Pharmaceuticals Greece report 2008

GreecePharma reportAugust 2008

Acropolis by D Veroukas. Courtesy Bayer

Greece’s Pharmaceuticals: Classical Thinking For A Modern IndustryGreece’s contributions to health are world-

renowned, whether through its Mediter-ranean diet and climate, or as the genesis of Western philosophy and mathematics. Less well-known are its modern-day activities in the pharmaceutical industry, where the blossoming market is distinctive for its diversity despite a population of just 11 million people. Between innovating multinational corporations (MNCs) and fast-growing locals, catch-up policymak-ers, companies and institutions supporting competitiveness, and the vertically integrated alongside the niche players—all underlain by the classic Greek entrepreneurial spirit—the re-emergence of the Hellenic pharmaceutical in-dustry is paving the way for the country’s glob-al recognition on an entirely different scale.

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Greece, in pole position

In the global fight for pharmaceutical supremacy, Europe’s multitude of heterogeneous markets plays an understandable

second-fiddle to the dominant homogeneity of North America. In the last 15 years, R&D investment grew just 2.9 times in Europe, compared to 5 times in the United States. Europe ac-counts for some 30 percent of world pharmaceutical sales and generates less than one-quarter of new medicines, compared to North America’s 48 percent and two-thirds, respectively. Tak-ing a global perspective, however, it’s clear that bigger trends are at work beyond a pan-Atlantic head-to-head. Comparing aggregate pharmaceutical plant openings and closings, the pic-ture gains resolution: In the past five years, there has been a net loss of 16 plants in Europe and one in the United States—and a net gain of 13 in Asia. Many people look to Europe’s big five of France, Germany, Spain, Italy, and the UK for the innova-tion necessary to stem this rising tide. But it is countries like Greece—with high per capita healthcare expenditures amount-ing to 10 percent of a $388.6 million GDP, and a bumper crop of companies whose expanding workforce exceeds 11,500—that offer an appealing alternative opportunity.

Greece is going through a strong economic upswing. Even though the investment and development frenzy from the 2004 Athens Olympics is long gone, Greece’s 4 percent GDP growth has outpaced the Eurozone average for the last decade, with the result that the country’s per capita income has grown from 64 percent of its more developed European peers to more than 80 percent. With a strategic geographical position at the crossroads of

Western and Eastern Europe, the Middle East, and Africa, Greece is poised to take full advantage of the confluence of its natural and economic strengths. Whether this potential is realized depends as much on the will of the Greek people as the resolve of the policymakers driving much-needed change in legislative and regulatory frameworks.

Career diplomat, former mayor of Athens, and current Minister of Health and Social Solidarity, Dimitris Avramo-poulos, while speaking at the American-Hellenic Chamber of Commerce (AMCHAM) Healthworld 2008 conference, stated that “Greece needs to streamline its National Health System and increase spending in the sector. These should be among the government’s top priorities.” This is a simple and straightforward message to a sector that is more than willing to listen. An advocate of private sector health services—which

have seen more than 10 percent growth in market share in the first half of 2008, Avramo-poulos contends that “private health services have contributed through competition, improv-ing service.” But with hospital debts reaching $3.1 billion—despite a 2005 account recon-ciliation—and decision-making fragmented across ministries as seemingly irrelevant as marine affairs, private sector actors will be looking to the government as a role model going forward.

In fulfilling their part of improving the national healthcare picture, pharmaceutical companies imbued with the Greek en-trepreneurial spirit—historically manifested in such luminaries as Aristotle Onassis and Stelios Haji-Ioannou—are evident in the sector. Continuing this tradition, entrepreneurs like Lavren-tios Lavrentiadis, the 35-year-old scion of Alapis, are floating capital and acquiring assets throughout the value chain to be-come European leaders in pharmaceuticals. Lavrentiadis alone has spearheaded 40 acquisitions in the past decade.

Indeed, the proof is in the numbers: Greece has 300 phar-maceutical companies, 130 wholesalers, 30 pharmaceutical cooperatives, and more than 10,000 pharmacies—impressive considering that the country has a population of only 11 mil-lion. Stefan Stefanidis is in a good position to attest the entrepre-neurial attitude of his fellow countrymen. As former president of Greek operations for Boehringer Ingelheim (BI) and president of the EU affairs committee of the Greek Pharmaceutical Asso-ciation (SFE), he was responsible for bringing BI manufacturing facilities to Greece, the last vestige of MNC-owned production in the country. Stefanidis illustrates the defining Greek charac-ter trait with an anecdote: “If you stand in Athens’ busy Con-stitution Square and call out loudly, ‘Mr. President!’ 50 percent of the crowd will turn around and answer, ‘Yes?!’ When Greeks hear this, they respond, ‘Why only 50 percent?’ to which you

must reply, ‘Because you called for Mr. President. The other 50 percent are women!’”

However, this attitude by it-self is not enough. An attractive and stable business environment is required in order to thrive. Dionysios Filiotis, an entrepre-neur himself as general Man-ager of the international joint-venture Pharmaserve-Lilly, as well as President of the Hellenic Association of Pharmaceutical Companies (SFEE), which repre-


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AUGUST 2008 FOCUS REPORTS

Dimitris Avramopoulos, Minister of Health and

Social Security

Vassilis Kontozamanis, President National

Association of Medicines

Stefan Stefanidis

sents 90 percent of the market’s value, remarks that “the Greece of the future must ensure im-mediate access of its citizens to the benefits of the continuous evolution of science. Achieving this goal means consistent imple-mentation of a policy, which un-like the practices of the past, will allow for the streamlining and unobstructed operation of the pharmaceutical market.”

A key player in streamlining these practices is the National

Association of Medicines (EOF), a fully-autonomous body under the Ministry of Health and Social Solidarity headed by President Vassilis Kontozamanis, who describes the associa-tion’s objective as “to increase the effectiveness of the health-care system in Greece. Our main activities involve processing the bureaucracy and streamlining the Greek policy to the Eu-ropean one, providing Greek patients immediate access to any pharmaceutical product, removing social or economic barriers to Greek pharmaceutical care, and ensuring the quality” of medicines delivered, by means of regular pricing bulletins.

The government is addressing such issues in initiatives in-cluding the Competitiveness Operational Programme, part of the National Development Strategy. Prime Minister Costas Karamanlis, however, shows cautious optimism. “In order for this national effort to bear fruit, we must adopt the philosophy of rewarding those who are excellent and highly capable. We must adopt the philosophy of a constant evaluation in the meri-tocratic and transparent way of universities and research insti-tutes, of professors and students.” Karamanlis emphasizes that

Greece, in the 21st century, “must rely on knowledge and research with people at its center, and science, technology and culture as its incentives.”

One of the most effective levers in realizing this endeavour is the General Secretariat for Research and Technology (GSRT), charged with strengthening, via competitive R&T programs, the activi-ties of research and productive institu-tions in sectors deemed significant for the Greek economy and the improvement of its citizens’ welfare. Says Professor Ioan-nis Tsoukalas, General Secretary for Research and Technology, “With the rapid development of technology and the dawn of the new millennium (the era of Homo technologicus) the GSRT is called upon to play a role of exceptional importance. Today, the need to intervene and co-ordinate research is an urgent mat-ter for the competitiveness of the Greek economy.”

The GSRT has designed, administered, and implemented research projects according to international standards. “It has also initiated the process of evaluating the research bod-ies under its auspices by committees of experts from Greece and abroad, in order to make the most efficient use of funds available for R&T,” explains Tsoukalas. This is no small task: Greece invests just 0.7 percent of its GDP in R&D, compared with 3 percent in the US and Japan. This figure is projected to double in upcoming years as Greece comes into compliance with the Lisbon Accord, which calls for all EU members to meet the 3 percent target, with the goal of making the EU the most competitive and dynamic knowledge-based economy in the world by 2010.

Investments in pharmaceutical R&D were disregarded for many years. Following a period of price freezes and counter-intuitive public policy, formerly strong MNC investment turned to persistent disinvestment throughout the 1990s, with the re-sult that Greece’s remaining production facilities are devoted almost exclusively to contract manufacturing and branded generics. This fact necessitates an organization like the Panhel-lenic Union of Pharmaceutical Industry (PEF), whose General Director Mark Hollandezos em-phasizes that “PEF represents the branded generics industry, not just simply generics. We see that as an important distinction that represents the value-added certainty and familiarity with a trusted product.” Hollandezos considers generics “a crucial part of the solution to the expenditure


Greece Report


Professor Ioannis Tsouka-las, General Secretary for Research and Technology

Dionysios Filiotis, President of SFEE

Mark Hollandezos, General Director of The Panhellenic

Union of Pharmaceutical Industry (PEF)

Retail Price Structure (courtesy of IOBE)

100%

80%

60%

40%

20%

0%VAT=9%

62.7%

5.3%

23.8%

8.2%

Manufacturer Wholesaler Pharmacist VAT

Retail price=100%

problem,” but remarks that “this cannot be done by market forces alone. We need a comprehensive policy that would pro-mote the use of branded generics in public hospitals and social security plans. Additionally, there should be incentives to the Greek pharmaceutical industry to help realize more research and development. In recent times, the climate for R&D in Greece was almost hostile, to the point that a research orienta-tion was at the bottom of the agenda.”

There is, thankfully, hope for the future. “Today things are changing. We believe that there are research areas that can be fruitful and efficient. In pursuing this type of research, we would like to see more collaboration with academia.” Under the auspices of GSRT and PPPs, the incentives are ripe for the taking. Although there may be some time to wait before these incentives bear fruit, in other areas Greek companies have been picking from the tree in a powerful way.

Education and awareness: public responsibility, private burden?

Though Greece is modernizing rapidly, it still has many ar-eas in need of improvement.

Which of them is most crucial? That depends on who you ask. Until recently pricing and reim-bursement, were critical issues for the country, leading to a parallel trade system that cost Greece more than $6.2 billion in lost revenues in 2005. But that situation has changed since the adoption of Law 3457, which stipulates a 2+1 drug pricing scheme, and requires prices be the average of the two cheap-est EU-15 countries (plus the cheapest from the new EU-10).

For some, broad public information appears to be the fac-tor that will drive the biggest changes. In April 2008, Minister Avramopou-los launched the Thorax advertis-ing campaign targeting youth in an anti-smoking initiative—an effort to reduce a problem that already con-tributes to one of Europe’s highest rates of cardiovascular difficulties. In the private sphere, Novo Nordisk’s “Changing Diabetes” bus is trying to ensure the wheels keep going round

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Gilead’s role in public education is amplified by the company’s focus, currently in Greece, on

life-threatening diseases in three therapeutic ar-eas: Chronic Hepatitis B, HIV/AIDS, and invasive systemic fungal infections.

Stelios Karagiannoglou, General Manager of Gilead Sciences Hellas, explains “Gilead’s vision in terms of shaping the market and benefiting patients in Greece is to ensure that all patients who are not diagnosed, or are diagnosed but don’t receive proper care, are fol-lowed up by physicians and start receiving life-saving treatment. Greece has 300,000-400,000 Hepatitis B carriers, 10 percent of whom have active chronic dis-ease, which means they should be treated. Actually, only 7,000 are on treatment and are followed up by a physician—and this is for an infectious and potentially life-threatening disease.”

Clearly, the numbers represent a significant risk. “Specially regarding Hepatitis B, awareness levels are relatively low in the general public and even with physicians. The problem has not received the appropriate level of attention,” particularly when considering effects such as liver cirrhosis or hepato-cellular carcino-ma, and eventually require liver transplantation, mak-ing Hepatitis B a serious public health issue. Gilead’s vi-sion is that, in a few years Greece there will be a proper prevention strategy to deter transmission and encour-age early diagnosis. “Generally, Greece is a patient-friendly market in terms of reimbursement, because from the moment of diagnosis, everyone is entitled to receive free treatment regardless of native or immigrant status The problem is to reach the point of diagnosis... Gilead is currently funding educational events focused on GPs, for example, with hepatologists addressing and educating primary care physician groups.

“When pharmaceutical companies do the right thing for the patient, they will be doing the right thing for their shareholders.... in my opinion this is the right model for the industry.”

Gilead Sciences Hellas

Stelios Karagiannoglou, General Manager Gilead

Sciences Hellas

Norbert Schmidt Gollas, Managine Director & Senior

Bayer Representative for Bayer Hellas AG

Greece Report


on the road to change.For others like Hara Kou-

soulakou of IOBE, the prob-lems are internal. Kousoulakou feels the government needs to look within and adopt sound economic evaluation proce-dures comparable to those employed by the UK’s NICE. Regardless of the direction ul-timately taken, it will take a mix of government energy and private know-how to effect the necessary changes.

One of the most important therapeutic areas is women’s health, a focus area for Bayer Hellas AG and an understand-ably touchy subject in a country numbering 97 percent Or-thodox Christians. “In Greece, oral contraceptives have a very low penetration rate,” says Norbert Schmidt-Gollas, Managing Director and Senior Representative for Bayer. At 1 percent, there is great room for improvement, especially considering the potential to reach levels seen in markets like Turkey at 12 percent, or Germany at 40 percent. Obviously, with an area like women’s health, it is important to be realistic

in anticipating the timelines for changing attitudes; it is not something that can be done overnight, but rather a gradual process that relies on the transmission of accurate and tactful educational materials to the general public. To begin, Bayer has sponsored a soft advertising campaign, without branding or product promotion, to raise awareness about the benefits available to Greek women who wish to take a proactive stance toward contraception.

Bayer recently commissioned a research study to deter-mine the sources of influence in women’s choices regard-ing contraception, and Schmidt-Gollas remarks that “some startling statistics were uncovered. First, the average num-ber of abortions expected by a Greek woman before the age of 30 was six or seven. Second, her decisions are largely influenced by peers and hearsay, in addition to her mother, who in turn is influenced by tradition and religious teach-ings. It is clear that in the face of conventional wisdom and unsubstantiated but emotionally powerful teachings, Bayer will have a challenging but rewarding effort ahead in mold-ing attitudes toward bringing women’s health issues to the forefront in Greece.”

In addition to pursuing women’s health issues, Bayer is trying to educate the government and responsible authori-ties about creating a better business environment. “Prime


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Neofitis Landis, Country Man-ager of Cegedim Dendrite

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Comparative price levels in 33 European countries in 2005SOURCE: EUROSTAT

Switzerland

Iceland

Germany

Denmark

Norway

Ireland

Italy

Finland

Netherlands

Austria

Belgium

Malta

Luxembourg

Cyprus

Sweden

Portugal

U.K.

France

Slovenia

Letonia

Estonia

Spain

Hungary

Croatia

Greece

Bulgaria

Slovakia

Czech Republic

Lithouania

Romania

Turkey

Poland

FYROM

50 100 150 2000

187

160

128121

120119

118

111

109

107

106

106

103

102

95

94

9391

86

79

79

7774

73

737271

71

70

70

6968

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issues include the adoption and implementation of modern technologies, as well as streamlining public regulation, re-imbursement, and pricing systems. At the hospital level, there is a lack of information and data. What’s more, Greek hospitals owe pharmaceutical companies an estimated $3.1 billion, carrying the debt on their books for as much as —an unacceptable figure in a modern market.”

Bayer proposes a three-step strategy. First, reducing the fragmentation of power between various ministries and other stakeholders. Second, improving access to in-formation such as hospital expenditures, for which there is still no data on the Greek market. Third, improving computer and IT systems. “For Bayer, change is chance, and having a reliable business environment is the most positive change to contribute to human health in Greece,” Schmidt-Gollas concludes.

Bayer is not alone in adapting to a sometimes challenging environment. As Thalia Koukidou notes, “IMS strategy in Greece has evolved gradually to the current stage because it was necessary to adapt to company profiles in the pharma-ceutical market in Greece, which has often created difficul-ties, especially from the financial point of view. In fact, in a changing environment such as this one in Greece, a consul-tancy firm should always be able to serve the customer needs in the different circumstances in which they are involved. Today, IMS is the best service provider in the Greek phar-maceutical industry.”

Similarly, the most practical way of coping with the market is, according to Neofitos Landis, Country Man-ager of the world-leading CRM and SFE solution provider Cegedim Dendrite, “‘business quality and satisfaction with clients. In fact, the pharmaceutical industry is made up of very demanding clients, and when firms invest in a CRM solution, they want to be able to deploy this so-lution to the maximum and increase the effectiveness of their operations.”

The possibility of making data and IT solutions available directly to the government offers a very pertinent, yet indi-rect, way of addressing streamlining issues. Speaking to the feasibility of such an approach in Greece, Landis remarks, “Cegedim Dendrite already provides integrated solutions to

public authorities in other countries, and it will be easy to adapt these solu-tions to the local market, as we already have the required know-how. How-ever, there presently is no evidence of interest from the local authorities. Nevertheless, the company perceives the business environment could turn more favorable as the public system needs to be restructured and become more efficient.”

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A case study in adaptability and perseverance, the Biospray success story can be traced to current

President Freideriki Zikidi, who took over during a rough patch three decades into the company’s life, in 2002. “Although I had prior business experience outside the specific field of pharmaceuticals, I made a decision to take over the management and go forward.”

Her first step was to invest in Biospray’s profession-als, and in doing so “immediately employed Mr. Bourlis, who since 2002 has been Biospray’s General Manager, and together we form a good team. At the outset, I told him: ‘You go forward and I’ll be behind you.’”

Rounding out this management team was George Florakis as plant manager, and George Kalogeras, who joined the company with over 12 years experience at GSK. With the right people in place, Biospray’s focus has since been on its core export markets of Cyprus and Yemen, with some business in Africa in addition to newer additions in countries like Romania, Bulgaria, Albania, Azerbaijan, Turkey, Malta, and Syria, with a special focus on inhaler products, about which Zikidi

notes “this inhaler product is our flagship and repre-sents a movement from the ranks of a small into a medium-sized company for Biospray.”

With this tightly knit team, Zikidi says “quality is Biospray’s number one job. We make a good product based on specifications in a GMPs environment, but go further to put as much as possible behind our brand,”

with both ISO 9000 and 14001 to back it up.Zikidi concludes: “Biospray has been around for 40

years, and has been a pioneer in the Greek pharmaceu-tical industry. The company believes in investing in new technology, having the right people, and is optimistic that it will achieve its goals – and that any other company will do well to join us in cooperation.”

Biospray, Changing Times, Changing Size

Locals: Reinvesting, re-emerging, and reaping the rewards

Looking at the objective data, it’s little wonder Greece is home to so many successful pharmaceutical companies,

Hara Kousoulakou, Research Officer at the Department of Health Economics of the Foundation for Economic & Indus-trial Research (IOBE), explains that “the industry has high turnover and increasing profitability, and offers a four-fold return on capital compared to other economic sectors.” In ad-dition to the financial attractiveness, Kousoulakou points out

that another strong point of the pharmaceutical industry is “its highly educated personnel, as well as the fact that the industry continuously invests in the training of the employees. Therefore, the Greek pharmaceutical industry has a positive effect on the national economy, as it contributes both to GDP and employment.”

One of the largest contributors to both GDP and employ-ment in the pharmaceutical sector is Pharmathen. The com-pany has seen exponential growth since Vassilios Katsos, President and CEO, took the helm in 1993. And with cur-rent annual revenues of $140 million expected to increase to $233 million by 2010, no end is in sight. “Today Pharma-then has slightly less than 100 people in R&D,” says Katsos. “This probably represents 60 percent of the total amount in the Greek pharmaceutical industry, and [the company] will

Biospray President Freideriki Zikidi


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be looking to add even more in the coming years” to cope with a second facility in the final stages of completion, as well as a third larger project comprising $62.2 million of investments. This latter sum is earmarked for solid dosage facilities, which are currently under construction in northern Greece, and will be fully operational before 2Q 2009.

With such a relatively high share of Greek R&D invest-ment, it’s natural to be skeptical of the company’s ability to meet future human capital demands. Fortunately, Katsos as-

sures that Pharmathen “began the recruit-ment process in 2006, to ensure that new recruits share the com-pany mentality and the work itself.” This will maintain the corpo-rate focus around the company’s three pillars of R&D: backward integration, strategic

selection of products with developmental barriers, and inter-national markets.

Indeed, this last pillar has become a cornerstone of the in-dustry, leading many insiders to characterize Greece’s brand-ed generic output as having European quality at Asian pric-es. Mark Hollandezos elaborates: “Today, Greek industries export in more than 60 countries, at competitive markets as those of other members of EU, the USA and Australia. We develop branded generics products using Greek know-how. We create jobs, we invest in high technology and we carry




Specifar’s production facilities, Athens Hara Kousoulakou, Re-search Officer at the De-partment of Health Eco-

nomics of the Foundation for Economic & Industrial

Reserarch (IOBE)

Evangelos Zekkas, HELP’s Managing Director


out feasible forms of research.”These four pillars play a large role

in the evolution of the Greek phar-maceutical company Specifar. The company’s history stretches back more than 75 years to its origins as a pharmacy in Patras (now a suburb of Athens), but it wasn’t until the third generation of Specifar’s founding fam-ily became involved in the business a decade ago that the company seized a market opportunity to focus on the pharmaceutical sec-tor in earnest. As a relative latecomer to the pharmaceuti-cal industry, Chief Executive Officer and President Titos Vasilopoulos says, “There was a lot of price pressure from the Greek government during the 1980s, which resulted in many Greek companies closing their facilities. At that time [founder] Periklis Vasilopoulos decided to diversify into other healthcare businesses, such as medical devices and buying a private clinic.”

Ironically, the success of these projects and Specifar’s con-sequent large market position dampened the attractiveness of focusing on pharmaceuticals. “As a result, pharmaceuticals played a smaller role in Specifar until the mid to late 1990s, at which time the company recognized the growing importance of generics in Europe. The Greek generics industry was small at the time, but it was a strategic decision to begin building up manufacturing capacity and serving European needs of many companies. Specifar started building its current facilities in 1998 and construction was completed in 2001, after which there was heavy R&D investment to build up development mainly for generic drug licensing to companies across Europe.” As a consequence, Specifar now counts more than 400 market-ing authorizations in all European countries, as well as Canada, South Africa, and Australia.

This rapid growth in less than 10 years is due to heavy investments in manufacturing facilities, funded by the profit-ability of Specifar’s non-pharmaceutical companies. “Speci-

far has changed from being a small, local Greek company to an international presence exporting all over the world,” says Vasilopoulos. But these investments are far from over. “Be-ing so successful in R&D, as well as exports, Specifar chose to build additional facilities to meet present and anticipated demand. This facility will occupy 27,000 square meters, and will begin development in 2008, to be finished by 2010 with the aim of meeting demand with significant capacity for the many contracts and product launches on the horizon for 2011 and 2012.”

Mark Hollandezos echoes this optimism for the industry and the members of PEF. “There is great hope for the future if coordinated action can be implemented. Many leaders of Greek pharmaceutical companies are second-generation own-ers that represent a new breed of people who have been highly educated, have international experience, and are ready to ad-vance.” In addition to this asset, “another advantage is our great scientific base—people who are very well trained abroad as researchers and scientists, and their will is to come back if they can find adequate opportunities.”

One company creating such opportunities is HELP S.A. Evangelos Zekkas, HELP’s Managing Director, stresses that “human resources are one of the most important pillars in HELP’s strategy and represent a very strong focus for the com-pany. HELP counts on a well-integrated network of specialists among the Greek and international scientific community, and


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Alexandros Lamnidis, Executive Director of the

American-Hellenic Chamber of Commerce

Thalia Koukidou, General Manager of IMS Hellas Ltd

Nikolaos Rassias, Rafarm’s Founder, President, and CEO


thanks to its good reputation with-in the pharmaceutical industry and an admirable track record of achievement, the company is able to attract a vast number of experts from the national community and beyond.”

As more and more Greek companies are discovering, with a booming industry at home, top-tier professionals who once would have fed a diaspora to larger markets, are choosing to stay in Greece or return from abroad. “Recent national eco-nomic growth has increased the power of local companies, which permits them to have stronger bargaining power in re-cruitment policies,” says Zekkas. “Currently, Greek firms can offer adequate incentive to the Hellenic expatriate scientist, and compete on the same levels as other pharmaceutical com-panies abroad in the search for talent. This, combined with the desire of Greek emigrants to return to their own nation, has widely benefited national players and, presently, HELP has the possibility to enroll many experienced and well-edu-cated scientists in different research fields.”

Having recently invested $9.3 million to modernize and implement its manufacturing facilities and increase develop-ment capability doesn’t hurt, either. Acccording to Zekkas, “Increasing market share in sophisticated countries, as those in Europe, requires brand recognition and innovative prod-ucts. For these reasons HELP built a pilot plant and labora-tories” that are dedicated to new drug delivery systems devel-opment, with the intent of scaling up pilot plant discoveries. “It is HELP’s intention to enlarge its partner network, both locally and internationally.” If HELP succeeds in this strat-egy, it will join the ranks of other Greek firms like number two–ranked local Elpen, a company whose $155.5 million in turnover is 25 percent composed of contract manufacturing, co-marketing, or license agreements with MNCs.

Entrepreneurial spirit, from sailing to selling

Although many Greek success stories trace their origins to a larger family business, Rafarm’s innovative investments

have been driven since day one by the strength of a singular

entrepreneur, Nikolaos Rassias, the company’s Founder, Pres-ident, and CEO. Commenting on the ideas behind the com-pany’s success, Rassias notes: “My vision was, and still is, to create something good for this sector and for Greece. In going from a single production plant of 13,000 square feet to over 110,000 square feet spread across three plants, this vision is being realized.”

Along the way to realizing this vision, Rassias has been per-sonally acclaimed. Recently, he received a lifetime achievement award from the University of Athens recognizing his lengthy career, including positions as a pharmacist at Evangelismos, Athens’ biggest hospital, and as the proprietor of a Peristeri pharmacy covering one of the country’s biggest territories.

In staying on the cutting edge of automation and technol-ogy, Rafarm has put a BMS (Building Management System) into its newest facilities—the only Greek pharmaceutical fa-cilities so endowed. Rassias explains that “every single room of the building is equipped with sensors linked to a CPU, from which it is possible to monitor and modify temperature, humidity, air flow, and pressure.” Additionally, the company has made a $6.2 million investment dedicated to quintupling the company’s sterile area to 9,142 square feet.

This commitment to state-of-the-art excellence has been re-flected in attracting international partners. Exports made up 10 percent of Rafarm’s business in 2007, and that figure pales in comparison with even the figures anticipated the coming years. “In 2008 and mainly in 2009, this balance will move toward 25–30 percent, based on a conservative estimate from more than 35 contracts already signed in the last years. Since 2004, Rafarm has doubled sales, and in the last 10 years Rafarm has tripled sales, and exports will play an important role in keeping up this momentum,” Rassias notes.

Rafarm is not a one-man show, however, with Rassias having enlisted the help of his two daughters and son-in-law Aris Mitsopoulos to guide the company into the future: “The new generation is working very well and plays a big role in the company’s success, in concert with excellent pro-duction, registration, and regulatory managers, in addition to all-around excellent human resources. Rafarm has already reached 180 employees, and is still growing.”

Although not an entrepreneur like Rassias, Thalia Kouki-dou, General Manager of IMS Hellas Ltd., is in a good posi-tion to comment on Greek entrepreneurial spirit. Being ed-ucated abroad, and serving professionally through stints at Novexal and Boehringer Ingelheim, her knowledge is supple-mented by her day-to-day interactions as a leader in provid-ing data and consulting services to the top companies in the Greek market. “Greeks are very entrepreneurial; they don’t see obstacles. First they have a desire and express: ‘I will do it’—and then, as a second step, one way or another, they find a way to accomplish their dreams. This of course results in Greeks having difficulties following and working with rules.

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Pharmathen’s plant Kostas Pachis, President and CEO of Farmanic-

Chemipharma S.A.



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Because of this independence, people in Greece make their means fit their desires, rather than the other way around.”

Alexandros Lamnidis, Executive Director of the Ameri-can-Hellenic Chamber of Commerce offers some impressive statistics to back up the more qualitative claims to Greek en-trepreneurial proficiency. “1.1 million Greeks, or 16 percent of the total population, are directly linked to some form of entrepreneurial activity. Of these, 600,000 are established entrepreneurs, and 540,000 are at an initial stage.” This is in addition to the 965,000 people who plan to start an entre-preneurial activity in the next three years.

For a example of this attitude in action, look no further than the President and CEO of Farmanic-Chemipharma S.A., Kostas Pachis. While it’s not uncommon for older, more established companies to acquire nimble start-ups, Farmanic-Chemipharma’s proceeded the other way around. Pachis explains the situation: “Farmanic was founded in the early 1960’s with the intention to operate in the tradi-tional side of the pharmaceutical industry, manufacturing its own products, importing others, and having a tradition-al approach to the company business units, such as sales marketing and R&D. In 2004, the company was positioned

as a mid-size company operating basically in the generics market, with a good reputation among the Greek scientific associations and the medical community.”

Explaining the origins of the merger’s other half, Pachis continues, “On the other hand, Chemipharma started in 1998, and the company had an impressive track record of achievement during its brief history. Thus, in 2004 the com-pany was able to acquire and merge with Farmanic. With top management perceiving the importance of the complemen-tary assets put in place, and the good reputation acquired over four decades by Farmanic, the firm decided to maintain both names for the new company.

“Chemipharma had from the beginning a very traditional approach to sales and marketing,” Pachis remarks “As the for-mer CEO of the company, I was personally responsible for the sales force,” as well as finding a “middle ground” philosophy between originals and generics, drawing inspiration from Aris-totle in defining the key to success.

In four years, this traditional sales approach translated into great growth. For example, the drug Allopurinol went from 100,000 to 700,000 units annually. Pachis’ hands-on philosophy seems to be working, with the sales force still di-


rectly reporting to the founder. Despite this constant close contact, Pachis is clear on where he places his trust. His peo-ple “represent one of the main assets and success factors for the company. Therefore, Farmanic-Chemipharma is keen to attract a very skilled work force and provide them the nec-essary training they need to operate successfully and effec-tively.” The company employs nearly 150 employees, a figure growing at annual rates of 30–35 percent, with 30 days of mandatory training per year.

Multinationals capitalizing on the Greek mentality

Despite their home turf advantage, local companies have no monopoly on Greece’s entrepreneurial mindset. Says

Philippe Meyer, President of AstraZeneca S.A., “AstraZeneca builds strong leaders who know where they want to go in the business.” As a French expatriate with previous experiences in Southeast Asia, Meyer affirms that “AstraZeneca believes difference is an asset and employs people with different back-grounds able to successfully operate in formal and informal

settings and manage activities in an effective, yet friendly, manner. In ad-dition, AstraZeneca works via cross-functional projects with a strong brand orientation, rather than with departmental labor division, which works particularly well in Greece, as people have a very strong entrepre-neurial mentality.”

Since arriving at the company, Meyer has been tasked with or-ganizing the Greek corporate structure. “When I joined the Greek subsidiary there were three business units, and the first challenge was to align these very clearly. More recently, the com-pany has introduced R&D and a strong medical department to ensure innovation, help the mar-keting department increase med-ication quality, and strengthen


Greece Report

Philippe Meyer, President of AstraZeneca S.A.

Pascal Apostolides, Manag-ing Director of Abbott



brand awareness.” Among these brands are AstraZeneca’s flag-ships, Symbicort in asthma and Crestor in lipid management. Meyer describes these brands as “unique products which rep-resent first-in-class interventions capable of delivering unique val-ue to end users and significantly improving their well-being.”

Pascal Apostolides, Manag-ing Director of Abbott, has established a corporate structure so inclined toward development that, much like the Greek myth of Icarus, it’s a victim of its own success, with employ-ees developing so well that they pursue opportunities else-where—a fact that Apostolides does not necessarily mind.

“Abbott’s strong focus on teamwork and empowering peo-

ple ensures the company always tries to fulfill the potentialities of its professionals, and design a career path adequate to their skills and personal qualities,” says Apostolides. “Not everyone can become a GM within the company, but the training and the managerial skills you can learn working in the company are unique assets on the market, and presently—besides our top ex-ecutive—many of the previous collaborators cover managerial positions in other pharmaceutical or diagnostic firms.”

Although these rising stars may contribute to some churn, turnover is exceptionally low: a mere 1.9 percent, compared to an industry standard of 12-15 percent. This figure is mirrored in the company’s upper echelons, where during the past 60 years, Abbott has counted only six Managing Directors. “This also reflects company policy to cultivate talent internally, and as a consequence we have a stable and efficient managerial style which strongly contributed to the company’s success.” This commitment is reflected in the company’s desire to bring clini-


“Diabetes is one of the major health challenges in the western world. Nevertheless, it is generally

overlooked by policy makers and authorities and many citizens, because, being a silent killer, diabetes reveals its consequences at a relatively slow pace.” Olympios Papadimitriou, Country Manager Novo Nordisk Hellas Ltd., sends a strong message regarding the niche focus of Denmark’s leading pharmaceutical company, present almost 30 years in Greece.

Greece is an attractive market for a niche focus on diabetes, a disease exacerbated by the population’s fre-quent hesitation to reduce risk factors, most significantly in diet and exercise, and implement positive preventive behaviours, which remain important even after patients have been diagnosed. Papadimitriou notes, “what is im-portant for the people who already have diabetes is to raise awareness about the meaning of good glycemic control, which can lead to prevention of additional and irreversible complications leading to serious conditions,

including death.” With the disease afflicting nearly 200 million world-wide, a figure the WHO expects to double by 2030. With a full range of fully-reimbursed products, Novo Nordisk is the only company on the market in Greece—and glob-ally—that offers an entire range of modern preparations.

“Currently, as diabetes rates are constantly increasing, gov-ernment, pharmaceutical com-panies, and society as a whole should be well aware of the problem, and promote treatments and ways to prevent this disease, as the impact on the societies is substan-tial, both in terms of financial costs and social burden.” says Papadimitriou, and refers to Novo Nordisk’s directly applicable global campaign named Changing Diabetes, presently ongoing in Greece.

Novo Nordisk’s sweet (but not too sweet) success

Olympios Papadimitriou, Country Manager, Novo

Nordisk Hellas, Ltd.

George Laitmer, General Manager, Astellas


Greece Report


cal trials to Greece, in coordination with EOF’s Kontozamanis, who remarks that, in addition to reducing procedural delays in clinical execution, “Greece has an excellent research center and private companies renowned worldwide for their ability to deliver complex and sophisticated outcomes.” Abbott, Apos-tolides says, is “truly committed to increasing the level of in-vestments in clinical trials, not only in Phase IV but chiefly in Phase II and Phase III. In this regard, Abbott recently obtained the authorization to run two chemical trials in oncology, which together with immunology and vitamins represent the largest part of Abbott’s activities in the local market.”

Astellas Pharmaceuticals S.A., the $22 billion company formed by the merger of Fujisawa and Yamanouchi in 2004, has been guided since its inception by General Manager George Laitmer, who was recruited from a more than decade-long career in start-up positions in Russia. Despite his world-ly past, Laitmer demurs on the importance of international experience per se, noting, “In my personal opinion I do not think that a country, geography-wise, can deeply influence managerial style, because after achieving a certain position within the company, managers are forced to be related to the international market, and to consider all the potential oppor-tunities and threats that might arise overseas.”

In implementing Astellas’ Vision 2015, there is room for Laitmer to leave his mark. This blueprint outlines the com-pany’s three key phrases: to become a leader in its chosen categories, create a value innovation cycle, and maximize value-added for people seeking health.

“What really defines a managerial style is the experience and phases gone through; for instance, I do not think a CEO can properly handle the different phases of a company with-out facing and surviving crises,” says Laitmer. And crises were certainly more prevalent during Laitmer’s tenure in post-Communist Russia than in present-day Greece.

“In my personal life I have been working in every depart-ment across many countries, occupying different roles and acquiring the necessary skills to properly manage a business unit,” he points out. Although this business unit comprises a diversified portfolio, Laitmer says “the aim is to focus on niche areas with a small prescriber base, and the ongoing project pipeline already shaping the business.”

Carve out a niche, focus, and prosper

Astellas is hardly the only company in Greece targeting a niche. Dimitris Demos, General Manager of DEMO S.A.,

speaks about niche markets from a place of authority, as head of one of the largest Greek companies, specializing in hospital injectables. “In fact, the local pharmaceutical firms are deeply specialized in niche products or market segments, which in turn

facilitates cooperation and partnership among the different com-panies,” which has allowed them to “internalize the managerial best practices and acquire the necessary know-how to compete on a global scale with the most advanced companies in the in-dustry,” says Demos

“In the past 20 years most Greek companies were small and unspecialized, producing several drugs in small quanti-ties, from tablets and capsules to gels and injectables, but the relative knowledge and the level of expertise were low. At an early stage, DEMO realized that because of its small size it could never be a quality player without specialization.”

And specialize it did, assessing the market opportunity that resulted in the current production of hundreds of mil-lions of ampoules for the hospital injectables market per year, in “a segment with high product development barriers where the company had a breakthrough technology which allowed it to have a competitive advantage.”

DEMO and Novo Nordisk are not alone in their niche fo-cus. This trend is most notable in local companies, and is even more striking in companies like Pharmathen, Gerolymatos (the health, beauty, and care company), and Adelco Pharmaceutical and Cosmetics S.A., which are all vehemently vertically integrat-ed. Evangelos Colocotronis, president of Adelco, says, “Adelco generally controls the entire value chain and all the phases are developed in-house in order to have a better control over the information flow and keep the quality standard required. On the other side, although in-house products register better perfor-mance on the market, they require a higher level of investment, the risk is higher, and it takes longer to penetrate the market and reach and adequate level of consumption.”

Despite the higher risk and longer lead times, “Adelco is the Greek leader in the cure of otitis and is the producer of the unique composition of Paroticin,” says Colocotronis.

When you’re a stand-alone leader, it’s not long before the in-ternational community catches wind. Colocotronis notes, “For Adelco, the internationalization process went through different stages. Adelco has been both an importer, and an exporter, selling its Greek-developed product abroad. It has become an R&D part-ner—as a taker from multinationals to support their first stages of international expansion, and as a giver when relating to less- developed countries.”

Greek biotechnology, from olives to oncology

At a basic level, it is simple to find facts supporting biotech-nology research in Greece—with over 5,000 species of flora

and fauna, the country’s biodiversity makes it a natural choice from which to specialize. Philippe Meyer, President of Astra-Zeneca, describes the role biotechnology plays in the global gi-ant. “Aging populations, biological expansion, and early patent



expirations force pharmaceutical firms to focus on new target clusters, increase investment in R&D, and launch new products on the market. Most MNCs are facing these problems, and to overcome them AstraZeneca took the strategic decision to in-vest in biotechnology by enlarging its proprietary pipeline and through external acquisition, for instance with the recent buyout of MedImmune.” That acquisition pushed AstraZeneca into the top 10 biotechnology companies worldwide, with 25 percent of the company’s current product portfolio dedicated to the sector.

MNCs could benefit by bringing R&D to Greece, he continues, but MNCs generally set up operational facilities where the realized comparative advantage maximizes invest-ment payoffs.

Genesis Pharma is one such company that has sprung up to fill the MNC void. Founded merely 15 years ago but with rev-enues already exceeding $31 million, the company specializes primarily in importing products from MNCs. Created by for-mer executives from MNCs, it represents a seemingly obvious yet shrewd market maneuver, and is the largest of few biotech-focused Greek local companies. Otherwise, it is up to MNCs like Merck-Serono to provide examples of other specialized biotech-focused companies in the Hellenic market.

Yiannis Vlontzos, President and Managing Director of Merck A.E. Hellas, summarizes the difficulties of the field: “Biotechnology in Greece is not only represented by the pharmaceutical industry; other sectors like agriculture and energy are proactive in this field. The country has one of the world’s leading levels of expertise among researchers and academics, although the scientific community has not yet received the recognition it deserves from the international business world. This lack of recognition leads to deficiencies in funding, and direct investments in research and innova-tion that in turn make it difficult to increase the country’s visibility in the international arena.”

However, he is not one to sit back without recognizing the efforts made to address this deficit. “The government under-took several initiatives, such as the foundation of a biotech cluster in Thessaloniki and the intention to increase R&D in-

vestments to 1.5 percent of GDP. Private companies appreciate such efforts, even though higher international participation and public involvement is still need-ed,” says Vlontzos

One of the most important initiatives is the Foundation for Research and Technology, Hellas (FORTH), founded in 1983, which has grown to one of the largest research centers in Greece. Functioning under the supervision of the GSRT and the Hellenic Ministry of De-velopment, FORTH consists of seven Research Institutes located throughout Greece, with head-quarters in Heraklion, Crete. One core activity area lies in the Institute of Molecular Biol-ogy and Biotechnology (IMBB), headed by Harvard graduate and Research Professor George

Thireos, leading research into diseases like malaria.“FORTH has a very well established cooperation with hos-

pitals and private clinics, and is very active in malaria research,” Thireos says. “The company has two ongoing malaria projects belonging to the European community scientific network co-ordinated by the WHO. These projects are mainly focused on preventing disease transmission through mosquitoes and plas-modium, and represent pioneering initiatives not only in Greece but also among the international research community, as there is still much to be done to defeat this terrible illness.”

Continuing Thireos’ explanation of the organization’s com-mitment to biotechnology, Alkiviades Payatakes, Director of Administration and Chairman BD, notes “FORTH’s mission in healthcare is to contribute with research to improving liv-


Costas Evripides, CEO of Genesis Pharma

Alkiviades Payatakes, Director Administration and

Chairman BD of FORTH


Greece Report

ing conditions, foremost of which include developing tools for clinical genomics interface, and a new centralized bio-bank in Athens that will represent a leading institute in the field.”

Payatakes echoes Vlontzos’ appeal to the government in encouraging innovation through Public-Private Partnerships (PPPs): “The government set some incentives to promote cross-sector cooperation and more and more initiatives will be imple-mented in upcoming years. FORTH is leading efforts to promote cooperation and networking through many initiatives such as PRAXI—a technology transfer network voted the best network in Europe 2002 by the company’s international partners—and the new biomedical research institute in Ioannina, which will soon be completed, as well as the idea of a new bio-cluster which has been accepted and is now in the design phase.”

Although Greece lacks a strong PPP tradition, some suc-cess in spin-offs, most notably with the technology company FORTHnet, suggest that persistence pays off. Payatakes also considers the “new generation” of Greek executives, with great-er international experience, less reluctant to extend cooperation with public authorities, research centers, and academic insti-tutes. Payatakes says, “In fact, although PPPs in Greece are not easy and require a mutual understanding among those involved, the local scientific community is highly qualified and private

companies should be aware of the joint venture opportunities and the business potentialities behind them.”

With such potential in bio-technology, and indeed with potential across many possible areas, is it time for Greece to choose a focus? Although bio-technology, fueled by the suc-cessful realization of PPPs, is an

uncertain bet to lead the charge, there are many paths to fol-low. Companies like Pharmathen, investing heavily in branded generics production and development, seem to be the dominant model, but specialized niche players from DEMO to Novo Nor-disk are thriving as well. Perhaps, as long as the Greek entrepre-neurial spirit remains throughout the pharmaceutical industry, it matters little where its sails may guide. Does Greece have what it takes to succeed? “I personally believe the country has the possibility to do so,” concludes Payatakes. In the July’s Spain Report, the name of CRM and database so-lutions provider Cegedim Dendrite was misspelled on several occasions. We apologize for the error.

FORTH’s headquarters in Iraklion, Crete

email: [email protected]

Pharmaceuticals Greece report 2008

Documents

Transcript of Pharmaceuticals Greece report 2008