Phillippe Lopes-Fernandes talks about Merck Serono’s strengths and successes in partnering




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Video title: Phillippe Lopes-Fernandes talks about Merck Serono’s strengths and successes in partnering
Released on: April 20, 2011. © PharmaTelevision Ltd
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In this episode of PharmaTelevision News Review, Fintan Walton talks to Phillippe Lopes-Fernandes, Corporate VP, Head of Global Business Development at Merck Serono
Structure of Business development
Fintan Walton:
Hello and welcome to PharmaTelevision News Review here at Bio-Europe in Milan, in spring 2011. On this show I have Phillippe Lopes Fernandes, who is Vice President and Head of Global Business Development at Merck Serono, welcome to the show.
Phillippe Lopes Fernandes :
Thank you for having me. Good morning.
Fintan Walton:
Good morning to you. Phillippe, people know Merck Serono it's one of the larger pharmaceutical companies based here in Europe, but obviously it's a global business you are the Head of Global Business Development could you just first of all describe to us how business development is actually structured at Merck Serono?
Phillippe Lopes Fernandes :
Sure, business development is actually a small focus team that is basically organized by business units so that we address in a best way the needs of all customers. So we have an oncology team, a neuro rheumatology team, and also fertility team and then we have a original BD team also and alliance management which is also part of the business development team reporting to me, because we believe that it's very important to continuously monitor the health of the alliance and adjust the as a contractual relationship on the basis of what happened during the life of the contract that's proving to be not only very important but very appreciated by all partners very important for us.
Fintan Walton:
Sure, so clearly the Serono part of the Merck Serono [PharmaDeals ID = 25251] equation was particularly strong in biologics I suppose Merck the other side?
Phillippe Lopes Fernandes :
Well, we were also quite strong we had Erbitux that we developed and commercialized outside the US and we were already quite strong in biologics, but it's clear that Serono did something that with very interesting strategies to that.
Fintan Walton:
Yes, I suppose my point really was that the strength in the organization. So you've described the story of how important biologics is obviously that's through your alliances obviously clearly for your function within Merck Serono how much of the future pipeline are you expecting to come from outside Merck Serono?
Phillippe Lopes Fernandes :
Right now the product comes from outside is both 65% it's just no predefined number, we believe that 50-50 is healthy, but again I mean right now is 65 it didnt mean that cannot go to 70 or go down to 68 it's in this whole partnering.
Strengths and success in partnering
Fintan Walton:
Yes, so you've also described how you are organized within the various therapeutic areas, how does a company like Merck Serono compete with the other pharmaceutical companies, because obviously there are all good quality opportunities out there so how do you compete, what is unique about Merck Serono that makes a biotech company or another pharma company say lets partner with Merck Serono?
Phillippe Lopes Fernandes :
Well we are in a pretty unique position because we are not big pharma where the project or the national partner would be know into a pipeline that is so large that it could be just ignored. We are not a smaller company that doesn't have the reach or the size to compete, so we are one of the rich we are present in all continents where we have a very strong presence of course in Europe, but also in the US, in Japan, in emerging markets, Latin America and Asia including China. So we can offer a global reach. We spend 1.3 billion euros in R&D per year so we have also significant investment on the other side again where we focus we a have only a few products that are our key products and we intend to remain focused on these key areas and that's guarantee for the partner that they have in organization that is human-size that their products are going to be the focus of our attention and we've been very successful for that I mean if you take Erbitux when we licensed that in '98 [PharmaDeals ID = 3520] we were nobody in oncology, we had never brought a product an oncology product to market and not only did we successfully bring these products, not only did we do the best oncology launch in Europe ever but we also helped our partner BMS [PharmaDeals ID = 28685] at the time number one oncology company in the world to register in the US, thanks to our clinical data that shows that we are refocused on delivering on our key areas.
Role of Merck Serono's venture arm
Fintan Walton:
Sure, how important is, I mean because you've also Merck Serono started a venture side to them venture arm side to your company how important is that venture arm to your ability to do deals now?
Phillippe Lopes Fernandes :
It's just another tool into tool box. It's actually very interesting one, because it's addressing deals that we in the past would have said well you know lets put them on the back burner because we are not sure exactly how it feels, so well basically what we are doing when we see a compound that or a technology that we can immediately use it's okay lets license or lets acquire, but sometime we say this company has a really interesting technology we want to follow them, but we are not sure how to use that, we are not sure how to use this technology or not sure if it's you know what compound is going to get out of that but we believe in this company so then we can use now our VC arm. So only for our strategic purposes, it's not of course if we get to find sure we do it later time, but it's the idea is really to support this strategic and complement the deal making through that.
Strategy on access to quality assets
Fintan Walton:
Sure, the other thing is that as somebody who is practicing looking at opportunities and taking into consideration that the biotech industries struggled a little bit over the last couple of years, do you see a quality of opportunities decreasing as a result or you seeing the same quality?
Phillippe Lopes Fernandes :
Well, I won't think that it had yet an impact on the quality of assets, because we are seeing still very nice assets and even to the quality as people were saying in 2008, 2009 you know assets are ready to be cheap now because of the crisis you are right assets are not cheap and that's normal, I mean do the right stuff you know cheap stuff was also there that was in the past although value of them are not really interesting. I am slightly worried about the fact that in the recent past VC's had been very shy in financing early companies, so have been putting more money's into companies that already in the clinic or very near the clinic and I am worried that it's going to create a gap not right now but in three, four-years, but of companies that can bring compounds into the clinic and that these companies that would have been financed by VC are not available, so that's my worry right now.
Fintan Walton:
So you see a future problem arising as a result of that?
Phillippe Lopes Fernandes :
I am fearing that.
Fintan Walton:
Yes, okay but equally important obviously is getting access to products that are in the clinic and that's a pretty crowded place a lots of companies want to get their hands on good quality assets that are in clinical phase, so how does Merck Serono get those products? How do you get access to those particular quality assets?
Phillippe Lopes Fernandes :
Particularly that's what I was mentioning in the beginning I mean the fact that we are a company that is at size that is human and were people very easily talk to us to our leadership and the people that I involve in the project is important for the companies of course we pay competitive prices because otherwise we would not get deals, but there is also the dimension of first the people we show the people that we are going to work on the project and we interact with during the deal discussions with their scientists and our scientist and show that well it can work people can have the right mind set or right goals can work together and would be that this is important. We also try to make sure that we capitalize on the expertise of the partner a lot of other companies are saying okay I do the deal thank you for developing the compounds so far now I take it over and your involvement is zero. We are trying to say look you know you've done nothing but great job but you have a fantastic expertise on these compound nobody knows these compound better than you, so yes we are going to help you bring it to the market, but we still need your help to continue that and to challenge ourselves on how we are doing it so that we together putting our minds together we are more successful.
Business and opportunities in emerging markets
Fintan Walton:
Sure, the other component you've mentioned that you're organized on a regional basis as well how active are you looking for opportunities and there may be late stage opportunities outside the normal high value areas like the US and Europe for an example, is part of your role a strategy to build up products for China and South East Asia and another emerging markets?
Phillippe Lopes Fernandes :
Yes, we are very active in that and same thing I mean in China for example we know it's true on all these emerging markets again we have the special team looking for these deals and in China we have a very nice business with over a thousand (indiscernable) only 14 products during quarter of the billion in sales and we intend towards select compounds when some of our competitors are in portfolio of 200 and 250 products in China, so yes they have nice revenue, but for the partner your product is going to be one of the 250 products that are there on the market here now we have 14 products if we go to 20 we still can have a guarantee to the partner that we are going to put the real strong focus on these products.
Fintan Walton:
So are you then basically behaving like a specialty pharmaceutical company in that respect?
Phillippe Lopes Fernandes :
Yes, specialty meaning targeting specialist, specialty also meaning that we are focused on late stage and marketing opportunities with in the emerging market we are also targeting GP's and we are actually a very experienceed in GP for example in cardiovascular or diabetes .
Significance of acquisitions
Fintan Walton:
Okay, the other area is acquisitions, I mean clearly a one way of getting your hands on a good asset is to buy the company rather than license it, I mean how important is acquisitions to your strategy?
Phillippe Lopes Fernandes :
Equally important as partnering, I mean basically the way we look at it is we look at the asset and we say how much do we like the asset what is the risk what are the other assets in the portfolio and then we decide what is the right structure would it be a corporate VC deal, would it be an option deal, would it be a traditionally licensing, would it be also a licensing with an equity component or would it be a full acquisition and we can play with all these premiers we are absolutely fine with that.
Future plans
Fintan Walton:
And looking at Merck Serono going forward into the future, I mean what sort of company do you see Merck Serono through your business development activities? What sort of company we are going to see in the future?
Phillippe Lopes Fernandes :
Well we want to remain this special company that is really focused on our key markets that is leader in this key markets multiple sclerosis , oncology, fertility and but that remains with a global reach and we probably want to a bit stronger in Japan and may be also in the US. We want to launch oncology compounds in US which right now we don't have, but we are really intending to remain focus on what we can do and what we know that we will do really well and be really successful with that.
Fintan Walton:
Phillippe, thank you very much indeed for coming on the show.
Phillippe Lopes Fernandes :
Well thank you Fintan for having me.
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).
Phillippe Lopes Fernandes
Vice President
Phillippe Lopes-Fernandes , presently serves as Corporate VP, Head of Global Business Development and Alliances Management at Merck Serono responsible for business development team for all the activity of prescription pharmaceuticals and Management of Alliances.. He previously held the position as Head of M&A at Merck KGaA responsible for Pharma and Chemicals transactions.Phillippe Lopes-Fernandes has 18 years experience in the pharmaceutical (prescription drugs, generic, OTC) and expertise in M & A, licensing, strategy, project management, marketing. Mobile and adaptable, who worked in 5 countries (USA, Germany, Portugal, Switzerland and France) and managed projects on 4 continents.He graduated from Graduate School of Management Institut Sup"rieur de Gestion. .
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.
Merck Serono
Merck Serono is the biopharmaceutical division of Merck KGaA, Darmstadt, Germany, a global pharmaceutical and chemical company. Headquartered in Geneva, Switzerland, Merck Serono discovers, develops, manufactures and markets prescription medicines of both chemical and biological origin in specialist indications. In the United States and Canada, EMD Serono operates as a separately incorporated affiliate of Merck Serono. Merck Serono has leading brands serving patients with cancer Erbitux, cetuximab), multiple sclerosis (Rebif, interferon-beta-1a), infertility (Gonal-f, follitropinalfa), endocrine and metabolic disorders (Saizen and Serostim, somatropin), (Kuvan, sapropterin-dihydrochloride), (Egrifta, tesamorelin), as well as cardiometabolic diseases (Glucophage, metformin), (Concor, bisoprolol), (Euthyrox, levothyroxine). Not all products are available in all markets. With an annual R&D expenditure of over 1bn, Merck Serono is committed to growing its business in specialist-focused therapeutic areas including neurodegenerative diseases , oncology, fertility and endocrinology , as well as new areas potentially arising out of research and development in rheumatology .