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Focus on Almirall: partnering, new products and mature markets are key targets

This article was originally published in Scrip

Executive Summary

Almirall, Spain's biggest domestic pharmaceuticals firm with sales of €882 million last year, has been going through challenging times - relying on Spain for around half of its revenues means the firm has been hit by austerity measures there - but newly appointed CEO Eduardo Sanchiz is focused on international growth and new product launches to help the firm through the difficult patch. And although the Spanish market's general stagnation and indeed recent recession, coupled with Almirall's international growth drive, means that the proportion of its sales coming from Spain will reduce, Mr Sanchiz maintains that Almirall's solidity there is a key priority. Scrip's EMEA editor Eleanor Malone spoke to him about the company and the world in which it does business. The interview is available as podcasts here

Eduardo Sanchi z, CEO of Almirall

These days, emerging markets are widely accepted to present the best growth opportunities for the pharma industry as it faces patent expiries, austerity measures and healthcare reform and ever-increasing competition in major western markets. Almirall, however, has not jumped on that particular bandwagon.

"We still see a bigger opportunity for our products in the more established markets," Mr Sanchiz told Scrip. Why? Because "for certain innovative products you may get a faster uptake and reach peak sakes potential quicker in markets that are already developed...[whereas] in emerging markets the higher market growth is particularly in generics", explained the CEO.

With ample room for market penetration in major territories like the UK and Germany, then, Almirall is still picking the low-hanging fruit in its orchard, while its larger, arguably more aggressive rivals have stripped the lower branches and are now clambering higher up the metaphorical tree – having to work harder to maintain their growth trajectories.

Nevertheless, while rivals are looking to tap into emerging markets which are driven by the increased spending power of individuals in growing middle classes and expanding healthcare provision by governments, Almirall focuses on markets that have passed their prime, commercially speaking. Despite this, Datamonitor identifies Almirall's current weakness in the US as an opportunity for growth: deals like that with Forest Laboratories for aclidinium bromide for chronic obstructive pulmonary disease (COPD) could help it to tap into that opportunity.

Another issue is that Almirall has yet to fully exploit these markets that once grew faster with products that have now passed their peak – it has missed the boat in some senses. Its biggest product was once Prevencor (atorvastatin, Pfizer's Lipitor) but this has been facing increasing competition as rival statins and now atorvastatin itself come off patent, opening the way for cheaper generic alternatives. In the first quarter, Prevencor sales dropped by 42% to €13 million. Other key products – such as the antidepressants Esertia (escitalopram) and Dobupal (venlafaxine) and the anti-inflammatory Airtal (aceclofenac) – are also suffering from generic competition. With price reductions hitting sales particularly hard in Spain as well, Almirall saw four of its five top-selling products declining in sales in the first quarter; these five accounted for more than 40% of group sales.

The firm is dealing with this by pushing out new products. "Products like Conbriza [baxedoxifene] for osteoporosis or Silodyx [silodosin] for benign prostatic hyperplasia. We are about to introduce now Sativex [nabiximols] and in the near future we will have products like Eklira [aclidinium bromide]," noted Mr Sanchiz.

This year Almirall has two principal filings slated: aclidinium bromide in the EU and US for COPD and linaclotide in the EU for constipation-predominant IBS. It filed aclidinium bromide, an inhaled long-acting antimuscarinic agent, in the US at the end of June, and says its plan to file in the EU mid-year is on track. "If Almirall is able to market Eklira, then the group will cash up in the growing COPD market," commented analysts at Datamonitor.

Linaclotide is a once-daily oral peptide which targets the guanylate cyclase type-C receptor found on the lining of the intestine; the company expects to file it by the end of the year and notes that there are no specific treatments currently approved by the European regulators for this condition.

According to Datamonitor, linaclotide will not be a high-revenue-generating product, and indeed none of the company's "launch category products shows potential to be blockbuster products for Almirall". The other products include the topical anti-inflammatory LAS41002, which acts on a corticosteroid receptor and is in Phase III trials for eczema; LAS41005 for actinic keratosis, which has been launched as Actikerall in the UK and Germany so far, and the cannabinoid mouth spray Sativex, the last of which has already been launched in Germany, the UK, Spain and Denmark for spasticity due to multiple sclerosis. "To maximise on the potential of these drugs Almirall should attempt to tap into the US market," commented Datamonitor.

But it's not all about the US. There are two aspects of Almirall, each of which requires a different strategy.

On the one hand it has its own R&D pipeline, which tends to be focused on products to treat inflammatory conditions across a range of disease areas. Although it invests a generous 15% of its turnover back into R&D, with turnover of around €1 billion versus the tens of billions raked in by big pharma rivals, it is limited in what it can do alone. To realise the full commercial potential of this pipeline it needs to sign both development deals and sales and marketing partnerships outside its core markets of western Europe. The recent deals with Forest Laboratories in the US and Kyorin in Japan for aclidinium bromide are examples of the kind of deal it needs to pursue.

On the other hand it has marketing strengths in Spain and other European territories that make it an attractive partner to big pharma companies, particularly in certain therapeutic areas including cardiovascular, dermatology, gastroenterology, CNS and respiratory diseases. For example, it recently signed a co-branding deal with Nycomed to commercialise the latter's once-daily oral phosphodiesterase 4 (PDE4) enzyme inhibitor, roflumilast, for chronic obstructive pulmonary disease, in Spain.

But even if there is plenty of room for growth both organically and through strategic partnerships, Almirall could do well to build critical mass through M&A. Mr Sanchiz said the firm had been approached by companies "interested in an important transformative M&A operation" but he preferred not to follow this path. He cited the firm's acquisition of the German dermatology firm Hermal in 2007 as the "kind of example that we think could better serve the long-term interest of the company". He said that Almirall was "very much interested in acquisitions" but only if they "made good business sense in the mid- to long term" and not for defensive reasons or to address short-term growth challenges.

Mr Sanchiz, who took up his new position this month after the role of chairman and CEO was split, was speaking to Scrip's EMEA editor, Eleanor Malone. To hear the interview, click here

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