Biopharmaceuticals: creating the new and the different By Patrick Mooney and Jan Campbell January 2012 At a time when much of the pharma industry seems This article, republished from to be beating a retreat, with uninspiring pipelines, Pharmaceutical Executive compliance contraventions, cost pressures and Global Digest, explores the shrinking workforces, as well as many major multi- challenges and rewards for nationals teetering on the edge of a $250 billion biopharmaceutical companies going global. patent cliff, optimism abounds in one corner of the industry—the biopharmaceutical field. Often addressing rare diseases in which patients have little in the way of meaningful treatment options, these companies put innovation at their core to develop next-generation therapeutics. It is also some measure of the attractiveness of the biopharmaceutical arena (and with Alexion’s hematology drug Soliris costing a reputed $400,000 per patient why wouldn’t it be?), that Big Pharma companies such as GlaxoSmithKline, Sanofi and Pfizer are themselves keen to get in on the act and have set up Rare Disease Units. Novartis is already selling its biological drug Ilaris for the treatment of cryopyrin-associated periodic syndrome (CAPS), a rare and lifelong debilitating auto-inflammatory disease, which is ringing the tills to the tune of $90,000 to 100,000 a year per patient, and Bristol-Myers Squibb’s melanoma treatment Yervoy is a cool $120,000 for a course of therapy. While there are some fairly well established global biopharmaceutical companies such as Celgene, Biomarin and ViroPharma (alongside the likes of Biogen Idec, Gilead and Amgen), the last 18 months has seen a steady increase in the number of companies setting up international operations—either from a US HQ to Europe or vice-versa—as the precur- sor to the commercialisation of therapeutics. Companies including InterMune, Human Genome Sciences, Clovis Oncology, Ipsen, Algeta and Onyx Pharmaceuticals have all developed international capabilities through 2010-2011 and are at various stages (and through varying business models) of bringing their drugs to market. But what are the rationales for these biopharmaceutical companies to go global rather than take a potentially less burdensome route and fully out-license their innovative assets? What challenges do they face in establishing international operations and what sort of people does it take to actually make it all happen? Just as importantly, are there lessons learned for other companies looking to follow in their footsteps? Why go global? Steve Aselage, Executive Vice President and Chief Business Officer at Novato, Calif.-headquartered BioMarin, says of their decision to go global: “Our original intent was to outlicense Naglazyme [an enzyme replacement therapy for the rare genetic disease MPS VI)], ex-USA. We set up our own operation in the EU when it became clear that we were not going to get a deal done that fairly valued the product. Interestingly, we went through the exact same process before expanding into Latin America. It was not clear-cut at the time but it is very clear now that we made the right decision.” Conversely for Gillian Ivers-Read, who was one of the founding execu- tives of Pharmion (acquired by Celgene in 2007 for $2.9 billion), and who with former Pharmion CEO Pat Mahaffy is part of the leadership team at Clovis Oncology (she is Executive Vice President, Technical Operations and Chief Regulatory Officer), the decision to develop an international footprint at Pharmion and second time around at Clovis—was a no- brainer. “We were clear from the outset that we wanted to commer- cialise in the US and Europe. It’s quite simple—we want to be in control of our products and the community of physicians/KOLs we need to engage with is of such a size that we know from past experience that we can establish EU operations in a cost-efficient and effective way.” It made sense financially of course but there was Dr. Thierry Darcis, the Vice Presi- something more. We felt that we could bring the dent and General Manager of ViroPharma’s European opera- passion to the patient. It is the difference between tions, (which he helped create in another product that a distributor or partner adds to 2007), echoes the ‘value’ argu- their portfolio and something into which all of our ment and goes further: “It made sense financially of course but collective energies are channelled. there was something more. We felt that we could bring the passion to the patient. It is the difference between another product that a distributor or partner adds to their portfolio and something into which all of our collective energies are channelled.” Barry Labinger, Chief Commercial Officer at Human Genome Sciences which partnered GlaxoSmithKline in developing and launching Benlysta (the first new treatment for Lupus in 50 years) offers a slightly different 2 slant on global expansion: “We have set up a European organisation, but one which through our 50:50 co-commercialisation agreement operates in tandem with counterparts from GlaxoSmithKline to maximise Benlysta’s performance as well as create a platform for future indepen- dent product launches.” Expanding from a European HQ to the US, Andrew Kay—CEO of Oslo- based Algeta says, “Selecting the US as our geography of choice for Alpharadin, (a compound being developed for bone metastases in cancer patients in partnership with Bayer), was the foundation for everything. Retaining the US rights and licensing them Rest of World enables Algeta to commercialise other products independently and to build a full scale oncology company in the US. In a deal you can always take royalties. If you have the confidence to do a 50 percent profit share, you can take advantage of delivering strong cash flow and more value to the company and to shareholders as well as the ability to fund and commercialise future products.” The building blocks Ipsen’s objective was to establish a full commercial presence in America. Says its US President, Sean McKercher: “We worked out the timing and cost implications of greenfield entry and realised it would be expensive and long term so was not the right approach. This drove the recognition that the best way to enter the US was through acquisition.” In early 2008 Ipsen bought Tercica as its endocrinology platform. “At that time we also had Dysport (our neurology product) going to the FDA for approval. We bought Vernalis as a means to establish a US based commercial organisa- tion in neurology and then we merged the two businesses.” At a structural level, Thierry Darcis makes the point that “the task of setting up a biopharmaceutical company is bigger than anyone can anticipate; just because we are specialty doesn’t mean we get to The task of setting up a biopharmaceutical company make compromises on how or when we do things and the rules is bigger than anyone can anticipate; just because we that apply to big pharma apply are specialty doesn’t mean we get to make compro- equally to us, be that pharmaco- mises on how or when we do things and the rules vigilance, compliance or medical that apply to big pharma apply equally to us. information.” Working in a partnership of course requires a certain type of organisation model Barry Labinger contends: “Once we had made our strategic intent clear, we worked closely with GlaxoSmithKline to work out how to structure our European organisation in order to complement their set up and take advantage of what they already had in place, leveraging to the best possible extent our mutual as well as separate skills and knowledge.” 3 The talent In some cases the first hires are people known to executives in the ‘parent’ organisation, like Thierry Darcis who had worked with Viro- Pharma’s COO Daniel Soland at Chiron in the 1990s. Regardless of this however, some common characteristics stand out. Steve Aselage says Biomarin looked for individuals that had the capabil- ity of taking on broad organisational roles: “Individuals that had spent some time in smaller companies tended to fit in well while people whose experience may have been deep but narrow had more trouble adapting.” Giacomo di Nepi joined InterMune as SVP and Managing Director Europe in November 2009 to build the organisation and lead the launch of Esbriet in Idiopathic Pulmonary Fibrosis: “In a big organisation you can afford to bring in the person with high-potential but little experience because you have the resources and set up in which they can learn and grow…we don’t have that luxury, so we need people who are accom- plished in their respective fields but at the same time are very driven— who aren’t used to ‘wearing white gloves’ and can get things done.” Dr. Helen Torley, who recently joined Onyx Pharmaceuticals as Chief Commercial Officer from Amgen, is in the process of building a Euro- pean leadership team to lead the commercialisation of Carfilzomib in multiple myeloma. Torley says that fundamental to their selection criteria was finding “individuals who all had deep experience and track records both in building organisations and navigating the landscape in Europe. The need to unlock and communicate the value of our offerings and products has never been higher and our new recruits therefore had to have deep experience and be passionate about doing this.” Barry Labinger says that finding candidates with the relevant CV and track record was to some extent straightforward, but people with the right values and fit to the Human Genome Sciences culture? Another matter entirely. “We were seeking people with the capabilities to run or be part of a fairly autonomous European organisation, who didn’t let their ego get in the way of doing the right thing for the business and who would embrace ways to stay connected to the Global HQ in the US.