its business model and pursue ues to evolve its business model and pursue opportu- opportunities to develop or nities to develop or acquire innovative medicines, acquire innovative medicines, the the specialty biopharma field still has a unique specialty biopharma field still has a unique opportunity to opportunity to bring real innovation to addressing bring real innovation to address- areas of high unmet medical need globally. ing areas of high unmet medical need globally. Such ventures take a considerable amount of energy, commitment, passion and a willingness to step into uncharted waters. However, the rewards for the people who go on the biopharmaceutical journey, and the patients they serve, can be truly exceptional.

7 Patrick Mooney, Senior Client Partner, Korn/Ferry International, London [email protected]

Jan Campbell, Senior Client Partner, Korn/Ferry International, Princeton [email protected]

About The Korn/Ferry Institute The Korn/Ferry Institute generates forward-thinking research and viewpoints that illuminate how talent advances business strategy. Since its founding in 2008, the institute has published scores of articles, studies, and books that explore global best practices in organizational leadership and human capital development.

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