The pharma and drug delivery technology business model: John Fraher on the Aptalis experience




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Video title: The pharma and drug delivery technology business model: John Fraher on the Aptalis experience
Released on: August 22, 2011. © PharmaTelevision Ltd
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In this episode of PharmaTelevision News Review, filmed at BIO 2011, Fintan Walton talks to John Fraher, President of Aptalis.
Origin of Aptalis Pharma: Reasons behind merger of Eurand and Axcan
Fintan Walton:
Hello and welcome to PharmaTelevision News Review here at BIO 2011 in Washington. On this show I have John Fraher , who is President of a company called Aptalis based in Pennsylvania here in the USA, welcome.
John Fraher:
Thank you. Thanks for having us.
Fintan Walton:
John, Aptalis is a recently formed company it's come out of the merger between Eurand and Axcan [PharmaDeals ID = 38362] which is a specialty company in Canada, could you tell us what was the reasons behind this merger and what sort of company is Aptalis today?
John Fraher:
Yes well Eurand was a public company, Axcan is a private company both companies have specialty pharma businesses in the GI space and so there was a very strong rationale in order for combining the GI and CF businesses and that was one of the big driving rationales behind the company, behind the merger, also within Eurand it has historically had a very strong pharmaceutical technology business that capability really allows then the company to develop many more new products more quickly and then enhance development of an internal pipeline, and so they were really the two primary reasons behind the merger of the two companies.
Fintan Walton:
So the company now remains as a private company the shareholders behind that company are who?
John Fraher:
Primarily TPG, Texas Pacific they took Axcan private back in 2008 and they're still the majority shareholder today. There are some other minor shareholders, but predominately it's TPG.
Aptalis Pharma's focus as a speciality pharmaceutical company
Fintan Walton:
Okay. Now you described Axcan as a specialty company, Eurand as a specialty company the ambition then for Aptalis is to continue to be a specialty pharmaceutical company?
John Fraher:
Indeed yes within with post merger we have formed two very strong synergistic business units in the organization, one specialty pharma business which is focused in GI and cystic fibrosis and the second is the pharmaceutical technology business which historically was the dominant part of Eurand's business. The specialty pharma business it's an international business it is stronger in the United States than international, but we have very I would say exciting growth plans for the international business, we are going to focus as I said in GI and CF and indeed since the merger we've actually in-licensed a very interesting compound for cystic fibrosis it's an inhaled antibiotic Levaquin, the brand name is Aeroquin and that product is entering Phase III trials, but that's a very good example of what we are doing with the specialty pharma business and that product will be launched in the United States and in Europe once it's approved. Our second business unit is a pharmaceutical technology business, we have a very strong oral technology business we are continuing to build that, we are continuing to invest in those technologies and continue to use those to develop compounds not only for ourselves, but also for other companies using those technologies.
Fintan Walton:
Of course the technologies are not just only for specialty products they can also be for a blockbuster either?
John Fraher:
Exactly, I mean the beauty of that particular business model over the years at Eurand was that they are essentially therapeuticagnostic we can apply them to any molecule that requires enhanced performance and so that's been the beauty of that model being continued to, to invest in that and continue to drive revenues from that business.
Fintan Walton:
And bring you in royalties from the technologies as well?
John Fraher:
Yes, we potentially we've evolved the business model as over the years many years ago was more fee for service, we have evolved that to doing co-development relationships with partners where we are partially now funding some of the development work and then in exchange for that we are getting a higher return either from sales or from fees from those product sales.
Business model
Fintan Walton:
Being a specialty pharmaceutical company there is different definitions for that, how would you define your specialty business?
John Fraher:
True, yes it's a moniker used by many companies, our focus is really driven around the patient targets and the doctor targets that we have, as I said we are focusing on GI and we are focusing on cystic fibrosis and cystic fibrosis the vast majority of the 30,000 patients in the US for example are treated then by the 120 cystic fibrosis centres so we mean specialty we mean.
Fintan Walton:
At a marketing level?
John Fraher:
at a marketing level that we don't require very large sales force, we have a very defined target market both patients and also prescribing physicians.
Fintan Walton:
Your strategy for the pharmaceutical if I call the pharmaceutical side of the business, the product side of business obviously you are expecting a pharmaceutical technologies to make a contribution to that are you in the business of in-licensing, are you in the business of acquiring other products to build that pipeline that you have?
John Fraher:
Absolutely our pipeline is I think going to come from number of sources internal development, in-licensing of products like the Aeroquin product that we in-licensed from Mpex [PharmaDeals ID = 40217] already and we are also looking at some marketing opportunities on the commercial side, so we really see the portfolio been enhanced from all the three of those areas.
Technologies and turn key development programs
Fintan Walton:
And we go back to the pharmaceutical technologies that you are developing you've got your established parks that you technologies that you have you've talked about developing those further, you talking about developing in relation of new products, new drugs going into those technologies are you also talking about bringing in other pharmaceutical technologies other drug delivery systems?
John Fraher:
It's really all of that Fintan, we have focused historically in the oral space and some people would say that's become quite crowded, we think that there is still a white space in that business that allows us to play, we have over the years evolved our technologies to work on more difficult but niche compounds and we've been quite successful in doing that we are excited by some of the things that we see going on particularly in the injectable space and so we've been looking in that area as well. So we think that even though that industry has evolved a lot of the technologies are established we still believe that there are opportunities for companies like us in that space. We take a unique approach, we have a broad platform we can tackle the problem with the tool kit of technologies, we provide turn-key development programs so we can actually help a lot of particularly smaller companies with their manufacturing, with their clinical development work, with their formulation work and we've been very successful in targeting companies with that approach. So we still are very excited about that, it's about a $70 billion industry we think that there is still room to grow we just continue to invest in particular technologies to optimize those opportunities.
Strategy for opportunities in emerging markets
Fintan Walton:
So John, for your company one of the opportunities I suppose is the emerging markets, what's your strategy for that?
John Fraher:
Yes and particularly in the pharmaceutical technology side we've been working in the emerging market for number of years, we are very excited by the potential of those countries, we obviously are working with licensing partners, but we are also noticing that a number of the indigenous companies in some of those countries are now looking at product development themselves and so we are now beginning to see opportunities for the use of our technologies that we haven't seen in the past. So we have a team based in Europe that are continuing to target those countries both for licensing of our products, but also now with much more focus on our technologies and development of products with these local companies and we're very excited by that.
Aptalis's vision over the next five years
Fintan Walton:
Okay, and John what can we expect from Aptalis going forward, I mean what sort of company do you see in your vision let's say for the company for the next five-years?
John Fraher:
Well I think we are very excited about the opportunity, we have a company now with revenues of about 520 million, we have a product launch in Europe, Pylera which is a drug for the treatment of H pylori infection . We have the Aeroquin product coming through in cystic fibrosis that we are really excited about, in the US Legacy Eurand had launched a pancreatic enzyme product called Zenpep that done very well taken 22% of the market share first year out, our intention is to launch that in Europe as well so we really are excited about the potential for international growth on the spec pharma side of the business. On the technology business we expect that business to continue to grow not at the same rate as spec pharma, but we are excited about some opportunities in that area as well.
Fintan Walton:
John Fraher, thank you very much indeed for coming on the show.
John Fraher:
Thanks for having us.
Fintan Walton
Dr Fintan Walton is the Founder and CEO of PharmaVentures . After completing his doctoral research on the genetics of cell proliferation at the University of Michigan(US)and Trinity College (Dublin, Ireland), Dr Walton gained broad commercial experience in biotechnology in management positions at Bass and Celltech plc (1982-1992).
John Fraher
President
John Fraher is currently President, Aptalis Pharma and assists with setting strategic direction for the company, with specific responsibility for leading the Pharmaceutical Technologies and Global Supply Chain business unit. Previously, he served as Chief Executive Officer of Eurand since January 2011, Chief Commercial Officer since August 2006, and held various executive management positions of increasing responsibility at Eurand since 1995. Prior to joining Eurand, John Fraher held management positions at subsidiaries of American Home Products Corporation and Sterling Drug in Ireland. John holds a bachelor of Science degree in Biochemistry from University College Dublin, Ireland.
PharmaVentures
PharmaVentures is a corporate finance and transactions advisory firm that has served hundreds of clients worldwide in relation to their strategic deal making in the pharmaceutical, life science and healthcare sectors. Our key offerings include: Transactions / deal negotiations; Product / technology valuations; Deal term advice; Due diligence & expert reports; Strategy formulation; Alliance management; and Expert opinion for litigation/arbitration cases. PharmaVentures provides the global expertise to ensure our clients generate the highest possible return on investment from all their deal making activities. We have experience of all therapeutic areas and can offer advice on both product and technology commercialisation.
Aptalis Pharma
Aptalis Pharma Inc., is a privately held, leading specialty pharmaceutical company providing innovative, effective therapies for unmet medical needs including cystic fibrosis and gastrointestinal disorders . Our manufacturing and commercial operations are located in the United States, the European Union and Canada, Aptalis Pharmaceutical Technologies formulates and clinically develops enhanced pharmaceutical and biopharmaceutical products for the corporate pipeline and for our partners using our proprietary technology platforms including bioavailability enhancement of poorly soluble drugs, custom release profiles, and taste-masking for dosage forms including orally disintegrating tablet (ODT) formulations. For more information, please visit www.AptalisPharmaTech.com