John Fraher, President, explains why it has been a phenomenal year for Aptalis




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Video title: John Fraher, President, explains why it has been a phenomenal year for Aptalis
Released on: September 05, 2012. © PharmaTelevision Ltd
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In this episode of PharmaTelevision News Review, filmed at #BIO 2012 in Boston, Fintan Walton talks to John Fraher, President of Aptalis
Merger with Eurand: Importance and integration benefits
Fintan Walton:
Hello and welcome to PharmaTelevision News Review here at BIO in Boston, in 2012. On this show I have John Fraher, who is President of Aptalis , welcome to the show.
John Fraher:
Thank you very much.
Fintan Walton:
You were on the show just a year ago and at that time you've just completed the merger with Eurand [PharmaDeals ID = 38362], so the last 12 months must have been interesting for you as you underwent the integration of Eurand. So John, how would you describe Aptalis today?
John Fraher:
I think it's, well if we go back one-year we had just completed the merger when we spoke last, and I think if we look at the last 12 months it's been an absolutely phenomenally successful year and the integration has gone extremely well. We closed revenues last year at 470 million which was a significant increase on the prior year, the integration is more or less completed this point in time and since then we've actually been able to grow the business organically; we've had a number of significant product approvals at FDA, we've in-licensed a number of products to our existing product portfolio and so I think all in all it has been a phenomenal year for Aptalis .
Fintan Walton:
Right, how important was the Eurand acquisition?
John Fraher:
I think it was a very important acquisition, it brought two things really to what was then the Axcan Company. It brought an enzyme product for the spec pharma business in the US that is now 25% of that market share, that product is currently on registration in Europe and we plan to partner that worldwide and additionally it also brought a platform of pharmaceutical technologies that we are now able to also use for developing our own pipeline products internally, which previously we had not been able to do. So I think the merger has been very synergistic, for both organizations and I think our owners TPG are quite pleased with the progress made to date.
Core focus and products in GI and Cystic fibrosis therapeutic areas
Fintan Walton:
Right, so being that you are a specialty pharmaceutical company you specialize in GI and cystic fibrosis so there are lots of specialty pharmaceutical companies and obviously one of the key things that a lot of the specialty pharmaceutical companies have are drug delivery systems which obviously Eurand brings, but how do you continue the success of a company like Aptalis in terms of focusing on your core competencies?
John Fraher:
Sure, well I think we've actually structured the organization to allow for that success. Our spec pharma business is solely focused on GI and cystic fibrosis so any products that we have in our pipeline or any products that we in-license we really only target those two therapeutic areas. We have a dedicated sales force in the US, we have one in Germany, one in France as well and I think that laser focus makes us not only successful with our own products but it is also makes us a very good partner for people you have GI or CF assets, because that is essentially the core competency of the spec pharma business and this is the basis for that success. And with respect to the pharmaceutical technology business that allows us to develop products for ourselves, but we have also decided strategically to continue the business-to-business aspect of that particular business unit, so we are continuing to develop products for our partners using that platform of technologies and a great example would be an approval that we received earlier this year for a pediatric taste-masked formulation of tenofovir which is a HIV drug sold by Gilead, that formulation of product was developed by the pharmaceutical technology business of Aptalis and will be marketed worldwide by Gilead [PharmaDeals ID = 47728] . So we have determined strategically that there is still value in that platform and we are continuing to leverage that as well. So I think we, as a partner, I think we can be a very valuable asset for other companies whether that's selling and marketing their GI and CF assets or helping develop products using our technology formulation work.
Fintan Walton:
So part of then the strategy going forward is to bring in additional products obviously at late stage presumably, or ready for market, or close to market in those areas?
John Fraher:
Yes absolutely, I think we really look at assets that are in Phase II, late Phase II, early Phase III, some good examples would be an Aeroquin product, sorry excuse me the brand name is Aeroquin it's a levofloxacin inhaled antibiotic that we acquired just over one-year ago, that is for the treatment of pulmonary infections and bacterial, excuse me bacterial infections in cystic fibrosis patients. A few months back we acquired the rights to a product called RECTIV [PharmaDeals ID = 44901] which is a nitroglycerin gel for the treatment of anal fissures , that gel is the only approved product for that particular disease currently in the United States. Prior to that patients were treated by compounding pharmacies and obviously being able to have an approved product, an FDA approved product that we can provide to those patients is a significant step change for them. So they are two very good examples, Fintan, of what we've done in the last 12 months and we would expect to continue those type of in-licensing and acquisitions over the next few years.
Business plans for emerging markets
Fintan Walton:
So John, obviously you are based in the US and you've got US and European operations, what are your plans for the emerging markets?
John Fraher:
Yes, I think internationally strategically we want to grow both business internationally not just in the emerging markets. We do have a sales force in Germany and in France we think that forms the platform to expand this spec pharma business in Europe particularly as we have a number of expected product approvals coming through in Europe in the next few years. We are targeting the pharmaceutical technology business more into the emerging markets particularly in South East Asia and South America, we are beginning to see a lot of indigenous companies looking to use our technologies to develop new products and so growth out ex-US is a key component of Aptalis 's strategy for the near to mid-term future.
Opportunities in GI and CF
Fintan Walton:
So the key thing to be in a specialty pharmaceutical company is to stick to your therapeutic focus, continue to have your specialized sales forces, but I suppose there must be a temptation to do another acquisition, to bring in another particular therapeutic field, because there is only a certain limited amount of mileage in going down one or two different therapeutic areas, particularly cystic fibrosis?
John Fraher:
Sure, but we don't think that we have exhausted the opportunities in GI and CF . I think it's absolutely true it's very tempting to start to look at other therapeutic areas, but we believe that we still have additional room to grow in the GI and CF area, particularly in CF you are talking about limited number of patients about 30,000 patients in the US, about 33,000 in Europe that's the bulk of the patients worldwide. There is no cure as of yet for CF , the current products available are really primarily for the treatment of those symptoms, and in the antibiotic space we think there is still room for additional products there, this is why we in-licensed or acquired the rights to Aeroquin. In the digestive space the enzymes which we have are the primary treatment for that aspect of the disease, but there are we think complementary products that can be added to that, so we don't think where we have exhausted yet the GI and CF space though we do continue to look in another areas I think it would be foolish for us not to, for long-term growth, but right now we have no plans to move into another therapeutic area at least in the immediate future.
Impact of large pharma companies getting into speciality pharma space
Fintan Walton:
The other aspect I suppose that's happened in recent years that the larger pharmaceutical companies are increasingly getting into specialty pharma space, so how do you see that affecting Aptalis is that, do you see those pressures?
John Fraher:
Well I think yes, we are seeing large pharmas begin to look for particularly in-licensing opportunities in areas where a few years back they didn't. So I think that is impact of that is, that it's increasing not necessarily just the competition but it's I think increasing the potential value of those assets in the eyes of the sellers and the licensers, and I think everybody realizes that pharma companies in general are acquiring products and needs to acquire products and so as a result of that I think the big challenge that companies like us have is trying to make sure that we are getting value for our acquisition, and because I think the asset prices are increasing perhaps and just viably so due to the perception that large pharma needs to acquire products and therefore value should increase accordingly, so that's I think where we see the biggest challenge.
Investors and future plans
Fintan Walton:
I suppose the key question here really is, is there a time when a company like Aptalis will want to float, I mean have you obviously one way in which your major investors can have an exit as that ever be considered at board level?
John Fraher:
Well yes, I can't comment on deliberations at board level. TPG is a private equity company and they will, as all private equity owners, will require and look for return on their investment at some point in time. We haven't had any discussions around when that might be or how that might be. I think TPG if we look at other investments in their portfolio has been a very long-term holder in their companies and they have invested significantly in Aptalis continue to support the strategy and when I think the time is right for them to look as gaining that return in their investment I am sure we will have that discussion.
Fintan Walton:
Very good. Well John, thank you very much indeed for coming on the show.
John Fraher:
Thank you very much Fintan. Pleasure to be here.
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
At the time of recording this PTV interview John Fraher serves as President of Aptalis Pharma Inc. Mr. Fraher is currently President, Aptalis Pharma Inc 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, Mr. 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 Inc
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 . Aptalis , formed from the recent combination of Axcan Company and Eurand, has manufacturing and commercial operations in the United States, the European Union and Canada, and its products include ZENPEP, CANASA, CARAFATE, PYLERA, LACTEOL, DELURSAN, PANZYTRAT and SALOFALK. Aptalis also formulates and clinically develops enhanced pharmaceutical and biopharmaceutical products for itself and others using its proprietary technology platforms including bioavailability enhancement of poorly soluble drugs, custom release profiles, and taste-masking/orally disintegrating tablet (ODT) formulations. For more information, visit the company website at www.aptalispharma.com.