Angus Russell, Shireâ€™s longtime CFOâ€”now CEOâ€”likens the failing US automobile industry to pharma. â€œAll the problems with the automobile industry were a long time coming,â€ he says. â€œItâ€™s just that the SUVs and the relatively cheap price of gas created a bubble, just like a booming economy and blockbusters.â€
But now that the bubble has burst, pharma can expect what Russell predicted a decade ago: a more competitive industry, with greater focus on pharmacoeconomic data, ROI, and less tolerance for me-too drugs. â€œThe economic miracle is overâ€”there will be a struggle to survive in this industry,â€ he says.
Russell, a speaker at the Reuters healthcare conference today, breakfasted with Pharm Exec at the W Hotel, and offered a preview before tomorrowâ€™s main event, the business update for its Human Genetic Therapies (HGT) business. The meeting will take place in HGTâ€™s new Lexington, MA, headquarters, and with more than 1,000 employees (up from 300 in 2005), it will also provide a visual reminder of how this business is a growth engine for Shire.
Over the last three years, this specialty pharma company has grown and diversified both its product portfolio and geographic reach. A few years back, Adderall XR accounted for the lionâ€™s share of Shireâ€™s sales. But recently announced Q3 earnings show that the company has succeeded in bringing along its newest drugsâ€”and for the first time, new product sales exceeded those of Adderall XR (and not a moment too soon, as generic Adderall arrives on the market in just six months). With almost two dozen potential launches planned for 2008-2015, Russell says the company is in â€œthe best shape itâ€™s ever been.â€ He attributes this to strong IP (even for its next-stage ADHD drug Vyvanse), a heavy focus on orphan drugs, and Shireâ€™s litany of productive deals including Jerini.
On Tuesday, Russell will address HGT and outline Shireâ€™s seven-year plan. (â€œFive years was too short, 10 too long,â€ says Russell.) It includes expansion into China andÂ a reorganization along patient lines; drugs for diseases that serve more than 50,000 patients will fall under specialty pharma head Mike Cola; smaller drugs will fit within Shire HGT, presided over by Sylvie GrÃ©goire. Russell says this paradigm best capitalizes on the different commercialization models, enabling smaller orphan drugs to fully leverage the â€œadvocacy-based selling model.â€
But itâ€™s not all roses for Shire. In the short-term, the company will experience a dip in sales in 2009, and possibly 2010, as it fully transitions away from Adderall XR. Perhaps a bigger issue is the biogenerics bill thatâ€™s shaping up among legislators. Russell plans to visit Washington, DC, several times over the next few months to conduct what he characterizes as much-needed education on the interaction between intellectual property and biosimilars. Right now, small molecules have 20 years of patent life, but biologics only have seven. â€œWithout 12 or 14 years of exclusivity, it just might not warrant the investment,â€ says Russell. â€œYou see the reaction when I tell people thatâ€”their eyes light up and you can tell they are beginning to understand.â€