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UKPharma reportDecember 2011

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and their families, and to increasing

the benefits healthcare provides.

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PATIENTS AND THEIR FAMILIES, OUR HEART AND SOUL

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SPECIAL SPONSORED SECTION

DECEMBER 2011 FOCUS REPORTS S2

UK Report

As the global economic roller coaster continues to unfold, govern-ments the world over have desperately been scrambling to � nd the right policies that will effectively clamp on the brakes to end this unnerving joyride we have witnessed over the last few months, if not

years. The frontline of this battle against economic gravity involves elabo-rate � nancial schemes to salvage countries and banks alike, but inevitably it has also meant that governments and companies have been tightening their belts to cut budgets wherever possible. In the United Kingdom, the slashing has heavily hit one of the country’s dearest public institutions, the National Health Service (NHS), which has been asked to whittle £20 bil-lion ($31.5 billion) from its budget by 2014. While most have grudgingly accepted this reality, some still remain optimistic in these times of austerity and vow to make the best out of it. Prime Minister David Cameron falls within the group of enthusiasts and has rallied his citizens by telling them that “we will be tested. I will be tested. I’m ready for that and, so I believe, are the British people. So yes, there is a steep climb ahead. But I tell you this: The view from the summit will be worth it.”

UK: KEEP CALM AND CARRY ON … DIFFERENTLY

This sponsored supplement was produced by Focus Reports.

Project Directors: Julie Avena Lea Boubon Carolina Oddone

Editorial Coordinators: Leonardo Barquero Koen Liekens

Contributors: Mathilde Paquet Marine Neveu Andrey Muntyan

Project Publisher: Crystelle Coury

For exclusive interviews and more info, please visit pharma.focusreports.net or write to [email protected]

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UK ReportSPECIAL SPONSORED SECTION

S3 FOCUS REPORTS DECEMBER 2011

UK Report

DESPERATE TIMES CALL FOR DRASTIC MEASURESBut what exactly will be unveiled when the British arrive at the peak of their mount? When it comes to its healthcare sys-tem, the controversial 2011 Health and Social Care Bill pro-vides concrete clues—but not quite certainties—as to where the country is headed in caring for its patients and how pharma-ceutical companies will play a pivotal role in constructing a more ef� cient NHS. The overarching aim of this unprecedented reform is to improve patient outcomes by simplifying the or-ganizational structure of health institutions, which presum-

ably will bring down costs, while at the same time increasing the uptake of innovation through a new value-based pricing (VBP) scheme.

As it stands, the procurement of healthcare services in the NHS is man-aged by hospital and primary care trusts (PCTs) that are allocated indi-vidual budgets for a speci� c geographic area. Under the proposed system, this responsibility will be delegated to smaller GP consortia that will also be able to procure services from private and third-party providers in order to

allow for greater competition. The proposal has been widely criticized as an attempt to privatize the entirely free NHS, to such an extent that the government had to halt its plans in order to hold a ‘listening exercise,’ after which the bill was amended to incorporate input received from all relevant stake-holders. The way forward is still under discussion.

One of the loudest voices heard dur-ing the exercise was that of innovative pharmaceutical companies who are al-ready at odds with the NHS due to the country’s lethargic uptake of new medi-cines and increasingly low prices (both among the lowest in Europe), exacer-bated by the alleged 85% penetration rate of generic drugs (one of the highest in the region). The industry fears that the proposed VBP system, which will replace the Pharmaceutical Price Regu-lation Scheme (PPRS), will further limit the reimbursement of new treatments by the NHS. Under the PPRS, “compa-

nies were allowed to include their assets as part of the calcula-tion that determined the amount of pro� t they could make in the country. This was extremely valuable for the pharmaceutical companies who were conducting research in the UK because those investments were then rewarded by the commercial envi-ronment,” explains Sano� UK general manager Steve Old� eld. Alternatively, the VBP scheme sets out to assess the value of a

medicine holistically by taking into account its bene� ts to the patient and wider healthcare system correlated to the overall cost burden for the NHS. In theory this is meant to reward in-novation and improve the uptake of new treatments, but skep-ticism prevails. Mark Jones, marketing company president for AstraZeneca UK, concludes that “While VBP aims to improve the valuation of new medical technologies it does nothing to ad-

dress the issue of the fragmentation of the wider healthcare system. The pric-ing scheme will not change the fact that products will still have to go through all these layers of approval before they reach patients.”

Sir Andrew Dillon, chief executive of the National Institute for Health and Clinical Excellence (NICE), explains that “what the government wants to do is to make sure that the price the NHS pays for new pharmaceuticals properly re� ects their value, which is an ambi-tion that NICE shares.” As the organi-

zation responsible for evaluating whether a new drug should be reimbursed by the NHS or not, NICE can be somewhat divisive among the pharmaceutical industry. Sir Andrew counters that “while NICE is sometimes criticized for restricting access to treatments and pharmaceuticals in particular, everything NICE has done represents a net bene� t to the NHS. Contrary to some beliefs, the vast majority (83%) of NICE’s recommendations are positive.” The reality is that no one is yet sure what VBP will look like nor whether it will be advantageous to the phar-maceutical industry in the long run.

Samantha Pearce, general manager of Celgene UK and Ire-land, is optimistic in her interpretation of the ongoing discus-sions and how they will affect her company. “The reality is that the reimbursement environment in the UK will always be a challenge, but what encourages me about the VBP discussion is that the rhetoric is centered on innovation. As long as Celgene remains committed to providing truly innovative products that add value to the health of patients, then I think our aim will be parallel to that of the authorities. In our commitment to seeing this happen we are persistent and creative to engage all the rel-evant stakeholders that will ultimately make the decisions. It is essential for us to understand where they are coming from and vice-versa. We knew from the beginning that it would be a long journey, because the therapeutic areas that our products operate in are quite complex,” she concludes. With growth at 40% for the � rst half of 2011, it is quite apparent that Celgene has in fact managed to communicate and � nd common ground with UK health authorities.

Nonetheless, Stephen Whitehead, chief executive of the Asso-ciation of the British Pharmaceutical Industry (ABPI), has taken it upon himself to voice the industry’s concerns. “The ABPI is work-

Sir Kent Woods, Chief Executive, Medicines and Healthcare products Regulatory Agency (MHRA)

Samantha Pearce, General Manager, UK and Ireland, Celgene

Mark Jones, Marketing Company President, AstraZeneca UK

Learn More: www.Watson.com www.ArrowGenerics.com

Watson. A Global Company with a World of Opportunity.

Watson Pharmaceuticals, Inc. (NYSE: WPI) is a dynamic global pharmaceutical company of more than 6,500 scientists, technicians, sales and marketing, administrative, manufacturing and business professionals working to achieve our global mission: to bring trusted generics, specialty branded pharmaceuticals and biologics to patients around the world.

Watson has operations in many of the world’s established and growing international markets. In Europe, where we operate under the Arrow name, we are committed to bringing a continuous stream of new products to market, and to expanding our commercial position and driving continued success.

Watson’s ongoing global expansion is creating exciting and unique opportunities at all levels across our Company – opportunities that encourage employees to grow, contribute, innovate and excel.

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UK Report

ing closely with the government to deter-mine how we can dramatically accelerate the uptake of innovation within the health-care system. The government recognizes that innovation is a key part of the solution to cutting costs,” he explains. One of his main goals is to get both his members and

healthcare au-thorities “to stop thinking about the product life-cycle as the patent lifecycle, because the real lifecycle of a product ex-tends beyond that—closer to 40 years. The value of a medi-cine, starting from discovery to the point where it is

replaced by something else is much greater than what is currently taken into account because medicines are typically used for about 40 years before a replacement treat-ment is available.”

Such a pioneering approach to ap-praising medicines would surely be in line with VBP’s stated goal of evaluating medicines holistically, but local manag-ers are still weary of whether the new pricing scheme can accelerate the current evaluation process. Nick Burgin, Euro-pean director of market access for Eisai, feels that “whilst VBP is an opportunity to improve access to patients for new

medicines, it does have the potential to make patient access worse. It could make the process even longer than it already is and lead to a greater number of payers and decision makers having to agree on access to a single product.”

Despite the company’s concerns over the local market environment, Eisai has chosen the UK as its new European headquarters from which all other mar-kets in the region will be cen-trally managed, touting the country’s talent pool and ex-pertise as a strategic advan-tage. Gary Hendler, president and CEO of Eisai Europe, lays out the company’s new regional strategy that has “shifted the focus from being country-speci� c to becoming European-speci� c. Now each country operates as a busi-ness unit that reports into a single European business unit constructed by therapy area and/or business synergy. The exciting challenge for us is to bring the differ-ences and similarities of all these coun-tries under one Eisai European business model as opposed to a business model that is the sum of all its parts”.

Basing themselves in the UK also makes sense considering that the coun-try has traditionally punched well above its weight within the global pharmaceu-tical sector, representing 10% of global R&D expenditures for the industry, as

well as a hub for manufacturing. Even though one-sixth of today’s most popu-lar prescription medicines were devel-oped in the UK, the dilemma is now whether the country can maintain its status as a pharma powerhouse and a trendsetting market for the rest of the world. Burgin concludes that “this situ-ation is not unique to the UK, with the increasing demands on health systems across Europe, many European coun-tries are implementing various methods of cost containment. The question is how to retain a vibrant pharmaceutical industry in the region while at the same time making treatments affordable to the national healthcare systems that pay for the products.”

Simon Jose, general manager of GSK UK, asserts “that as long as we all play our parts and are mature about the way forward, then we will be able to fashion a more harmonized system where our re-sources are deployed more ef� ciently to improve patient outcomes.” “Fortunate-

ly, or unfortunately, the UK is leading the world in this direction, so that pharma-ceutical products begin to be evaluated based on their added value to patients and healthcare systems,” states Martin Dawkins, Bayer’s general manager in the UK. “This is a change that I fore-see, and the UK will be one of the leading markets that will bring on this shift in mentality to think in terms of integrated healthcare.

The focus will be on how a product will affect the greater population in terms of costs and bene� ts rather than only focus-ing on the patients that will be using the treatment directly,” he concludes.

THE UK STANDARDThis wouldn’t be the � rst time that the UK sets the standard for the global phar-maceutical industry. Historically, both companies and regulatory authorities have looked toward the British market to

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Simon Jose, General Manager & Senior Vice President UK Pharma, GSK

Stephen Whitehead, CEO, Association of the British Pharmaceutical Industry (ABPI)



UK Report

determine what policies were most effective to therefore enact them elsewhere. GSK’s Jose recounts that “the UK has a dispro-portionate in� uence on the global commercial environment for the industry; 25% of world markets reference their prices to the UK, and decisions by NICE have in� uenced well beyond the borders of England.” A tendency to reference prices and regula-tion on UK practices can also been seen in the predominant role that the Medicines and Healthcare products Regulatory Agency (MHRA) has played in pan-European regulatory initiatives. Sir Kent Woods, chief executive of the MHRA, states, “The agency

has attracted an increasing amount of work on European regulatory work. The Agency does more of the decentral-ized procedures than any other state. Part of our growth has been drawing in work from other areas of the EU.”

Beyond regulation, “the British pharmaceutical industry has a dispro-portionate amount of R&D spent here. GSK alone locates around 40% of its R&D in the UK and 20% of its manu-facturing, while the country only repre-sents 4% of our sales,” says Jose. Surely

it makes sense that being a British company GSK would have a top-heavy presence in the country, but many of the other Euro-pean and American pharmaceutical giants have a similar story to tell—even the French. Sano� ’s Old� eld validates their local manufacturing and R&D presence by arguing that “the qual-ity of British industry has always been very well-regarded and continues to be so today. For example, the ‘Made in the UK’ symbol is still a solid sign of good quality around the world. Additional to that is the UK’s ability to drive quality improve-ment measures that continue to raise the standards of produc-tion. Another major asset that the UK offers the pharmaceu-tical industry is the quality of innovation not only in terms of new products, but also in operational and manufacturing processes.” Jose concludes that “there already is a strong in-dustrial base here, but the government realizes it cannot be complacent given that other countries are creating policies to attract inward investment in this sector.”

This point has become most palpable over the last couple of years after companies such as Novartis, MSD, and P� zer announced plans to shut down R&D and manufacturing sites in the country, representing a total loss of more than 3,000 jobs. “Given our track record in the UK, this was a very dif� cult decision for the company, but it was in no way a response to the quality of British science and the individu-als that are available to conduct research in the country,” explains Richard Blackburn, general manager of P� zer UK. “Rather, people should understand that our decision to exit the site was based on P� zer’s need to rationalize the num-ber of therapeutic areas that we are conducting research

in.” Yet, such statements have been ineffective in mollify-ing those who see one of the country’s greatest industries in sharp decline. “What I believe has happened is that people

have interpreted changes in R&D in-vestments as a signal that the quality and standard of British science is also changing, but I don’t think that is the case,” states Blackburn. “The UK is still a place where we conduct great R&D, and this is why we have recent-ly established our Pain and Sensory Disorders research unit in Cambridge. The good news is that companies tend to be fairly unsentimental in terms of where they conduct their research,” which means that if the metrics im-

prove then there is a good prospect of this continuing to take place in the UK.

Stephen Whitehead of the ABPI is convinced that, regardless of unsettling news of site closures and the uncertainty around the healthcare reforms, “the UK will always be a world leader in science and R&D policy because we have some of the best universities, some of the best pharmaceutical companies and we

Steve Old� eld, Manag-ing Director, Sano� UK

Committed to improving the lives

of patients worldwide

www. c e l g ene . com

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Martin Dawkins, Man-aging Director UK and Ireland, Bayer



UK Report

have strong R&D bases here for these global companies.” With academic bastions such as Oxford and Cambridge, British sci-ence has typically been regarded as authoritative on a global ba-sis. Chief executive of the BioIndustry Association (BIA), Nigel Gaymond, adds that “looking at the long heritage of research,

the number of Nobel laureates that come out of the UK for example, it is probably fair to say that the UK is one of the most productive nations when it comes to the generation of intellectual property (IP). Four of the top 10 universities in the world, around 19 of the top 100 and 30 of the top 200, are in the UK. For a relatively small country in comparison to some of the giants in the world, this represents a tremendous front of knowl-edge, which certainly drives us forward. Whitehead adds that as a country which disproportionately leads the industry’s

R&D efforts, “the UK is very signi� cantly exposed to global trends of the industry,” including the myriad economic pressures and the weak productivity of new drugs over the past few years. Certainly this is re� ected in the generally somber mood of Big

Pharma locally, which Gaymond justi� es by concluding “that in the UK in particular, we sometimes dwell too much on the nega-tive news rather than celebrating our successes”.

THE DEMISE OF ANOTHER BRITISH GOLDEN AGE?As an eminent � gure of the UK’s life sciences sector, Sir Richard Sykes is arguably the man responsible for consolidating what is today GlaxoSmithKline, up until 2002 when he stepped down as chairman of the � agship British pharmaceutical company. He reminisces about the times when in the UK “companies could make as much pro� t on a product as they wanted as long as it was relevant to the amount the company had spent on R&D in the country. This is why many companies came and set up their facilities here, because you had a great pool of people to do the research and also had the government that provided in-centives for it. You also had a great test bed in the NHS. Today most of these factors have changed so the positive environment no longer exits.” Eisai’s Nick Burgin drives this point home with the example of Japanese pharmaceutical companies that “are currently in an investment phase in which they are look-ing to spread their wings and invest in new markets outside of

Japan. As with any investment deci-sions there are limited resources avail-able to these companies, and therefore they will choose the most attractive opportunities for them. Emerging mar-kets such as the BRIC countries are very interesting options for these com-panies and therefore markets in Europe must compete for these investments by sustaining an appealing environment through investment-friendly policies.”

When compared to some of its re-gional neighbors the UK has one of the lowest medicine expenditures as a

percentage of its GDP, standing at 0.91% in 2010 compared to 1.53% in France and 1.22% in Germany. Furthermore, the NHS has gradually been spending less on medicines every year, from 12.5% of its total budget in 1999 to 9.8% in 2008, even though the institution’s total budget has been increasing to more than £120 billion ($192 billion) in 2011. This is in contrast to the fact that, following the � nancial services sector, the life sciences provide the greatest contribution to the UK economy, having generated a trade surplus of over £7 billion ($11 billion) in 2009.

Why then would the country become complacent about the attractiveness of its commercial environment for phar-maceutical companies? The answer is: It is not. Rather, the cost-cutting and restrictive spending is re� ective of the overall economic malaise around the world and a greater need for governments to stabilize their budgets. Picture the UK gov-ernment walking on a tightrope trying to balance a pole with

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Richard Blackburn, Managing Director UK, P� zer

Nigel Gaymond, Chief Executive, BioIndustry Association (BIA)



UK Report

a sluggish economy and public debt on one end, and the de-mands of pharmaceutical companies to improve commercial conditions on the other. The point of equilibrium is far from evident. Despite his nostalgia for better times, Sir Richard Sykes advises pharmaceutical companies “to hold their nerve. Yes, they are going through a bad period at the moment, but this is only a period after all. The industry is not in terminal decline by any stretch of the imagination.”

Quite the contrary, the government seems to have taken stock of the warning signs and has reacted by implement-ing a number of incentives to ensure that the UK remains a stronghold for the global pharmaceutical industry. One such

initiative is the Cancer Drug Fund, whose role is to fund the use of inno-vative cancer treatments that have not been approved for reimbursement by NICE for not meeting cost-effective parameters. Another notable example is the Patent Box Law, currently un-der discussion, which would provide a preferential tax rate to companies who develop and register their intel-lectual property in the UK. Similarly, the government has implemented an R&D tax credit system that allows companies to obtain a tax deduction

in return for R&D investments made in the country. In Janu-ary 2009, the Department for Business, Innovation, and Skills (DBIS) also created the Of� ce for Life Sciences (OLS) that dedicates itself entirely to shape a positive business environ-ment for this strategic sector. The OLS is a collaborative ef-fort with DBIS to align business priorities with those of the country’s healthcare.

RESURGENCE AT ITS BESTThere are indeed other segments of the UK pharmaceutical in-dustry that are thriving and promise to bring back the scienti� c

and manufacturing prestige that the country is used to. Generic manufacturers in particular are extremely pleased with the an-nounced budget cuts for the NHS, as this means that doctors will be encouraged to prescribe generic products whenever possible. Watson Pharmaceuticals’ vice president for European generics, Anish Mehta, is con� dent that “one of the greatest levers that exists for cutting costs is to increase the use of ge-nerics throughout the system. Generics already save the NHS between £7 billion to £8 billion ($11 million to $12.5 billion) annually and there is still more room for greater cost savings. This is a trend that we are seeing all over the world, from the US to France and Germany. The end goal of governments is to improve the quality of healthcare by focusing more on patient outcomes and streamlining healthcare systems so that they be-come more ef� cient.” In the face of such savings, the DH went as far as proposing an automatic generic substitution scheme in January 2010, which would require pharmacists to dispense

generic drugs whenever available, even when a branded prescription had been written by the doctor. To the disap-pointment of generics companies, the proposal was later scrapped, but busi-ness still seems to be moving full-steam.

Watson is a prime example of the rise of generic players in the country, having acquired UK-based Arrow Generics in 2009 to establish its headquarters for all markets outside of the US. Prior to the acquisition, Watson was a single-mar-ket company, whereas today it boasts a presence in 17 markets in Europe and is

planning for a greater global expansion in the near future. Meh-ta explains, “The UK is a trendsetting market that has evolved through different healthcare models to achieve a high level of ef-� ciency and high penetration of generics.” While some would ar-gue that the British generics market is already saturated, Mehta believes that “the real penetration rate of generics will depend on

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Gary Hendler, President and CEO, Eisai Europe

Nick Burgin, European Director of Market Access, Eisai Europe



UK ReportUK Report

what data you look at. Nev-ertheless, there are still some opportunities in drugs that are still prescribed for their brand even though a generic option is available. Undoubt-edly the main growth driver in the future will come from biologic products. Watson is positioning itself to play a very important role in bi-osimilars in the mid to long term.” His vision also extends beyond European borders, as

he expects the company to grow steadily over the next few years. “From 2004 until today, we have grown almost $3 billion in revenue and are targeted to reach $4.5 billion at the end of this year. Even as we are expanding our Euro-pean presence at the moment, we are still looking to grow in other global markets. We are very interested in Latin America and also exploring opportunities in Asia Paci� c.”

RECUPERATING BROKEN PIECESHowever, it is not only the generics play-ers that have taken advantage of changing times in the UK. As Big Pharma stream-lines their operations, shedding away staff, operational sites, and niche segments, the local industry has eagerly been pick-ing up the pieces to turn them into their own growth opportunities. With origins dating back to 1787, Martindale Pharma is a niche and specialty pharmaceutical company that was struggling to maintain its revenues just over a year ago, when in October 2010 its new chief executive of� -cer, Richard de Souza, took the reins of the company. “My job was to � gure out what the company could do better and identify through the product portfolio the therapy or business segments that we truly wanted to be a part of. These segments were se-lected based on whether we were already ranked No. 1 or No. 2, or if we could achieve one of those positions within a segment over the course of two years,” he says. Under this new strategy Martindale has identi� ed � ve business segments—spe-cials, critical care, ophthalmics, hospital specialty products, and addiction—where

Anish Mehta, Vice President of European Generics, Watson Pharmaceuticals

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DW Languages — Rebuilding the UK Word by WordThe impetus to restore the British pharmaceutical indus-try, as a key sector in the full economic recovery of the country, has also taken root amongst service providers to the industry. Translating service provider, DW Languages, is a prime example of a company that is positioning itself as an essential partner to the industry by taking over services that used to be conducted in-house by pharma-ceutical companies. Created in 1962, DW Languages has leveraged its medical expertise to translate vital docu-ments for the pharmaceutical industry, including market-ing authorization applications and clinical trial documents, into all the EU and EEA languages, as well other major global languages. “One of my main objectives is to posi-tion DWL as a critical part of the pharmaceutical industry. Our specialization is entirely in the pharmaceutical mar-ket, so our aim is to be an integral part of that industry rather than only being considered a part of the translation industry”, details Samuel Wirth, managing director of DW Languages. “Translation services work best when a ‘strate-gic partnership’ is achieved whereby the client knows that

DWL can provide the solutions to this vital component of their business.”

Having started as one-woman operation by his mother, Wirth aims to expand his business not only for his own ben-e� t, but also for that of the pharmaceutical industry and the UK economy. “I would also like to achieve a greater penetra-tion of the UK market making a contribution to the country’s economic recovery” he says. Furthermore, Wirth believes that in order to achieve this, one must look beyond national borders and leverage the UK’s advantage on a global scale, particularly now when pharmaceutical companies are increasingly conducting their clinical trials in emerging mar-kets rather than in the UK. “There is no doubt that we have to meet the demand in these global markets and must be a part of them. One is a reminded of a slogan widely used by the British government after WWII that starkly stated : “export or die”. The Clinical Contract Research Association (CCRA) is doing an important job in this respect by helping British member companies to focus outside of their tradi-tional UK market and venture overseas”, concludes Wirth.

Take a fresh look.

Martindale Pharma is evolving to be brighter, fresher and better equipped for the

ever-changing specialty pharmaceutical environment.

Simplified packaging, expanded product ranges, improved formulations, and enhanced

supply chain and customer service operations – these are just a few of the transformations

we are making to ensure we provide the highest quality products and services for both our

customers and their patients.

Evolve with us. For more information or to find out about career opportunities at

Martindale Pharma, visit www.martindalepharma.co.uk or call 01277 235300.

SPEC/10/11/013

MART-11-023 Fresh Look Press Ad.indd 1 27/10/2011 10:16

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UK Report

it is already leading or is soon to be. In order to achieve such a position, the company has under-

gone a restructuring that included the up-skilling of its person-nel, which was made possible due to the availability of pharmaceutical experts that had recently been laid off by other companies. Detailing Martindale’s strat-egy, de Souza sees “new product devel-opment as a key aspect to ensure the continued growth of the company well into the future, but to maintain current growth we have had to develop a very active business development culture. We have been able to better gauge demand by establishing preferred partnership status with major retail pharmacy es-tates so that when a patient walks into

one of those pharmacies with a prescription for a special, then that order will directly come to us. Innovation and customer-centric service improvements help underpin our status as the partner of choice for many pharmacies.” This service-oriented approach includes delivering orders within 24 hours of them be-ing placed and launching a new online platform from which a

pharmacist can directly make orders. With steady growth and success in the UK the company is now looking to leverage its business model beyond its borders. “As a company, we already know how to solve some of the problems in the UK, so we are looking to transfer that knowledge to other European markets with similar needs and conditions. In 2010 Martindale only had 4% of its turnover coming from international markets. Within

12 months we have taken that up to 10%, and my goal is to reach over 20% within three years.”

In similar fashion, Alliance Pharma was created in 1996 when its founder perceived the outsourcing trend that was taking hold of the global pharma-ceutical industry. Founder and chief executive of� cer John Dawson took advantage of the opportunity to create a company that specializes in market-ing and distributing niche products. Dawson describes, “Having seen the splintering of R&D, with small biotech

boutiques being set up as spinoffs of bigger pharmaceutical corporations … I realized these companies would need partners to do their marketing and distribution in the future. Our per-ception as a growing specialty pharmaceutical company is to exploit opportunities that do not come from our own research and development, which can relate to both mature as well as innovative products that need launching. We have seen an in-creasing demand for our products even in the areas that we do not promote. Many of our products are so well established that it does not even make economic sense to promote all of them. For example, we have seen growth in non-promoted products purely for demographic reasons such as a growing or aging population.” Despite Alliance’s impressive performance over the past few years, such as growth of 44% in 2009, Daw-son cautions that “it is crucial, however, to keep your two feet on the ground.”

Swiss biologics specialist Lonza is also taking advantage of the current situation of the pharmaceutical industry by position-ing itself as an indispensable partner in product development and manufacturing. In 1996 the company acquired Celltech Biologics based in Slough, UK, which today has become Lonza’s global center of excellence for mammalian cell cultures and is currently undergoing a £16 million ($25.3 million) renovation and expansion. “The investment will create a � exible operation-al infrastructure utilizing state-of-the-art equipment and tech-nologies. The scope includes new puri� cation and fermentation suites, new process development laboratories, a new GMP ware-house, and new of� ce facilities,” explains Gordon Bates, head of operations of Lonza UK. He adds, “Within the context of a growing biologics sector, where many large pharmas have pub-licly stated that they expect 20% to 50% of new molecules to be

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John Dawson,Founder and CEO, Alliance Pharma

Richard de Souza, CEO, Martindale Pharma



UK Report

biologics over the coming years, Lonza’s UK operations, which are solely focused around mammalian cell culture, are well positioned to support this projected growth. The UK also retains a strong position in scienti� c ed-ucation and academic research that contin-

ues to create a great resource base and talent pool. Geo-graphically speak-ing, Lonza Slough is also well positioned to support a global customer base giv-en we are only 20 minutes away from Heathrow Airport. Overall, I think this is a very exciting

time for the biotech sector in the UK at the moment.” The enthusiasm for UK biotech is re� ected in the collabo-

rations that pharmaceutical companies are forging with small startups and academic groups. Particularly now that the indus-try is struggling to maintain its R&D productivity, new mod-els of research have been emerging out of scienti� c centers of excellence such as the UK. “While we believe that close part-nerships with academic institutions globally are important, the availability of a wide range of collaboration models and � ex-

ibility over intellectual property rights are factors that continue to make the UK academic sector an integral part of our innovation efforts,” says Bates. Deepak Khanna, MSD’s managing di-rector, adds, “The UK will continue to have academic partnerships because of the high-quality scientists and the high-quality work force skills that exist here, but I think we are going to see more of these collaborations and partnerships earlier on. This is part of the chang-ing R&D model versus the traditional bricks-and-mortar R&D facilities.”

A SCIENTIFIC RESURGENCEExciting times they are indeed changing, and the UK’s histori-cal excellence in scienti� c research has fashioned a multifaceted landscape of biotech spinoffs and startups that are leading the country’s—and the world’s—drug discovery and development front. While capital and funding is not always readily available for small biotechs, with an estimated 20% decrease in VC fund capital in 2010, a number of these small ventures have man-aged to prevail by innovating outside of the laboratory. Most

of them have been reaching out to global pharmaceutical companies to obtain fund-ing through drug development partnerships, but others have also found money in unusu-al places.

London-based Xenetic Biosciences has tak-en the approach of � nding investors outside of the UK in order to fund its development of new-generation drugs and vaccines through its proprietary PolyXen, ImuXen, and Oncohist technology platforms. Xenetic has forged tra-ditional partnerships with Big Pharma, such as with Baxter, however, their latest growth has mostly been fueled by funding from un-likely partners in Russia and India. “Russian and Indian companies have proven to be more open to partnering early-stage technolo-gies and candidates by taking the candidates into their home country so that they can then

have the exclusive rights to the products in their domestic market,” says Xenetic chief executive of� cer Scott Maguire. “They also view our partnership as key to building a presence in their local biotech market by bene� ting from our technology and learning from our

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Scott Maguire, CEO, Xenetic Biosciences

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UK Report

research experience. While most companies in the UK are able to secure enough fund-ing to take their products through Phase I and Phase IIa trials, when they reach Phase IIb and III they usually have to turn to the US capital markets for fund-ing because local investors are unwilling to commit large sums of capital to expensive late-stage clinical trials,” he adds. With a product pipeline of 12 products, some already in Phase IIb trials, Maguire “hopes that Xenetic Biosci-ences will be able to set a new trend as an example of a fund-ing and risk mitigation model that merges world-class sci-ence with foreign capital and clinical trials coming from countries that recognize the value of UK science.”

Generally the industry agrees that British science is among the best in the world. However, the local biotech sector is often criticized for not having gener-ated a major biotech success story in the likes of major American companies, such as Genzyme. Nigel Gaymond of the BIA predicts that “it is unlikely that there will

be any more large biotech companies such as Amgen or Genentech because Big Pharma recognizes the value in bio-tech and as a result biotechs are often bought out earlier. The bottom line is

that things cannot be done alone anymore. Partnerships are the only way forward.” Dr. Keith Martin, chief execu-tive of Bristol-based Apitope, goes even further by declar-ing that the success of local biotechs will depend entirely on the value of the products they develop and the qual-ity of the management team with the necessary expertise to drive these products for-

ward. “The environment is certainly dif-� cult, but then it has always been. Bio-tech � rms need to discover new products that address unmet needs and are clearly differentiated from products that are al-ready available on the market or in de-velopment,” he states. Despite the fund drought for the sector, Apitope was able to raise capital during the global � nancial crisis of 2008–2009 to � nance its devel-opment of products for rare and severe

diseases, such as multiple sclerosis and factor VII intolerance for hemophilia.

The company has also struck a multi-million-pound partnership with Merck-Serono. “Many biotechs � nd themselves in positions where they have great tech-nology but they do not have the exper-tise to develop it commercially. Apitope’s management team is outstanding in this regard and we are starting to see the ben-e� ts of it as we are driving our multiple programs forward very quickly. One of the main assets for biotech in the UK is the amount of people that have worked in Big Pharma and understand how to develop drugs. Not only do these people understand what needs to be done, but they are also deeply committed to bring-ing innovative products into the market,” he concludes.

Corrections: Country Report: India, Pharmaceutical Executive, September 2011, Volume 31, Number 9: The correct spelling of the President of Manufacturing, Life Sciences and Energy at Tata Consulting Services is Debashis Ghosh.Country Report: Russia, Pharmaceutical Executive, November 2011, Volume 31, Number 11: The correct spelling of the President of AstraZeneca Russia is Nenad Pavletic.

Dr. Keith Martin, CEO, Apitope

The Word on UK BiotechWhen assessing the UK’s dynamic biotech sector, general managers and investors across the board � nd consensus in identifying innovation and productivity emerging from academia and small start-ups.

Allan Marchington, partner, Apposite Capital: “The UK market is differentiated by the number of pharmaceutical companies that are based here, not only commercially, but more importantly through research operations. This has been a major driver of the successes we have seen come out of the UK. When you couple this with some of the world’s leading universities with great science and entre-preneurial initiatives, as well as easy access to capital and capital markets, you end up with a highly competitive mar-ket. Nevertheless, the biotech sector is experiencing a very dif� cult period right now. Capital markets are not rewarding innovation the way they should be, and this is not due to a lack of new technologies and innovation, but rather is tied to investor risk appetite and perception of limited returns linked to drug approval and market access.”

Deepak Khanna, managing director, MSD UK: “That

is an advantage the UK has because of the quality of the institutions that exist here. The UK will continue to have aca-demic partnerships because of the high quality of scientists, and the high quality work force skills that exist here, but I think we are going to see more of these collaborations and partnerships earlier on. This is part of the changing R&D model, vs. the traditional bricks and mortar R&D facilities.”

Harren Jhoti, president and director, Astex Pharmaceu-ticals: “Whether biotech will drag big pharma out of the productivity issue is still to be seen. One thing that is certain though is that innovation was hot happening within big pharma, at least not to the level that is required. Fortunately the large companies have realized that biotech is something they are now absolutely reliant upon and are increasingly viewing the biotech sector as peers rather than simple business opportunities that they can take advantage of. I am hopeful that the biotech sector will help big pharma to come out of the current slump and the data suggests that innovation does happen in small groups. If the data delivers on that trend then we can remain positive.”

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