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Ireland Pharma report June 2013

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NINE OF THE WORLD’s TOP TEN Pharmaceutical companies Ireland is the

8th LARGEST PRODUCER

of pharmaceuticals in the world Find out more at http://www.idaireland.com/life-sciences/


Acknowledgements Focus Reports would like to warmly thank the Irish government for taking the time to help introduce this unique report. We would also like to extend a huge thank-you to all of the members of the private sector—including plant managers, sales directors, and those in service roles—that granted us an interview. We hope we won’t disappoint you!


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CONTENTS

2 7 8 10 12 13 13 14 15 16 17 20 21 22

ACKNOWLEDGEMENTS IRELAND: PUNCHING ABOVE ITS WEIGHT THE 3 T’S: POSITIONING IRELAND FOR FDI UP THE LADDER CUT COSTS, OR ADD VALUE ? FROM FOREIGN INVESTMENT, IRISH COMPANIES WHITE ELEPHANT SYNDROME FROM LOCAL SUPPLIER TO GLOBAL PARTNER PAIN AND GAIN: INSIDE THE LOCAL MARKET PUNCHING ABOVE ITS WEIGHT: HOW A SMALL AFFILIATE CAN MAKE A DIFFERENCE MADE IN IRELAND: FINDING SYNERGIES BETWEEN SALES AND PRODUCTION SUPPORTING A PIPELINE, AND DRIVING PRODUCTIVITY, FROM IRELAND SANOFI: ONE MULTINATIONAL’S INVESTMENT IN IRELAND WHAT’S NEXT FOR IRELAND ?

INTERVIEWS 24  Interview with: Anne Nolan, Chief Executive, Irish Pharmaceutical Healthcare Association (IPHA) 26  Interview with: Bryan Meehan, General Manager, MSD in Carlow 28  Interview with: Francis Lynch, General Manager – A. Menarini Ireland & President, Irish Pharmaceutical Health Association (IPHA) 30  Interview with: Greg Timmons, President & CEO, Takeda Ireland Ltd. 32  Interview with: Mark Ferguson, Director General – Science Foundation Ireland 34  Interview with: Matt Moran, Director, Pharmachemical Ireland (PCI) 36  Interview with: Dr. Paul Duffy, Vice President, External Supply Operating Unit, Pfizer Global Supply 38  Interview with: Shane Cooke President, Alkermes 40  Interview with: Dave Murphy, Chief Executive - PM Group This report was prepared by Focus Reports Project Director: Andrey Muntyan Project Assistant: Alina Manac

Project Coordinator: Isabella Romeo Gomez Project Publisher: Julie Avena Cover Photo: Andrey Muntyan

Copyright All rights reserved. No part of this publication maybe reproduced in any form or by any means, whether electronic, mechanical or otherwise including photocopying, recording or any information storage or retrieval system without prior written consent of Focus Reports. While every attempt is made to ensure the accuracy of the information contained in this report, neither Focus Reports nor the authors accept any liabilities for errors and omissions. Opinions expressed in this report are not necessarily those of the authors.


WORKING TO FILL LIVES WITH MORE YEARS AND YEARS WITH MORE LIFE.

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WORKING TOGETHER FOR A HEALTHIER WORLD.


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ireland report

IRELAND:

Punching Above its Weight: This sponsored supplement was produced by Focus Reports.

T

he elements that have made Ireland attractive for decades are still here. The big difference since 2007, however, is the cost base. If you are building a pharma plant in Ireland today, it will cost 35 to 40 percent less than it did six years ago. — Barry O’Leary, CEO, Industrial Development Agency (IDA) Ireland

Barry O’Leary, head of the IDA, Ireland’s inward investment agency, reels off a long list of investments into the country. Lilly, he says, committed $420 million (€320 MM) to its second Irish

Project Director: Andrey Muntyan Project Coordinator: Isabella Romeo Gomez Project Assistant: Alina Manac Project Publisher: Julie Avena Cover Photo: Andrey Muntyan Barry O’Leary, CEO, IDA Ireland

biotech facility. Allergan announced a $250 million (€190 MM) investment in biologics in the west of Ireland. Amgen initiated a $200 million (€150 MM) expansion in Dublin. Mylan declared plans to split $500 million (€385 MM)

For exclusive interviews and more info, please log onto or write to contact@focusreports.net between production sites in Dublin and Galway. Abbott is making a $110 million (€85 MM) investment in small molecule, high potency production. Lilly, Merck, and Gilead established financial shared services centers.

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Ireland pharma report June 2013

ireland report O’Leary notes that these announcements came in the first six months of the 2012 fiscal year alone. According to a report by the Irish Times, 2012 was Ireland’s best year for foreign direct investment in more than a decade. It seems that Ireland—the country that Prime Minister Enda Kenny promises will be the best small country to do business in by 2016—has become more attractive for foreign direct investment (FDI) in the wake of an economic crisis that has ravaged its domestic economy. Not only has the cost of doing business been reduced by 1015 percent since the onset of the recession (Ernst & Young), but Ireland has also adopted what Matt Smith, VP and head of the global pharma business for engineering giant CH2M Hill, calls a “laser-clear” focus on the customer. From what he has seen along his globetrotting route, Smith believes, “Ireland has never been more competitive around the world. The Irish have a clear vision of who they are: their brand, their identity, and their fit in the value chain. I am confident that any manager in the country will have roughly the same impression of what Ireland can offer their business; in other markets, you will find that opinions differ on the country’s positioning in the chain. Some of the emerging markets, in particular, don’t really know who they are yet—and if you

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The 3 T’s: Positioning Ireland for FDI What makes Ireland attractive for FDI? As the former GM of Genzyme’s Waterford site Pat O’Sullivan explains, a longstanding 12.5% corporate tax rate (that isn’t going anywhere) is one factor—but it doesn’t end there. Talent: “The first factor is the excellence of the workforce, which is highly qualified thanks to the superb third-level and post-third-level education offered in this country.” Tax Rate-Plus: “The second factor is that ‘Ireland Inc.’ is a highly attractive place to do business. Companies operating here receive a great deal of support from the state, channeled through a network of government agencies and tax incentives.” Track Record: “The third factor is our excellent regulatory track record. Ireland has not received a warning letter from the FDA in the last decade.”

are competing without a clear vision of your value, you will get beat by a country like Ireland any day of the week.” Ireland has been a pharma industry darling since the 1960s, when a then-newly established IDA targeted the sector as a strategic area for development. Today, the numbers are eye-catching. As reported by the IDA, nine out of the top ten— and 13 out of the top 15—pharma companies in the world have substantial manufacturing operations in Ireland. The industry has invested over $7 billion (€5.4 BN) in the market over the last decade. Ireland has become the largest net exporter of medicines in the world and the eighth-largest producer in absolute terms, with pharmachem shipments worth €55.1 billion ($71.63 BN) (2011) accounting for nearly half of Irish exports. As Colin Kavanagh, Partner and Head of Life Sciences at local law firm Arthur Cox, puts it, if a company is a player of scale in this industry, then they have likely already invested in Ireland—“and if they haven’t, they’re thinking about it, or they have a good reason not to.” Many of those that have already invested are now diversifying their operations away from what has classically been a pure manufacturing base to include more complex value-added activities like product and process development. The concentration of FDI has also had a strong hand in the rise of a growing indigenous life science sector, often led by Irish entrepreneurs who have either learned the ropes by working for a multinational, or built their businesses upon a foundation of collaborating with multinationals from Ireland. Yet as multinational investment in infrastructure reaches new heights and indigenous players ramp up overseas expansion, some industry actors face a more uncertain scenario. On the local market, innovator sales operations have been challenged by recession-driven austerity. A new price-cutting agreement has

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ireland report The pharma sector advanced from bulk manufacture of chemicals and intermediates to formulation and finished products. In the early 2000s, in addition to small molecules, Ireland became a key location for complex bioLilly set up in Ireland three Richard Bruton TD, pharmaceutical production. Pfizer’s biotech site at Grange decades ago by purchasing a Minister for Jobs, Enterprise and Castle in Dublin, inherited farm. In its early days, the op- Innovation from Wyeth, was the largest in eration produced intermedithe world when it went into operation aries for small-molecule drugs. Nearby, in 2005. Pfizer was manufacturing citric acid for Pfizer VP of External Supply Paul soft drinks. The country was a fledgling Duffy summarizes a story that is emblemindustrial economy that was still mostly atic of the market at large: “In Ireland, reliant on sectors like agriculture and we have moved from making sweetener fishing. for soft drinks, to manufacturing some No more. Thanks to a strategic reUp the Ladder of the most innovative medicines Pfizer vamping of its educational system and distributes around the world.” the development of a highly attractive “An important aspect in the development And today, as reported by Matt package of business incentives, Ireland of the sector—which has helped to signifiMoran, director of local industry ashas diversified its investment base and cantly boost its contribution to the Irish sociation Pharmachemical Ireland continually moved up the value chain. economy—has been the success of the (PCI), “the aim is to move the sector from manufacturing, to ‘manufacturing plus.’” What is manufacturing plus? Moran explains, “Not very much basic research is done in Ireland. However, the industry is now investing in product and process development—in other Creating Utilities & Energy Progress words, competencies that are close to manufacturing. This makes sense, given Expert energy services for Pharmaceutical industries: the size of the production base here.” Ireland is today a place to not only • Energy & Environmental Solutions This includes: manufacture, but also to address chal• Utilities & Energy Performance Solutions Industrial utility energy optimisation lenges like manufacturability. At Lilsolutions: • Compliance, Risk-based and Lean ly’s operation in Kinsale, Cork, Gen• Steam • Hot water • Compressed air Approach • Calibration • Cooling and Refrigeration eral Manager Edward Canary reports, • Multi-technical Asset Management • Condition-Based Maintenance “As the site’s mission has evolved, the Services • Combined Heat & Power (CHP) complexity associated with our opera• Asset Life Cycle Management Environmental optimisation solutions: tion has increased. Through ongoing • Biomass • Carbon footprint reduction investment in our people and facilities, we have become a center of excel: lence for chemical synthesis and the m o fr Benefit vements nal Impro commercialization of new molecules. • Operatio fficiency lE • Financia duction Several new medicines are currently Re • Carbon undergoing development work in Kinwww.veoliaenergyna.com www.dalkia.ie sale, and new manufacturing technoloContact us in the USA: Contact us in Ireland: gies such as process analytics and conJeff Perry, Chief Development Officer Colm Flanagan, Commercial Director tinuous processing are being deployed Email: marketing@veoliaenergyna.com Email: info@dalkia.ie Tel: +1 617.849.6600 Tel: +353 (0)1 870 1200 at the site in collaboration with our sent a clear message that the government will increasingly delink its approach between courting investment from the industry and supporting an unsustainable drugs bill. For generics marketers, longexpected regulations should open up new possibilities—but the full ramifications of prospective legislation are as yet unclear. According to Anne Nolan, head of the local innovator group Irish Pharmaceutical Healthcare Association (IPHA), companies looking to reach the 4.5 millionpatient Irish market must contend with a health system that has changed as much in the last four-five years as the UK’s National Health Service (NHS) has changed in the last 40.

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industry in diversifying the nature of its investment in Ireland, from the original bulk active plants to higher-value activities.” – Richard Bruton, Minister for Jobs, Enterprise, and Innovation

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ireland report colleagues in drug development. We now have the opportunity to advance our late stage pipeline, while continuing to leverage our long history of performance in the supply side of the business.” Indeed, in a rapidly evolving environment, many stakeholders have said that if Ireland did not itself continue to evolve, the industry would look elsewhere—and in the words of Deloitte Ireland Managing Partner Brandon Jennings, it would look elsewhere “very quickly.” But what of cost—one of the greatest drivers of change for the pharma business today? Great science alone may not hold the industry’s attention. As Bristol Myers Squibb’s VP of external manufacturing John Nason says, “To be very clear, we operate in a cold business environment. You either make a profit, or you fail—it’s that simple. We are up against Switzerland, and we are up against Singapore and the Far East. China has invested billions to attract the industry.” Ireland has an answer: leading in the implementation of manufacturing excellence and continuous improvement. Rottapharm’s managing director for its Dublin site, Patrick Garrahy—whose team recently won multiple awards for continuous improvement from the World Trade Group—believes that the country “can mitigate whatever cost differentiators may exist

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From left: Paul Duffy, VP External Supply Operating Unit, Pfizer; Matt Moran, Director, Pharmachemical Ireland; Edward Canary, General Manager, Lilly Kinsale Site

between ourselves and the low-cost producers by evolving into world-class manufacturing operations. The efficiencies we gain from these efforts allow us to continue to compete.” In fact, Rottapharm’s neighbor in Clonmel, Pinewood Healthcare—the Irish affiliate of Indian giant Wockhardt—reports manufacturing on a cost-competitive basis with one of Wockhardt’s plants in low-cost India. All across Ireland, production and development sites are applying technology and innovative ideas borrowed from industries as varied as aerospace and fast-moving consumer goods (FMCG) to realize some of the most efficient pharma operations in the world. 17:21 Page 1 IMSUK-PharmExec-advert-03313_85x117 26/03/2013

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Ireland pharma report June 2013

ireland report

Cut costs, or add value? It is widely acknowledged that pharmaceutical manufacturing operations have entered into a period of significant cost reduction. Service providers like Dalkia—a French energy services company that has built its Irish business upon serving the pharmaceutical sector—have had to help clients cope. Dalkia Ireland’s managing director Pat Gilroy remembers his years Pat Gilroy, Managing Director, of collaboration with the country’s Dalkia Ireland pharma industry: “We have worked with many of our partners for over ten years. In the earlier days, many new products were coming online. Existing facilities were being expanded or refurbished. New facilities were being constructed. The focus, at first, was simply on getting things working. “But naturally, as sites moved ahead and became very good at manufacturing their products, the next logical phase was cost reduction—how do we do the same job for less, while maintaining integrity in reliability and availability?”

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Servier’s Management Team in Arklow

Dalkia takes a creative approach, helping clients make better use of their assets. Some of the company’s best work has been in partnership with Servier, at the latter’s Arklow site in eastern Ireland. Their implementation of an energy-focused maintenance program garnered a MEETA Award for Maintenance Excellence in 2011. Focus Reports spoke with several members of Servier’s leadership team in Arklow: Allain de Wilde, Mark Brunton, and Duncan Nugent—respectively general manager, production manager, and human resources manager. Arklow is the first site in Servier’s industrial network to deploy Lean Six Sigma, an efficiency methodology that many facilities around Ireland are busy applying today. But de Wilde is quick to point out that for his team, driving efficiency has a very particular meaning. “We have been very cautious”, he says, “in avoiding the use of the term ‘cost targets.’ Instead, we have emphasized adding value.” Over the past five years, Arklow has increased activity by 40 percent and multiplied threefold the number of references it handles, while increasing its workforce by only 17 percent—“meaning,” de Wilde concludes, “that we have attained greater productivity from our existing staff. Budget planning and cost control are important for us—but they are not our primary focus.” For a number of pharma producers in Ireland, recent efficiency programs have led to job cuts on a scale that has gabbed front-page headlines in Irish newspapers. At Arklow, HR manager Nungent describes a more positive outlook: “We have been very clear with our people. We have pledged to retain the resources we have—but we must become better at our jobs.” Production manager Brunton believes that in today’s constrained environment, becoming better at your job is more than a matter of trimming the fat. It is about a proactive response to challenges. “We adapt, “ Brunton says. “We adapt our business model, our working organization, and our technology. Our people, too, adapt—constantly.”


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ireland report The result, as Pfizer’s Duffy points out, is this: “Globally, the pharmaceutical industry has seen a significant reduction in capital investiture in the past few years. And yet, when we have chosen to invest, we often chose to invest in Ireland.”

From Foreign investment, irish Companies “The government’s vision has always been for indigenous companies to develop from the expertise brought in by

From left: Joe Costello TD, Minister for Trade & Development; Frank Ryan, CEO, Enterprise Ireland

White elephant syndrome Cormac Callaghan, founder and managing director of Primecore, a portfolio and program management consultancy based in Dublin and Cambridge, Massachusetts, has managed large-scale change programs for the pharmaceutical industry for the better part of 30 years. He has seen his share of setbacks: between 2006 and 2008, Callaghan was the first, and last, Irish employee of a major biotech that made and subsequently reversed Cormac Callaghan, Managing Director, a decision to construct a new campus in Cork. Primecore Callaghan refers to this case as a “‘failure’ with inverted commas”: “You might say that this was an investment gone wrong. Personally, however, I believe that it was an investment gone right. It was a smart, and very brave, decision to bring the program to a timely end. There have been many examples in the industry of companies not having the courage or strength of conviction to reverse course, and building costly ‘white elephants.’” Callaghan points to a macroenvironment that, more than ever before, will punish companies that deploy constrained resources to execute a questionable business case. Callaghan observes, “Companies need to ask the right questions about the robustness of their business case, in a broad sense: not whether the program is on schedule or on budget, but rather, ‘Is this something we still need?’—thereby freeing up scarce resources to work on something of greater value.”

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ireland report FDI—and we are seeing that happening now.” —Joe Costello, Minister for Trade & Development

From local supplier to global partner SteriPack, a packaging solutions provider based in Clara, Ireland, founded its business upon servicing Ireland’s ‘other’ major life science sector: the medtech industry. Ireland is not only the largest net exporter of medicines in the world, but also home to over 250 medtech companies, including operations for 15 of the top 20 global players. From its beginnings as a service provider to this cluster, SteriPack went on to develop Barry Moore, Group facilities across Poland, Malaysia, and U.S.—and seiz- Sales Director, ing upon opportunities in Asia, pharma now accounts SteriPack for 50% of a business that exports to over 48 countries. Barry Moore, Group Sales Director, comments on the benefits of building this business from Ireland. “The large multinationals,” Moore says, “have streamed into Ireland. As a service provider to the market, we built all of our processes and quality systems around their high standards. This meant that our standards met the highest parameters in the world. We were able to leverage that investment, and knock on the doors of sister operations within the multinationals’ global production networks and say, ‘We are approved to serve your sister company in Ireland. Perhaps we can work together with you, as well!’”

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The facility in Kinsale uses advanced chemical and biological processes to support the development and manufacture of many of the company's newest medicines. The company is currently investing €300m in a m u l t i p h a s e p ro g r a m t o e x pa n d i t s Biopharmaceuticals Manufacturing capabilities at its existing site in Dunderrow, Kinsale, Co. Cork.

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FDI into Ireland has created a feedstock for the indigenous ecosystem: raising the bar for standards and technology, contributing to the experience of the workforce, and providing a strong customer and partner base for Irish enterprises. Over the years, the indigenous sector has matured, and today, its companies are making a name for themselves all over the world. Frank Ryan, CEO of Enterprise Ireland, the state agency responsible for fostering the growth of Irish companies, describes a marked shift: “Once upon a time,” Ryan says, “we had mainly sub-supply companies, who serviced the needs of the multinationals that had invested in the country. While we still have a number of such companies, many of our players have evolved to offer design and development activities, and many now act as strategic partners to multinationals outside of Irish borders. We find that, today, many of our companies engage with major life science companies all over the world—even before they engage with them in Ireland.” PM Group, Ireland’s leading indigenous engineering and project management company, has worked on many of the country’s landmark pharma projects. Dave Murphy, CEO, says that PM’s early growth was fueled by servicing multinationals that had invested in Ireland—but that its later growth came from following those same multinationals abroad. Murphy tells Focus Reports, “over the years, as we developed relationships with companies like Johnson & Johnson and Pfizer, we followed them to foreign markets. We developed a much deeper understanding of their business, to the point where we became seen as a preferred partner.” PM Group reported €400 million ($520 MM) in new projects in China


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ireland report last year. Just as the local market is only a small pool for the multinationals, Ireland became too small for PM. Meanwhile, local law firm Byrne Wallace’s Catherine Guy, Colin Sainsbury, and Tom Maher—the managing partner and life science leads of the firm—believe in promoting Ireland Irish Retail Market

10%

Ireland

Europe

8% 6%

Growth Rate

4% 2% 0% –2%

first, and promoting their own services second. Lately, they have been selling Ireland to the next expected wave of investors—so-called “micro-multinationals,” smaller international companies that are very selective about expansion. What is most exciting about that wave? According to Maher, just as the influx of larger foreign investors did, “the influx of micro-multinationals is spawning new, indigenous companies, which will in turn spawn new companies of their own—and so on into the future!” Perhaps the benefit is mutual. Enterprise Ireland’s life science manager Brian O’Neill stresses that the indigenous sector has evolved so much, it is no longer just an effect of the foreign investment: it is a draw for it. “I would cite indigenous companies,” O’Neill says, “as one of the most important magnets for FDI into this country.”

pain and gain: inside the LoCaL market

–4% –6% –8% 2008

2009

2010

2011

2012

2013

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2015

2016

Figures based on trade prices for both private and public sales

Courtesy of IMS Health Ireland

“I am confident that the health services and pharmaceutical industry will continue to work together in a spirit of partnership, to ensure that the needs of the patient are to the fore when decisions are being made regarding the pricing and supply of drugs.” – James Reilly, Minister for Health

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ireland report

Punching above its weight: how a small affiliate can make a difference The Irish market is one of the smallest in the world. Nonetheless, its much-lauded talent pool has produced a number of innovative solutions to the challenges that multinational organizations face around the globe. Take Astellas’ affiliate in Ireland, headed by Patricia Kelly, GenKelly, eral Manager. Kelly says that since the organization was founded Patricia General Manager, in 2006 after the merger of Fujisawa and Yamanouchi, the Irish Astellas Ireland business has been achieving group targets in category leadership and leveraging momentum in legacy products. “We talk about Ireland ‘punching above its weight,’” says Kelly. “As Astellas Ireland, we punched above our weight for the company within Europe from the beginning.” Astellas Ireland also developed an innovative approach toward the marketing of one of its urology products, providing a service that trained physicians in the proper administration of the drug after the team identified a problem in the care model. Kelly is proud. “People sometimes feel that small affiliates cannot compete with big ones—but just last year, our team won an award in innovation. This was something that a small group of people came up with on their own, and it cost very little money. Now, other affiliates around the world have begun to implement this program.”

“Over the last five years,” says Fergal Egan, commercial director for IMS Health Ireland, “the Irish market has gone through an absolutely phenomenal flux. With the arrival of the recession in 2008, change has been dramatic. The health bill is the government’s largest expenditure and an obvious area to target for austerity. “Pharmaceutical exports are the biggest driver of Ireland’s GDP—but nonetheless, officials have begun to increasingly decouple their policies toward pharmaceutical manufacturing, from their policies toward the local drugs spend.” Welcome to the post-Celtic Tiger Irish market.

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ireland report

Made in Ireland: Finding synergies between sales and production As noted by LEO Pharma’s vice president of finished goods, Brendan Fitzpatrick, LEO was the first foreign company to invest in pharmaceutical production in Ireland when it took over a former tobacco plant in Dublin in 1960. A key strategic site for the group globally, the operation also provides a welcome brand boost for LEO’s local sales and marketing efforts. Fitzpatrick’s colleague Geraldine Murphy, Managing Director UK/Ireland, explains, “LEO is extremely well known in Ireland. We have a very high level of recognition and trust amongst our customers, having first invested in the country 55 years ago. “Our production commitment has been absolutely instrumental in building up loyalty to our medicines. The medical profession does understand and appreciate the importance of the pharma industry to our economy. “Over the years, we have continually promoted the fact that our products are made in Ireland. All of the products we currently sell in the market are manufactured here, either wholly or in part.”

From left: Dave Murphy, Chief Executive, PM Group; James Reilly TD, Minister for Health

From left: Fergal Egan, Commercial Director, IMS Ireland; Yann Mazeman, General Manager, Servier Ireland

the innovator side For innovators, perhaps the most impactful outcome of the recession has been a recent drug supply agreement with the state that, according to Servier Ireland General Manager Yann Mazeman, is the single largest cost-cutting deal, per-capita, the industry has ever concluded in Europe. In November of 2012, in an agreement that Mazeman says would be worth three or four bil-

LEO® © 2000/10179a DATE OF PREPARATION: December 2012, All LEO trademarks mentioned belong to the LEO Group

lion euros on an Italian or French scale, IPHA member companies consented to deliver in excess of €400 million ($520 MM) in savings to the state over the next three years—on top of the approximately €300 million ($390 MM)

From left: Brendan Fitzpatrick, VP Finished Goods Manufacturing, LEO Pharma Dublin Site; Geraldine Murphy, Managing Director, LEO Pharma UKIreland

IPHA reports delivering between 20062010, and the €200 million ($260 MM) delivered in 2011. Takeda Ireland’s GM Kieran Leahy calls the deal “short-term pain, long-term gain.” Mazeman explains the

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Special SponSored Section

Ireland pharma report June 2013

ireland report

From left: Ralf Zimmermann, Managing Director, Bayer Ireland; Francis Lynch, General Manager, A. Menarini Ireland; Kieran Leahy, General Manager, Takeda Ireland

pain: “The ramifications of this agreement are huge. Looking at our product portfolio at Servier Laboratories, the agreement means that 12 of our 18 products will suffer a price decrease between minus one and minus 52 percent. This will have direct consequences on our activities—including a very strong impact on our turnover in 2013. “Furthermore, it is worth noting that the price cuts in Ireland will have a direct or indirect impact on markets worldwide. In fact, several countries use the ‘country of manufacture’ as a reference price for their own market. The Irish authorities need to bear this global domino effect

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in mind when taking decisions regarding the drug market locally.” Many Irish innovator operations have taken a significant loss in recent years, with the latest price reductions delivering yet another blow. Coupled with the genericization of a number of key products, the climate has led to redundancies, restructuring, and consolidation with other regional affiliates. Personnel recruitment in Ireland is stagnant; for some, investment in local initiatives such as patient support and public outreach has taken a more conservative turn. Meanwhile, the ripple effects of price changes in the Irish market are set to impact the operations of far larger affiliates overseas. The longer-term consequences of the agreement,however, are more encouraging. The deal was, in part, a solution to a straightforward but critical problem: the state lacked funds to pay for new medicines. A number of companies reported a recent freeze on reimbursement for new products that lasted 6-9 months—even for products with EMEA approval that had proven cost-effective at the Health Technology Assessment (HTA) stage in Ireland. That freeze has seemingly been lifted. With the savings accrued from the markdown on existing products, the Department of Health expects to allocate €210 million ($273 MM) to fund new drugs—ensuring that, at least for now, there is a clear mechanism for innovative medicines to reach reimbursement in Ireland. Managers report that the market has gained a healthy measure of stability. Bayer Ireland MD Ralf Zimmermann points to an understanding between industry and state: “The government has acknowledged the critical importance of better access to new, cutting-edge drugs for patients, while the industry is acutely aware of the financial situation facing the government. I think both sides, throughout our negotiations, acknowledged each other’s perspective, while striving to make a deal that could benefit patients and the health system.” The level of constructive dialogue between the private and public sectors continues to demonstrate that Ireland is decidedly pro-business. Menarini’s GM in Ireland and current president of IPHA Francis Lynch says that, ever since the first structured drug supply agreement was concluded in 1968, state and industry have preferred to “collaborate, rather than go to war.” And of course, in the end, companies with a great offer will endure even the most challenging external conditions. Zimmermann expects Bayer’s strong pipeline to buffer his business from the vagaries of a market that IMS expects to decline by six percent this year. In fact, Zimmermann expects his affiliate to grow at six percent in 2013. He comments, “The Irish environment is difficult—but it is not uniquely difficult. Portugal, Greece, Spain, and Italy all face problems that are perhaps greater. Moreover, even in difficult times, if you have the right strategy, with the right products, there is a way forward!”


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ireland report

From left: Tony Hynds, Managing Director, Actavis Ireland; Fergal Murphy, Company Director, Pinewood Healthcare; Julie Murphy, Commercial Manager, Gerard Laboratories (Mylan) Ireland

the generic side Just as Ireland has taken a hard line with innovators, the market has increasingly opened up to generics. For a state strapped for cash, the shift is not surprising. By European standards, it’s perhaps rather late. Tony Hynds, who convinced Actavis to invest in a greenfield sales and marketing operation in Ireland and serves as managing director for the market, says, “prior to 2008, the Irish pharmaceutical market was primarily dominated by innovators. Although in most of Western Europe, generic

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companies had fairly robust market share, in Ireland their role was minimal. Even after a patent expired for a given product and equivalents were allowed onto the market, originator companies still held 85-90 percent market share. The reason for this was the fact that, traditionally, there had been no government initiatives to support generic sales—no mandated generic prescribing, no legislation to support generic substitution, etc. Largely, generic companies had to make a go of it themselves.” But when the recession hit the market, Hynds saw the state’s budget dwindle “seemingly overnight.” Seeing a major opportunity for generics, he approached Actavis. Hynds’ business has been growing at over 100 percent per annum since then. More broadly, the generics group Association for Pharmaceutical Manufacturers in Ireland (APMI) reports that Ireland’s off-patent segment has grown 35-40 percent in value in the last 18 months—even as the overall market has slid considerably, and even as the APMI’s own structured agreement with government led to an interim pan-market price reduction of 15 percent. Thank pro-generics policies. Fergal Murphy, APMI Chairman and company director of the leading generics business in Ireland—Wockhardt affiliate

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Special SponSored Section Ireland pharma report June 2013

ireland report

Supporting a pipeline, and driving productivity, from Ireland In Ireland, the local marketing organizations that are suffering the most are those that cannot bring anything new to the table in the face of generic encroachment and reduced prices on existing products. It helps to have a good pipeline—and Loretto Callaghan, CPO Head for Novartis Ireland, has one. Callaghan tells Focus Reports, “Our research is our strength. We have over 140 projects in our pipeline, many of which are new molecular entities—an unprecedented figure in the industry. I am confident that we are in a good position to recover from current and future patent losses through bringing new medicines to the market.”

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From left: Dave Mitchell, Managing Director, Novartis Ringaskiddy Site; Loretto Callaghan, CPO Head, Novartis Ireland

The manufacture and development of this pipeline is critically supported from Ireland. At Novartis’ production site in Rigaskiddy, Cork, Callaghan’s colleague David Mitchell recently arrived to oversee operations as managing director after a long stint with

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Astrazeneca in the UK. Mitchell found that in Ireland, despite the widely reported shift in the cost base, “there is still a knock-on effect from the Celtic Tiger years. Labor costs remain quite high, even compared to the UK.” He believes that his “most pressing challenge, therefore, is to ensure that manufacturing practices at Ringaskiddy are lean and there is a focus on increasing productivity through technical improvements and through eliminating non-value added work.” Mitchell now leads his team at Ringaskiddy in realizing the solutions to that challenge through the implementation of programs like Lean Six Sigma. The site has been successful thus far, and its MD affirms that it is well positioned to support Novartis’ future. Mitchell notes that in 2013, the organization will make further investments in Cork. And then there’s clinical development. Since Callaghan took on her current role, Novartis has more actively invested in local research. Callaghan reports, “Four years ago, we had little or no clinical trial presence in Ireland. We now have 24 trials ongoing, and we will look to increase this number in the future. “At Novartis, we have faced significant and sustained costcontainment measures and other challenges which have meant that we have had to change the way that we do business. Part of that change has been the necessity to drive productivity initiatives and to reallocate resources across the organization—so that we can continue to invest in research, scientific education, patient support, and clinical trials.’’


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ireland report

Sanofi: one multinational’s investment in Ireland On responding to challenges in the local market: Mary Dickens, Country Manager, Sanofi Ireland: “2009 marked the beginning of real change in the legislative environment in Ireland, and sudden price cuts. We had a sudden loss of revenue that was highly impactful. “At the beginning of 2010, and into 2011, Sanofi announced a pan-European reorganization, and Ireland became a multi-country organization (MCO) alongside the UK. Restructuring challenges followed. However, we rebuilt Sanofi Ireland to be very much focused on the patient and the customer. As a team, we set out our own philosophy. We needed to become smarter— to work more efficiently and more effectively, and look carefully at our investment policy.”

Pinewood Healthcare—explains that while off-patent prices are set to be reduced by an additional 15 percent soon, first, two new elements will be defined: generic substitution and generic reference pricing. The two will have a highly impactful, if not revolutionary, effect on the local market landscape in Ireland. Murphy comments, “In five years’ time, I believe generics will take up to 90 percent of the public market in the off-patent space—up from about 50 percent today—with the originator brands retaining the remainder. In the overall market, I believe generics will constitute 35 percent share—up from about 18 percent today. I would like to reach the level of generic penetration in Ireland that we see in the UK.” How to be prepared for a new paradigm? Mylan UK/ Ireland MD John Munson and colleague Gerard Laboratories (Mylan) Ireland Commercial Director Julie Murphy believe that in an environment that was once controlled by indigenous generics companies, the time has arrived for global entities. Competition will be defined by the breadth of one’s pipeline, the quality of one’s offering, and the reliability of one’s supply chain. Mylan, the country’s largest manufacturer of generics, will produce 2.7 billion doses in

From left: Brendan Martin, General Manager, Genzyme UK/ Ireland; Mary Dickens, Country Manager, Sanofi Ireland; Pat O’Sullivan, Former General Manager, Genzyme Waterford Site

On whether a small market is a worthwhile business case: Brendan Martin, General Manager, Genzyme UK/ Ireland: “Genzyme is in the business of helping patients. We are active in one disease area where there has been only one patient identified with the condition in Ireland. “For Genzyme, it is not so much a question of whether or not the business case is viable in one region or another; rather, it is a responsibility to work out how we can partner with health systems to provide adequate treatment for affected patients, regardless of their location or scarcity.” On manufacturing for the future of the parent organization: Pat O’Sullivan, former General Manager, Genzyme Waterford Site: “In April of 2011, Genzyme was acquired by Sanofi, and as part of that acquisition, Sanofi also gained ownership of this plant. Sanofi now has plans to invest €44 million ($57.2 MM) into the facility, with the aim of manufacturing Lantus, a Sanofi insulin product. This investment clearly demonstrates the confidence that Sanofi has developed in Genzyme’s Irish operations in just a short period of time. The organization is willing to not only continue to make Genzyme products in Ireland, but also to manufacture products for Sanofi’s own future.”

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Ireland pharma report June 2013 Special SponSored Section

ireland report to capitalize on emerging opportunities here in Ireland—as long as generic medicines become more widely accepted in the market.”

What’s next For ireLand?

From left: John Munson, Managing Director UK/Ireland, Mylan; Mark Ferguson, Director General, Science Foundation Ireland; Alan Looney, Managing Director, National Chemical Company

Ireland this year—but Mylan’s commercial team remains hard at work bolstering its sales operation. The difficulty is cultural: will a market where doctors, pharmacists, and patients are used to the innovator brand, accept the International Nonproprietary Name (INN)? Munson says of Murphy’s challenge today: “Julie is in an interesting position in the market. When generic substitution is introduced, we have little idea whether the volume effects will hit on day one, or a year down the line. In this sense, we have a lot of planning challenges. However, we have a highly flexible supply chain, which is a fantastic advantage. I believe we are well positioned

Changing tomorrow

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“If you look at the cuts in the public sector, the science budget has been relatively lightly touched. This sends a signal at a very high level that science, the knowledge economy, and the smart training of people are very important for our economic recovery.” – Mark Ferguson, Director General, Science Foundation Ireland There are murmurs in the industry that earlier stages of research could find a home in Ireland—and some indigenous players are already innovating, if one believes in the promise of the pipeline of an Irish biotech like Alkermes. Multinationals may follow suit, if their Irish operations can continue to demonstrate value and if indigenous companies continue to offer opportunities for valuable collaboration. But whether the science is in drug discovery or in process development, Mark Ferguson, director general of Science Foundation Ireland (SFI), Ireland’s support agency for the sciences, believes his job is to work with the private sector to create an economic impact. As evidenced by the fact that its science agency falls under the Department of Jobs and Enterprise rather than the Department of Education, Ireland is betting on the innovation economy to bring it out of the recession. It is betting on continued investment from foreign players, it is incubating its own companies for the world stage, and it is increasingly creating links between the two on its course to climb even higher in the value chain. Forward-thinking sales operations are also dreaming of a day when Ireland can capitalize on its critical mass of stakeholders across nearly every facet of the industry, and build new global roles for Ireland: manufacturing hub, development hub—and why not center for global commercialization activities? In commenting on the effects of the recession, Alan Looney, managing director of the internationalizing Irish chemicals supplier National Chemical Company, says: “Perhaps the best thing that happened to us was the economic crisis. I believe that the Irish people genuinely have shown their resolve in how they have responded to hardship. We have not demonstrated in the streets; instead, we stood up to the challenge by working harder, often offering more for less. This is true of the public system, and it is true of industry. We have become more competitive relative to our European neighbors. “We also have come to a firmer realization that we must compete. In Ireland, we are operating from an open economy— one of the most open in the world. We have to compete globally. I think the pharmaceutical industry has responded, and we are the better for it.“ To borrow an old boxing metaphor often used by the Irish, Ireland continues to ‘punch above its weight,’ for and within the industry.


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Interview with: Anne Nolan, Chief Executive, Irish Pharmaceutical Healthcare Association (IPHA)

INTERVIEW WITH:

Anne Nolan, Chief Executive, Irish Pharmaceutical Healthcare Association (IPHA) Focus Reports: You have been chief executive of the IPHA since 1994. How have you seen the Irish pharmaceutical environment evolve over these last two decades? ANNE NOLAN: The environment has become increasingly difficult with each passing year. Our principal method of establishing the rules for pharmaceutical sales in this country has typically been to reach a formal agreement with the Irish Department of Health. We have had ten or twelve such agreements over the years, and each one became a bit tougher in terms of elements like supply contracts. The last few years have been particularly challenging. Ireland is in a deep recession. The government has a severe lack of funds, including for pharmaceutical spending. Officials have approached us three or four times in the last few years asking us to please help them to realize savings. The industry has assisted in whatever fashion it could to provide additional savings over and above those already provided for by in our supply agreements. In the domestic market, since 2010, we have provided savings in the order of 19% of the total pharmaceutical market—which is quite considerable. The environment will never be what it was before. It was easier to reach mutually beneficial agreements in the past; it is proving extremely difficult at the moment. It is very important for the industry to ensure

that the government understands and appreciates our members’ needs—we cannot simply bail officials out of the troubles in the healthcare system. The government has always been very supportive of the industry, and it is very important that they continue to be supportive. We can always find some way of helping when we’re talking. If we as an industry were the subject of draconian legislation that was passed without any dialogue, it would be much more difficult to do business in Ireland. Thankfully, this is not the case—the dialogue is there. Many people have asked, ‘The local market is very small; why does the industry care?’ The industry cares because Ireland has always had a reputation as a good place to do business, and a good place to invest. The sentiment in the market, and the way in which the government will choose to

Many people have asked, ‘The local market is very small; why does the industry care?’ The industry cares because Ireland has always had a reputation as a good place to do business, and a good place to invest.

Anne Nolan, CHIEF EXECUTIVE, IRISH PHARMACEUTICAL HEALTHCARE ASSOCIATION (IPHA)


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support them, is very important in terms of sending the right message out to companies: that Ireland is a business-friendly environment that is supportive of innovation, and a country that particularly welcomes the pharmaceutical industry.

FR: Pharmachemical Ireland’s Matt Moran commented that without the pharmaceutical industry, economic conditions in Ireland would be quite grim—certainly more so than they are now. Do you share this opinion? ANNE NOLAN: Things are already quite grim here—but indeed, the situation would be even more grim without the industry. When Mary Harney was Health Minister, she called us in twice within the span of ten months, and I will always remember her words that Ireland is in a very ‘bleak’ place. Without the pharma business—particularly the export business—things would be worse. The government is struggling, because last year, the net growth in the pharmaceutical business was negative five percent. The elements of growth within this figure were minus eleven percent on price, and six percent positive growth in volume. Unfortunately, because there is an increasing number of unemployed people in Ireland, the state is having to shoulder the cost of their welfare—this means that although we have delivered a substantial reduction on the price front, demand is going up.

FR: Looking forward, what opportunities and challenges do you foresee for the next five years of Irish pharma? ANNE NOLAN: In terms of challenges, we foresee difficulties in getting products to the market, and in keeping dialogue open with the government such that we can reach

When Mary Harney was Health Minister, she called us in twice within the span of ten months, and I will always remember her words that Ireland is in a very ‘bleak’ place. Without the pharma business— particularly the export business—things would be worse. agreements about satisfying the needs of all patients. And yet, within a five-year horizon, I believe that much of the difficulties will have washed through the system, and we will be in a more stable market. The major problem in Ireland over the last few years has been the pace of change: if we look at the evolution of the NHS in the UK over the last 40 years, we see that Ireland has experienced similar changes within a 3-5 year horizon. The situation is quite difficult, and we would like the government to take cognizance of that and allow people the time and opportunity to change— although the austerity does not make it easy. Despite our current difficulties, and the challenges we have yet to face, Ireland is still an excellent place in which to do business. The government is still willing to talk to us and to listen to us, and therefore we can help each other. People should have confidence in the Irish state and its support of industry—for instance, our highly attractive corporation tax code is here to stay. The international pharma community should not lose confidence or lose faith, and they can rest assured that their businesses will be secure in Ireland—and indeed they will prosper and grow. There is a light at the end of the tunnel. n


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Interview with: Bryan Meehan, General Manager, MSD in Carlow

INTERVIEW WITH:

Bryan Meehan, General Manager, MSD in Carlow Focus Reports: In 2008, MSD began building a human vaccine facility in Carlow—a €220 million investment that the company expanded upon last year with an additional 7Mn EUR. What is the importance of this site to MSD’s strategy? Why did the company choose Ireland for this investment? BRYAN MEEHAN: We started designing our facility here in Ireland in 2007, and broke ground in 2008 with a ceremony that was attended by the then-Taoiseach, Brian Cowen TD, and Willie Deese, President of Merck’s Manufacturing Division. This is MSD’s first investment in manufacturing vaccines outside of North America. We recognized the need to diversify ourselves in order to move into the European market. We also had several products in our biologics pipeline that needed a new manufacturing facility to accommodate their production. Our clinical and biological vaccine pipeline is now coming to fruition, so we are working very hard to bring our lineup of vaccines to the marketplace. We had done a global search for the most suitable manufacturing locations to invest in. In 2007, we had not yet merged with Schering-Plough, and hence had one manufacturing site in Ireland: our facility in Ballydine, Co. Tipperary. For over 35 years, this site has been one of our most successful and productive operations—so we became convinced that the company would have a much easier time in setting up a new operations facility if we chose Ireland. We have also enjoyed a great relation-

Bryan Meehan, GENERAL MANAGER,

MSD IN CARLOW

ship with the Irish Government—particularly IDA Ireland (the agency responsible for industrial development in Ireland)— and not just in relation to tax incentives. We have found great support in sourcing the most skilled and suitable employees to work with us. Right now, the most complicated vaccine in the world is made in Ireland, which says a lot about the calibre of talent that is available here. The fact that we have access to this talent pool is a primary incentive for choosing Ireland for investment. IDA Ireland is a brilliant agency. I have worked with comparable organizations around the world, but the IDA are the best. They know our business, and they know how our executives make decisions.

FR: In an article you wrote for an Irish business publication in 2010, you said, “the global pharmaceutical sector faces a challenging decade ahead, and in order to grow the Irish pharma industry, we need to plan how best to meet those challenges head on.” What specific challenges were you referring to, and how is the Irish industry, and MSD in particular, evolving to overcome them? BRYAN MEEHAN: From my perspective, our challenges are around cost. I am committed to making sure that our Carlow manufacturing facility can compete on an international scale. I’m convinced we can do that, thanks to our level of automation and thanks to the skilled employees we have working at the facility. We undertake a significant amount of


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process development work in our Carlow plant to discern how our products can be made with utmost efficiency. The Government has supported that work with R&D grants and tax credits. We have an excellent cost structure here in Ireland that enables us to supply Europe, North America and Japan, and also offers us the opportunity to deliver our vaccines to the developing world. By 2020, MSD wants to ensure that its vaccines are available to anybody who needs them. In North America and Europe, the discussion revolves more around the risk inherent in vaccine administration, because most people have never seen measles, mumps, or rubella. However, in many places in the developing world, the risk of contracting these diseases remains considerable, so MSD is committed to making sure that that risk is eliminated—regardless of the location. At the moment, MSD is investing heavily in India and in China. More vaccines are made in India than anywhere else in the world. They are currently not licensed for European or American markets, but I wouldn’t underestimate the speed with which they will catch up. Therefore, it is important that we can remain competitive with our cost structure in Ireland. MSD’s total output of vaccine doses last year approached 150 million; our Carlow plant is capable of producing that amount on its own. At the moment, our focus in Carlow is on clinical supply, but once we get our commercial licence, we will have the capability, depending on product mix, to meet global demand from our facilities here. It is an amazing time for our plant. The Irish Medicines Board (IMB) will be here next month, having already visited us in

IDA Ireland is a brilliant agency. I have worked with comparable organizations around the world, but the IDA are the best. They know our business, and they know how our executives make decisions. 2011 for an engineering assessment. On this occasion, they will conduct a clinical supply and clinical and medicinal licence investigation. Once successfully completed, their approvals will allow us to send some really exciting products from Carlow to clinics across Europe, Asia and North America. 2013 is going to be a breakthrough year for our Carlow operation. We have to make clinical material for 5 different products, while preparing ourselves for commercial supply—so it will be a highly complex process of operations management when we consider all of the new tasks and high volumes of staff, both internal and third party, who will be working together for our company.

FR: Ultimately, what will be the role of FDI from the pharmaceutical industry, and the export operations of companies like MSD, in driving Ireland’s economic recovery? BRYAN MEEHAN: Exports have gone up in this sector, whereas costs have gone down. Certainly, that model has to continue, and we have to offer improvement each year in terms of output and cycle time, to drive down costs. I think Ireland can succeed and prevail at this aspect of the industry, even if prices have gone down. I think that there has also been a shift towards moving further up the value stream in relation to R&D and process development in Ireland, which is a growing trend. n


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Interview with: Francis Lynch, General Manager – A. Menarini Ireland & President, Irish Pharmaceutical Health Association (IPHA)

INTERVIEW WITH:

Francis Lynch, General Manager – A. Menarini Ireland & President, Irish Pharmaceutical Health Association (IPHA) Focus Reports: You established Menarini’s Irish affiliate in 1999. How have you seen the market evolve over these last 13 years? FRANCIS LYNCH: The major changes in the market have principally occurred in the last four or five years, rather than the previous ten. Generally speaking, the industry has always had a very strong rapport with government, and the authorities have been quite supportive of our activities. Thanks to this dialogue, and the positive growth of the market, the environment was highly stable for a number of years—until austerity started to bite in 2008. State budgets have now become much tighter, and the government has really looked into how they might control pharmaceutical spending. Unfortunately, this trend first manifested itself in the non-reimbursement of products, which was obviously very challenging for the industry. However, because of the longstanding relationship between government and IPHA, we have been able to maintain a constructive level of discourse. Recently, IPHA has come to the fore with a new agreement that has offered huge savings—400Mn EUR over the next three years—to the state. This has come at considerable pain to the industry; but it has had the beneficial effect of freeing the environment to allow patients access to new medicines. FR: You mentioned that austerity measures have caused ‘considerable pain’ to the industry; what exactly does that mean?

FRANCIS LYNCH: Firstly, if drug prices are reduced, this will obviously have an effect on our revenues as pharmaceutical players. As a result, quite a number of companies have had to let people go at the sales and marketing level. At the same time, because of the patent cliff—which too is at the foreground of our challenges as an industry— there have been redundancies identified at some of the Irish manufacturing plants. Hence, we have had significant job losses, and companies have had to reconfigure their businesses and slim down their operations. For certain players, recent times have been particularly difficult.

FR: Is there room to find any further efficiencies, or would you say the industry is at its limits? FRANCIS LYNCH: I suppose that there are always ways to trim, and necessity becomes the mother of invention. With that said, I believe most companies in the market have been running highly efficient operations already, so I doubt there is much ‘fat’ left to cut. FR: Do you believe the dialogue between industry and government remains positive? FRANCIS LYNCH: I do. The government values the industry because, as the title of your report correctly indicates, the pharmaceutical sector is ‘punching above its weight’ in Ireland, in many respects. The contribution of our companies to healthcare has been immense. For instance, if we look at

Francis Lynch, GENERAL MANAGER – A. MENARINI IRELAND & PRESIDENT, IRISH PHARMACEUTICAL HEALTH ASSOCIATION (IPHA)


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an area like arthritis, we see that in the 1980s, drug costs were low, but societal cost was huge—people stricken with arthritis could hardly work. Today, the situation is drastically different, because we are able to treat the disease with innovative biologics. The drug cost has increased, but this has been totally offset by the cost savings in the social sphere. The government appreciates the positive change that the pharmaceutical industry can bring to society. And yet, at the same time, one would have to have sympathy for any government trying to fund that. A remarkable quality about the Irish pharmaceutical industry is that managers seem to remain quite positive, and take the austerity measures in stride—in a recent report on the Czech Republic, Focus Reports found that the overall feeling about austerity in the market was often quite grim. I would not necessarily say that we are ‘taking it in stride’—however, we should note that the industry has had a long history of dealing with the government as partners. We have had structured agreements—‘supply agreements,’ as well call them—since 1968. We prefer to collaborate rather than take the authorities to war. On balance, over the years, the state has gotten good value for money, and a steady supply of medicine. On the other hand, the industry has always been well heard and our concerns have been addressed to the extent possible. Of course, we often must make concessions, and the state certainly drove a particularly hard bargain with our most recent agreement. Moreover, the health department came to us in 2010 and 2011 to ask for savings outside of our effective agreement. As good partners, we recognized

their need, and we made adjustments, particularly in the off-patent space, to meet budgetary demands. We are not only good partners, but we are also good investors into the country, and I believe the government recognizes that. There is a great understanding between us. I would not by any means suggest things are easy. Nonetheless, Ireland likes to think of itself as a pro-business environment—as a small country, we are very much dependent on inward investment—and so the government listens to business.

FR: Anne Nolan of the IPHA said that Ireland’s healthcare system has undergone as much reform within the last 3-5 years as the UK’s NHS has undergone in the last 40 years. What is your opinion about the rate of change, the predictability of the market, and the effect of such rapid evolution on companies? FRANCIS LYNCH: This is a good question. We have truly had quite a lot of change in recent years—but, at the end of the day, I believe the market is predictable. The last two or three years have been very, very unpredictable, but the entire global economy has been very unpredictable in that timeframe. We prefer to focus on where we are now. I think that our recent agreement with the authorities bring precisely that—predictability, certainty. This is obviously critical from the point of view of business planning. It is critical from the point of view of local business planning, and also critical from the point of view of inward investment. The government is aware of that, and they endeavor to stabilize the market insofar as their budget allows. n


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Interview with: Greg Timmons, President & CEO, Takeda Ireland Ltd.

INTERVIEW WITH:

Greg Timmons, President & CEO, Takeda Ireland Ltd. Focus Reports: What do you believe attracted Takeda to Ireland? GREG TIMMONS: In the late ‘90s, Takeda was perhaps more interested in Greenfield operations overseas. However, the company realized that its needs and Grelan’s were very closely aligned, and, if it purchased Grelan’s existing Irish factory, it could benefit from a very quick start-up. It was too good of an opportunity to turn down—especially when Takeda had two blockbusters on its hands, and was gearing up for the next two. Takeda needed a facility to manufacture these new products for overseas markets. The stars simply aligned. Takeda also did a very detailed review of potential locations, and, at the time, 9 out of the top 10 pharmaceutical manufacturers in the world had invested in Ireland. Some had very, very significant operations here, and some had been present for over 20 years. The country had not yet entered its own boom period, so it was in the lower cost bracket in Europe. At the same time, Ireland had an advanced, English-speaking, pro-business environment. Ireland also had a very vibrant, liquid market for the recruitment of people, because it was not a country where the occasional pharmaceutical company might set up and grow organically. No—Ireland had the likes of Wyeth, Pfizer, Lilly, and Glaxo coming in to develop state-of-the-art facilities with cutting-edge equipment. Ireland always had the latest technologies. Even outside of pharmaceuticals, IT com-

Greg Timmons, PRESIDENT & CEO,

TAKEDA IRELAND LTD.

panies like Intel had arrived on the island by 1990, making their largest global investments. For Takeda, it seemed a good idea to look strongly at what the competition was doing—and we were sold.

FR: How did the acquisition of Nycomed affect the positioning and significance of the Irish activities? For example, to what degree have you had to protect your business of late, as this market begins to compete with Nycomed legacy sites in emerging markets such as Russia? GREG TIMMONS: Takeda has been on the acquisition trail for quite a few years. One of our key acquisitions, for instance, was of Syrrx, a San Diego-based company. Here in Ireland, we will be manufacturing on two shifts a product that has emerged from that deal. This product is one of our successor products to Actos. Syrrx, hence, was a very, very significant move for us. We then acquired an organization called Paradigm, which had research operations in Cambridge and Singapore. Subsequently, the first big integration came—the 8.8Bn USD acquisition of Millennium. Millen-

For Takeda, it seemed a good idea to look strongly at what the competition was doing—and we were sold.


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nium is now ‘Millennium—the Takeda Oncology Company,’ and it encapsulates our entire oncology business unit. Here in Ireland, are also gearing up for manufacture of a product from this oncology unit. Takeda next bought Nycomed. This was a significant acquisition for us all. Before Nycomed, we had 18,000 people worldwide—after Nycomed, the organization grew by an additional 12,000. Nycomed had a different portfolio profile—the margins on their products were lower than those on Takeda’s innovative drugs. However, the organization came with an absolutely amazing network, from manufacturing to supply chain management. What does this mean for the future? I fully expect that the acquisition will create a more competitive environment—and this can only help us. If we had to run shy of being competitive, I don’t believe that we would be driving in the right lane in this industry.

FR: At the end of the day, do you expect additional investments in Ireland, based on a model of ‘starting earlier’ and ‘finishing later’ in the production process? GREG TIMMONS: I think that, going forward, Ireland will have to compete for every investment coming down the line. With that said, we have in this country a critical mass of key product manufacturing. We are supplying products that, directly and through licensees, find their way to 66 countries around the world. For instance, we supply a significant amount of tablets to the U.S. in bulk form. Meanwhile, we have overcome our challenges in formulation production. Lastly—and this is the latest jewel in our crown—we have started to supply the Japanese market from our Bray facility.

Greg Timmons, President & CEO, Takeda Ireland Ltd.

I think that, going forward, Ireland will have to compete for every investment coming down the line. This year, we have been able to take back business that we previously outsourced to CMOs, and we have achieved the milestone quality level for the Japanese market— which, on cosmetic criteria, is the most challenging market in the world. We have had to invest heavily to reach this achievement, installing automatic visual inspection systems that you will not find in Europe, and the mindset, skill and dedication that our team has brought to this endeavor is something we are all proud of here at Takeda Ireland. We have a niche competitive edge, in Ireland, to supply the key worldwide markets of Takeda: the U.S., Europe, and many other markets. I am extremely proud to say that now, we also have the ability to supply what is still Takeda’s largest individual market: Japan. n


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Interview with: Mark Ferguson, Director General – Science Foundation Ireland

INTERVIEW WITH:

Mark Ferguson, Director General – Science Foundation Ireland Focus Reports: When you were recently appointed to direct SFI, local newspapers ran headlines such as “New SFI head to drive economic impact from research investments.” What do you understand as the mission of this organization, and what is your strategy for running it? MARK FERGUSON: At SFI, we are focused on two principles: excellence and impact. Both are important—we will only fund excellent research, but we will also only fund research that is potentially impactful. Ireland is a small country with approximately four million people. We cannot do everything well. Therefore, we have to focus on our unique selling points if we aim to lead. For instance, Ireland has a very high density of pharmaceutical and medical device companies, and we should support their work. In Ireland, there is a good connection between academia and industry, but we need to increase and deepen the level of discourse and we need to look more closely at areas of interface where academics and business people can interact. In the Irish science base, there has always been a focus on industrial engagement at all levels: collaboration with multinational companies, indigenous companies, and start-ups. In this way, we are able to ensure that Irish taxpayers fund not only excellent research, but research that has economic relevance. FR: In an open letter to the Irish Times, a number of Ireland’s prominent scientists criticized SFI for neglecting basic research

Mark Ferguson, DIRECTOR GENERAL –

in favor of short-term economic impact. What is your response to such critiques? MARK FERGUSON: We are not abandoning basic research. We will continue to fund excellent basic research—particularly in priority areas. The issue is that our current portfolio is unbalanced. As Ireland’s scientific investment agency, we are funding an abundance of fundamental research, and not enough translational research, which is problematic. It is a question of balance between long, short and medium-term. Another issue is finding a balance the appropriate balance between various areas of science. There are certain things that Ireland is good at; equally, there are areas where we do not have critical mass or impact—such as nuclear physics. It is not about picking winners, but rather about picking our races: we want to fund excellent impactful research in the broad areas of pharmaceuticals, life sciences, medical devices, ICT, and renewable energy. We must be focused. This means, by definition, that there are some areas that will be of lower priority. This is not to say they are not important—I only mean to say that that will have less emphasis in Ireland. I would also like to clarify that our emphasis on collaboration with industry does not equate to an emphasis on the short-term. Major industries, and large corporations, are often interested in projects that have a longer horizon. However, these projects often do not warrant 100% funding from the interested company— therefore, collaborating with agencies like

SCIENCE FOUNDATION IRELAND


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SFI is beneficial to both parties. For a small country with a limited budget, I think it is very important to use the state’s capital catalytically. We must be able to incentivize the community to win European or commercial money or money from philanthropic organizations. For this, partnership is key. In research not everything will work. We do not know the outcome beforehand— this is the very nature of research. However, I think what we are doing is making research relevant, and helping companies secure a greater-than-average chance that their initiatives will be impactful and quickly adopted.

FR: What makes Ireland competitive? MARK FERGUSON: There are many factors. Looking at the competition to attract multinationals, we can consider a very broad range of factors such as corporation tax, availability of land, ease of doing business, language, availability of skilled educated workers and interactions with the research base. In terms of local spin-off companies, it is about making sure there is a flow of ideas and venture capital. Ireland has taken some of its state pension fund money and invested in world-leading international venture capital organizations, mandating that these investment firms will maintain some presence in Ireland. Incidentally, the government has not mandated that these enterprises have to spend their money in Ireland—a very sensible decision that I support. Venture capital firms should invest in the best projects. If the best projects are not in Ireland, then we are not doing our job properly. Another question is whether we can develop the talent: whether we can offer

Ireland is a small country with approximately four million people. We cannot do everything well. Therefore, we have to focus on our unique selling points if we aim to lead. appropriately trained people with the right graduate education. Are there research groups in Ireland for interested companies to interact with? Are their plans executable here? These are important elements and our quality of relevant trained graduates and research excellence in this sense is something that we want to promote internationally. Does our approach work for Ireland? If you look at the job announcements this year from our sister agency IDA, you will find that two thirds of all newly created jobs have a previous link with SFI. This demonstrates our scientific pedigree. If a company is assessing the market, a mixture of human and scientific factors will weigh into the decision. These might not be the deciding factors—corporation tax, for instance, might be more important—but they must be part of the package. One of the advantages of a small country with joined up thinking is that it is quite easy for us to have an integrated strategy. The limitations of small size are in many ways outweighed by our communal nature. Ireland can also be competitive because it has a good track record. There has been major multinational investment in Ireland for decades—notably in the pharma sector—and the vast majority of companies have had a good experience. n


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Interview with: Matt Moran, Director, Pharmachemical Ireland (PCI)

INTERVIEW WITH:

Matt Moran, Director, Pharmachemical Ireland (PCI) Focus Reports: Historically, why do you believe the international pharmaceutical industry chose to invest so heavily in Ireland, ultimately making this sector one of the country’s most important economic drivers? MATT MORAN: The investment drive goes back to the early 1960s. At the time, Ireland—which is not a relatively new country—was exploring ways to move from what was essentially an agricultural economy, heavily protected by tariffs, to a market-focused system. The government established IDA Ireland, which is the industrial development authority. The IDA was given the remit of trying to attract international businesses into Ireland. Given the size of the country, and the fact that we have very few raw materials apart from grass and rain, the agency concentrated on sectors that were based on intellectual property. They picked pharmaceuticals, chemicals, technology, and etc. The IDA simply went out and sold the country—and they did so quite successfully. Through a number of incentives, they attracted names such as Pfizer and BMS to invest in this market. When the multinationals arrived here, they found that things worked quite well, and additional companies followed one after another. We saw an in-rush of companies from the 1960s through the 1980s. The industry first brought bulk API manufacturing to the market. However, as time went on, they integrated additional stages of production, including finished

Matt Moran, DIRECTOR,

PHARMACHEMICAL IRELAND (PCI)

products. Further still down the line—in part through our own advocacy as PCI— they moved to highly complex biopharmaceutical production. Laterally, the industry has expanded operations to include development as well as manufacturing, aiming to create supply hubs for the sector. Because the industry had a great experience with the performance of its initial infrastructure in Ireland, they have now re-invested. Several large multinationals now have a number of sites here. Some of this has been driven, obviously, my merger and acquisition—but much, as I have noted, is a result of re-investment. Interestingly, given the current environment, which is quite challenging in terms of elements like the patent cliff and the difficulty of getting new molecular entities approved, we have nonetheless seen, in the last 12-15 months, approximately 1.5Bn EUR of re-investment into Ireland—either in the ground or CAPEX. The industry, though challenged, remains very important in the country. As we discussed prior to the interview, over half of Ireland’s exports come from this sector. The sector is also very high performance—the quality record is second to none. We receive very few warning letters from agencies like the FDA, and our companies stand on their reputation. The evolution of their operations has facilitated the development of quite a significant cluster of expertise in this country. Ireland is today the largest net exporter of medicines


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in the world. PCI has been working on a strategy for the industry for the last couple of years, and our aim is to move the sector from manufacturing to ‘manufacturing plus.’

FR: When you say ‘manufacturing plus,’ do you refer to research activities? MATT MORAN: Not very much basic research is done in Ireland. However, the industry is investing in product and process development—in other words, competencies that are close to manufacturing. This makes sense, given the size of the manufacturing base here. Producers want to enhance how their manufacturing activities function, affect cross-fertilization between manufacturing and development, and tighten the process between the clinic and product launch. They look to establish an end-to-end stream. In real terms, this may mean something like bringing a product from Phase II trials directly to launch quicker, more efficiently, and more reliably, while paralleling the regulatory track. We are trying to position Ireland as the location of choice for the supply of all new entities (although unfortunately, there are fewer and fewer of those in the world, both in terms of large and small molecules). This drive fits well with the development of cutting-edge regulation, such as ICH 8, 9, and 10: QBD, and PAT. PCI actually hosts a specialist QBD and PAT working group. We also do a lot of work with our members in manufacturing excellence, helping to implement techniques such as Six Sigma and LEAN. We look more and more to learn from other industrial sectors in that regard, because we do not believe the pharmaceutical industry has a great track record in the manufacturing excellence area. For instance, we are soon taking a number of

our members to Wales to visit one of Toyota’s plants. We believe industries such as the airline sector, where Six Sigma came from, or cost-challenged industries such as the automotive sector, have much to teach us. Within our Innovation and Excellence report, we have identified several attributes that we believe a fit-for-purpose site of the future should have. The first of these is full compliance—which in our view is a given at this stage. Even though most companies in the industry are multinational, the managers are mainly Irish. This allows them to develop the entire skills base of their operation hence bringing benefit locally and to the entire corporate network. Obviously, cost is very important. We must compete head-to-head with India and China—we have no other choice. Our labor costs are higher, though they are reducing. Therefore, we must compete through smarter methods of manufacturing. This is the reason we put such focus on manufacturing excellence. Another element that we often discuss is the seamless transition from lab to plant. If a company wishes to improve or enhance the process mid-stream or mid-patent, they should have that kind of capability on-site to make the process quicker and more reliable. People in laboratories also must be aware of what happens when their ideas wind up in a manufacturing plant—which is often not the case, because, say, they may be 3,000 miles away in New Jersey. We have an opportunity to install such capability locally, and the companies are investing. MSD, for example, have put 100Mn EUR into such a facility next to their manufacturing plant. Pfizer have done it. Sanofi-Genzyme and GSK are in process. n


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Dr. Paul Duffy, Vice President, External Supply Operating Unit, Pfizer Global Supply

INTERVIEW WITH:

Dr. Paul Duffy, Vice President, External Supply Operating Unit, Pfizer Global Supply Focus Reports: You once said, "There has been a lot of concern about the Irish economy, but we haven't become stupid over night; we still do a good job, we are still innovative and we deliver good value for money for the company." Can you elaborate on why Ireland can still attract investment, despite the difficult economic climate? DR. PAUL DUFFY: Globally, we have seen a significant reduction in the amount of capital investment in the pharmaceutical industry in the past few years. And yet, when we have chosen to invest, we often chose to invest in Ireland, which is a strong testament to the confidence the company has in the capabilities of our people. It is not just Pfizer who has invested in the country, there have been many large Pharma investments made in Ireland over the last number of years and these investments continue even in these difficult economic times Having said that, the industry does face a myriad of challenges. A slowdown in the productivity of research in past years, combined with a significant number of products going off patent and increased pressure on pricing has put a lot of pressure on the manufacturing networks of many companies. Also, a number of merger/takeovers in the industry have created duplication in these networks. The impact of this duplication has been felt in Ireland due to the significant manufacturing presence of most of these companies in the country. The consequence of this has been that some companies here

in Ireland have had to reduce their operations in order to manage their operating costs. These reductions have been challenging for people in an industry that was traditionally viewed as being somewhat 'recession proof' with long term job security. At a corporate level, manufacturing costs are always in focus. Therefore, it has been a necessity to rethink our production and supply chain practices in order to make our operations more efficient. We must accurately forecast demand and use a more 'pull' based system of production, rather than the traditional 'push' based system, which entails simply manufacturing what our capacity allows us to make and not always what the customer wanted. In our industry Quality is king; our customers place their trust in our ability to reliably supply quality medicines. We are dealing with people’s lives and take enormous responsibility for this. We also have to be conscious of the need to supply products that patients can afford so managing our costs is an important part of what we do every day.

FR: How can supply operations find the right equilibrium between external and internal supply, especially given the overcapacity issues we have seen across the industry in recent years? DR. PAUL DUFFY: At Pfizer, approximately 30% of what we sell in the market comes from

Dr. Paul Duffy, VICE PRESIDENT, EXTERNAL SUPPLY OPERATING UNIT, PFIZER GLOBAL SUPPLY


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external vendors—this is the area that my group currently manages. There are many reasons why we decide to either manufacture products internally or with external vendors. One of these could be the fact that some technologies required to manufacture our products do not exist within our current manufacturing network; therefore, we must look to outside partners or else invest in creating the requisite facilities. Companies have to carefully choose the technologies in which they decide to invest as the available capital in most companies is limited. We have experienced issues in the past where we purpose-built plants for drugs that were not yet approved for sale, and those drugs ended up never making it market. This resulted in us selling off the assets in question, recouping only a small fraction of the initial investment. Looking into the future, it will be interesting to see whether or not it is possible for a large pharma company to create a completely independent internal supply chain or whether there is a push to the sharing of parts of these supply chains. There can be difficulties when working with a co-manufacturer, such as confidentiality and patenting agreements—but these difficulties are not insurmountable, so it may possible for companies to use one another's production assets. The other side of the coin is this: while we don't have any set targets with regard to what percentage of our operations happen externally, in the past some of the rational for using external manufacturers was the fact that they offered cheaper rates than our own internal manufacturing costs, this was often driven by the third party manufacturers ability to run their plants at a higher level of utilization. Pfizer has a very strong track record for quality, globally and in Ire-

reductions have been challenging for people in an industry that was traditionally viewed as being somewhat ‘recession proof’ with long term job security. land, and quality will always be our top priority as we try and achieve greater competitiveness. Over time, our internal operations have now become much leaner, and thus are capable of competing with some of our external partners. Hence, there is a balance to be struck between cost, reliability and external and internal operations with quality always being our key focus.

FR: Do you have a final message about Pfizer's investment in Ireland? DR. PAUL DUFFY: We have endured a difficult period of site divestures and site sales— some more successful than others but have also benefited from a number of very large investments. Together we are working hard to build a sustainable future for our organization and employees, if we are not efficient and effective in every part of the organization, then the whole of the organization will suffer, and there may be tough decisions to make in the future but they will always be made in the best interest of the company and the people. We should remain confident that with the strong capability of our people and the excellent facility we have at our disposal that we will continue to play a key strategic in Pfizer’s future supply network. As a company we have very rich pipeline of products and Pfizer colleagues in Ireland will play a key role in helping bring these products to market and helping improve the quality of patient’s lives all over the world. n


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Interview with: Shane Cooke President, Alkermes

INTERVIEW WITH:

Shane Cooke President, Alkermes Focus Reports: Alkermes has traditionally partnered with larger players to bring products to the market—but is now shifting toward wholly owned compounds. What has been your typical partnership structure until this point, and what has been the impetus behind the shift? SHANE COOKE: As a smaller company, it is very difficult to finance the development and marketing of your own products. Hence, Alkermes built a business that offered our technologies to Big Pharma partners. They would develop the products to the final stage, while we would input our expertise and sometimes take part in the manufacturing effort. The partner would then take charge of selling the drug. We would be awarded a royalty on the product, plus reimbursement for manufacturing costs. For a product like Risperdal Consta, we receive a royalty of seven percent and approximately two and half percent to cover manufacturing. We have a similar deal with Johnson & Johnson for Invega Sustenna. For our drug Ampyra, however, we actually brought the product idea ourselves further along the development pathway— through Phase II. Only then did we license the intellectual property to a partner. Because we brought the drug further along, and took on more risk, we were able to secure a better deal, and share in more of the profits. In Ampyra’s case, we receive 18 percent of revenues. The more the company has grown—and this was part of the reason for our merger

Shane Cooke President, ALKERMES

with Elan’s drug delivery unit—the more revenues we have had, and the easier it has been for us to carry products further through their lifecycle. Our current strategy is to bring that idea to its logical conclusion: we want to bring drugs to the market ou rselves, f rom d iscover y to development to production to sales and marketing. Our target, in five or ten years’ time, is to independently sell a much higher percentage of our portfolio—and at the moment, our focus will be on the CNS space, where we believe we may bring some potential blockbusters to areas of significant unmet need. We want to achieve full integration.

FR: As the company itself likes to say, Alkermes is in a phase of growth that very few

We don’t need to spend a billion dollars to get a drug to the market. And if you look at the drugs we have, our model has served us well. The combination of our technologies with known compounds has created some great products.


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biopharmaceutical companies reach. What have you done right? SHANE COOKE: Both in Alkermes’ original business, and in the legacy Elan drug delivery business, we have always focused on what we are very good at—and what we are very good at is analyzing known disease biology and known pharmacology, and using our technologies to develop new compounds that we know can add a huge amount of value for patients. Typically, pharma and biotech companies will have their researchers try to discover how a given disease functions, identify targets, and try to develop a compound that can go after those targets—while being unsure of whether those targets are the right targets. This is the approach we see in areas like Alzheimer’s disease. At Alkermes, on the other hand, we have focused on better-known disease areas, where the risk is lower. We don’t need to spend a billion dollars to get a drug to the market. And if you look at the drugs we have, our model has served us well. The combination of our technologies with known compounds has created some great products.

FR: How have investors responded to your strategy? Last year, one analyst wrote, “For a large part of its history, Alkermes (ALKS) never quite seemed to get its due from the Street. Given its business plan of helping other pharmaceutical/biotech companies develop drugs in exchange for modest royalties, perhaps that’s not so surprising.” Are you getting your due today? SHANE COOKE: The reason we began to develop our own products is the fact that as a drug delivery business, you will find that there is a limit to how large you can become. If you’re basing your business on

We want to be the next big biotech! modest royalties, as the analyst noted, then you are not in control of your own destiny as a company—because if your partner decides that the product is no longer a significant part of their portfolio, you are directly impacted yet have no influence. As we’ve discussed, we have moved away from being a drug delivery business toward a fully integrated biotech model. We currently have a broad range of revenue streams from a number of products that have been developed over the last ten to twenty years—but we also have an unpartnered pipeline that is set to accelerate our growth. Historically, Wall Street has not thought of our pipeline as a proprietary pipeline. They thought of us as a drug delivery company, and therefore a company that would earn royalties on its pipeline, rather than selling the drugs and enjoying the full economic benefit ourselves. Investors have valued us based on our revenues, and largely ignored the potential value of the company’s developing assets. But Wall Street’s perspective is beginning to change. We find, when we speak with analysts and investors today, that most of the discussions are around our pipeline.

FR: What is this company’s ultimate ambition? Are you chasing the story of biotech like Amgen and Genzyme? SHANE COOKE: We are. We want to be the next big biotech! n


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Interview with: Dave Murphy, Chief Executive - PM Group

INTERVIEW WITH:

Dave Murphy, Chief Executive PM Group Focus Reports: Mr. Murphy, you first joined PM Group 24 years ago. How has the company, and the market, changed? DAVE MURPHY: When I joined PM Group it was a small company. However, it was already working mostly for multinational clients. The growth that we’ve achieved has predominantly been fueled by servicing multinationals, and in particular it has been fueled by servicing the pharma sector. We have seen our client list shrink throughout the years due to consolidation and merger. For instance, where there was Pharmacia, Wyeth, Warner Lambert, and Pfizer, there now is only Pfizer. Where there was Merck Sharp and Dohme, Schering-Plough, and Organon, there is now Merck. M&A has impacted the industry in Ireland hugely over the last ten years. On the other hand, we have seen a huge wave of investment from the mid-90s through to the mid-2000s, predominantly in manufacturing facilities. That wave has waned now—but we are seeing more investment in research and development. Many players are building process R&D centers, pilot plant facilities, etc. in Ireland. We see a lot of investment in brownfield facilities: the industry must constantly refresh itself, and as such, much work is being done to upgrade plants, improve standards, and etc. Whereas for quite a while, investment in Ireland’s pharma cluster was driven by the need to increase production capacity to support blockbuster drugs, today much investment is driven by the need to make

Dave Murphy, CHIEF EXECUTIVE - PM GROUP

plants more flexible, and more multi-product. Companies are also looking at their entire networks, and trying to optimize supply chains. There is a huge focus today on the supply chain—rather than just on manufacture, manufacture, manufacture. Companies are asking, where is the best place to produce from a cost and efficiency standpoint? Where is the product going next in terms of filling, finishing, or the ultimate market? A lot of the science, now, is going into that. As PM Group, we grew into the largest EPCM player in the Irish market. And over the years, as we developed relationships with companies like JnJ and Pfizer, we followed them to overseas markets. We developed a much deeper understanding of their business, to the point where we became seen as a preferred partner. This idea is key for us: our work for them is not just a transaction. Rather, we are seen as a partner, and we are seen as a partner in markets all over the world. We have been involved in some of the landmark global projects in the pharmaceutical sector. Some of our larger competitors—Jacobs Engineering, CH2M HILL, and others—are quite diversified in terms of the sectors they serve. We are considerably more focused on our niches, and principally serve the pharmaceutical, food, and medtech sectors. This is where we bring a lot of value.

FR: When accepting the Best Large Company


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Honor at the Engineers Ireland CPD (Continuing Professional Development) Awards in 2012, you said, “our CPD program was recognized for enabling us to adapt to a rapidly changing environment as we shifted our work base from Ireland and internationalized our company over a relatively short time period.” Can you tell our readers more about your internationalization experiences? DAVE MURPHY: We first began to internationalize in the late 1990s, when we opened subsidiaries in the UK and Poland. However, it was not until the mid-2000s that internationalization became a key focus for the company. We were looking to diversify, so that we could become less dependent on the Irish market, and less dependent on the pharmaceutical industry. We had seen the winds of change coming in this country, and we were fortunate to have adopted the international model when we did: in the later 2000s, FDI dropped off dramatically in every sector where we were active. In the pharma sector, in particular, investment declined because of the patent cliff, because of slow approval of new drugs, because of cost pressure put on the industry by world governments, and etc.—all factors that were much-prophesized. The industry is not investing at anywhere near the level that it invested at five or ten years ago. As a service provider, we had to adapt. We pushed out into other regions, and other sectors, based on the skills we had. Food, for instance—particularly high-end food—was an obvious choice for diversification, because of its similarity to the pharmaceutical business from a compliance perspective. We have taken our work with this industry into Asia, for example, where we have been involved in facilities in Singa-

pore, and China, where Pfizer built the world’s largest baby food plant. Maximize your skill set, follow your customer: these ideas are key to our strategy. We moved into Singapore five years ago, and followed with an office in China and India. Two years ago, recognizing that the bulk of our clients were headquartered in the U.S., we fulfilled a long-held ambition and set up offices there—we now have an office on the West coast in San Jose and on the East coast in Boston.

FR: The pharmaceutical industry is today focused on cost with an intensity that it has never experienced in its previous history. What does that mean for you as a service provider? DAVE MURPHY: There are two factors here. The first is that when a client is considering the construction of a new facility, they want to make the decision as late as possible, and they want the capability to be delivered as quickly as possible when the decision is made. This is because the future of a pharmaceutical company is driven by drug approvals, and because of cost pressure, they cannot afford to invest at the levels of the past—hence, they want to de-risk any investment as much as possible. We need to deliver on this need as a service provider. The second factor is the cost of the facility. Those of us designing and building those facilities have to ensure that we are not over-designing: that the plant is fit for purpose from a quality perspective, but that it is also cost-effective. Cost effectiveness must then extend to our own fees as an EPCM company.


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Company index Abbott.................................................... 7 Actavis........................................... 18, 19 Alkermes.................................. 22, 38, 39 Allergan................................................. 7

Irish Pharmaceutical Healthcare Association (IPHA)..10, 17, 24, 25, 28, 29 Leo Pharma......................................... 17 Lilly...................................7, 10, 11,14, 30

Amgen..............................................7, 39

Menarini........................................ 18, 28

Arthur Cox............................................. 8

Merck................................................7, 26

Association for Pharmaceutical Manufacturers in Ireland (APMI)....... 19

Mylan............................. 7, 19, 21, 22, 23. National Chemical Company....... 15, 22

Astellas.......................................... 16, 22

Novartis........................................... 9, 20

Bayer.............................................. 16, 18 Bristol Myers Squibb...........................11 Byrne Wallace...................................... 15 CH2M Hill............................................... 8 Dalkia............................................. 10, 12 Deloitte.................................................11 Enterprise Ireland.......................... 13, 15 Genzyme............................. 8, 21, 35, 39 Gilead..................................................... 7 IMS Health................................11, 15, 16 Industrial Development Agency (IDA) - . ................................. 3, 7, 8, 26, 27, 33, 34

Pfizer..6, 10, 11, 13, 14, 30, 34, 35, 36, 37 Pharmachemical Ireland.... 10, 11, 25, 34 Pinewood Healthcare..............11, 19, 21 PM Group........................... 13, 14, 17, 40 Primecore.......................................11, 13 Rottapharm..........................................11 Sanofi............................................. 21, 35 Science Foundation Ireland......... 22, 32 Servier...................................... 12, 17, 18 Steripack........................................ 14, 19 Takeda................................. 17, 18, 30, 31


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PAST REPORTS


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Pharmaceuticals Ireland report 2013  

Written after exclusive interviews with Ireland's decision makers from local and multinational companies, manufacturers, distributors, exper...

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