Pharma Cutting-Edge Swiss Companies Groundbreaking Medicine | Big Data | the Fight Against Cancer

N°4 SEPTEMBER 2017 WWW.SWISSQUOTE.COM CHF 9.-

FINANCE AND TECHNOLOGY UNPACKED

BOSSARD The Swiss family business that rolls with Tesla

COMAC Chinese manufacturer up against Airbus and Boeing

MCDONALD’S Under pressure, the fast-food giant reinvents itself

DOSSIER PHARMA CUTTING-EDGE SWISS COMPANIES GROUNDBREAKING MEDICINE | BIG DATA | THE FIGHT AGAINST CANCER

ROCHE NOVARTIS IDORSIA ACTELION BASILEA SANTHERA SIEGFRIED

Boutiques OMEGA: Zürich Genève Luzern Interlaken Bern CransMontana Zermatt Bürgenstock The classic in a new light USM Modular Furniture Haller now features revolutionary integral lighting: cable-free, dimmable, energy efficient. A true innovation – get inspired! www.usm.com Visit our authorized sales partners or our USM Showrooms in Berlin, Bern, Düsseldorf, Hamburg, London, Munich, New York, Paris, Stuttgart, Tokyo

usm_swissquote_hallerE_2017.indd 2 06.04.17 08:13 EDITORIAL SWISSQUOTE SEPTEMBER 2017

Banks, watches and...pharma

By Marc Bürki, CEO of Swissquote

anks, watches and dream, personalised medicine is p. 38 chocolate. For the rest of benefitting from constant progress the world, Switzerland’s in genetics and genomics and is Breputation consistently boils down little by little becoming a reality. to these three things, according to the “ Swissness Worldwide ” But don’t miss the next big thing : the study, an interview of thousands digitisation of data and big data is of people in several countries shaking up the world of big pharma. conducted at regular intervals Who knows ? Companies outside by the University of St. Gallen. the industry, such as Google or Apple, could come onto the scene However, one look at the half-year next. It wouldn’t be a surprise to press releases from the Swiss Thomas Cueni, Director General of p. 54 Federal Customs Administration the International Federation of Phar- shows a far more nuanced and maceutical Manufacturers & Asso- comprehensive picture of what is ciations (IFPMA), who we interview really going on in the country. What in this issue. That’s because the stands out is the pharmaceutical pharmaceutical industry, while on industry’s rise to power, year after the cutting-edge of R&D, is con- year, as the top driver of Swiss servative in its operations and still exports well ahead of other indus- relies on rather traditional models. tries. No less than 40% of Swiss A recent McKinsey study showed exports now come from this sector, that the sector is falling behind in a pillar of the national economy. The terms of “ digital maturity ” and is number of jobs on Swiss soil that far behind other industries such are directly or indirectly associated as tourism, media and banking. with pharma is close to 200,000. But for how long ?

After heavyweights like Roche and In addition to the feature on pharma, Novartis, which regularly rank among this issue of Swissquote Magazine, the top five pharma companies which is decidedly very Swiss, also in the world in terms of turnover, takes a never-before-seen look p. 34 there are other promising Swiss at Zug-based Bossard. With 2,000 p. 20 companies, as well as a myriad of employees, this company is a market burgeoning start-ups across the jewel but still relatively unknown. country. A commonality among the It specialises in fastening tech- majority of these Swiss players is nologies (screws, nuts and bolts, their ability to innovate. Roche and etc.), particularly for high-tech Novartis are the top two companies industries such as aeronautics, and globally when it comes to investments is currently the official supplier in pharma R&D (Roche leads the for US auto manufacturer Tesla. way with nearly 8 billion invested in 2016). Long considered a futuristic Happy reading !

4 SWISSQUOTE SEPTEMBer 2017

BOSSARD

26 28DOSSIER PHARMA CUTTING-EDGE SWISS COMPANIES

COMAC

TABLE OF CONTENTS

3. EDITORIAL 20. BOSSARD 28. DOSSIER : PHARMA by Marc Bürki The Swiss family CUTTING-EDGE SWISS COMPANIES business that 6. SCANS rolls with Tesla 33. Infographic : 44. In the shadows of the Economic Pharma in figures pharma industry, clinical survey 24. FOCUS trials prosper Saudi Arabia is 34. Five Swiss firms 16. TRENDS open for business in the forefront 50. When pharma out- Personalities, sources production st nations, 26. ANALYSIS 38. 21 century medicine Interview with Thomas innovations Chinese aircraft 54. 42. Infographic : Cueni, Director General manufacturer, How a drug is made of the International 18. THE MATCH COMAC, takes on Federation of Pharma- Easyjet vs Ryanair Airbus and Boeing ceutical Manufacturers & Associations (IFPMA)

5 TABLE OF CONTENTS SWISSQUOTE SEPTEMBER 2017

BURGERS

58 PUBLISHER Swissquote Chemin de la Crétaux 33 1196 Gland – Suisse +41 44 825 88 88 www.swissquote.com [email protected]

Manager Brigitta Cooper

EDITORIAL

Editor-in-chief Ludovic Chappex

66 Design director Natalie Bindelli and Caroline Fischer CANA atelier graphique Route de Jussy 29 – 1226 Thônex www.ateliercana.ch

Editorial staff Stanislas Cavalier, Sophie Gaitzsch, Benjamin Keller, Salomé Kiner, Oscar Lemaire, Marie Maurisse, Philipp Müller, Gaëlle Sinnassamy, GAMING Julie Zaugg

Layout 72 Natalie Bindelli, Caroline Fischer, Coralie Meder (CANA atelier graphique)

Cover NBC Universal

Photography Nicolas Righetti, AFP, Keystone, iStockphoto, Newscom, Reuters

MEXICO Editing (English version) Ose Ayewoh, Marco Simon

Translation Technicis Finance

PRINTING, BINDING AND DISTRIBUTION Stämpfli Ltd. 58. MCDONALD’S 72. TRAVEL Wölflistrasse 1 – 3001 Bern The revenge of the burger La dolce vita in Mexico www.staempfli.com ADVERTISING 62. SWISSQUOTE 76. CARS Infoplus AG The platform of choice Small SUVs Traubenweg 51, CH-8700 Küsnacht for investing in Bitcoin take the spotlight [email protected]

WEMF 65. APPS AND BOOKS 80. PRIVATE ISSUES REMP 2017 : 50,638 ex. Print run : 60,000 ex. The selection of the month : Lea von Bidder, to read and download co-founder of Ava and L’inouï 66. GAMING The battle between four SUBSCRIPTIONABONNEMENT of the major publishers CHF 40.-40 FOR pour 6 6ISSUES numéros www.swissquote.ch/magazinewww.swissquote.ch/magazine/f/ BOSSARD /WANG JILIANG, AFP / ISTOCKPHOTO BLIZZARD ACTIVISION GLADYS GARA BOSSARD /WANG

6 SCANS SWISSQUOTE SEPTEMBER 2017 SCANS engineering OC OERLIKON TAKES ON 3D PRINTING OC Oerlikon – a Pfaeffikon-based company in the Canton of Schwyz – is set to invest 300 million Swiss francs in 3D printing materials over the next five years. Last July, in an interview for the e-paper Schweiz am Wochenende, group CEO Roland Fischer revealed his turnover target of 300 million Swiss francs by 2020, representing a market share of 15%. According to Fischer, the primary areas “ This is not served would be medical prosthetics, aeronautics and the automotive industry. OC Oerlikon plans a Tinder to manufacture advanced metal powders for 3D printing and will even print certain components relationship ” in-house for its customers. The Swiss company The CEO of Whole Foods, also announced a partnership in June with General John Mackey, commenting on Electric, one of the biggest 3D printing system the buyout of the organic manufacturers. OERL supermarket chain by Amazon

energy RISE OF ELECTRIC CARS WORRIES OPEC

The new Volvo XC60 SUV. The Swedish automotive company announced that +70% beginning in 2019, all of its cars will be The increase in the electric or hybrid number of IPOs models.

worldwide in H1 2017. VOLVO There were 772 in total, The electric car market should soar doesn’t anticipate that the electric car including the US firm over the next two decades, with a fleet fleet will expand to that extent, but Snap (which raised consisting of 530 million vehicles by it certainly revised up its projections. $3.9 billion), the Korean 2040 according to a study conducted Despite the fact that OPEC’s 2015 pro company Netmarble by Bloomberg New Energy Finance. The jections included a 46-million-vehicle ($2.3 billion) and the American agency concluded that as a fleet of electric cars by 2040, they have Chinese firm Guotai result, oil demand will drop by 8 million re-estimated that figure at five-fold its Junan ($2.2 billion). barrels by 2040, or the equivalent starting point, or 266 million vehicles. of current Iranian and Iraqi production The intergovernmental organisation combined. The Organization of the claims that electric cars will repre- Petroleum Exporting Countries (OPEC) sent 12% of the market in 2040.

6 SCANS SWISSQUOTE SEPTEMBER 2017

RANKING

THE FIVE BRANDS THAT ARE WORTH THE MOST (calculated using consumer polls and company financial results) GRZEGORZ MICHALOWSKI / KEYSTONE

1. GOOGLE $246 BILLION 2. APPLE $235 BILLION 3. MICROSOFT $143 BILLION 4. AMAZON $139 BILLION 5. FACEBOOK $130 BILLION A 3D-printed implant. This technology is adaptable to the needs of each Source : annual BrandZ ranking compiled by WPP individual patient.

THE FIVE QUIRKIEST BENEFITS SILICON VALLEY COMPANIES OFFER

wellbeing THEIR EMPLOYEES GIVAUDAN : AN AROMATIC WAKE-UP CALL App developer Y Media has 1 rented a house in Hawaii that is available for its employees to use whenever they like

Software developer Atlassian 2 gives its employees an unlimited “ From a number of paid holidays

market The start-up Indeed provides its dynamics 3 employees with an insurance plan that enables them to be ROBYN BECK / AFP standpoint, repatriated by helicopter from anywhere in the world I’m absolutely The Geneva-based perfume expert convinced the Givaudan has decided to invest in Google, LinkedIn, Intel, Spotify, Sensorwake, a French start-up. The 4 Facebook, Microsoft and Amazon worst is over ” two joined forces to develop an alarm promise to pay the costs of IVF clock that wakes users not only via treatment for all employees. Antoine de Saint-Affrique, audio stimuli, but by diffusing morning Some of these companies also CEO of the B2B chocolate aromas “ that make you want to get finance the freezing of eggs manufacturer Barry Callebaut, during an out of bed ”, such as freshly-brewed coffee, cut grass, warm croissants Employees at GitHub are able interview with the Financial 5 to take advantage of free mas- Times. The Swiss company and mint. They also released Oria, a device that diffuses scents such as sages, a gift card for books and, is back in the black after once a year, they can attend a fresh linen and sandalwood which profits plummeted in 2016. conference of their choice help you doze off and sleep soundly. Sensorwake won the award for the consumer technology industry in both 2016 and 2017 at the CES Innovation Awards held in Las Vegas. GIVN Source : Mashable

7 SCANS SWISSQUOTE SEPTEMBER 2017

SCANS automobile TECH COMPANIES KEEN ON DRIVERLESS CARS

aviation GULF AIRLINES FACE STRONG HEADWINDS

Gulf airlines – Qatar Airways, Emirates and Etihad Airways – aren’t faring well. After years of sustained growth, Emirates posted profit margins of just 1.5% for the fiscal year ended in March. Qatar posted -3%. The airlines are suffering from the drop in the oil price, which has led to a sharp fall in the number of business passengers travelling to the Middle East. The travel restrictions imposed by the Trump ad- A fleet of autonomous ministration on travellers from the Gulf cars, outfitted with region have also had an effect. Etihad technology from has also had to absorb losses due to Chinese company, financial difficulties experienced by Baidu, undergoing the test phase in Alitalia and Air Berlin, two airlines that Wuzhen, near Etihad holds a stake in. Shanghai, China. HANDOUT / REUTERS

The tech giants are becoming for driverless cars and intelligent increasingly interested in driver- mobility solutions. These part- less cars. Waymo, a subsidiary of nerships are aiming at catching Alphabet, is involved in developing up with Uber, which is currently this type of vehicle in conjunction bogged down by legal wranglings with the on-demand taxi service, and damage to its reputation. Lyft. Chinese firm Baidu announced This summer, Nvidia and Autoliv a partnership with automotive- have also forged a partnership components manufacturers Robert with Volvo to develop software Bosch and Continental, with the for driverless cars, using artificial aim of designing new technology intelligence.

+5% FLOP The increase in revenue Biscuits with flavours for the pharmaceutical that were one step too far group Allergan in Q1 Oreos, sold by Mondelez, are were decidedly underwhelmed, 2017, which now totals the top-selling biscuits in the with the majority declaring the $3.6 billion. Sales were world. But after years without biscuits too sweet and arti- boosted by the demand any significant changes, the ficial. Oreo therefore decided for its flagship product, biscuit needed a make-over. Half to give its customers a voice Botox, which is gaining a dozen new flavours were in- and organised a competition, in popularity in emerging troduced in the spring, including with a $50,000 prize, to decide countries and with men. Blueberry Pie, Firework (with which flavour would be put on popping candy), Jelly Donut and the market. And the winner is… Waffles & Syrup. Consumers Brownie Batter. MDLZ

8 SCANS SWISSQUOTE SEPTEMBER 2017

KICKSTARTER

a m “ China is shifting from 45% exporting to The share of sales importing. using mobile China is going payment in the 2,400 to be the world’s Chinese McDonald’s largest con- restaurants. The majority of these sumption place payments are and that engine made using a QR is going to drive code generated by the customer’s the world AMABRUSH smartphone. The economy ” figure for Chinese HANDS-FREE Starbucks was 30%. Jack Ma, CEO of Alibaba TOOTHBRUSH Amabrush is the first toothbrush that brushes all your teeth at the same time and in less than 10 seconds. In the shape of a semi-circle and energy covered in antibacterial silicone NEW PIPELINE FROM RUSSIA TO EUROPE bristles, Amabrush comes with a rechargeable battery which powers the brush’s small oscil- lating movements and dispenses just the right amount of toothpaste from the device’s refillable toothpaste capsule. The brush sits in your mouth like a set of dentures. As the device is hands- free, the user can multitask A section of the while his/her teeth are brushed Nord Stream 2 pipeline undergoing automatically. The whole opera- inspection at the tion takes 10 seconds and saves Kotka plant in users 108 days of brushing Finland. over their lifetime. Amabrush’s designers promise that the NORD STREAM 2 brushing quality matches dentist recommendations (3 minutes, Europe is importing more and more the export capacity to Europe. using a series of movements Russian gas. Gazprom exports have Five European firms – Uniper adapted to the teeth and gums). increased by 12% during H1 2017 and Wintershall (Germany), OMV in comparison to the same period in (Austria), Engie (France) and Shell 2016. To meet the demand, the Rus- (headquartered in the Netherlands sian-based group will construct a and incorporated in the UK) – are new pipeline, Nord Stream 2, which involved in the project. They will will run under the Baltic Sea and into provide half of the total €9.5 billion FUNDS RAISED AVAILABILITY € 3.2 MILLION DECEMBER 2017 Germany. The pipeline will double needed for the project.

9 SCANS SWISSQUOTE SEPTEMBER 2017

SCANS

music SONY GETS BACK INTO VINYL Popular with hipsters and music-lovers, vinyl has experienced a spectacular renaissance over the last few years. And nowhere more so than in the US, with sales of 13.1 million records in 2016, 10% more than in 2015. The trend started in 2006 and hasn’t stopped since. The vinyl revival has prompted a shortage among the small number of vinyl manufacturers who survived the birth of the CD and digital music, and who are now barely keeping up with the increased demand. This situation encouraged the Japanese group Sony For the last 10 years or so, vinyl record to re-start pressing vinyl records in sales have been a new factory south of Tokyo, after steadily increasing – a hiatus of 28 years. 6758 an opportunity that Sony has decided to capitalise on.

security KABA’S ALL-KNOWING LOCK

“ If you don’t get $4.8bn invited to this DORMAKABA The amount that Total is meeting and expected to invest in Iran, The Swiss lock maker Dormakaba want to know in collaboration with has just launched a new electronic what it was like, China National Petroleum lock called Quantum Pixel. This lock just drink a Corporation, to develop is equipped with an RFID chip which the South Pars gas collects and analyses a huge amount bottle of gin and field. This is the largest of data about how the lock is used, then waterboard such as the exact time and number of deal signed between a yourself ” Western group and the times that users come and go each day. This allows hotels to better schedule Iranian government since housekeeping services, anticipate peak The ex-CEO of Twitter, the easing of sanctions times for check-in or check-out and against Iran in 2016. Dick Costolo, on a meeting stay informed of any doors accidently held between Donald Trump left open. DOKA and several representatives of the tech industry

10 SCANS SWISSQUOTE SEPTEMBER 2017

watchmaking RICHEMONT OPENS ITS INNOVATION CENTRE

The watchmaker and jeweller, “ We need to Richemont, has just opened a centre in Neuchâtel dedicated to innovation. become more Boasting laboratories dedicated to energy efficiency for watch parts and integrated, new lubrication techniques, the centre more collab- should enable the R&D process optimisation of 19 of the group’s brands. This orative and new set-up also aims to take advantage of synergies created due to its prox- less bureau- imity to the Neuchâtel innovation park, cratic ” which brings together a branch of EPFL, the University of Neuchâtel and the HE- Arc. In the long-term, this collaboration Tom Enders, CEO of Airbus, will provide employment for approxi- during the company’s recent mately 50 people. CFR restructuring ISTOCKPHOTO

energy THE BIRTH OF AN OILFIELD-SERVICES GIANT

Baker Hughes is now owned by General Electric. +60% The increase in global drone sales last year, according to consulting firm Gartner. The firm

PETER BENNETT / NEWSCOM estimates sales of The oilfield-services specialist Baker Hughes has merged $6 billion this year and with General Electric’s oil and gas division. This new sector $11.2 billion by 2020. giant will be the only company involved throughout the entire Drones for professional oil value chain, from drilling, extraction and transportation to use currently equate to the sale of the end product. The company will share the market only 6% of the market, with Halliburton and Schlumberger. The synergies created by but generate 60% of this merger will enable the company to save $1.2 billion, and the revenue. the new entity aims to develop new, more efficient drilling techniques by using digital technology. BHGE GE

11 SCANS SWISSQUOTE SEPTEMBER 2017

health SWISS PHARMACIES ARE ALL SMILES

A Galenica distribution centre.

challenge everything

14,000 km The amount of roadway that the Italian toll-road operator Atlantia would own if it completes the acquisition of its Spanish competitor, Abertis. Atlantia would acquire roads in Spain and Latin America through the deal, which is valued at €16.3 billion. GALENICA

Galenica – which operates 500 phar- further into Europe, taking advantage macies in Switzerland – floated on the of the liberalisation that the pharma- stock market in April, raising 1.9 billion ceutical market is currently undergoing. chemicals Swiss francs. The company’s rival Zur In Switzerland, the company has just CLARIANT JOINS Rose, which sells medication online and opened its first brick-and-mortar phar- WITH HUNTSMAN is based in the Canton of Thurgau, held macy, located in the supermarket Migros. its IPO in July and raised a total of 233 Both Galenica and Zur Rose should The Swiss chemicals company Clariant million Swiss francs. With a presence in attract investors thanks to their stable has announced a merger with Huntsman, Germany, Zur Rose is looking to expand revenues. GALE its US counterpart. The new entity, which will be headquartered in Switzerland, will be valued at $20 billion. The deal IPO will give the Basel-based group access to its new partner’s expertise – with Huntsman boasting BMW, GE and DELIVERY HERO FLOATS Procter & Gamble among its clients – ON THE FRANKFURT STOCK MARKET in automotive coatings, insulation materials, textile and cosmetics. But Delivery Hero, the German operates in over 40 coun- a handful of its more activist share giant of the food delivery scene, tries. On certain markets, the holders are looking to derail the floated on the Frankfurt stock company trades under the transaction. To achieve this, they market, raising €1 billion and names Lieferheld, Foodora or have increased their stake in Clariant valuing the company at €4 bil- Foodpanda. Despite the success- CLN HUN to 7.2%. lion. This IPO has also boosted ful IPO, the company is facing H 0 black the share price of the start-up relentless competition from incubator Rocket Internet, Deliveroo, JustEat, GrubHub and which holds a 35% stake in Takeaway.com, and must also Delivery Hero. The Berlin-based prepare itself for the onslaught firm, founded in 2011, dom- from outsiders like Uber and GENEVA MONTRES PRESTIGE INTERLAKEN k IRc HHOFER Ha UTE HORl OGERIE inates the German online Amazon, who are also planning LAUSANNE OURa NOS LUGANO l ES a M baSSa DEURS LUZERN l ES a M baSSa D E U R S food-delivery market and to break into this market. ZUG FINERYS ZURICH l ES a M baSSa DEURS HYTWATCHES.COM 12

HYT-Ad-SwissQuote2-200x260-H0Black-PosCH.indd 1 07.06.2017 09:22:51 challenge everything

H 0 black

GENEVA MONTRES PRESTIGE INTERLAKEN k IRc HHOFER Ha UTE HORl OGERIE

LAUSANNE OURa NOS LUGANO l ES a M baSSa DEURS LUZERN l ES a M baSSa D E U R S

ZUG FINERYS ZURICH l ES a M baSSa DEURS HYTWATCHES.COM

HYT-Ad-SwissQuote2-200x260-H0Black-PosCH.indd 1 07.06.2017 09:22:51 OUTLINES LIVE TYPE

PERFECTING THE JOURNEY

SWISSQUOTE SEPTEMBER 2017 TRENDS

the country VIETNAM The world’s new manufacturing hub

Last year Vietnam posted growth of 6.2%, making it one of the world’s most dynamic economies. This increase is thanks to the expanding manufacturing sector. With sala- the figure ries rising steadily in China, more JIM HACKETT and more companies are choos- ing to relocate their factories to Vietnam, where costs are lower. This The outsider put in charge is especially noticeable in the tech sector, where the arrival of firms like of re-launching Ford Samsung and Intel is transforming the country into a hub for manu- Jim Hackett is now in the driving seat facturing smartphones and other Position at Ford, following the precipitous electronics. Several large CEO of Ford departure of his predecessor Mark textile and car companies Fields, who was shown the door after also have factories in Population Age disappointing results and a 40% drop Vietnam. But other desti- 93.6 million 62 in the company’s share price be- nations even cheaper than tween 2014 and 2017. The new CEO GDP Vietnam are starting to Nationality is not an establishment figure. After emerge, such as Cambodia American per inhabitant graduating with a degree in finance $2,306 and Myanmar. Luckily, and following a brief spell at Procter Vietnam also has a second & Gamble, Jim Hackett spent 30 years – 20 of those as Growth in 2016 growth driver : the emer- CEO – at the office-furniture manufacturer Steelcase. He 6.2% gence of a middle class joined Ford in 2013, as a member of the Board of Directors, with purchasing power. The before taking charge of the division for projects linked to Key economic proportion of the population on-demand car services and driverless cars. Jim Hackett sectors living below the poverty line will be responsible for helping Ford transition to these electronics, had decreased from nearly types of services and for managing the risks linked to textiles, oil, 60% in 1993 to 13.5% in the company’s high dependence on the US market, which agriculture 2014. In 2016, retail trade currently accounts for two-thirds of its revenue. F increased by 10.2%.

16 TRENDS SWISSQUOTE SEPTEMBER 2017 ROBA ARCHIV / KEYSTONE

the innovation Company NEURALINK Neuralink

Launch The man–machine symbiosis within the next Elon Musk, the man behind Tesla, has called Neuralink and appointed several initial phase five years a crazy dream : to equip human beings renowned scientists to manage it. The dedicated to with interfaces featuring electrodes aim is to start by creating cerebral diseases, the Cost that would be implanted in the brain so implants designed to help improve new company will not provided that they can communicate seamless- the treatment of certain neurologi- start work on im- ly with computers and the internet. cal conditions, such as Alzheimer’s plants for the general public. The end This concept, known as “ neural lace ”, and Parkinson’s disease, or paralysis goal is to artificially increase human takes its inspiration from a sci-fi novel caused by a stroke. These devices intelligence by giving the brain access by Iain M. Banks. To carry out this am- could enable a patient who has lost to all the information that is currently bitious project, the South African-born his memory to recall and retain certain available on the web and provide it entrepreneur has founded a company memories or information. After this with the computing power of PCs.

17 THE MATCH SWISSQUOTE SEPTEMBER 2017

THE MATCH

PASSENGERS PROFITS AFTER MARGIN (2016) TAX (2016) (2016)

73.1 M 120 M £427 M €1.3 BN 10.6% 20%

CHANGE IN STOCK CONNECTIONS PRICE OVER 2017 EASYJET

803 1,800 VS +41% +28% RYANAIR

TURNOVER CHANGE IN PROFITS AFTER MARKET (2016) TAX (YEAR-ON-YEAR) CAPITALISATION

£4.7 BN €6.6 BN -22% +6% £5.6 BN €22.4 BN

FLEET 144 AIRBUS A319 383 BOEING 737 113 AIRBUS A320

BY BENJAMIN KELLER

British airline easyJet was less resil- the EU is set to affect the London- month of May, seven different pension ient than its Irish counterpart amidst based company even more adversely. funds worth over 300 million Swiss the turbulent headwinds that faced CEO Carolyn McCall announced the francs in assets under management European aviation in 2016. The two creation of a subsidiary should barriers refused to add the airline to their port- low-cost airlines were hit hard by ter- to free circulation arise, but that kind of folios due to its failure to comply with rorist attacks and the slump in sterling fix would cost a pretty penny. Ryanair labour laws. “ We haven’t had a strike post-Brexit, but easyJet has repeated managed to increase profits, but the in 31 years, ” retorted Michael O’Leary, strikes to add to its list of grievances. hyper-aggressive strategy of this sector CEO of Ryanair. Furthermore, the UK’s departure from leader sometimes backfires. During the EZJ RYA

Sources : financial reports, Bloomberg. 18 T a ur ke to the virtual

THE CHEDI PENTHOUSES

The Chedi Penthouses combine the exclusivity of a private home with the amenities of the most elegant and luxurious hotel in the Alps. When it comes to the interior layout and finishing of your penthouse, you can let your imagination run free. Our architects and designers will work with you to realise your personal wishes, whether one-of-a-kind master bedroom, stylish library, expansive private spa landscape or private hideaway with guest rooms for your friends.

Sizes range from 189 m² to 616 m²

Contact us for more information or visit us in Andermatt (Switzerland). Phone +41 41 888 77 99, [email protected] www.andermatt-penthouses.ch PORTRAIT SWISSQUOTE SEPTEMBRESEPTEMBER 2017

Xxx BOSSARD

EN CHIFFRES

BY THE NUMBERS 2,100 695 11.3% $486 1987 Number of million Operating margin Average amount Year Bossard went employees across In Swiss francs, in 2016, compared Bossard receives public on the stock 75 locations 2016 turnover, up to 10.7% in 2015 for each Tesla exchange 5.9% over a year vehicle produced in 2017, compared to $567 in 2016, according to estimates*

*Marta Bruska

20 PORTRAIT SWISSQUOTE SEPTEMBER 2017

Bossard, the Swiss family business PAR BENJAMIN KELLER that rolls with Tesla The Zug-based company specialising in fastening technology owes a large part of its current growth to its partnership with the electric car brand owned by visionary entrepreneur Elon Musk. It’s also one of the most high-tech companies in the industry.

BY BENJAMIN KELLER

t the end of July, California “ external ” CEO. When they first manufacturer Tesla took on their roles, Bossard was launched its new electric affected by the difficulties expe- Acar, which aims to provide wider rienced by its main client, the US access to the brand with a more agricultural equipment manufacturer accessible price than the previous John Deere. The duo then decided models. A Swiss company will be to target new industries, particularly closely following the sales of the the e-mobility segment. It paid off. Model 3 : Bossard, based in Zug, is one of the market leaders in fa stening techniques in Europe, the United States and Asia. Founded “ Tesla opened in 1831 as a hardware store, the doors to other family business is Tesla’s main start-ups in supplier for fastening parts such the field of as screws, nuts and rivets. e-mobility ” Stephan Zehnder, CFO of Bossard Bossard grew gradually, first re- since 2005 gionally, then nationally and finally internationally in the 1970s. But its growth has sped up considerably in The collaboration with Tesla started recent years. Revenues have more in 2010, when the brand, founded than doubled since the late 1990s. seven years earlier, still only pro- Its share price has quadrupled since duced roadsters. “ At the beginning, 2010. The company benefitted from Tesla chose two suppliers ; however the leadership of David Dean, CFO the second one, Anixter, decided not A Bossard employee since 1998 and then CEO starting in to continue with the partnership, ” restocking : logistics 2005, as well as Stephan Zehnder, said Michal Lichvar, analyst from management is one CFO since 2005. Both of them were Vontobel bank. Bossard believed in of the Zug-based group’s biggest recruited from outside the founding the future potential of the auto brand strengths. family and David Dean is the first and became Tesla’s sole supplier.

21 PORTRAIT SWISSQUOTE SEPTEMBER 2017

It helped develop the Model S, Zehnder. Tesla, which put out a bit ceived reduced pricing, according a top-of-the-line saloon car that less than 50,000 cars (Model S and to Rechberger. But Bruska believes would make Tesla known to the public, X) in the first half of 2017, is aiming it is unlikely that the US company and signed a three-year contract in for 500,000 sales per year in 2018 will change suppliers so quickly : March 2014 for a delivery volume and one million in 2020, thanks to “ Bossard is the main supplier of worth $140 million. Ever since, Tesla the Model 3, whose base price starts fasteners for Tesla cars, has de has been Bossard’s top client (7% at $35,000. Marta Bruska, analyst at ployed over 1,500 SmartBins (ed. of revenue in 2017), ahead of John Baader Helvea, estimates a baseline note : storage bins that check stock Deere (6%). Sixty employees are exceeding 200,000 models in 2018, levels using weight sensors and au- dedicated solely to the American which means Tesla would account for tomatically reorder when necessary) auto brand. “ The growth linked to nearly 10% of Bossard's turnover. at Tesla’s Fremont plant and oper- Tesla’s business was immense in ates a new distribution centre near the last couple of years, ” said But what about after 2020 ? One of the factory. In our view, such a high Lichvar. And it’s far from over. the risks for Bossard, according to level of integration into Tesla’s pro- Armin Rechberger, analyst at the duction set-up significantly decreases CONTRACT EXTENDED TO 2020 Zurich Cantonal Bank, is that with the likelihood of being replaced by an- The contract between Bossard and the spike in volume, Tesla could look other supplier as well as the risk that the company owned by visionary for other suppliers or buy its fasten- Tesla switches to a direct sourcing Elon Musk was recently extended to ing parts directly. Indeed, the Zug- from C-parts manufacturers. ” 2020. “ Tesla’s business is depending based company doesn’t manufac- on the success of the Model S and X ture the parts it sells to its clients. (ed. note : already on the market) Instead, it specialises in finding the going forward and the ramp-up most appropriate and effective prod- phase of the Model 3, as well as ucts on the market for their clients. “ Bossard is one Tesla’s future volume and produc- of the leaders tion capacities, ” said CFO Stephan Already, Tesla is purchasing fewer parts for its Model 3 and has re- in new trends ” Michal Lichvar, analyst from Vontobel bank

ANALYST’S ADVICE Whatever happens, the collaboration with Tesla has positioned Bossard as a privileged partner for e-vehicle “ PERFORMANCE IS HIGHER THAN EXPECTED ” manufacturers. “ Tesla opened doors to other start-ups in the field of After record results in 2016, predicts the company will make e-mobility ”, said Stephan Zehnder. Bossard began the new fi- 784 million (12.8% growth) nancial year with a bang. Net and estimates that the income The Swiss company works with profits were up 44.7% in the Bossard generates because of several California start-ups, such first half of 2017 year over year, Tesla will grow 24% to reach as Lucid Motors, NextEV, Karma and reaching 45.3 million Swiss $60 million. “ Bossard contin- Faraday Future. While still margin- francs. Turnover increased 15%, ues to perform slightly ahead of al, this market is expected to take reaching 395.1 million. Thanks expectations, ” agrees Lichvar. off. Bloomberg New Energy Finance to the partnership with Tesla Investors also like the exposure predicts that 35% of the new vehi- and the improved business from to Tesla. For Rechberger, if John agricultural manufacturer John Deere’s recovery is confirmed, cles on the market in 2040 will be Deere, Bossard’s second largest its effect on Bossard’s revenue electric. But if e-vehicles have fewer client, the US market continues could even exceed that of Tesla. assembly parts than their ances- to become increasingly signifi- The weakened Swiss franc tors, parts will be more expensive cant. Growth in the market has against the Euro should also be and margins will be higher. reached 32.3% or 114.3 million. beneficial to the company, ac- This figure also includes the cording to him. Bruska advises acquisition of US competitor to purchase shares, with a tar- INDUSTRY 4.0 Arnold Industries. get of 225 Swiss francs. Lichvar Bossard has a leg up on the electric advises to keep shares, with vehicles market, but it is part of an Bruska believes that the Zug- a price targeted at 200 Swiss industry that is highly fragmented. based company will exceed its francs. Rechberger believes The company holds less than 1% 2017 target of 750 to 760 million the current share price (around globally, despite its ranking as a Swiss francs in revenue. She 210 Swiss francs) is a bit high. world leader. “ In Switzerland, one

22 PORTRAIT SWISSQUOTE SEPTEMBER 2017

of the competitors is SFS. In Europe, These technologies allow for a more there are Böllhoff, Würth, Bufab and efficient allocation of resources, REVENUE BY REGION Trifast. In the United States, there greater control over the manufac- are Fastenal and Optimas, along with turing process and lower costs. many local players, ” said Lichvar. To With SmartBins, an order is placed stand out, Bossard can rely on its re- automatically, Bossard processes liability, good reputation, broad global the request and sends the materi- reach and tech innovation. “ Bossard al – screws, for example – directly is a very innovative company and to the production site. The client I would say is one of the leaders in doesn’t lift a finger. Sixty per cent new trends. Bossard was one of the of orders are digitised in this way. first to use automated smart bins, which are now becoming standard. ” With electric vehicles, Industry 4.0 Europe (excluding Switzerland) 41% is one of the fields that are very United States 27% SmartBins are a key component of promising for Bossard’s future Switzerland 17% “ smart factories ” or Industry 4.0, growth, according to Bruska. This Asia 15% and Bossard relies heavily on them. is in addition to the aerospace The concept builds on the Internet of industry and fastening solutions REVENUE BY SEGMENT Things, whereby tools and machines for lightweight materials : “ We on production sites communicate believe that the smart inventory with each other, as well as ex management solutions are a very ternally with clients and partners. strong driver for Bossard’s business

Electrics and electronics 27% Machines 26% Transportation and automobiles 17% Metal construction 11% Medical 5% Other 14%

Source : Marta Bruska, Baader Helvea (estimations)

even in a difficult economic environment, as in tough times, ever more companies rethink their supply chain management approach towards leaner solutions. Moreover, Bossard’s high level of integration into the client’s operations creates additional ties to the customers. ” Will this result Bossard’s “ smart ” in one billion in revenue by 2020, as bins sent to clients continuously mo- Bossard execs believe ? “ I expect nitor the amount of turnover of 900 million by that time, stock by weighing with an additional 50 to 60 million it and automatically places orders to rep- with potential acquisitions, said lenish the supply. Rechberger. “ So that number isn’t too far off. ” BOSN BOSSARD

23 ANALYSIS SWISSQUOTE SEPTEMBER 2017 ANALYSIS THE VIEWPOINT OF SPECIALISTS

FOCUS “ Saudi Arabia is full of opportunity ”

The desert kingdom is looking to reduce its dependency on oil by developing industries and attracting investors. The Swiss economy may be in a position to benefit from the upcoming diversification. ohann Schneider-Ammann, BY BENJAMIN KELLER head of the Swiss Federal Department of Economic Affairs, Education and ResearchJ (EAER), made an official two-day visit to Saudi Arabia last July. The federal councillor was joined by a delegation comprised of government representatives and business minds. The country has initiated a dramatic economic shift to reduce its reliance on oil. And Swiss players stand to gain from the diversification in the works.

Black gold currently constitutes 80% of the government’s budget and more than 40% of GDP. Until now, this abundance has always enabled the monarchy to take care of the people. The government employs 75% of Saudi citizens and there are no taxes. But now the economy is teetering. With the fall in crude oil prices – which have been cut in half since 2014 – along with a skyrocketing population that has

24 ANALYSIS SWISSQUOTE SEPTEMBER 2017

doubled to reach 32 million since member of the Swiss Business move, including UBS, Credit Suisse, 1990, the government has had to Network Saudi Arabia (a network Novartis (marketing, sales), as seek out new sources of income. for the exchange of economic well as Schindler and ABB (assem- information) who has lived in the bly). Saudi Arabia is Switzerland’s In April 2016, the monarchy country for 15 years. second-largest financial partner in launched Vision 2030, a plan to the region and has had a fully en- diversify its economy. The plan “ Tourism is another very promising forced free-trade agreement since provides for a sovereign fund sector, ” adds Syfrig. As home to January 2016. As such, it is and will worth $2 trillion to be invested in Islam’s two main holy cities, Saudi remain a significant export market, non-oil sectors. In order to fund Arabia receives 8 million visitors particularly for luxury and conveni- the venture, the country is floating a year and is looking to kick that ence goods. around 5% of the Saudi Arabian figure up to 30 million by 2030. “ If Oil Company (Aramco) in an IPO they can manage to keep visitors What is it like doing business with that could be worth $100 billion. for a week and not just during their Saudi Arabia ? “ You have to accept One of the fund’s first moves was pilgrimage, there’s a lot of money that things can take a turn rather to invest $3.5 billion in the San to be made, ” explains the former quickly, ” says Syfrig. “ As far as Francisco-based transportation Novartis executive. To manage this, working with the government goes, company Uber. they have substantially improved I wouldn’t recommend it to anyone. the country’s infrastructure. Air- You need a good Saudi partner, In addition to investing via its ports and especially international otherwise it’s going to be very sovereign fund, Saudi Arabia aims hubs have been expanded. difficult. ” With respect to the in- to develop national industries to stability that is currently rampant increase foreign direct investment. in the Gulf – including the Qatar Could this be a golden opportunity diplomatic crisis and the Yemeni for Swiss firms ? “ Saudi Arabia has Civil War – Syfrig doesn’t see the a lot of opportunities for foreign “ The country need to “ overestimate ” the risk. companies, ” says Chris Watts, head is undergoing “ There are conflicts all of the of Swiss Business Hub Middle East, time in this region. ” the Dubai-based representative of a process Switzerland Global Enterprise (S- of widespread There is one more issue to ad- GE) in the UAE. According to Watts, dress, but this time it’s ethical. the tourism, renewable energy, social and Even if the Vision 2030 plan is aeronautics, professional training, economic supposed to pave the way for agriculture, pharmaceuticals and social change, Saudi Arabia is an food industries are the most profit modernisation ” absolute monarchy based on divine able for Swiss companies. Chris Watts, Consul General of Switzerland right. Sharia law is strictly en- in Dubaï forced (adultery is punishable by TOURISM AND RENEWABLE ENERGY stoning) and fundamentalist Islam “ The Saudi kingdom has undertak- is promoted beyond its borders. en projects of historical propor- Chris Watts put it diplomatically, tions in renewable energy under a Syfrig believes that rather than in- stating that “ Saudi Arabia is un programme budgeted at $30–$50 vesting in manufacturing facilities, dergoing a process of widespread billion, ” reveals Watts, who is for example, the best opportunities social and economic modernisa- also Consul General of Switzerland are in consulting and equipment. tion, and Swiss companies could in Dubai. “ Anything to do with “ All of the Swiss groups who found contribute considerably. ” But greentech, cleantech, water treat- it worthwhile to have a location in Bruno Syfrig is more cynical. ment or alternative energy has high Saudi Arabia are already there, ” ac- “ Business always brings change. growth potential, ” states Bruno cording to Syfrig. About a hundred After all, all the major Swiss Syfrig, legal advisor and a committee Swiss companies have made the firms are already here. ”

ANALYSIS SWISSQUOTE SEPTEMBER 2017

INVESTOR INTERVIEW “ Airbus and Boeing need not worry ”

Designed by the Chinese aircraft manufacturer COMAC, the C919 – the largest airliner ever manufactured in China – flew its first successful flight in May. But turbulence lies ahead on the path to success...

BY STANISLAS CAVALIER

Shooting the Airbus-Boeing duopoly out of the sky : The C919 by COMAC has just carried out its first flight. that’s the ambitious goal of the Commercial Aircraft Will it rival the A320 Neo and B737 Max ? Corporation of China, or COMAC. The Chinese aircraft This first flight unquestionably represents manufacturer has just taken a huge step towards an impressive success for the Chinese fulfilling this goal. On 5 May 2017, its C919 aircraft aircraft industry. However, I think that the took its first test flight. The aircraft took off from Airbus-Boeing duopoly need not worry about the Pudong International Airport in Shanghai to the the short term : there’s a long road ahead for applause of a large crowd, and landed without a hitch COMAC. The next step for the C919 is cer- after 80 minutes of flight. "This is an impressive step, tification from the American and European because it is incredibly difficult to enter the aero- aviation authorities, the FAA and the EASA. space industry. Since 1969, no player has been able to This could take a long time. Airbus waited 14 penetrate this market," stated Richard Aboulafia, vice months for its A320 Neo to be certified, and president of Analysis at Teal Group, an aerospace and Boeing waited 13 for its B737 Max. Certifi- defence market research firm. This aircraft is able cation for the C919 will take much longer to carry 168 passengers over 5,550 kilometres, and because COMAC started off with a blank COMAC hopes to challenge the two international stars sheet, unlike Airbus and Boeing. In compari- on the regional flight market, the American aircraft son, the ARJ21 – a regional 70- to 90-seat B737 Max by Boeing, and the European A320 Neo by jet developed by COMAC which completed Airbus. But Richard Aboulafia isn’t convinced about its first flight in 2008 – was certified by the this in the short term. Chinese authorities in 2014, but hasn’t yet been authorised by the FAA or the EASA. There is the C series from the Canadian manufacturer Bombardier, the C919 from the Chinese manufacturer But in order to speed up this process, COMAC called on COMAC and the MS-21 from the Russian manufacturer several Western subcontractors who work with these Irkut. Why would so many aircraft manufacturers want two manufacturers. In the end, only the assembly is to invest in the civil aircraft market for 100- to 200- 100% Chinese. Does this mean rapid certification ? seat medium-haul aircraft ? COMAC called upon companies like GE-Safran, All of the manufacturers have already devel- Thales, Zodiac Aerospace, Hamilton oped smaller models (50 to 100 seats). Their Sundstrand and Honeywell. However, instead logical goal is to develop larger aircraft, as of buying their products on a global scale, the market for 100 and 200-seat aircraft is the Chinese manufacturer demanded local worth 10 times the 50 to 100-seat market, production of all the main components and and as they don’t have the necessary means subsystems, without intellectual property to break into the long-haul segment. COMAC protections for their partners. In my opinion, could become a big player in this segment. this was where COMAC went wrong. Because

ANALYSIS SWISSQUOTE SEPTEMBER 2017 WANG JILIANG / AFP WANG

The satisfied Chinese flight crew at the Shanghai Internatio- nal Airport on 5 May 2017, after comple- ting the COMAC C919 commercial airliner’s inaugural flight. The aircraft manufacturer has already received 600 orders for the new model.

ultimately, the subcontractors know that ment with Airbus so that the A320 Neo could the technology that they are transferring be manufactured in Tianjin. If Chinese airlines will be used by Chinese suppliers. In fact, are invited to buy products "made in China", they are only accepting to provide old tech then they can turn to the A320 Neo. Addition- nology. This procedure was detrimental ally, the Chinese economy is highly dependent to the ARJ21, an aircraft that was already on exports and open borders. technologically outdated, and the same is happening with the C919. This model is still If COMAC were to drastically lower prices for the very far from the ones it hopes to rival. The C919, would they likely gain market shares by offering C919 is on the same level as good aircraft a low-cost aircraft ? from the 1990s. Yet, in an era where aircraft The cost of labour is marginal in the price companies’ margins are so tight, any disad- of this type of aircraft. Margins are made vantage in fuel consumption compared to by saving on large volumes. On this note, the market references (A320 Neo and the COMAC is starting out late in the game. It’s B737 Max) is crippling. necessary to develop a maintenance service around the world. COMAC would have trouble However, the C919 has already booked more than proposing their C919 at a competitive price. 600 orders and intents to order. Orders don’t mean anything. These come After the C919, COMAC aims to develop the C929 exclusively from Chinese customers and (250 to 290 seats), then the C939 (350 to 400 seats). could easily be cancelled if the aircraft Are these aircraft also destined for failure ? doesn’t meet the customer’s needs or takes COMAC has the resources to become an too long to get certified. By comparison, important player in the aerospace market and COMAC had 340 orders for the ARJ21. to rival the Airbus-Boeing duopoly in the next And then what happened ? Only three 10 years, taking into account the resources aircraft have been delivered and most of and talented workforce available in China. the orders have been abandoned, making But in order to achieve this, COMAC must stop this industrial programme a veritable requiring suppliers to hand over their intellec- disaster. The same may be true for the C919. tual property.

China has become the leader on the global market for civil aviation. Could Beijing force the C919 on local companies ? RICHARD ABOULAFIA VICE PRESIDENT, ANALYSIS This could happen, but I don’t think it will be the TEAL GROUP case. In March 2014, Beijing signed an agree-

27 PHARMA SWISSQUOTESWISSQUOTE SEPTEMBER MARS 20162017

33. Infographic : Pharma in figures

34. Five Swiss firms in the forefront

38. 21st century medicine

42. Infographic : How a drug is made

44. In the shadows of the pharma industry, clinical trials prosper

50. When pharma outsources production

54. Interview with Thomas Cueni, Director General of the Internatio- nal Federation of Pharmaceutical Manufacturers & Associations (IFPMA) DR

28 PHARMA SWISSQUOTESWISSQUOTE SEPTEMBER JUILLET 2017

DOSSIER PHARMA CUTTING-EDGE SWISS COMPANIES

The main driving force behind Swiss exports, the pharmaceutical industry is entering a new age. Gene therapy, treatments for rare diseases and the emergence of big data are at the core of the intensifying battle for innovation.

BY LUDOVIC CHAPPEX

Dossier prepared by : Stanislas Cavalier Ludovic Chappex Sophie Gaitzsch Benjamin Keller Marie Maurisse Julie Zaugg

29 PHARMA SWISSQUOTE SEPTEMBER 2017

CANCER IS KEY ar ahead of other drugs, cancer Ftreatments make up close to 40% of1 medicines currently in development. Roche is the world DEMOGRAPHICS leader in this category, taking in more than 30% of revenue gener- ARE BOOSTING GROWTH ated by this activity. Credit Suisse n ageing global population, an have pushed generic drugs, which analyst Lorenzo Biaso said price Aever-increasing number of chronic are less profitable for the industry. pressure is stronger in common illnesses associated with age, and an Nevertheless, the majority of the medications (to treat diabetes, overall rise in standards of living,2 along large pharmaceutical companies are for example) than in cancer treat- with an uptick in demand for caregiv- doing well. Individual performances ments, less widespread but very ing, especially in emerging countries… fluctuate based on new product lucrative for pharma companies. all these big trends are quite positive releases. But a company’s quarterly for the pharmaceutical industry and results rarely shock the market, ” said “ Oncology is a double-edged are expected to last for the next sev- Schupp. “ Usually what increases a sword, ” explained Jérôme Schupp. eral years : “ Currently the global phar- company’s share price is good clinical “ It’s a huge market that’s growing ma market is growing approximately trial results, for example when a enormously. The potential is 5% per year, or 1.5 times the growth promising drug moves from phase significant, especially when you of global GDP, ” said Jérôme Schupp, II to phase III. ” take into account the progress an independent analyst. “ Govern- that can still be made. The danger ments are becoming more demanding is that competition is fierce in in terms of reimbursements (ed. note : Emerging countries this field, and it will only get see p. 32), so we are no longer in a are growing twice worse with the increased presence phase where growth can reach 10%, of the big US companies (Pfizer, but the fundamentals remain solid. ” as fast as developed Merck, Abbott, etc.) and European countries companies like Sanofi. It’s also According to a report published by a pharmaceutical industry where the firm EY in May, turnover growth Currently, the United States is by far the failure rate is extremely high. for the top 21 pharmaceutical the largest pharmaceutical market Approximately 80% of developed groups dipped slightly in 2016 com- in the world. For example, 45% of drugs don’t receive market au- pared to 2015. Their operating profit Roche’s sales come from the US. The thorisation. As a result, compa- (EBIT) improved, however, up 6.3%. US market also guarantees the high- nies in this industry must be very The authors of the study highlight est profits, since the price of drugs resilient. ” that the situation isn’t similar across is high and there is a strong demand the board, as some companies are for innovative – and therefore expen- posting “ robust growth ” while sive – treatments. Unsurprisingly, others “ tarnish the overall trend ”. emerging countries are growing, on US companies posted more positive average, twice as fast as developed figures than their European and countries. “ Companies that know Japanese competitors, taking up the to take advantage of the demand in top 10 spots in the ranking for high- emerging countries and not focus est annual turnover growth. These solely on the United States are results do not surprise Schupp : “ This the ones who will stand out, ” pre situation is due particularly to the dicted Lorenzo Biasio, an analyst fact that many European countries at Credit Suisse.

30 PHARMA SWISSQUOTE SEPTEMBER 2017

SWITZERLAND DEFIES THE US t would be an understatement to cial powerhouses have significant Isay that the pharmaceutical indus- cash flows and are generous in pay- try plays a central role in the Swiss ing out dividends (generally between economy. Pharma exports now make 3% and 4%). But most importantly, up close to 40% of all Swiss3 exports. innovation is the focus of their strat- Last year, the 250 companies in the egy ; they are the top two companies PROMISES industry exported more than 80 billion in the world in terms of investments Swiss francs’ worth of products. And in research. Last year, Roche invested OF BIG DATA that’s not even including the tens of €7.88 billion in R&D, and rival Novartis n time, when pharmaceutical thousands of jobs created by these invested €6.43 billion, according to EY. Icompanies will likely be companies (see on p. 33), particular- reimbursed based on the proven ly in and around Basel, Lausanne, Like many Swiss export industries, effectiveness of their drugs, they Zurich, Zug and Lucerne. Swiss pharma saw its profit margins will4 need to be able to manage fall over the past few years because and interpret a large number of of the strong franc. Pressure over data and results. Roche and drug prices is also becoming appar- ent within Switzerland. But nothing This is because now, information on Novartis are challenges the central role the each patient has been digitalised ; among the top country plays as a hub for innovation. it is no longer just wishful thinking. It remains the leader in terms of filing The long-held dream of personal- five companies patents, as Lorenzo Biasio highlights : ised medicine for all, which Roche in the world “ Pharma’s very specific business holds dear, has never seemed so lines and R&D activity certainly have attainable and concrete. In oncol- their place in Switzerland. The CFO ogy particularly, doctors are now This ecosystem gave rise to a of Novartis often confirmed that able to use high-speed, low-cost myriad of very promising start-ups, they would never relocate their main DNA sequencing to identify the ge- which are often in the news, such research activities to countries such netic profiles that are more likely as CRISPR Therapeutics, AC Immune as China, India or Poland. For Swiss to develop various diseases. and Sophia Genetics. In terms of pharmas, it is vital to take advantage large listed companies, only two of the ecosystem in place, stimulat- Networking connects hospitals, Swiss giants remain : Roche and ed by the presence of universities giving them access to enormous Novartis. The two heavyweights are and polytechnic schools. However, databases that include details now among the top five companies in low-cost jobs will move to countries such as the effectiveness of treat- the world in terms of turnover (see where wages are lower. But that’s a ments administered to individual the ranking on p. 37). These finan- trend that affects all industries. ” patients. But it remains to be seen how we can effectively process all the data… “ The key isn’t accumu- lating data in itself, but rather our ability to extract relevant information from that data by employing artificial intelligence, for example, ” said Jurgi Camblong, CEO of Sophia Genetics, a Swiss start-up active in the field. “ The goal is to better target treatment for each patient. It’s a major change in the industry, one that is very concrete and pragmatic. ” (See also our interview on p. 54.)

31 PHARMA SWISSQUOTE SEPTEMBER 2017

THE REIGN OF MERGERS AND ACQUISITIONS iven the pressure for growth Gthat the pharmaceutical industry is experiencing, analysts expect5 that the mergers and acquisitions market will remain very active. According to EY, the DRUG PRICES : COUNTRIES total number of acquisitions hit a record high at $258 billion last CRACKING DOWN year, compared to $230 billion in overnments are increasingly able to demonstrate that the drug re- 2015. The biotechnology industry Gcracking down on drug prices duced hospitalisation rates by 20%. in particular doubled its mergers to reduce medical costs. Both the In that case, the company can market and acquisitions spending, which European Commission and6 the the drug at a higher price because went from $22 billion to close to United States are putting pressure governments will save even more $40 billion. on pharmas – even if, according to money from keeping patients out of analysts, rapid drastic changes are the hospital. For Novartis, it’s easy Like many of his fellow analysts, unlikely, despite recent threats. to do the maths and set a competi- however, Jérôme Schupp believes The problem can be boiled down to tive price. ” that the time for “ mega merg- this : as healthcare costs rise, the ers ” has passed : “ Over the past requirements in terms of results in- few years, we’ve seen a number crease. “ We’re still moving towards “ To be competitive, of mergers between large compa- a system where a drug will be reim- companies must be nies. In Switzerland, Serono and bursed based on how it concretely able to convince recently Actelion were acquired affects the patient, ” said Jurgi regulators of a drug’s by Germany’s Merck KGaA and Camblong, CEO of Sophia Genetics, real effectiveness ” US-based Johnson & Johnson, a Swiss start-up specialising in Jurgi Camblong, CEO of Sophia Genetics respectively. In Europe, the big- Data-Driven Medicine (DDM). gest companies such as Sanofi, GlaxoSmithKline and AstraZene- This pragmatic approach can be Beyond regulators, pressure groups ca are the result of large-scale beneficial to pharmaceutical com- also have a considerable influence mergers. But beyond a critical panies, if they are able to stand out on prices, as Biasio explains : “ In size, it becomes very complicated from the rest : “ If a company can the United States, pharmacy benefit and unproductive to carry out offer a more innovative and more ef- managers (PBMs) represent insured a merger. If we take Roche and fective product than its competitors, patients against pharmaceutical Novartis, for example, these two then the government will be ready companies. But we’re starting to see companies alone spend close to to reimburse the product, even if these types of activities become very 15 billion Swiss francs on R&D. it is expensive, ” said Schupp. consolidated. In other words, fewer Regrouping and managing such PBMs will represent an increasing immense structures would result “ The ability to innovate is one of the number of patients, which will give in operational problems. ” determining factors for price position- PBMs more negotiation power against ing in the industry, ” said Camblong. pharmas. They can therefore pressure “ To be competitive, companies must the drug companies for lower prices be able to convince regulators of by agreeing to promote the products a drug’s real effectiveness. Take to their insured patients. This will Entresto, a Novartis drug to treat force pharma companies to reduce cardiac failure : scientists were their margins. ”

32 PHARMA SWISSQUOTE SEPTEMBER 2017 PHARMA IN FIGURES

WORLDWIDE SWITZERLAND

40% Percentage of Swiss export market accounted for by pharmaceutical industry, representing roughly CHF 80 billion. This percentage has almost $149.8 billion doubled in the last 20 years. Total Combined annual spending by pharmaceutical exports increased tenfold. companies on R&D

SIZE OF THE PHARMACEUTICAL MARKET +31% Year-on-year increase in Swiss $1.105 trillion pharmaceutical exports to China in 2016, totalling CHF 4.1 billion In 2016 $1.480 trillion Estimation in 2021 250 Number of pharmaceutical companies in Switzerland

+40,000 Number of people in Switzerland directly +5 million +1,900 employed by the pharmaceutical industry. Number of pharmaceutical- Number of cancer treatment Add people indirectly employed by the sector employees worldwide drugs in development industry and this figure climbs to 180,000.

Sources : International Federation of Pharmaceutical Manufacturers and Associations, Administration fédérale des douanes, Interpharma 33 PHARMA SWISSQUOTE SEPTEMBER 2017

SWISS FIRMS IN 5 THE FOREFRONT Well-known for their inclination towards innovation, small and large Swiss pharma stars have varied profiles. We took a look at a few.

BY LUDOVIC CHAPPEX AND JULIE ZAUGG

Founded ROCHE 1896

ONCOLOGY SPECIALIST Headquarters With promising new products in its pipeline, the Basel-based company Basel (Switzerland) is quite attractive to analysts Revenue 2016 CHF 50.6 billion

Founded in 1896, the company company is emerging as the world is far more ef- Employees had a difficult start to this year. leader in oncology and biotech. fective than the 94,052 Disappointing clinical trials let down Avastin (ed. note : a drug to treat majority of the investor expectations and the share various types of cancer) is their solutions that are ROG price fell as a result. In particular, flagship drug. The company’s funda- currently on the the market was expecting that the mentals are very good. No company market. Doctors and drug Perjeta would be more effec- has invested as much in R&D as patients are very excited. We tive in treating breast cancer when Roche has. ” recommend purchasing shares. ” combined with Herceptin, another treatment developed by Roche. According to Bruno Bulic, analyst “ The scientists at Roche are at Baader Helvea, the share price brilliant, ” said Schupp. “ They have Nevertheless, the advances made of the world leader in oncology is been able to successfully mix their by the Basel company in terms of currently undervalued and therefore products, making them effective for genomics and immunotherapies makes a good medium-term invest- several types of cancer. ” For the en- should quickly increase its revenue. ment. Credit Suisse is also optimis- tire financial year, Roche is expect- “ With a portfolio that includes three tic : “ We’re expecting a big market ing revenue growth of approximately high added-value drugs, Roche aims breakthrough with their new drug 5%. Earnings per share are expected to be much more specialised than Ocrevus, a revolutionary treatment to increase at the same rate. Fur- Novartis, ” said Jérôme Schupp, an for multiple sclerosis, ” said analyst thermore, the group is counting on independent financial analyst. “ The Lorenzo Biasio. “ This drug a new increase of their dividend.

34 PHARMA SWISSQUOTE SEPTEMBER 2017

SANTHERA PHARMACEUTICALS EXPERT IN RARE DISEASES Active in a niche market, this small company seems to be undervalued

This company, founded in 2004, focuses on finding treatments for rare diseases. “ Its a risky investment since revenue is still uncertain, but it’s also attractive, since the company is currently very undervalued, ” said Bob Pooler, analyst at Val- uationLAB. Its value is only calculated based on revenue from the drug Raxone (idebenone) for a single indication, while it is expected to obtain several BASILEA PHARMACEUTICA other indications shortly. Share prices are FOCUS ON ANTIBIOTICS currently It’s been a banner year for this Roche-based around 70 Founded 2004 company with high potential Swiss francs but should be Headquarters This Roche spin-off focuses on producing antibiotics worth more Liestal (Switzerland) and antifungal medications. Analysts predict there than 200, according Revenue 2016 will be a significant progression in its business vol- CHF 19 million ume in the medium term. This year, the company will to Pooler. conduct a phase III clinical trial in the United States to Employees test its antibiotic Ceftobiprole. This drug will also be 80 sold in several European countries SANN and Latin America. Its antifungal Founded medication Cresemba (Isavu- 2000 conazole) was put on the market in the United States and Europe, Headquarters and will soon be sold in Japan. In Basel (Switzerland) June, Basilea also signed a licence Revenue 2016 agreement with US-based Pfizer CHF 66 million to produce and market the drug. Bruno Bulic from Baader Helvea Employees recommends purchasing shares. 240 BSLN

35 PHARMA SWISSQUOTE SEPTEMBER 2017

Founded NOVARTIS 1996 (merger between Ciba-Geigy THE DIVERSIFIED GIANT and Sandoz) The Basel-based company lost patents by the handful and experienced disappointing growth, but is starting to see the light at the end of the tunnel Headquarters Basel (Switzerland)

Novartis is slowly coming out of a slightly. Revenue was down 1% in various fields Revenue 2016 $48.5 billion difficult period of losing patents and and net profits down 5%. In the such as ophthal- battling competition from generic drugs. short term, investors aren’t interest- mology, multiple Employees Over the past few years, the group’s ed in the shares but many believe sclerosis, cardio- 123,000 several blockbusters such as Diovan the company’s performance will vascular disease (for high blood pressure) and Glivec (for recover. “ The next growth phase and dermatology, ” NOVN leukaemia) successively fell into the should start in 2018, ” said CEO said Gbola Amusa, public domain. To make matters worse, Joe Jimenez. Schupp agrees : analyst at Chardan the Basel-based giant suffered a major “ Starting next year, growth should Capital Markets. The Swiss company setback in ophthalmology, said Jérôme once again be above the market also benefits from its ranking as the Schupp, independent financial analyst : average. ” world’s second largest producer of “ Novartis’ big concern is Alcon. It was generics, under the brand Sandoz. acquired by Nestlé for $52 billion in Novartis has two potential block- 2008. But Novartis has clearly underin- busters waiting in its coffers, “ Novartis will continue to lose a few vested in this entity, which has fallen including Cosentyx (psoriasis) and more patents and the company con- back a bit. It lost market share and its Entresto (heart problems) that have tinues to spend a significant amount margins fell considerably. They are cur- just been put on the market and on marketing, ” said Lorenzo Biasio, rently trying to remedy the situation. ” should help the company get back on analyst at Credit Suisse. “ But it is track. Furthermore, Novartis stands certainly a diversified company that In the first half of 2017, Novartis out due to the diversified nature pays substantial dividends and its posted results that were down of its portfolio. “ They are leaders fundamentals are solid. ”

36 PHARMA SWISSQUOTE SEPTEMBER 2017

GLOBAL TOP 10 : US COMPANIES COME IDORSIA OUT ON TOP THE CLOZELS’ BET (BASED ON GLOBAL REVENUE*) This Actelion spin-off has just gone public and has high hopes for the future Johnson & Johnson (US) $71.9 billion Repeat Actelion’s success story. This could easily sum up the ambitious project of the couple, Jean- Paul and Martine Clozel. Having sold Actelion, Bayer (DE) $55.2 billion which they founded in 1997, to Johnson & Johnson for $30 billion, they created the biotech Idorsia Pfizer (US) $52.8 billion from a development unit that did not interest the American group. Introduced on the stock market in June, the new company already has more than $2 Roche (CH) $50.1 billion billion. Jean-Paul is CEO and Martine is scientific leader. The company has an advantage in that it is not starting from scratch, as Lorenzo Biasio from Novartis (CH) $48.5 billion Credit Suisse states : “ The pipeline of products in development is clearly more advanced than your average start-up (ed. note : Idorsia is testing mole- Merck & Co (US) $39.8 billion cules to treat high blood pressure and insomnia in clinical trials that are already in Sanofi (FR) $36.6 billion phase II). For investors, it could be a potential golden nugget. ” Founded 2017 But don’t get too optimistic : GlaxoSmithKline (GB) $34.8 billion “ We made a rational calculation Headquarters based on the current pipeline Allschwil and the chances the drugs will (Switzerland) Gilead Sciences (US) $30.4 billion be on the market. We estimate Revenue that the share price is 50% too - high, ” warns the analyst. But AbbVie (US) $25.6 billion this could change if there are Employees positive announcements in +600 *The revenues have been converted to dollars the future. ” IDIA EYE OF SCIENCE / PHOTO LIBRARY

37 PHARMA SWISSQUOTE SEPTEMBER 2017 MIKE BLAKE / REUTERS

21ST CENTURY MEDICINE

Rather than sinking all of genetic basis for diseases and to their efforts into develop- GENETIC MARKERS develop targeted treatments. Didier ing potential blockbusters, Genomes provide insight Trono, head of EPFL’s Laboratory pharmaceutical compa- into the mutations respon of Virology and Genetics (fondly nies are now broadening sible for some diseases, referred to as “ Tronolab ”), says, “ we their research to include making it possible to can now identify the mutations that make you genetically predisposed to rare and as-yet incurable develop personalised treatments for them. some diseases, such as the BRCA1 diseases, using revolu- and BRCA2 mutations that increase tionary methods such as Leading pharmaceutical the risk of breast and ovarian cancer, immunotherapy and low- companies : Roche (Switzerland), or mutations in the low density lipo- cost genome sequencing. Novartis (Switzerland), AstraZeneca protein receptor (LDLR) gene related An overview of the main (UK), AbbVie (US), Biogen (US) to hereditary high cholesterol. ” developments. The advent of low-cost genome Drugs that repress these mutations BY JULIE ZAUGG sequencing has revolutionised the are nothing new. Glivec by Novartis pharmaceutical industry, making it is a perfect example. According possible to better understand the to Trono, “ this drug inhibits a

38 PHARMA SWISSQUOTE SEPTEMBER 2017

oping genetic testing to put on the Bruno Bulic, an analyst at Baader American market. “ Roche is way ahead of the Bank. Roche also developed the biotechnologist and game in this area, ” Trono confirms. first immunotherapy to hit the businessman Craig The Basel-based group teamed up market – Tecentriq, a drug for lung Venter, pioneer in human genome with the British government to se- and bladder cancer patients – and sequencing. A quence 100,000 genomes in cancer which was FDA-approved in 2016. controversial figure, patients and people with rare diseas- “ AstraZeneca, Bristol-Myers Squibb, he is considered to be one of the most es, and has established a partnership Merck and Novartis are also highly brilliant scientists with the American company 23and- invested in this area, ” says Bulic. of his time. Me in order to access their genetic data on people with Parkinson’s The next phase will focus on the and Crohn’s disease. These projects genome-editing tool CRISPR-Cas9, should provide Roche with what it which was discovered in 2012. needs to develop treatments aimed “ With this technique you can insert, at the genetic mutations behind delete or reorder bits of genetic these diseases. code, which can promote or inhibit genes, ” says Martin Jinek, a bio- chemist at the University of Zurich, who worked in the American lab that IMMUNOTHERAPY — discovered it. “ The primary advan- TEACHING THE BODY tage is that it’s fast and extremely precise. ” The first clinical trial TO DEFEND ITSELF using immunotherapy and CRIS- This revolutionary method PR-Cas9 is set to take place in China teaches the immune system this autumn for lung cancer patients. to target cancer cells or the AIDS virus, and may usher in a new era for treatment. LIVING DRUGS Leading companies : Roche (Switzerland), AstraZeneca (UK), Made with the patient’s own Bristol-Myers Squibb (US), Merck blood and cells, these drugs (US), Novartis (Switzerland) have made substantial progress, making them sig Immunotherapy uses the patient’s nificantly more profitable. immune system to fight some mutation-based enzyme that causes diseases such as cancer. “ This Leading companies : Genentech certain forms of leukaemia. ” Genome procedure involves infusing patients (Roche Group – Switzerland), sequencing also enables doctors to with T lymphocytes, or T cells, that Sandoz (Novartis – Switzerland), examine the genetic profile of each come from their own body and have Amgen (US), Biogen (US), tumour and to tailor treatment specif- been modified by genome editing, ” Johnson & Johnson (US) ically to the patient by giving them the explains Fyodor Urnov, a geneticist most efficient combination of drugs at the University of California at The first biodrugs – made from living possible. “ This is less about devel- Berkeley who helped develop this components like blood plasma and oping new drugs and more about form of therapy. In 2014, American proteins – came out in the 1980s. better using the ones available. ” researchers successfully cured Up until recently they were used to leukaemia patients and injected a T treat inflammatory diseases such As for the pharmaceutical industry, cell mutation that made HIV-positive as rheumatoid arthritis and Crohn’s this trend could reduce the number patients resistant to the AIDS virus. disease (chronic inflammation in the of drugs on pharmacy shelves since digestive system), but according to every prescription would be fully Roche is currently the no. 1 com- Graham Jones, a biodrug specialist personalised in the future. But this pany in the world for immunother- at Tufts University, “ the latest de- also opens the way for innovation apy, devoting “ over 50% of its R&D velopments have been in oncology. ” in diagnostics, specifically for devel- budget ” to this field according to Genentech, an American group

39 40 – aNovartissubsidiary –became letter. ” In 2015,however, Sandoz really difficulttocopythem to the unstable andunpredictable, so it’s that arethebasisforbiodrugs are Jones assertsthat“ the proteins into suchacomplicatedprocess. despite theinitialhesitationto delve dergone substantialimprovements versions ofbiodrugs,have alsoun Biosimilar drugs,whicharegeneric and thepurityofthesesubstances. ” have managedtoimprovethe yield recent years,pharmacompanies components, ” Jonesadds.“ But in because theyaremadefromliving drugs islabour-intensiveandcostly tion process.Theproductionofbio- been madetoimprovetheproduc Significant developmentshave also mia andbreastcancerfollowed. of drugsforskincancer, leukae Then from2009–2013,aseries says BrunoBulicatBaaderBank. suffering frombreastcancer, ” ing lifeexpectancyforpeople the market,dramaticallyincreas revolutionary drugHerceptinon rugs. “ In 1998,Genentechput the has beenatrailblazerforbiod which Rocheacquiredin2009, and Microsoft. with PizerandJohnson &Johnson, aswell as Alphabet are alsoinvolved inpartnership ofresearch inthisarea disorder.neurodegenerative IBM Watson supercomputers aprogressive Gehrig’s (ALS), disease forLou treatments possible companyAI tofind used This BenevolentAI. ofBenevolentBio,CEO abranchoftheBritishstart-up inthelab, ” tocreate new ones explainsJackie Hunter, up when ofthemanddream combiningseveral reactions “ AI will anticipatethe enableustoexploremoredrugs, and digitalpatientiles, anddraw theirownconclusions. literature, analyse all clinicaltrialresultscould medical drugs intohighgear,drugs that suchasmachines ofnew kickthediscovery could of factors future ofpharmaceuticalindustry. A number the tobe isthought intelligence (AI) Artiicial AI PHARMA’S NEW FRIEND BEST

- - - - -

certain auto-immunediseases. used totreatbloodcancersand biosimilar forRituximab,whichis Rixathon, theSwisscompany’s June, Europeanauthoritiesapproved drug usedtotreatleukaemia.Last a legitimatecopyoftheAmgen released abiosimilarcalled Zarxio, the firstgrouptodoit.Sandoz THE SPOTLIGHT ENING DISEASESTAKE RARE ANDLIFE-THREAT that have longbeenontheback renewed interest inrarediseases Pharma companiesnowhave (Switzerland) Nordisk (Denmark),Santhera Bristol-Myers Squibb(US),Novo Baxter (US),Bayer(Germany), companies : Leading totreatthem.the market on drugs torelease easier it’sstreamlined, much canbeapproval process years. Nowrecent thatthe pickingupin been es has Interest inrarediseas

PHARMA

Pfizer (US), -

CURTO DE LA TORRE / AFP life-threatening conditions],com for drugs[usedtotreatseriousor FDA FastTrack approvalprocess University assertsthat“ with the burner. GrahamJonesfromTufts Idebenone –adrugdevelopedby that That’s howtheydiscovered evaluates thecompanyforinvestors. an analystatValuationLAB, which ening diseases, ” saysBobPooler, have aneffectonrare orlife-threat pre-existing drugstoseeifthey of lookingfornewdrugs,ittests up withauniqueapproach.“ Instead The SwisscompanySantheracame fibrosis –that’s1,200Americans. of peoplesufferingfromcystic company Vertex, whichtargets4% Ivacaftor, developedbytheUS-based fit fromacceleratedapprovalwas this area. ” Onesuchdrugtobene panies areencouragedtoinvestin (2016). multiple sclerosis like rare diseases awareness for toraise in Madrid hit thepavement costumes Clause inSanta Runners SWISSQUOTE SEPTEMBER2017 SWISSQUOTE - - - PHARMA SWISSQUOTE SEPTEMBER 2017

A Roche production centre employee in Kaiseraugst, Switzerland. GEORGIOS KEFALAS / KEYSTONE GEORGIOS KEFALAS

straightforward discoveries in pharmaceuticals had already been made. On top of that, with little return on investment, El Dorado was unattain- able for antibiotics. Patients only generally take them in the short- term, roughly one to six weeks, and they are inexpensive. High blood pressure or diabetes medication, however, is a lifetime investment.

But in 2010 when drug-resistant bacteria became a serious public health threat, a slew of initiatives were launched in the hope of spur- ring research for new antibiotics. The EU invested hundreds of millions Takeda Pharmaceutical Company THE WAR AGAINST of euros in the Innovative Medicines in Japan for Alzheimer’s – was Initiative (IMI) and the US govern- extremely efficient in treating SUPER BACTERIA ment agency called the Biomedical Leber’s hereditary optic neuropa- Drug-resistant bacteria Advanced Research and Develop- thy (LHON), an eye disorder that has become a serious public ment Authority (BARDA). A number affects one in a million people. health issue. Much to the of pharmaceutical companies ben- The drug was approved in Europe delight of pharma compa efitted from the influx of funding. for this new purpose in 2015. nies, many countries have set up funds to promote re Takeovers such as Merck’s ac- “ Now Santhera wants to get it search for new antibiotics. quisition of the American start- approved for Duchenne muscular up Cubist Pharmaceuticals and dystrophy (DMD), ” claims Pooler. Leading companies : GlaxoSmith- Pfizer’s purchase of the antibiotics “ We are expecting the request to Kline (UK), Roche (Switzerland), division at AstraZeneca have also go through in Q3 of this year. ” This AstraZeneca (UK), The Medicines ramped up antibiotic research. In would make the number of patients Company (US), Basilea (Switzerland) Switzerland, the industry is head- taking Idebenone skyrocket. “ The ed by the giants Basilea, Novartis drug can also treat one form of From 1960 to 1980, the quantity and Debiopharm. Basilea released multiple sclerosis present in 15% of new antibiotics on the market a fifth-generation cephalosporin of those afflicted, ” he says. If it increased exponentially. But then – an antibiotic – known as Cefto- were approved for treating this came a wave of chronic under- biprole in Europe and Canada, and disease, the number of patients investment as pharmaceutical received $100 million from BARDA taking it would be even higher. companies realised that the most to get it approved in the US.

41 PHARMA SWISSQUOTE SEPTEMBER 2017

HOW A DRUG IS MADE

-5 TO 0 YEARS 0 TO 5 YEARS DISCOVERY PHASE PRECLINICAL TRIALS NUMBER OF MOLECULAR COMPOUNDS : NUMBER OF MOLECULAR COMPOUNDS : 100 ONE MILLION The effects and toxicity of the Many molecular compounds are patented compounds are tested studied – mainly in university in silico (computer simulation), laboratories – to understand in vitro (on cell models) and in their chemical makeup. vivo (on animals).

1 3 4 5 7 -5 YEARS 0 YEARS 5 YEARS 10 YEARS 12 YEARS 20 YEARS 2 6

0 YEARS 5 TO 10 YEARS BIRTH OF A DRUG CLINICAL TRIALS NUMBER OF MOLECULAR COMPOUNDS : 10,000 NUMBER OF MOLECULAR COMPOUNDS : 10

A patent is filed for the most promising The efficacy and tolerance of the future drugs are studied molecular compounds. This type of pro- on humans. tection allows for exclusive commercial Phase I : Evaluates the absence of adverse effects on a use for 20 years. small group of healthy volunteers (20 to 80 participants). Phase II : The pilot study aims to determine the efficacy of the compound on a limited number of patients (100 to 200). Phase III : This is the final phase of testing that must prove the absence of adverse effects as well as the benefits of this future medicine against a placebo on a large group of patients (several thousand).

PHARMA SWISSQUOTE SEPTEMBRESEPTEMBER 2017

INCREASING COST OF DEVELOPMENT $2.5 BILLION

This is currently the presumed average cost of developing a drug that is successful on the market, according to an estimate published in 10 TO 12 YEARS 2015 by researchers from Tufts University in the Journal of Health MARKETING Economics. This study was carried out based on 100 drugs containing AUTHORISATION new active substances. This figure is still being contested by many NUMBER OF MOLECULAR COMPOUNDS : 1 specialists and NGOs.

In order to be marketed, a drug must obtain marketing authorisation, which THE SWISS MARKET is given in Switzerland by the Swiss Agency for Therapeutic Products (Swissmedic). 2,500

This is the number of products that the Federal Office of Public Health (FOPH) reimburses.

EVEN MORE GENERICS 12 YEARS TO... DRUG SAFETY MONITORING 270 NUMBER OF MOLECULAR COMPOUNDS : 1 This is the amount of active substances with generic competitors Once the drug is authorised, serious in 2016, compared to 100 in 2000. adverse effects must be monitored during its lifetime.

This is phase IV of the clinical trial. HIGH COSTS

PRICE OF PATENTED DRUGS PRICE OF GENERICS

+ 14% + 53%

20 YEARS EXPIRATION OF THE PATENT For a patented drug worth CHF 100, Europeans only pay CHF 86. The patent expires 20 years after it And, for a generic drug worth CHF 100, Europeans pay CHF 47. has been filed. The drug then enters In other words, the traditional formulas cost on average 14% more into the public domain, opening up the than they would abroad, while generics cost 53% more.* possibility for marketing generics.

*Source : Interpharma

43 PHARMA SWISSQUOTE SEPTEMBER 2017

In the shadows of the pharma industry, clinical trials prosper

Pharmaceutical companies have largely outsourced testing on patients to determine the effectiveness of new medicines. This has led to an ecosystem of companies specialising in the field of clinical trials.

BY JULIE ZAUGG

Captain America is the ultimate guinea pig. The Marvel icon owes his superhuman powers to a lab experiment in he pharmaceutical indus- which he willingly try includes players in the participated : the combined effect shadows : contract research of a special serum organisations (CROs). These and Vita-Rays Tdiscrete yet essential pawns in the transformed him into a super- game of putting new medicines on soldier. the market conduct clinical trials for pharma companies. CROs recruit patients, test the effects of a new treatment and send the results to the pharmaceutical company that requested them.

“ This type of externalisation began in the 1980s, ” says Kenneth Getz, a professor at Tufts University who specialises in studying CROs. “ At

the start, pharmaceutical companies SHUTTERSTOCK

44 PHARMA SWISSQUOTE SEPTEMBER 2017

COMPANIES TO WATCH

QUINTILES Global leader The global leader in clinical trials holds a 12% market share and dominates the industry, owing especially to its extremely diversified services offer. “ Quintiles can conduct clinical trials from phase I to phase IV in a wide range of medical fields, ” says David Windley, analyst at Jefferies. It was also innovative, taking advantage of the possibilities of big data to recruit patients. Its recent merger with IMS Health, a company that collects data on US patients, is an example of this. CEO : ARI BOUSBIB HEADQUARTERS : DURHAM (NORTH CAROLINA), UNITED STATES EMPLOYEES : 50,000 REVENUE (2016) : $7.8 BILLION Q

LABCORP The king of laboratory testing Acquired by LabCorp in 2014, Covance now makes up 30% of its turnover. “ This CRO specialises in laboratory testing (blood tests, etc.) conducted on patients before they begin a clinical trial. It currently dominates the industry, ” says David Windley. LabCorp also developed its own factories to produce medicine used in clinical trials, which is a timesaver. CEO : DAVID P. KING HEADQUARTERS : BURLINGTON (NORTH CAROLINA), UNITED STATES EMPLOYEES : 52,000 REVENUE (2016) : $9.4 BILLION LH

45 PHARMA SWISSQUOTE SEPTEMBER 2017

PORTRAIT

Parexel : The (almost) Swiss clinical trials giant One of the major companies in this booming industry was founded by Josef von Rickenbach, a native of Schwyz.

BY SOPHIE GAITZSCH

With $2.1 billion in turnover for The company first specialised in the 2015–2016 financial year and regulatory consulting, but quickly 18,600 employees in 52 countries, added clinical trials, which is now Parexel is one of the leading clinical its core business and the key to its trials companies in the world. success. Founded in 1983, the pharma giant is firmly established in the Boston The young founder managed to area, the Silicon Valley of life raise funds at a time when venture sciences. But it was founded by a capital was just beginning, and Swiss citizen, who is still the CEO. Parexel made its first acquisitions (there have been over 40 since) It all started in Sattel, a mountain in Canada and the UK. Since the village in the Canton of Schwyz early 1990s, the company has had where Josef von Rickenbach grew the biggest names in the pharma up with five siblings and his industry as clients. Parexel, listed parents, who owned a local service on the Nasdaq since 1995, is also station. After a sales internship quite stunning on the stock market. in a travel agency, he attended the Since 2012, its share price has School of Business at the Lucerne quadrupled. University of Applied Sciences, then broke into the pharmaceutical world Despite its impressive growth, for the first time at Schering-Plough action taken, and “ best employer ” in Lausanne. The young man had Ωisn’t isolated from turmoil. a steely determination and was Under pressure from one of its “ extremely disciplined ”, according shareholders who deemed its to his friends and family. He set margins insufficient, Parexel his sights on the very prestigious announced it was being bought by Harvard Business School, where he investment company Pamplona passed the entrance exam in 1979 Capital in June. The transaction and received his MBA. will be finalised before the end of the year, and Parexel will His entrepreneurial adventure be off the stock market. “ The then becomes even more of an biopharmaceutical services American success story. “ Joe ” market is changing, ” said von Rickenbach, not yet 30 years von Rickenbach during his old, launched his pharmaceutical announcement. “ The transaction services company with a former will give us a more flexible colleague, chemist Anne Sayigh. structure and better positioning She knew the industry and he took to advance Parexel’s strategy to care of the business side of things. face the new market reality. ”

46 PHARMA SWISSQUOTE SEPTEMBER 2017

LES ENTREPRISES À SUIVRE only outsourced a small part of the Smaller companies focus on just ICON process, generally the steps that one part of the process or one med- An Irish innovator used the most workforce, such as ical field. For example, INC Research With a 7% market share, Icon monitoring the progress of the specialises in advanced-phase (III is the only non-US company clinical study. ” But since the end and IV) clinical trials, whereas No- in the top 10 CROs global- of the 1990s, pharma companies vella, acquired in 2013 by Quintiles, ly. “ This company is very have outsourced the entirety of their specialises in biotechnology. profitable due to its resource clinical trials, from phase I (confirm- management and efficient employees, ” says Eric Coldwell, ing that the tested substance isn’t But why do pharma companies analyst at Robert Baird. “ Its toxic) to phase IV (identifying the delegate such an essential part of margins have increased since side effects of a medicine after it their business to an external organ- 2012. ” A series of information has been put on the market). isation ? First and foremost, using tools developed internally CROs saves money, particularly by to facilitate contact with This gave the CRO industry a tre- reducing the workforce needed to patients and running clinical mendous boost. Today, it is worth run trials. “ Clinical trials require lots trials give Icon a leg up on $38 billion and is expected to reach of employees over a short period of the competition. However, between $45 and $65 billion by time, ” says Getz. “ Companies must Coldwell believes that the 2022, according to estimates from hire many employees on a tempo- Irish company is too depend- various research institutions. Its rary basis, which is complicated and ent on its main client, Pfizer, annual growth rate will increase to costly to manage. ” Conversely, CROs which makes up 17% of its 6% or 7% over the next five years, conduct studies for many pharma revenue. “ But that led to an according to a KPMG report. The CRO companies and as a result, employees under-valuation of its share price, ” says Coldwell. industry is extremely fragmented. are permanent and always keep busy. CEO : STEVE CUTLER “ There are six or seven giants with a HEADQUARTERS : DUBLIN, IRELAND global presence, as well as several Pharma companies are also attract- EMPLOYEES : 12,500 hundred smaller companies, ” says ed by the gains in efficiency and REVENUE (2016) : $1.7 BILLION David Windley, an analyst at Jefferies speed. “ CROs have developed a ICLR who covers the industry. unique expertise in terms of clinical trial protocols, or in certain medical fields, which is very complex for INC RESEARCH pharmaceutical companies to repli- The new heavyweight “ Medicines cate internally, ” says Getz. Earlier this year, the merger between INC Research and tested in Externalising clinical trials also InVentiv created a giant that clinical trials allows pharma companies to concen- is now among the top three trate on their core business : discov- largest CROs. It is worth have become ering new medicines. In its report, $7.4 billion and has significant experience with both small more complex ” KPMG compares this evolution in David Windley, analyst at Jefferies and large pharma companies. the industry to the one that airlines This transaction was made experienced in the 1990s, when they possible by INC Research’s began outsourcing ticketing, baggage dynamic growth. The compa- management, catering and aeroplane ny’s revenue increased 9.3% However, the 10 largest CROs hold maintenance to third parties. in 2016. This merger will also a 57% market share all by them- allow the company to access selves. The vast majority of the But despite the undeniable success marketing services for medi- big companies are US-based (Quin- of this model, CROs still face a cine developed by InVentiv. tiles, Covance, Parexel, PRA Health number of challenges. They increas- CEO : ALISTAIR MACDONALD HEADQUARTERS : RALEIGH Sciences), while one is based in Ire- ingly struggle to recruit patients. (NORTH CAROLINA), UNITED STATES land (Icon). “ These companies are “ Medicines tested in clinical trials EMPLOYEES : 6,700 able to conduct a clinical trial from have become more complex, ” says REVENUE (2016) : $1 BILLION beginning to end, ” says Getz. “ Some Windley. “ Now, companies must INCR even offer upstream services, such find patients with extremely precise INCR as pre-clinical research, or down- diagnoses. They can’t just look stream services, such as treatment for people with high cholesterol approval or marketing. ” anymore. They have to find people

47 PHARMA SWISSQUOTE SEPTEMBER 2017

A volunteer receives an experimental Ebola vaccine (Oxford, UK, 2015).

Conducting a clinical trial in China costs 40% to 60% less than in Europe or the United States, since there is a large number of affordable medical personnel. It is also easier to recruit patients. Healthcare is expensive in China. So if patients are offered free exams and medicine in exchange for participating in a clinical trial, they are more likely to accept than a European or American EDDIE KEOGH / REUTERS covered by health insurance.

The Chinese population also is usually not medicated. “ Patients recruited in a clinical trial usually with a specific type of hereditary the past few years. “ They ask CROs aren’t on other medications, ” says cholesterol. ” As a result, four out to measure more parameters of the Getz. “ This reduces any interference of five clinical studies become patients, recruit more participants with other drugs that would be in delayed. in more countries and provide more their system. ” detailed results, ” says Getz. To combat this, some CROs have gone to increasingly extreme meas- These challenges have led to a vast ures : Quintiles employees recruit CRO industry in emerging economies, Quintiles patients in homeless shelters. With- especially in China, India, Turkey, employees out any other access to healthcare, Eastern Europe and Brazil. Current- homeless people are more likely ly, China is the clear leader of this recruit to participate in a clinical trial. trend. “ The clinical trials industry in patients in China has gone from slightly more The industry has also experienced than $1 billion to $6 billion over the homeless a series of scandals which has past eight years, ” says Philip Gregory, shelters damaged its reputation. In 2006, six the China director of a CRO called healthy participants almost died af- George Clinical. ter testing an experimental synthetic The immense size of the medical antibody given to them by Parexel China has between 400 and 500 CROs. industry in the country of 1.3 billion, in London. In 2005, news broke that The largest, WuXi AppTec, holds a as well as the emergence of several CFBC International, another CRO, 10% market share, ” says Gregory. innovative Chinese pharmas over conducted clinical trials on undocu- Other big players are Tigermed, Boji the past few years, have also at- mented immigrants in a Miami hotel. and R&G PharmaStudies. Three US tracted the CRO industry to China. companies, Quintiles, Covance and In 2016, China surpassed Japan to Requirements from pharma compa- PPD, also have a significant pres- become the world’s second largest nies have also become stricter over ence in China. pharmaceutical market.

48 PHARMA SWISSQUOTE SEPTEMBER 2017

INTERVIEW

“ The United States remains the primary market for making medicines profitable ”

Valérie Junod, professor of pharmaceutical law at the University of Geneva and specialist in drug clinical trials, answers our questions on developments in the industry. BY LUDOVIC CHAPPEX

During clinical trials, what are of patients that can be recruited certain points in terms of what the most important factors for for clinical trials, often through constitutes the universal minimum pharmaceutical companies ? university hospitals. US patients and for patients. For example, when a Pharmaceutical companies have doctors are also more inclined to clinical trial is over, who monitors two major concerns during clinical test new treatments. As a compar- and is responsible for the patients trials. First, they have to quickly re- ison, in Switzerland for example, a who participated in the study ? Do cruit enough patients and convince pharmaceutical sponsor isn’t going you offer them the experimental them to stay on until the end of to start the entire administrative treatment ? Another treatment ? the study (ed. note : patients are process just to recruit only three Or money so they can continue to free to leave the study whenever patients in a cantonal hospital. receive medical care ? If so, for how they wish). The second concern is Besides, the United States remains long ? These ethical questions have related to the first, in that the trials the primary market for making been the subject of heated debate have to generate “ clean ” data – or medicine profitable. Pharmaceutical for over 20 years. Non-govern- in other words complete, detailed companies don’t hesitate to involve mental organisations have played and non-contradictory data. If a “ Key Opinion Leaders ” (ed. note : a decisive role in protecting the clinical trial doesn’t generate data renowned doctors) upstream in the rights of vulnerable populations. that is deemed credible by the trial process in order to increase the regulating body, regulators will not chances that the drug will be favour- Nevertheless, a poor person with grant market authorisation, which ably viewed by future prescribers. little education who is sick and is necessary to put a drug on the has no health insurance – regard- market. It is also virtually impossi- In very poor countries, some- less of which country they’re from ble to “ correct ” data after the fact times clinical trials are conduct- – does not have the same freedom if it was poorly collected during the ed under morally questionable of choice that someone from Swit- clinical trial. That’s why it is rare for conditions – for example recruit- zerland would have when deciding a trial to be conducted entirely in an ing people living in poverty or whether to participate in a clinical emerging country, at least when the needing medical care. Is this a trial. If a clinical trial is the only company needs definitive results topic of debate in the industry ? way a person will have access to gain market authorisation. Most It is unanimously agreed upon to medical care or certain treat- often, phase-III trials are conducted that clinical trials must follow ments, that person will undoubt- in several countries at the same a minimum legal and ethical edly agree to participate. However, time using a single protocol. framework, regardless of where systematically refusing to conduct the trials are conducted. These clinical trials in poor countries Why has this industry developed regulations have been carefully could also be discriminatory to mainly in the United States ? defined in international docu- those populations, since people in The main advantage of the United ments. In practice, however, there those countries also need to have States is that it has a high number is occasional disagreement on access to promising treatments.

49 PHARMA SWISSQUOTE SEPTEMBER 2017

WHEN PHARMA OUTSOURCES PRODUCTION

50 PHARMA SWISSQUOTE SEPTEMBER 2017

Linnea, Siegfried and Cerbios are Swiss firms that port muscle mass and bone mineral WHEN PHARMA supply pharmaceutical companies with active ingredients density. The company’s sales to- used in drugs. The industry may be shrouded in mystery, talled $36 million in 2015. but Switzerland’s transparency is taking the world by surprise. One of the other companies that has earned a shining reputation in OUTSOURCES BY MARIE MAURISSE the API market is Helsinn, which specialises in oncology and gas- troenterology. These companies are part of an industry in which PRODUCTION secrecy is paramount – hence their preference not to respond f you have cramps or abdom- to our questions or disclose their inal pain, your pharmacist clients. But a number of major Swiss I might recommend that you pharma companies outsource drug take Buscopan. It’s a fairly com- manufacturing mainly for financial mon drug in Switzerland, but its reasons, which helped the global active ingredient is lesser known. pharmaceutical outsourcing market Butylscopolamine (quite a mouth- rake in $65 billion last year according ful compared to its brand name) to a Visiongain report. Ticino-based is an antispasmodic used to calm company Cerbios manufactures a wide cramps and treat irritable bow- range of substances el syndrome. But it’s not always for the pharma manufactured by pharma heavy- A lot of listed industry, including some of the active weights – sometimes production companies in ingredients of is outsourced to Linnea, a Riazz- Switzerland have Vitamin D. ino-based company in the Canton of Ticino, nestled between Locarno grown in the and Bellinzona. pharma industry

Switzerland’s Italian-speaking region is actually home to a cluster of family-owned companies known “ Manufacturing drugs requires for their expertise in manufacturing a substantial investment, ” says active pharmaceutical ingredients Research Partners AG analyst (APIs) for the industry. Founded by Martin Vögtli. “ You need a plant an Italian engineer 37 years ago, that meets industry standards and Linnea has posted annual revenue you need qualified employees… It’s of 45 million Swiss francs. Close to costly and there is risk involved, Lugano and not far from the Linnea because if the drug isn’t approved plant lies another plant owned by in the end, which is not uncommon, Cerbios, an industry player that you’ve invested in new buildings for primarily manufactures vitamin D nothing. That’s why pharma com- compounds such as Calcitriol and panies prefer to outsource produc-

CERBIOS Anhydrous Calcipotriol, which sup- tion to specialised companies who

51 PHARMA SWISSQUOTE SEPTEMBER 2017

already have the infrastructures the Canton of Aargau. This company they need. ” with 2,300 employees worldwide has blossomed, posting record rev- But some companies prefer to enue of 718 million Swiss francs manufacture in-house, especially in 2016 with EBITDA up more than for drugs under patent protection. 30%. Martin Vögtli expects that That’s why in 1959 Johnson & this trend will continue in the months Johnson acquired the Schaffhaus- to come. He has issued a buy rec- en-based company Cilag – “ one of ommendation for the stock, stating the largest manufacturers in the that “ Siegfried has bought out a Swiss pharmaceutical industry ”, number of companies over the past with 1,200 employees. Companies five years that were fully integrat- looking to outsource, however, have ed last year, and now is the time to to find reliable partners at a low reap the benefits ! ” price. Siegfried’s portfolio contains dozens Apart from the family-owned compa- of APIs, including Butalbital, a nies in Ticino, a lot of listed compa- sedative, and oxymorphone hydro- nies in Switzerland have grown in chloride, an analgesic. The group the pharma industry, including the also has a plant in China where it Zofingen-based Siegfried Group in manufactures generics, which isn’t GAETAN BALLY / KEYSTONE BALLY GAETAN

surprising considering the down- ward pressure on prices in plenty of sectors, not just pharma. Manufac- turing in Asia is a recipe for substantial savings when it comes to APIs that are no longer patent protected. For drugs that are patent protected, however, and that are also parti cularly difficult to manufacture, Pharmaceutical pharma companies prefer to confide ingredient manu- in Swiss sub-contractors, who offer facturing at the Bachem factory in quality and confidentiality. Bubendorf, Swit- zerland. Specialised That’s the scenario according to equipment is used to a pharma expert (who wished to keep the ingredients in constant motion remain anonymous) from Dottikon

GAETAN BALLY / KEYSTONE BALLY GAETAN during production. Exclusive Synthesis – another

52 PHARMA SWISSQUOTE SEPTEMBER 2017

A Bachem employee oversees the production of a pharmaceutical ingredient.

manufacturer listed in Switzerland company Bachem specialises in poly- that focuses primarily on APIs. For Only 2% to 3% peptides – chains of amino acids that non-disclosure purposes, he was not of a drug’s shelf are required to manufacture drugs, at liberty to discuss the names of price is allocated particularly to treat cardiovascular clients or the APIs they manufacture. diseases. Bachem’s revenue jumped “ It’s in the hundreds, ” he says, re- to manufacturing 13% in 2016. vealing that they are largely focused costs on immunology, oncology and neu- According to Vögtli, these compa- rology. The German company posted nies are a profitable investment revenue of 152 million Swiss francs “ We’ve had to learn to be more against a global background in which last year, up 25% year-on-year. efficient in bulk production. ” In the elderly population is growing and Switzerland, two other listed com- will require more medical care. “ But Only 2% to 3% of a drug’s shelf price panies are also vying for a slice of keep in mind that this sector fluctu- is allocated to manufacturing costs ; this market, even though it’s not their ates dramatically, ” he warns. Though so how do manufacturers turn a primary business activity. Lonza is it may be a nice way to round out a profit ? “ Economies of scale, ” says unique in that it develops drugs with less risky securities portfolio that the expert. high potential. The Bubendorf-based has more steady stocks.

53 PHARMA SWISSQUOTE SEPTEMBER 2017

INTERVIEW

“ DISRUPTIVE COMPANIES WILL BREAK INTO THE MARKET ”

As of this year, Swiss native Thomas Cueni is the new Director General of the International Federation of Pharmaceutical Manufacturers & Associations (IFPMA), the global umbrella association for pharma companies and organisations. He discusses the major challenges in the industry.

BY LUDOVIC CHAPPEX

he International Federation In the space of a few years, it has of Pharmaceutical Manu- moved from chemistry to biotechnol- T facturers & Associations ogy and other cutting-edge technol- (IFPMA) represents the interests ogies. In the current context, with of pharmaceutical research around an ageing population that is overall the world. This Federation is also becoming richer, biopharmaceutical an intermediary to governments companies have many opportu- and international organisations nities. Demand for good health is such as WHO (health), WTO (trade) universal. The healthcare field is and WIPO (intellectual property), less affected by crises than other as well as NGOs in the industry. industries. The new Director General began his role in February 2017 and is well-known in Switzerland. Prior to " Overall, the IFPMA, he spent several years as quality of Secretary General of Interpharma, the association of pharmaceutical innovation is are able to integrate software research companies in Switzerland. improving " expertise will come out on top. The We met Cueni, who lives in Basel, real question to ask is : what is the in the light-filled avant-garde Cam- pharma industry’s business mod- pus Biotech building in Geneva, not But isn’t the emergence of el ? Is it selling big data expertise, far from Lake Geneva where the big data a form of disruption ? or is it developing medicines ? In IFPMA offices are located. In other words, would a tech the future, we could see these two company be able to break into avenues coexist. But even if data The pharmaceutical industry the market thanks to its net- management becomes a business has a reputation for being con- work and its data expertise ? model, it will not happen without servative. To what extent are Yes, I think we can expect some new treatments. I could see a sce- traditional players threatened disruptive players to come on nario where companies collaborate by industry newcomers who are the scene. It’s not just start-ups, to achieve both aspects. more innovative and reactive ? but also tech giants like Apple Let’s start by remembering that and Google. The industry is being Are pharmaceutical companies pharma is an industry that has called on to transform itself, so inclined to work together in evolved and continues to evolve. pharmaceutical companies that these types of collaborations ?

54 PHARMA SWISSQUOTE SEPTEMBER 2017

A CONVERTED NICOLAS RIGHETTI JOURNALIST

Few people have as much expertise in the pharmaceutical industry. Originally from Zwingen in the Canton of Basel-Country, Thomas Cueni (63) began his professional career as a journalist in 1979 as a London-based correspondent for the Basler Zeitung and the Bund. He then spent a brief period of time as a diplomat, posted in Paris and Vienna, before joining the Swiss branch of Interpharma in 1988. He was Secretary General of the association until 2016. He was named Director General of IFPMA, the global pharmaceutical association, in February 2017. Cueni holds a Master’s degree in economics from the University of Basel and in political science from the London School of Eco- nomics. He also studied at the Geneva Graduate Institute for International Studies.

This perspective has evolved. We of big pharmaceutical more expensive than preclinical can already see some collaborations companies ? research. Sometimes start-ups between big biopharmaceutical com- The relationship between start- are successful at large-scale panies. Take Alzheimer’s research ups and big companies is above development, as was the case for for example. No company works in all mutually beneficial. For the Actelion – and could be the case this field alone. The scope of investi- past 15 years, collaborations for Idorsia – but that only happens gation is so enormous that even the and acquisitions have multiplied. for a small minority of compa- biggest company can’t tackle it alone. I don’t know of a single big phar- nies. For the spin-off Idorsia, if its There is a trend where the bounda- ma company that isn’t looking for clinical trials result in innovative ries between “ open innovation ” and opportunities to collaborate with products, it could rely on Johnson competitive research move. There are the best start-ups for research & Johnson’s sales force (ed. note : similar types of collaborations in oth- purposes. But large companies the US company acquired Actelion er cutting-edge technologies, such as still have a crucial advantage : they in January). It’s a very interesting semiconductors. have the financial means to take model : on one hand, you have the risks and can have several studies innovation and expertise of the To what extent do innovative running at the same time. Devel- founders, Martine and Jean-Paul start-ups step on the toes oping a drug is very expensive, far Clozel, and on the other hand, you

55 PHARMA SWISSQUOTE SEPTEMBER 2017

have the power and capital from a large company. NICOLAS RIGHETTI In your opinion, why should investors consider investing in pharmaceutical companies ? I have a positive outlook for the long-term future of the industry. We’re expecting weaker growth than the past few years, particularly due to price pressure from regulators. But there will be growth nonetheless. Emerging countries are still developing, which will increase sales volumes. As long as companies will be able to offer innovative products, profits will come. The way to survive in this industry is be innovative.

Speaking of which, has the pharma industry made enough significant progress lately ? Overall the quantity of new drugs on the market is stable, but the quality of innovation is improving. Fifteen years ago, the industry was criticized for putting out products with only a marginal benefit to patients. “ Little progress, high prices ”, everyone said. I believe that companies learned quite a few lessons during that time. They realised that by offering only marginal therapeutic gains, they wouldn’t be able to make a profit from their drugs. Now, companies focus on developing treatments in fields where need is high, for example drugs to treat cancer and degenerative diseases. This has tangible results : many cancers are treatable nowa- days. Pharma companies have also made significant progress in treating aims to become a leader in their reputation among the general cardiac problems : mortality due to chosen field, that is, for at most public, because of scandals and hypertension and heart attacks have three or four different illness- various debates. In particular, decreased substantially. es. For example, Novo Nordisk NGOs question the exorbitant in Denmark is focused solely cost of developing drugs. What Will this trend drive companies on diabetes. Other companies do you think of this criticism ? to specialise ? focus on asthma medications or I notice it. That being said, I do be- They already do, more or less. Most cardiac diseases. But yes, this lieve that the role and importance big pharma companies have their trend towards specialisation will of the biopharmaceutical industry specialities. Of course, Johnson & continue. for society is well regarded overall. Johnson and Novartis are more gen- Essentially all the controversies eralised. But no company develops Despite scientific advances, are regarding price and access drugs for everything. Each company pharma often has a negative to drugs. On those two subjects,

56 PHARMA SWISSQUOTE SEPTEMBER 2017

the industry has to explain it- Yes, and that wouldn’t necessar- major topic of discussion on the self better and demonstrate the ily harm pharmaceutical compa- G20 agenda. Second, the indus- value of therapy and progress in nies. Actually, I noticed on several try is researching treatments for access. Generally, our challenge occasions that the companies were Alzheimer’s. Finding a treatment is to demonstrate how pharma often more inclined to start this de- for this disease could very signif- objectively contributes to improved bate than governments were. The icantly reduce the costs of caring health. We have to do better. In concept of “ pay for performance ” for older people. Finally, pharma terms of development costs, for makes sense to companies. If they is preparing to effectively combat example, we don’t focus enough on are able to demonstrate the ef- future pandemics, such as Ebola the fact that for every market au- fectiveness of their product, they or the Mexican flu. As an umbrella thorisation for one drug, a company can legitimately set a higher price association, IFPMA participates in has had approximately nine unsuc- for it. Advances from big data that focused research to find solutions cessful developments. Calculating can identify patient typologies to these problems. Compared to only the development cost of an and evaluate the effectiveness of the situation 15 or 20 years ago, I isolated molecule doesn’t reflect treatments should encourage this believe that the implementation of all the costs. approach. public-private partnerships is far more effective now. For example, WHO and pharmaceutical companies “ It’s time to change the model. collaborate more. There is a real desire to combat major public health Biopharmaceutical companies should problems. In Geneva, many human- be reimbursed based on the concrete itarian organisations have been benefits of their drugs ” created over the past few years. Incredible progress has been made in developing countries with vac- cines against malaria or neglected But the prices of certain What’s keeping governments diseases, not to mention AIDS, which drugs are still very high... from reforming the system ? has gone from a deadly disease to You have to be careful of per- Governments hesitate when a chronic one. According to WHO spectives that are too simple they’re faced with big changes statistics, nearly 20 million people in and static. Take treatments for and complexities, as well as when developing countries have access to hepatitis C, for example. This is a they have new administrative work AIDS treatment. case of an “ innovative disruption ” to accomplish. This is also the in the best sense of the phrase : case in Switzerland. Discussions Do pharmaceutical companies we had a disease that was fatal took place regarding new ways have a financial interest over the long-term, weighed heav- to set drug prices, how to deter- in this type of work, or is ily on healthcare systems and the mine the added value of a product it simply to improve their costs were spread out over several compared to another, etc. But the image ? years. But the drug can treat that willingness to implement innova- Of course, every company has their very illness in 8 to 12 weeks. Of tive solutions came moreso from own financial interest, but I also course, the treatment is expen- companies rather than university believe that there is awareness as sive, but in reality it significantly hospitals or health insurers. Nev- to the importance of treating certain reduces spending if we take into ertheless, I think we’re headed in problems collectively. In October, for account all the long-term costs. that direction. example, we’re actively participat- Essentially, that shows that it’s ing in a summit organised by WHO time to change the model. Biophar- In terms of public health, and the Uruguayan government on maceutical companies should be what are the major upcoming non-communicable chronic diseases, reimbursed based on the concrete challenges for the pharmaceu- but it wouldn’t have been possible benefits of their drugs, and not tical industry and what role without help from the private sector. based on the amount of money will IFPMA play in handling Biopharmaceutical companies re- they spent to develop them. them ? alise that their reputation is on the There are three main challeng- line. By getting involved in pro- Exactly. Shouldn’t governments es. First, we’re fighting against jects like this, companies have the be more demanding in this regard multi-resistant bacteria and we opportunity to be seen not as the and require guaranteed results ? need new antibiotics. This is a problem, but as the solution.

57 PORTRAIT SWISSQUOTE SEPTEMBER 2017

The revenge of the burger

Competing with newcomers on the market, the hamburger giant has been through some difficult years. But McDonald’s hasn’t given up. With home delivery, all-day coffee and gluten- free menus, it is trying new things left and right and seeing positive results.

BY MARIE MAURISSE MINETTE LAYE

58 PORTRAIT SWISSQUOTE SEPTEMBER 2017

n January, McDonald’s Swit- self-service machines, which take recently opened restaurants in the zerland opened its newest one-quarter of all orders. Self-ser- United Kingdom and France. Other restaurant in Tour-de-Trême vice kiosks have increased sales fast-food chains are publicly listed, in the Canton of Fribourg. It by 2%, according to figures from the most well-known of which is Iis the 165th McDonald’s in Swit- McDonald’s Switzerland. Shake Shack, founded in New York zerland. Customers can taste the in 2004 and listed since 2015. classics, including Big Macs and Its claim to fame is using fresh, soft-serve ice cream, while sitting non-frozen meat for its burgers, as on cushy chairs illuminated by vin- Other brands have well as potatoes as the base for its tage lamps. But for the first time in bread. It also offers a large range history, customers don’t have to go made their mark of milkshakes. Shake Shack also up and get their food. After placing with fast service, their order at the counter, they can affordable prices find a table, and a server will bring and original dishes them their food. Restaurant-style, BY THE NUMBERS with fast food prices. What’s better than that ?

In Switzerland, 26 McDonald’s fran- Ronald McDonald has modernised $24.6bn chises now offer this new feature. It’s rapidly, but only because it no 2016 revenue no coincidence, however. In Switzer- longer has the choice. For the past land and elsewhere, the Golden Arch- several years, the legendary comes are being chased by competitors, pany founded by Ray Kroc in 1952 who offer “ gourmet ” fresh hamburg- has faced growing adversity. In the 375,000 ers…served at your table. One com- fast-food market, other brands such petitor, Holy Cow, has 14 restaurants as Subway, Starbucks and KFC have Number of employees in the world from Lausanne to Zurich. On a small made their mark with fast service, scale, the Swiss market is perfectly affordable prices and original dishes. representative of the ups and downs in the hamburger industry. With 46% But above all, McDonald’s has lost 37,000 of sales, according to figures from its monopoly on hamburgers. Now, Euromonitor, McDonald’s is the leader the trend skews towards “ better Number of McDonald’s restaurants in of a global industry estimated to be burgers ” : “ They are made from 120 countries worth more than $200 billion. But it higher-quality ingredients, they must fight to keep its rank. cost a bit more and they attract a younger, trendy crowd who can To provide faster service, the brand’s afford to pay slightly higher pric- 100 first step is digitalisation. In the es, ” says Brian Vaccaro, an analyst United States, its primary market, and restaurant-industry expert at million the fast-food giant is progressively Raymond James Financial. Over installing self-service kiosks in the past 10 years, several chains Number of customers in Switzerland in 2016, each restaurant where custom- have broken into the US restaurant amounting to 275,000 ers can choose their own menu. market. Five Guys, an independent orders a day Switzerland is ahead of the game company whose burger was praised in this respect : every McDonald’s by Barack Obama, boasts more in the country already has these than $1.5 billion in revenue and has

59 PORTRAIT SWISSQUOTE SEPTEMBER 2017

ANALYST’S ADVICE

“ MOBILE SALES WILL GIVE MCDONALD’S A BOOST ”

Andrew Charles, an analyst In 2020, the 14,000 US locations at Cowen, is one of the most as- will all have these types of tute observers of the fast-food machines. industry. The expert predicts better results for the burger So digitalisation and fast giant and advises to invest now. service are key ?

What are your predictions Indeed. As for the rest, for McDonald’s shares ? McDonald’s should continue to simplify its menus, an initiative They are excellent. We raised it began in 2015, and definitely our price objective for this not bank on a “ premium ” burg- stock. It has gone from $142 to er that costs more than $5 in $180. Sales will keep rising in the US. Innovation shouldn’t 2017 and 2018. The majority of replace simplicity and efficien- results are expected in the US cy. For example, “ signature ” market, which makes up 47% hamburgers (ed. note : served of the brand’s profits in 2017, in a premium wrapper with according to our estimates. services like table delivery) had disappointing results, according What is improving to our observations. Conversely, McDonald’s results ? making their hamburgers with fresh, non-frozen beef is a good Through the end of 2017, the idea, which will be implemented company will catch up to its at most US locations in 2018. competitors in terms of mobile sales, as the ordering service What do you think of home will be available at 14,000 loca- delivery ? tions in the United States. This is expected to help increase US I think it’s a good idea for revenue by as much as 0.6%. McDonald’s to test delivery. In It is part of the company’s the US, 3,500 restaurants will project called “ Experience of offer this service by the end of the Future ”, which also includes 2017, especially via partnerships placing digital screens in res- with UberEATS. But we’re not taurants to replace orders at the entirely convinced yet, as deliv- RUSTY CLARK counter (ed. note : this is already ery services distance wealthier the case in Switzerland). More customers from restaurants, than 2,500 McDonald’s restau- leaving behind lower-income rants in the US will have the customers waiting in restaurants is also authentic and local, ” says screens by the end of the year. for their burgers to be ready... Elizabeth Friend, a strategic analyst at Euromonitor who specialises in the restaurant industry. “ This trend has not benefitted fast-food giants like McDonald’s. ”

wants to break into the European Robin Gourmet, have also tried their This is why the chain has seen its market and tempt customers away hand in this market, offering quality growth stall several years in a row from McDonald’s and Burger King, burgers that cost around $10. and its customer base drop by the other giant in the fast-food in- 500 million per year. In 2014, turno- dustry. It has been successful thus These brands have been successful ver was down 2.3% and profits down far : even though its stock price because they offer what consumers 15%. As a result of these disap- was overvalued at its IPO, Shake now want. “ In developed markets, pointing figures, McDonald’s CEO Shack profits tripled in Q4 2016, the current trend is that consumers Don Thompson stepped down and reaching $3.92 million, or $0.15 are looking for two types of services, was replaced by Steve Easterbrook, per share. Other fast-food chains, which seem contradictory : a prac- whose first order of business was such as Habit Restaurants and Red tical, technological experience that very clear : change the model.

60 PORTRAIT SWISSQUOTE SEPTEMBER 2017

While the “ gourmet ” in response to customer requests. McDonald’s has restored its legiti- hamburger market The other component is digitalisation. macy. First, with its simple menus In addition to self-service kiosks, and unbeatable prices. And secondly, is becoming saturated, McDonald’s wants to strengthen with fast service and mobile order- McDonald’s has its relationship with customers by ing. This two-pronged strategy has restored its legitimacy launching home delivery via online paid off, making McDonald’s one of ordering. In April, the CEO told the highest performing brands on Easterbrook’s strategy has sever- shareholders, “ Besides our res- the market right now. “ 2016 was al components. First, improve the taurants in Florida, you can order our strongest year in terms of global brand’s reputation by focusing on a McMuffin on your smartphone sales since 2011, ” said CEO Steve more quality items. The Big Mac was at any hour of the day. It will be Easterbrook recently. Globally, cus- made available in several sizes and delivered right to your doorstep. ” tomer traffic is up 6%. More custom- customers can create their own This delivery model isn’t in all res- ers have gone to McDonald’s restau- recipes. Since June, McDonald’s restaurants yet, but it will gradually rants in Q1 2017 compared with Q1 taurants in Switzerland also offer become available. 2016. Switzerland is no exception, gluten-free hamburgers and muf- as sales rose 1% in 2016 compared fins. Additionally, breakfast and hot While the “ gourmet ” hamburger with the previous year. drinks were made available all day market is becoming saturated, MCD

61 SWISSQUOTE SWISSQUOTE SEPTEMBER 2017

THE PLATFORM OF CHOICE FOR INVESTING IN BITCOIN

Starting this summer, Swissquote clients can invest in the virtual currency and, most importantly, receive potentially high gains

SWISSQUOTE.COM/BITCOIN

Taking advantage of the rise in How does Swissquote’s it an attractive investment. When cryptocurrencies within a familiar, platform stand out from other we began this project in May 2015, secure environment is now possi- competing solutions ? one bitcoin was worth approximately ble. Since July, Swissquote offers We’re the first online bank in Eu- $400, compared with close to $4,000 clients the opportunity to invest rope to offer bitcoin investing. Our now. Clients can purchase bitcoins in bitcoin via its trading platform. platform was duly authorised by the with euros or dollars through their Céline Bonola, in charge of imple- Swiss Financial Market Supervisory trading account. It’s just as easy as menting this service, discusses Authority (FINMA). As a Swiss bank, buying any other currency. How- the advantages. we offer all the associated warran- ever, clients do not benefit from ties and security to our clients, who leverage. So they do not risk losing Who is this new offer can access the service in just a few more than they invested. targeted towards ? clicks. Until now, many investors Our platform is for any investor have been interested in crypto- What is the minimum who wants to exchange euros or currencies but were hesitant to investment amount to take dollars for bitcoins, and vice versa. begin investing, since the majority part in this offer ? All that’s needed is a trading ac- of players on this market aren’t The minimum amount is $5 or €5. count with Swissquote. Creating very well known and often require We also set a maximum investment one only takes a few minutes. Giv- transferring funds to a foreign amount at $100,000 / €100,000. en the high volatility of the price account. Fees are charged based on the of bitcoin and its current upwards transaction amount, between 0.5% trend, investing in the currency To what extent is it risky and 1% depending on the total has a clear speculative interest. to invest in bitcoin ? amount (ed. note : see table oppo- It’s also an interesting, innovative The risk is the high volatility of this site). Please note that we do not way to diversify a portfolio. currency. But that’s what makes offer a “ wallet ” on this platform. So

62 SWISSQUOTE SWISSQUOTE SEPTEMBER 2017

clients cannot make any transfers since 2011. It is the only bitcoin BITCOIN IN BRIEF or purchases using bitcoin. exchange that has a license from the European Union. Bitstamp The term “ bitcoin ” is a com- Why not ? provides us with pricing data pound word meaning “ digital Mainly for security reasons. and carries out the transactions money ”. This virtual currency is neither printed nor mint- Swissquote would have to be able that clients make on our platform. ed and is not controlled by to provide 100% secure protection any institution. As a result, for the wallet. Someone could Will Swissquote be offering bitcoins are not subject to the obtain the key and do with it what other virtual currencies regulations of a central bank they wish. The wallet concept in the future, such as Etherum and do not depend on mone- could also have potential risks in or Litecoin ? tary policies or interest rates. Their value is based solely on terms of money laundering. Yes, we’re working on it. Other cryp- supply and demand. Bitcoins tocurrencies will be available soon. were worth close to nothing How did Swissquote implement in 2009, but their popular- this platform ? ity has grown significantly We collaborated with Bitstamp, CÉLINE BONOLA since then. As of 15 August, a Luxembourg company that has BUSINESS ANALYST one bitcoin was worth $4,200, SWISSQUOTE BANK far exceeding the price of an solid expertise in virtual currency ounce of gold. and has specialised in bitcoin trading

63 Experience is essential for orientation.

Good fund management needs the virtues of an elephant: prudence, experience and navigation skills. ese traits underpin longterm strategies and a carefully selected weighting of the asset classes. Discover the qualities of the balanced asset allocation funds of ETHENEA. ethenea.com

Y E A R 5 S 1

* * E

E T V T V H I I H N S N T A N A - A K - D E F E EthnaAKTIV (A) EthnaDEFENSIV (A), (T) Inception date: 15.2.2002 Inception date: 2.4.2007

For detailed information on the opportunities and risks, please refer to the most recent sales prospectus. The information contained in the sales prospectus, in the current annual and semiannual reports as well as in the Key Investor Information Document form the sole legal basis. These documents can be obtained free of charge in English from the management company ETHENEA Independent Investors S.A., 16, rue Gabriel Lippmann, 5365 Munsbach, Luxembourg and from the representative in Switzerland IPConcept (Schweiz) AG, In Gassen 6, Postfach, 8022 Zürich, Switzerland. Paying agent: DZ PRIVATBANK (Schweiz) AG, Münsterhof 12, Postfach, 8022 Zürich, Switzerland. FREE TIME SWISSQUOTE SEPTEMBER 2017

GOOGLE MY BUSINESS SEARCH ENGINE OPTIMISATION This Google app helps entrepreneurs TO READ, Free manage their company’s Google, Google Apple Store, Maps and Google+ SEO rankings. You can Google Play update company info (name, address, TO DOWNLOAD opening hours, pictures), manage com- ments and get personalised information on the number of search requests and where they are coming from. Never miss a customer again. CRUDE VOLATILITY By Robert McNally HEADSPACE (Columbia University Press, 2017) MEDITATE WITH YOUR THE HISTORY AND THE FUTURE SMARTPHONE OF BOOM-BUST OIL PRICES Free Ed Halliwell told the New York Times that Over the past decade, the oil market has Apple Store, Andy Puddicombe is “ doing for medita- Google Play been characterised by volatility levels tion what someone like Jamie Oliver has that are higher than they’ve been in a done for food. ” Translation : he’s making long time. Among the major reasons for it accessible for everyone. A British na- From CHF 34.- this volatility are OPEC’s waning influ- tional, Puddicombe created Headspace, ence on oil prices and increased output an app that offers guided meditation in the US due to fracking. In his book, sessions suitable for beginners and McNally delves into the history of the seasoned meditators alike. The first 10 production and consumption of black sessions are free and last 10 minutes gold from the Pennsylvania oil fields of the 1860s to the overly-exploited each. Middle East of today. He deciphers the current cyclical ups and downs in an endeavour to predict the future of oil. SURVEYMONKEY SURVEYS MADE EASY Need feedback on a product or service ? Free SurveyMonkey lets you create surveys Apple Store, and share them via social media, email BLACK EDGE Google Play By Sheelah Kolhatkar and text message. You can build your (Random House, 2017) survey from the ground up or take advantage of personalised models. THE ENIGMA OF THE CENTURY The answers are updated in real-time. Hedge funds account for a staggering Ninety-nine per cent of Fortune 500 $3 trillion in assets throughout the companies use this online tool. world, and everyone wants a cut. Steve Cohen was one of the lucky ones who came out on top. He built his company, SPROUT From CHF 24.- SAC Capital, into a 15-billion-dollar empire. He was a legend on Wall Street – THE ULTIMATE SOCIAL MEDIA was being the operative term. Then SAC NETWORK Capital went under after a seven-year Free Sprout is the amalgam of all your social Apple Store, media networks – in one single app. federal insider trading investigation Google Play revealed widespread fraud. SAC traders One newsfeed lists all of the latest were encouraged to uncover inside in- posts from all of your sharing platforms. formation (referred to as “ black edge ” Intended primarily for companies, the in finance). A riveting story told by The app has advanced features, including the New Yorker’s very own Sheelah Kolhatkar. number of internet users who have seen a message.

65 GAMING SWISSQUOTE SEPTEMBER 2017

VIDEO GAMES Developers are updating their games

Additional content, multi-player modes galore, micro-transactions… For heavyweights in the gaming industry, keeping gamers engaged for as long as possible has become a priority.

BY OSCAR LEMAIRE *

he traditional big players More recently, the newest trend is game sales themselves. Indeed, in the video game sector “ games as a service ”, which is the the challenge is no longer to sell lots are facing a changing logical next step : ensure a game has of games, but to capitalise on the industry and the emer- a long-term lifespan and encourage profits from each player. Tgence of new models. Unlike mobile the player fan base not to stop gaming, console games now must playing, but to keep the game alive “ An excellent online service model pay for development costs that are through an online multi-player can maintain player engagement rising sharply, causing major game format. This favours the longevity for years after the game is released. developers to rethink their econom- of the game and its ability to be sold It can also turn a game that had a ic strategy. beyond its launch period. The model weak launch into one of the highest also facilitates selling additional selling games several months later, ” The challenge is no content and micro-transactions, said Piscatella. “ On the other hand, longer to sell lots of which are when players make a game could have a strong release games, but to capitalise simple purchases (such as costumes but falter due to a basic online on the profits from or virtual money). model. ” each player Mat Piscatella, an analyst at NPD, Therefore, the real question is : The first response to this trend believes that evaluating game which companies will create and was to expand access for people to developers’ ability to establish the maintain the most effective online buy extra content. This brought in “ games as a service ” model has services to support their games ? additional revenue from every game become “ the best barometer of We take a look at four of the leading for a very low development cost. potential future sales ”, rather than companies.

* Journalist specialised in video game economics, author of a chronicle of the Zelda games. 66 GAMING SWISSQUOTE SEPTEMBER 2017

ACTIVISION BLIZZARD ASSETS SUCH AS DESTINY AND OVERWATCH ACTIVISION BLIZZARD

The leader among Western game developers is benefitting from its acquisition of mobile gaming expert King (Candy Crush) to cover a variety of genres and maintain its lead over Electronic Arts in terms of turnover. But one might wonder how relevant this acquisition is, since the Candy HEADQUARTERS Crush phenomenon has died down SANTA MONICA (US) and the company is having a tough ESTABLISHED time reinventing itself. Activision’s 1979 (ACTIVISION), 2008 more traditional catalogue is also (ACTIVISION BLIZZARD) struggling : the Call of Duty series is CEO declining and even if the 2017 version BOBBY KOTICK could potentially lead to an uptick REVENUE 2016 in sales, it would be minimal at best. Halo. While relatively mixed reviews brands, which $6.6 BILLION It will not be easy for annual sales from the press disappointed observ- is potentially EMPLOYEES to make up for players losing interest ers when the game was released, the worrying for 9,600 in the long term. The Skylanders series game has since been successful, with the future of has dropped even more, leading Ac- more than 10 million purchases in the company. ATVI tivision to slump in 2017 for the first just a few months. It has also enticed While this is year since it began producing games. its player base to remain engaged in alarming news, Finally, Guitar Hero’s 2016 return was the long term : with the “ game as a it is balanced by the effectiveness a commercial failure and will not service ” model, Destiny keeps players’ of its Blizzard hub, inherited from be continued. attention and managed to effectively the merger with Vivendi Games. The sell its paid extensions. Delaying the designers of World of Warcraft – which launch of Destiny 2, which was initially is also on the decline – have created Destiny keeps players’ slated for 2016 but will be released in new projects to refresh their titles. attention and managed September 2017, is a sound decision Launched in 2016, Overwatch is an to effectively sell its that will help the game succeed : the impressive success, going from 10 paid extensions delay will drum up more reviews to million players when it was released recruit new players and strengthen its in June that year, to 20 million in long-term success. October, and up to 30 million in April That said, Activision has reason to 2017. It has the potential to remain be optimistic about Destiny, its new With the exception of Destiny, Activi- the leading game for several years brand launched in 2014 by Bungie, sion does not have fresh content in its and constantly bring in new revenue the independent studio that created catalogue to counter the decline of its by adding new content regularly.

67 GAMING SWISSQUOTE SEPTEMBER 2017

UBISOFT BLOCKBUSTERS RUNNING OUT OF STEAM UBISOFT

the possibility of an acquisition. However, the Guillemot family, the founders and leaders of the company, have been ardently fighting the creeping acquisition, which suggests that employees (scared at the prospect of a Vivendi acquisition) could come together spectac- ularly against the transaction. The engagement would be good for the company. Ubisoft handles market trends effectively and favours the “ game as a service ” model for all of its titles, which has already shown good results for its varied catalogue.

Ubisoft does lack a hugely successful game that could be comparable to the blockbuster games of its competitors

This success, however, depends on original projects with varying levels of popularity. Ubisoft does lack a HEADQUARTERS hugely successful game that could RENNES (FR) be comparable to the blockbuster ESTABLISHED games of its competitors. This is 1986 Ubisoft’s main shortcoming, as it CEO has a greater workforce than Elec- YVES GUILLEMOT tronic Arts or Activision but turnover REVENUE 2016 Ensnared in a financial battle with is much lower. Potential success €1.5 BILLION Vivendi, which has been trying would come if it could relaunch

EMPLOYEES to take over the French company Assassin’s Creed (November 2017) 12,000 since 2015, Ubisoft benefits as and Far Cry (February 2018) and UBI much from its potentially overval- adapt them to the “ game as a service ” ued share price as it is does from model, which is no easy task.

68 GAMING SWISSQUOTE SEPTEMBER 2017

ELECTRONIC ARTS only does it have no royalties to pay to a third party (the Star Wars brand) THE HEAVYWEIGHT but it is also a “ game as a service ”, OF THE BIG DEVELOPERS ELECTRONIC ARTS oriented to a multi-player format with guaranteed updated support and additional content over 10 years. These two projects, expected in 2018, could significantly increase revenue and profits for Electronic Arts. Their success largely depends on the quality of HEADQUARTERS REDWOOD CITY (US) the games, which is indeed promising given the designers working on them. ESTABLISHED 1982

CEO The projects expected in ANDREW WILSON 2018 could significantly

REVENUE 2016 increase revenue and $4.8 BILLION profits for Electronic

EMPLOYEES Arts 8,800

EA After re- Visceral Games studio that is building Further down the road, Electronic Arts structuring, a Star Wars game. The game’s solo is preparing other ambitious projects, Electronic Arts mode comes in response to a strong including an action adventure game has come to establish one of the most demand from players. The Bioware produced by young studio Motive, led stable models in the industry. The studio put out the Mass Effect series, by Jade Raymond, who produced the company relies on sure values with which was critically acclaimed but first Assassin’s Creed games. The goal frequent new releases, such as FIFA never really commercially successful is to create a game similar to Assas- or Battlefield – Call of Duty’s main rival enough to balance out its develop- sin’s Creed. Another Star Wars game is – as well as a partnership with Disney ment costs. For the past four years, in the works with Respawn Entertain- to produce ambitious titles based on Bioware has been working on Anthem, ment, the studio that created Titanfall, the Star Wars universe. Even though which aims to rival Activision’s Destiny. led by the designers who developed none of these games is truly built While Visceral’s game is sure to be Call of Duty. The fact that these on the “ games as a service ” model, successful because of the popularity projects are being made demonstrates they do provide regular extra con- of Star Wars, Bioware’s game could be Electronic Arts’ ability to work on a tent (Battlefield and Battlefront), as more profitable to Electronic Arts. Not long-term basis. well as micro-transactions (the FIFA series with the Ultimate Team mode). These additions all increase revenue significantly. The group expertly manages these pillars to sustain its REVENUE FROM ELECTRONIC ARTS EXTRA GAME CONTENT brands and ensure their longevity. The In millions USD financial year 2017-2018 has begun 1400 on relatively stable footing (Star Wars 1297 Battlefront II should have no trouble 1200 1120 compensating for the absence of a new Battlefield) and intermediate and 1000 925 long-term plans have the potential 800 760 654 to reinforce Electronic Arts’ positive 600 numbers. 433 400 296 The company hired Amy Hennig, 200 119 renowned designer who created the 0 Uncharted series, to manage the 09-10 10-11 11-12 12-13 13-14 14-15 15-16 16-17 Years 69 GAMING SWISSQUOTE SEPTEMBER 2017

TAKE-TWO TAKE TWO TAKE THE GRAND THEFT AUTO MIRACLE

Take-Two has crafted a strategy to not over-exploit its strong brands to ensure their longevity, with the exception of its sport titles less likely to become unpopular with gamers. As a result, the company strug- gles to ensure its stability because it lacks regular new features. Its Achilles heel is its 2K Games label, which had a few big successes (Bio- Shock, Borderlands), but they weren’t HEADQUARTERS huge compared to their development NEW YORK (US) costs. Furthermore, their prolonged ESTABLISHED absence on the market could mean 1993 that the games will no longer be popular when they return. CEO STRAUSS ZELNICK

Grand Theft Auto V did REVENUE 2016 $1.8 BILLION phenomenally well, additional multi-player mode, which long develop- with over 80 million in includes regular new content and EMPLOYEES ment process keeps the game current by bringing 3,707 and benefit- sales and an incredible in very substantial additional revenue TTWO ed from the longevity through micro-transactions. Grand indisputable Theft Auto was very much a solo expertise of The very solo orientation of BioShock game, but this online model made its designers (some of which also also makes it difficult to adapt to it possible to add a “ game as a ser- designed Grand Theft Auto), fore- the “ games as a service ” model. vice ” component. shadowing an enormous critical and The Rockstar label, however, is an commercial success. If sales are undisputed success. Grand Theft While the current financial year has similar to the latest Grand Theft Auto V did phenomenally well, with no notable new titles, the 2018-2019 Auto, Red Dead Redemption 2 could over 80 million in sales and an year is very promising for Take-Two, sell over 40 million copies around the incredible longevity. It remains in the thanks to the release of Red Dead world. Like Grand Theft Auto V, it will top weekly and monthly sales in the Redemption 2, a variant of Grand benefit from an additional online mode main markets almost four years after Theft Auto with a Western theme. to maintain its long-term success and its release. This is due in part to the Red Dead Redemption 2 had a very ensure a source of extra revenue.

GENÈVE ZÜRICH LUZERN LUGANO ST. MORITZ RUE DU RHÔNE BAHNHOFSTRASSE KAPELLPLATZ VIA NASSA PALACE GALERIE

WWW.LESAMBASSADEURS.CH SWISSQUOTE SEPTEMBER 2017 TED MCGRATH

TRAVEL La dolce vita in Mexico

A former haunt of the colonial aristocracy, Roma Norte is a unique quarter of the Mexican capital. Walking around, you can’t take your eyes off the murals and the neo-classical architecture, all the while following the aroma of chilli.

BY SALOMÉ KINER

MEXICO

MEXICO CITY

72 TRAVEL SWISSQUOTE SEPTEMBER 2017

he sprawling Mexico City, a diverse, patchwork picnics. Whilst certain parks are metropolis, is daunting for ﬁrst-time visitors. But in more run down than others, those in reality, with the exception of its historic centre and Roma Norte have a certain flamboy- giant esplanades, the city is made up of a multitude ancy about them. This is certainly Tof small quarters which often have a welcoming, intimate feel. the case for the aquatic Plaza Luis Roma Norte is one of these quarters. Whether you’re passing Cabrera, which is popular due to the through on the way to Mexico’s beaches or tempted by an numerous restaurants and art gal- exotic city break away from the busy city streets, here’s our leries that surround it. Further on, guide to an enthusiastic Chilango’s perfect day. planted in the middle of a fountain in the Plaza Rio de Janeiro, a re- production of Michelangelo’s David seems to laugh at dog-sitters tan- 8 am the perfect fuel to set you up for gled up in the leads, and children in A desayuno to start your day right ! a long day of exploring. Add a fruit school uniforms. Daybreak is the perfect time to get juice, freshly prepared to order and a feel for a city. In Mexico, breakfast made from any number of different In the evening, salsa dancers and is an unmissable local tradition…and combinations of fruit. karate students gather for their you definitely won’t go hungry. The rehearsals and training sessions. favourite dish on the menu is huevos 10 am Grab a seat on a bench and have a rancheros (or “ rancher’s eggs ”), A stroll in the park snack as you enjoy the spectacle. which comprises fried eggs on a Mexicans love making use of public Opposite the park, on the corner of corn tortilla, accompanied by a tangy spaces and parks for sporting Durango street and Orizaba street, sauce and refried kidney beans. It’s activities, amorous rendezvous and stands the emblematic building

73 TRAVEL SWISSQUOTE SEPTEMBER 2017

in the El Pendulo “ cafebrary ”, where A traditional building in the district of Roma students and those out for a stroll Norte. can get away from it all, from the comfort of the Acapulco armchairs.

2 pm The riches of street-food You definitely can’t miss this aspect of the local culture : Mexicans eat in the street, sitting on plastic stools or lounging against a wall in the shade of a palm tree. The puestos – travelling stalls that are ports of call for tacos, sandwiches or quesadillas – aren’t all the same standard, but there is a sure-fire way of sampling the pleasures of “ urban gastrono- my ” : the Mercado Roma, an upmarket version of the popular markets. It’s a foodies’ paradise and offers a maze of tables where you can sample

TORRESIGNER / ISTOCKPHOTO grilled insects, octopus ceviche, craft beers and rice with mole, an inimi- table sauce made from chilli, cocoa, La Casa de las Brujas, constructed Mexican culture : the history of sesame seeds and peanuts. in 1908 on the orders of President Mexican wrestling, how to make Porfirio Diaz to celebrate the 100th Mezcal, a thousand and one ways 4 pm anniversary of Mexican independ- to make a tortilla, etc. Book-lovers The hall of souvenirs ence. Recognisable from its red-brick will adore getting lost amongst the To unearth sugar skulls, Aztec turrets, the building was renovated endless rows of wooden shelves spices, maté, embroidered tunics, in an Art Nouveau style. The building is a strange contrast between its austere facade and fantastic interiors, blending different styles that are unique to the history of the city.

Midday A helping of culture It’s not quite lunchtime, but there is time for some food for the soul. The history of art has often involved Mexico, witnessed by the numerous museums in the city. But it’s the con- temporary art scene that is coursing through the veins of Roma Norte. The OMR gallery, very well-known in international circles, exhibits a highly specialised selection of local and international painters, sculptors and photographers.

More popular, and both fun and educational, the Museum of Objects gives you the opportunity to discover the most important aspects of

74 TRAVEL SWISSQUOTE SEPTEMBER 2017

The cozy ambiance at El Pendulo, café and the best fish can be found at Con- library in one. tramar. El Parnita is less pretentious and always busy, and is ideal for JULIO MARQUEZ those of you who want to overdose on tacos.

11 pm La Vida Loca The Roma Norte streets are jam- packed with bars, easily identifiable by the hip crowd smoking on the pavement outside. For a more authentic experience, those of you with fast feet should venture to Mama Rumba, a Cuban bar where you can salsa the night away.

HOW TO GET THERE Flights are available from Geneva and Zurich : approx. 900 Swiss francs per person (no direct flights). Mexico City sits more than 2,200 m above folk nativity figures or SpongeBob sea level. Temperatures are SquarePants piñatas, the only place often lower than elsewhere in you need to go is Mercado Medellin the country. To avoid the rainy

OMAR BARCENA with its 500 bazaar stalls. To recover season, it is better to visit from this technicolour trip, you between October and April. The should hurry over to the tiny stall Day of the Dead, held on 1 and 2 Helado Obscuro, where the ice-cream November, is a remarkable time maker spices up his recipes with of festivities and tradition. mezcal and tequila. WHERE TO STAY 7 pm LA VALISE HOTEL : Salud y Buen Provecho ! The most chic “ urban refuge ” in You either love it or you hate it : Roma Norte offers exceptional Michelada is a typical Mexican drink suits, including one on the roof made by mixing beer with lemon, for a night under the stars. salt, assorted spices, chilli, Worces- From 290 Swiss francs per night tershire sauce and tomato juice. for 2 people. The drink is best sampled at Broka, WWW.LAVALISE.COM.MX on the terrasse, accompanied by a selection of tapas. HOTEL LA CASONA : More conventional, but with a The Luis Cabrera Dinner time is approaching and Roma touch of imperial elegance. Plaza, a lively Norte is, without doubt, a food quar- From 146 Swiss francs per night locale lined with ter. Chef Elena Reygadas is head of for 2 people. restaurants and galeries. the romantic restaurant Rosetta, but WWW.HOTELLACASONA.COM.MX

75 CARS SWISSQUOTE SEPTEMBER 2017

CARS From maxi to mini SMALL SUVS ARE IN THE SPOTLIGHT BY PHILIPP MÜLLER

MINI COUNTRYMAN JCW, IN A CLASS OF ITS OWN

ENGINE : 4-CYLINDER, TURBOCHARGED 2-LITRE PETROL ENGINE with a true build (4.29 metres long, On sale from July, the Citroën C3 POWER : 231 BHP 5,000 RPM 1.5 tonnes). MINI also stepped up Aircross is top of the line for half the 0 TO 100 KM/H : 6.5 SECONDS the engine specifications, with a money. It boasts multimodal (front) STARTING PRICE : CHF 43,900.- John Cooper Works version equipped traction control and the latest gim- with a 2-L turbocharged BMW petrol micks such as a head-up display engine producing 231 bhp. These and an induction smartphone charger, gile, versatile and more envi- improvements were necessary to as well as a maximum modularity A ronmentally friendly than the keep the Audi Q2, its nearest com- worthy of the C3 Picasso, which, as a heavyweights in their class, small petitor, at bay. All-wheel drive and sign of the times, has been forgotten SUVs are now in vogue. There are all powerful Brembo brakes come as like many MPVs. Finally, in the much kinds : urban, sporty and adventure standard, but the 8-speed automatic contested “ subcompact Sport Utility models, as well as award-winning and transmission – a staple for cars Vehicle ” segment, the winner of the very chic versions, equipped like min- from good companies – is an add- “ happy medium ” title could very well iature Range Rovers. The first small on. Fast (234 km/h) and alluring, go to the unprecedented Hyundai SUV to win top honours was the MINI the Countryman JCW can get expen- Kona. Hyundai could also jump in Countryman, launched at the end of sive quickly ; count on CHF 50,000 front of the VW T-Roc and the Seat 2010. Its soothing curves have been for even slightly personalised Arona, which are also expected to replaced for a more aggressive design configurations. go on sale this autumn.

AUDI Q2, DIESEL AS ALWAYS ! HYUNDAI KONA, STRAIGHTFORWARD ! A bit shorter (4.19m), the other premium member of Small (4.17m) and sporty, the Kona has strong techni- the class came out with all guns blazing with its 190 cal aspects : 4X4, 7-speed dual clutch turbocharged bhp turbodiesel engine with powerful torque (400 Nm). engine producing 177 bhp, with ventilated seats, full Quattro transmission and 7-speed s-tronic direct-shift LED headlights, blind spot detection and complete gearbox. Top speed of 190. Prices start at CHF 43,700. connectivity. 1.6 T-GDI. No price given.

76 Turning good ideas into great investments. ⌻Themes Trading

Swiss Smart

Gold & Beta China Online BioTech Metal Miners Revolution Social • ifestyle • ulture Industry • Science • Technology ulture • conomy • Industry Science • Biology • Health

I T I IS G T HIGH IS G T IS G T HIGH IS

Trade trends in one click Invest in thematic portfolios with ⌻Themes Trading from Swissquote. swissquote.comthemestrading SWISSQUOTE SEPTEMBER 2017

BOUTIQUE

SOLE POWER 2.0

Designed for avid runners, the smart insole, Run Profiler, slips into a pair of trainers for a 3D analysis of your running and course characteristics such as average speed, distance, number of steps, calories, etc. An integrated audio coach monitors your performance in real time. www.digitsole.com CHF 99.-

AN ELEGANT OLED

Starting this summer, the German company Loewe – known for its exceptional design and finishing – will offer a new range of OLED television, the bild 5. Available in 55 and 65 inches, the Bild 5 boasts an ultra-thin screen at 4.9 mm and is equipped with a 1 TB hard drive for digital recording. Several types of bases are available, including a unique “ tripod ” look. www.loewe.tv/ch From CHF 4,250.-

HUMANITARIAN PEN

Montblanc is partnering with UNICEF to offer a limited-edition collection to help improve literacy and children’s education. The Montblanc UNICEF Meisterstück stands out from the rest, featuring the first character learnt by children around the world and adorned with a gold nib engraved with the organisation’s symbol. www.montblanc.com CHF 9,100.-

78 BOUTIQUE SWISSQUOTE SEPTEMBER 2017

SMART SHOWER

Designed by Smart & Blue, a start-up from Grenoble, Hydrao First is the first eco-friendly showerhead. The connected showerhead has an integrated set of LED lights to indicate in real time the amount of water used, and lets the user monitor their energy savings via its mobile app. The natural water-flow powers the showerhead, so no batteries are needed. www.hydrao.com CHF 98.-

LIKE THE PRINCE OF WALES

Hublot has teamed up with Lapo Elkann, the jet-setting ULTIMATE PROTECTION businessman who founded Italia Independent, to redesign The outdoor gear supplier, its automatic watch Clas- Vaude, is introducing a new rain sic Fusion. The result is a jacket so you can bike during collection of timekeepers every season. This breathable dressed in classic fabric from rain jacket has an environmen- the renowned Italian tailor, tally friendly, water-repellent Rubinacci. The Prince-of- finish made without fluoro- Wales version stole the show carbons, and helps you stay for most stylish, available safe on the road with its 360° in titanium, ceramic and reflectors. King Gold. www.vaude.com www.hublot.com CHF 165.- From CHF 14,300.-

THE CIGAR SAFE

Known for their luxury safes, the German company Döttling is presenting its first cigar safe. Equipped with LED lighting, this calfskin and Spanish cedar humidor opens like a drawer and includes five removable trays that can store up to 50 cigars. The integrated humidifier designed by CigarSpa ensures an ideal climate for storing your cigars with the help of a thermometer, barometer and hygrometer. www.doettling.com CHF 13,100.-

79 PRIVATE ISSUES SWISSQUOTE SEPTEMBER 2017

According to Berlin-based eco- LEA VON BIDDER nomics magazine The Hundert, von CO-FOUNDER OF AVA Bidder was amongst the top 100 AND L’INOUÏ entrepreneurs in Europe in 2016. BORN 11 MARCH 1990 IN ZURICH, SWITZERLAND At 27, she has already co-founded two companies. L’inouï, her first, is a production line and chain for high-end chocolate in Banga- lore, India. The second, Ava, is a Zurich-based start-up that sells smart bracelets which measure women’s fertility. The bracelets take nine factors into account, including your pulse, body temper- ature and sleep patterns. A clinical trial carried out by The University Hospital Zurich demonstrated that it is possible to detect an average of 5.3 days of fertility per men- strual cycle with 89% accuracy. A Zurich native, von Bidder runs the Ava branch in San Francisco, where the device was launched in 2016 and has been making a kill- ing. She holds a bachelor’s degree in Business from the University of St. Gallen in Switzerland, as well as an MBA which she earned with studies split between the French Ecole de Management de Lyon, Zhejiang University in China and Purdue University in the US. She INDIA, SURFING was formerly employed at Procter & Gamble in Frankfurt.

AND OVULATION DR

A KEY EVENT FROM YOUR CHILDHOOD ? THE IDEAL MAN ? I was very involved with girl scouts Mine is pretty wonderful. and look back on that time fondly. THE IDEAL ANIMAL ? THE PROFESSION YOU WOULD HAVE LIKED TO DO ? Migratory birds – I love to travel. Doctor. YOUR SECRET HOBBY ? SOMETHING THAT INSPIRED YOU RECENTLY ? I love to surf. It’s a secret because I’m not very Conversing with other female company good at it yet ! founders in San Francisco. YOU WIN 5,000 SWISS FRANCS ON THE STOCK MARKET. A PLACE THAT MADE AN IMPACT ON YOU – AND WHY ? WHAT DO YOU DO WITH THE MONEY ? India. It’s where I launched my first company – I’d invest it in Ava, my company. L’inouï. Every day there is an adventure. A BOOK THAT YOU RECOMMEND ? THE FILM THAT YOU WOULD HAVE LIKED TO EXPERIENCE ? I’d currently recommend the biography I’m already living a parallel life to the TV show of Phil Knight, founder of Nike. Silicon Valley – that’s enough for me right now. WHAT IS YOUR FAVOURITE WORD AND YOUR FAVOURITE THE IDEAL WOMAN ? SWEAR WORD ? Every woman is the ideal woman. “ Ovulation ”. I don’t really swear.

How will markets react?

Prepare your investment strategy.

• Exclusive market analysis • Custom trading strategies • #DE30 Social Sentiment Index swissquote.com/german-election