Nycomed CEO Hakan Bjorklund On Emerging Markets As Core Focus For Growth: An Interview With PharmAsia News

Zurich-based Nycomed's Chief Executive Håkan Björklund was in India recently to unveil the company's new manufacturing site that is expected to match all its future global raw material requirements (PharmAsia News, Sept. 30, 2010). A Swedish national, Björklund played a key role in AstraZeneca before moving to the €3.2 billion Nycomed.

Zurich-based Nycomed's Chief Executive Håkan Björklund was in India recently to unveil the company's new manufacturing site that is expected to match all its future global raw material requirements (Also see "Nycomed To Beef Up Sales In China Through Buyout; Bets On India For Global API Supplies" - Scrip, 30 Sep, 2010.). A Swedish national, Björklund played a key role in AstraZeneca before moving to the €3.2 billion Nycomed.

At Nycomed, Björklund identified emerging markets as the core focus to achieve high growth rates while also leveraging regional strengths like manufacturing. For more than a decade, Nycomed has enjoyed a smoothly running manufacturing joint venture with India's Zydus Cadila for sourcing raw materials for pantoprazole. The company is also on course to building a large site in Russia that could add to its competitiveness in that growing market. Björklund candidly spoke to PharmAsia News' India bureau and delved into diverse subjects from strategies in China to damage claims from Teva and Sun Pharma on its blockbuster anti-ulcer medicine Protonix (pantoprazole).

PharmAsia News: You have built very strongly in Russia. Even in tough times you stayed on and decided to invest in a large manufacturing site. That strategy seems to be working well now. What is your future outlook for the Russian business?

Håkan Björklund: We are very optimistic about the Russian market. As you said, we are there for a very long time and we have invested though there have been some rough times, and we are in the process of building a very significant plant in Yaroslavl with a €75 million investment. We believe that the Russian and CIS markets will continue to grow. We expect to take a good part of that market share. So, it should be a very nice market going forward.

PharmAsia News: Even as we talk about a nice market unfolding, there is a lot more competition. Though you put the necessary infrastructure way in advance of others, competition may be getting tougher in Russia?

Björklund: Of course, competition in Russia is getting tougher but the advantage that we have is that we set up there at a very early stage and we have a very mature and established presence there. We have people in Russia in almost every major city and that takes a lot of time to build up in that country for any foreign company. Also, our plan to build a Russian site is a way to strengthen our competitiveness. We believe that having a local plant is very essential to stay in the game for the future.

PharmAsia News: Last week, you spoke about a Chinese acquisition at a European conference. Where does that stand and could you share strategic details?

Björklund: You should expect some announcement in the next few months. This is for a stronger sales and marketing presence. We are already in China through our subsidiary and we feel we should make an acquisition for a stronger foothold in the Chinese market. We should be doing [substantial business] in that market essentially because we are coming from a very low base and we are smaller relative to others. Next year onwards, we should do well.

PharmAsia News: Can you talk about your presence in India and how you see India fitting into your emerging market strategy?

Björklund: There is no question that at some point in time, we will need to have a very strong sales team in India. There is no question about that. We said that our priority number one is China. When and if we do something in India, I don't know when but India is of high interest to us.

PharmAsia News : You mentioned earlier at the press conference that you will be exploring certain possibilities here. What did that mean - maybe a partnership or a contract field force?

Björklund: There could be different ways to enter the Indian market. It could be all on our own, it could be through a partner, so we are not excluding anything. We will explore various opportunities that make sense to us.

PharmAsia News : Your COPD drug Daxas (roflumilast) is seen as a big product going into the future. While the EU regulatory permissions are in place and you have launched the drug, what is your strategy on the U.S. FDA's questions?

Björklund: We have Forest as our partner in the U.S. and they are directly in touch with the FDA but we are assisting our partner. We have received a full response from the FDA to which we responded a few weeks ago. We have said before that the FDA has not required us to do any additional clinical trials and we are very optimistic of getting an approval in the United States but when that will happen is very difficult to predict.

PharmAsia News : PDE4 as a class of compounds has been a little difficult for a few companies. Your partner Forest Labs had a tie-up with India's Glenmark for Oglemilast, which was called off as the results were not found to be satisfactory. But now Glenmark has worked on Revamilast - a back-up to its earlier product, which is seen internally as a good candidate. How do you see this shaping up in the future?

Björklund: We have not done any comparative studies, since the product is not in the market and that may take some time.

PharmAsia News : How do you want to approach the U.S. market? Will you seek partnerships on the lines of the Forest labs deal?

Björklund: In the U.S. we have a strong dermatology subsidiary selling [our] branded topical dermatology product. We have no ambitions to enter the U.S. with our innovative new drugs. So, even when we have, say a Daxas 2 or Daxas 3, they will not be sold directly by Nycomed. We [would] rather be focusing on entering the emerging markets than the U.S. Of that strategy, Asia, Middle East and Latin America are big.

PharmAsia News : Nycomed has been partly held by large financial investors. Will an IPO ultimately give them the exit route?

Björklund: Our biggest investor is Nordic Capital Private Equity based in Stockholm and Credit Suisse Private Equity. Nycomed can do an IPO at any time but the question is [whether] the market is ready yet for a big IPO? At the same time, of course, if we go to the market, we will want to get a good valuation, but right now I think we still have some questions that need to be straightened out and we would wait to see what happens. We would like to see the registration of Daxas in the United States before an IPO, so there are no current plans but we will be watching.

PharmAsia News : So there is no immediate funding issue that requires you to go for an IPO?

Björklund: Yes, that's right and we have owners who are willing to contribute more equity if necessary.

PharmAsia News : What about your discovery research activities in India? Any push for a greater presence here?

Björklund: We have a set up in India that is contributing significantly to our global efforts but there are no current plans for any ramp ups. But what lies in the future is still to be seen and we are not contemplating as of now.

PharmAsia News : From €3 billion, where do you think Nycomed will go in the next three years?

Björklund: One should not expect a dramatic growth coming in the next three years because we will see a continuous decline in pantoprazole sales. So we will have a good job to do in compensating for the loss of sales of pantoprazole for the next two years. Probably from 2013, we should see good growth.

PharmAsia News : You are very clear on claiming damages for loss of sales of Protonix as Teva and Sun launched their generic versions in the U.S.? Any possibility for an out-of-court settlement?

Björklund: Yes absolutely, we are clear about the damage claims. It will be a big sum in terms of the damages. After Jan. 17 or 18, 2011, anyone can come and launch a pantoprazole product but for those who launched before that, we are sure to ask for the penalties for half of 2007, 2008 and part of 2009. Before the generics came in, Protonix sales were $1.9 billion and that says a lot. We are not talking small money here. If Teva and Sun come to us and talk about settlement, we will still talk to them but I cannot comment on those points. We are not closing the doors for anyone at Nycomed.

- Vikas Dandekar ([email protected])