What’s Next For Nycomed?




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Video title: What’s Next For Nycomed?
Released on: February 17, 2009. © PharmaVentures Ltd
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Following the acquisition of Altana in 2006, Nycomed grew from a small Scandinavian company into a global pharmaceutical company with the resources to perform its own R&D. Håkan Björklund, CEO, explains that in-licensing still remains essential for the company, only now they have the capability to move the focus away from late stage products to early stage opportunities as well. With a strong pipeline and no fears over the financial crisis, Mr Björklund hints that Nycomed’s future plans are very much hinged on whether its ownership structure remains the same or whether it is about to change.
Merger with Altana, Nycomed growing into a global pharma company.
Fintan Walton:
Hello and welcome to PharmaVentures business review here in San Francisco. On this show I have Hokan Bjorklund, who is the CEO of Nycomed. Welcome to the show.
Hokan Bjorklund:
Thank you very much.
Fintan Walton:
Hokan, Nycomed is a company that has an interesting history, it's started as Norwegian company and it's now ended up with its headquarters in Switzerland and that's been a journey for that company, you've been part of that organization over the some of the more interesting years in recent times and particularly the merger with [PharmaDeals ID = 25330]Altana and so forth. So how would you describe Nycomed today in relation to where it was say five-years ago?
Hokan Bjorklund:
Well you know if you look at the company five-years ago we were primarily a Scandinavian company with presence also in some small European markets and had been a lot sourced to Switzerland. And a pretty okay business also in the former Soviet Union, we were trying to expand into the major European market, but we were still a relatively regional player. The Altana acquisition changed everything it basically catapulted us into a different league it tripled our size, there was a full Pan-European presence both in the GP and the specialty sector. And it also gave us a very strong presence in some other key markets in Latin America, in Canada, in Australia. You can say we really become global and it also gave us significant, mean better opportunities to do R&D and to do in licensing because of the sheer size of the business.
Nycomed focus on clinical development and capability of inlicensing at each stage of products.
Fintan Walton:
And the other feature of Nycomed and even five-years ago and it is today I understand is that it focuses on largely bringing in products at a clinical stage and taking them through the clinical development?
Hokan Bjorklund:
Absolutely. I mean five-years ago we were really focusing on in license from late stage products because of our size and also R&D capabilities basically to some extent restricted us to late stage development, now one of the beauties of the Altana acquisition was that we also got our own discovery research and that also gives us an opportunity now to do early stage in licensing because we have the technical capabilities to evaluate and take care of the projects.
Fintan Walton:
Right.
Hokan Bjorklund:
So today I would say that we are looking at in licensing at in each stage of the development.
Fintan Walton:
Right.
Hokan Bjorklund:
But I think we are pretty unique in the sense that we clearly state that we expect a majority of our future projects will emanate from the outside doesn't mean that our own discovery research is not important, but we still except the majority of the projects emanate from the outside.
Nycomed's competitive position in inlicensing.
Fintan Walton:
Right. So clearly you've come from being a relatively small player in Europe to a Pan-European company?
Hokan Bjorklund:
Yeah.
Fintan Walton:
But also one with presence outside Europe, but with the exception of Japan and the US, so has that placed you in a more competitive position for in licensing?
Hokan Bjorklund:
Absolutely. I think you know if you're looking for a partner in Europe you want one partner, US is one market in the sense that you can only have one partner because of pricing and the parallel important of that situation it was very important to be Pan-European. But today if we are looking at an opportunity we can either take the European rights or we can take global rights and then we'll eventually find a partner in Japan and in United States.
Fintan Walton:
So you are a mid size company or a specialty company or how would you describe yourselves?
Hokan Bjorklund:
I think we are both, I mean we are mid-sized if you look at the size of the company we have a turnover of around 3.5 billion euro, 12,000 employees I think that makes us a mid-sized company. Specialty pharma I think is a little bit undefined, if you mean by specialty pharma that we focus more on specialist product and on products for the general practitioners then we are Specialist Company.
Fintan Walton:
Right. Now the in licensing game has become very competitive?
Hokan Bjorklund:
Absolutely.
Fintan Walton:
Pharmaceutical companies are now much more active getting to earlier stage products?
Hokan Bjorklund:
Yeah.
Fintan Walton:
The landscape for opportunities is diminished into where it was say several years ago?
Hokan Bjorklund:
I think it's becoming more competitive as you rightly pointed out. There is still a lot of opportunities out there because the biotech industry has been very active and discovered lot of interesting projects over the last decade. What has happened is of course that the big companies have now lowered their target a little bit.
Fintan Walton:
Yes.
Hokan Bjorklund:
They use to look only for blockbusters now they are actually willing to take on considerably smaller products to ones that we have been looking for.
Fintan Walton:
Sure.
Hokan Bjorklund:
So we are more competitive company for in licensing after the Altana acquisition, but the market is also more competitive.
Nycomed's balanced product pipeline and early stage competence.
Fintan Walton:
Right. Now let's just look at the product pipeline that you have because obviously that is a mark of your future?
Hokan Bjorklund:
Absolutely.
Fintan Walton:
So what do you see as a significant change for you in the next few years?
Hokan Bjorklund:
Well I mean If you look at our pipeline I think we have a very balanced pipeline with couple of products in registration, couple of products in Phase II, Phase III but of course if I would pick one product which is the most important for us over the next few years it's clearly Daxas which is our new novel treatment for COPD or smokers disease, it's a Phosphodiesterase-4-inhibitor and if we are successful with the regulatory process it's going to be the first oral anti- inflammatory treatment for COPD. And this is of course a huge disease which is severely undertreated and we think we have the unique opportunity here.
Fintan Walton:
And that actually originated from the Altana side of the project?
Hokan Bjorklund:
It did, it did.
Fintan Walton:
And so I supposed to ask the question if you are a company that's trying to in license the products you've mentioned the Altana merger or acquisition helped you to gain access to earlier stage competence?
Hokan Bjorklund:
Yeah.
Fintan Walton:
In the end does a company like Nycomed really have to fit out the jigsaw puzzles in other words it has to get back even further, it has to be part of the discovery process itself and it has to fill those other pits Japan and USA?
Hokan Bjorklund:
Well you know we have our own discovery, so from that point of view we are doing everything, we are fully fledged company from an R&D point of view and all even do I say that we except most of the projects emanates from the outside of the lab our scientist too come up with some fantastic products not only Daxas but things in the future. The important thing is that we are able to take on products at an early stage. Do we need to have a presence in United States and Japan? I don't think so, I don't think on shorter-term. It's very easy for us to find a partner in Japan and also in United States if we develop a product which has global opportunities.
Why biotech companies should chose Nycomed for partnering products.
Fintan Walton:
So Hokan if I was a biotech company looking to partner my products why should I choose Nycomed?
Hokan Bjorklund:
I think there is a number of reasons why you should pick Nycomed over our competitors, we have all the R&D capabilities to handle the product at any stage in development from late stage to early stage. We also have the sales and marketing capabilities to market your product very successfully. But maybe what makes us unique is that we clearly state that we except most of our future products to emanate from the outside i.e., licensing is for us absolutely essential. I think we also have a culture which is a little bit more like a small company culture, we come from the small company background and we have short lines of communication, we have quick decision making, so if you are a biotech company I think you will feel that Nycomed has a culture which is not too dissimilar to your own which is not unimportant.
Nycomed's strategy in future acquisitions.
Fintan Walton:
So making acquisitions like Altana may give you - may have given you a taste for what it's like to do may be a good one or may be a bad one you know better than I do?
Hokan Bjorklund:
Yeah.
Fintan Walton:
But is there a likelihood that you'll continue the strategy of making acquisitions in the future?
Hokan Bjorklund:
I mean we are always looking at acquisitions but from an opportunistic point of view, if the right company comes up at the right time at the right price we're definitely interested.
Fintan Walton:
Okay.
Hokan Bjorklund:
Now Altana was a very large acquisition.
Fintan Walton:
Yeah.
Hokan Bjorklund:
And I think unlikely that we would do anything of that size shorter-term but smaller build on acquisitions and we did one last year when we acquired a company in the United States, Bradley [PharmaDeals ID = 28791] when we said that we have no presence in the United States I think we should however mention that we do have a more or less exclusively dermatology business in the United States and we did an acquisition and combined that with our existing business.
Fintan Walton:
Right. And of course when you did the acquisition of Altana you just said it was a very large acquisition part of that in the public domain was debt financed?
Hokan Bjorklund:
Absolutely.
Fintan Walton:
We are in times were debt financing is often considered more deeply than in the past, where does that place Nycomed in relation to its ability to service that debt?
Hokan Bjorklund:
Well we have no problem to date to service our debt, because we were lucky that we did deal in 2006 when of course the market for rising debt is totally different and it is today which means that, that if we look at our debt packets are very attractive package in terms of interest rates and so on and so forth. So we are not really worried about the financial crisis when it comes to our ability to finance our debt because that deal was done in 2006 and it's not changed by the crisis.
Nycomed's future plans.
Fintan Walton:
So if I was looking at Nycomed say may be in two or three-years time what changes do I would I except to see at Nycomed in and after three years?
Hokan Bjorklund:
I think you will see there will be a couple of things that will change the company. The biggest product today is Pantoprazole a proton pump inhibitor that goes off patent in Europe this year and a year and a half later in the United States of course there is going to be decline in the sales of Pantoprazole and will be declining that's inevitable. The other thing that's going to change the company is hopefully Daxas and also some other smaller products that we have launched over the last couple of years which are growing significantly already today. And the third thing that might change is of course the ownership structure, we have private equity owners today may be will be on the stock market may be something else would have happened in the couple of years time
Fintan Walton:
And may be you will try and get rid some of the debt through further equity financing?
Hokan Bjorklund:
Yeah, but that would probably will be in connection with the change in ownership in one way or the other.
Fintan Walton:
Okay. Hokan, thank you very much indeed for coming on the show and telling us all about Nycomed. Thank you very much.
Hokan Bjorklund:
Thank you very much for having me.
Hokan Bjorklund
Chief Executive Officer
Before joining Nycomed, Hokan Bjorklund, CEO, was Regional Director at Astra (today AstraZeneca). He was President of Astra Draco from 1991 to 1996. Hokan is a member of the Board of Directors of Atos Medical AB, Coloplast and Danisco A/S. He holds a PhD in neuroscience research from Karolinska Institutet, Sweden.
Nycomed
With turnover growing by 3.0% to 3.5 billion in 2007, Nycomed is among the 25 largest pharmaceutical companies in the world and the 15th largest provider of over-the-counter medicines. Nycomed operates throughout Europe and in fast-growing markets such as Latin America, Russia/CIS and the Asia-Pacific region. It is present in about 50 markets with over 11,500 employees worldwide. Nycomed's largest country presence by revenue is Germany, followed by Russia/CIS, Canada and France. Nycomed is a privately owned pharmaceutical company that is active in a range of therapeutic areas. Its key products are aimed at gastroenterology, pain management, osteoporosis, respiratory diseases and tissue management. New products are sourced both from the company's own research and from business partners. Partnerships in all parts of the value chain play an essential role in Nycomed's business strategy. Their main shareholder Nordic Capital is a leading private equity firm. The other main shareholder CSFB Alternative Capital is one of the world's largest private equity firms.