Swiss company Ferring is an interesting test case in the pharma sector. In just a few decades, with one family's private investment, a company that was almost negligible in the international arena has become a company with annual revenue of $2 billion. For the sake of comparison, young Israeli medical companies are usually preoccupied with achieving revenue in the tens of millions of dollars, at which point they level off (or are acquired). Planning for the longer term is a distant dream for them. If one or two companies succeeds in positioning itself where Ferring is now, however, it could affect the entire industry.
Somewhat unusually, Ferring's big breakthrough was not achieved through a gamble on one bestselling drug, but by improving the user experience for older products - something that is definitely within reach even for Israeli companies. "Globes" reported the story of Bio-Technology General (BTG), the Israeli biotechnology pioneer acquired by Ferring ("Biotechnology can provide an entire industry, but we're alone here"), and is now presenting the other side of this story.
"When I joined Ferring, it was a company with $300 million in revenue," says Michel Pettigrew, who recently resigned as company president and now chairs Ferring's US division. He was the one who led Ferring's growth from a young drug company into an international corporation. Pettigrew, a Canadian by birth, began his career at Procter and Gamble's non-prescription drug division, and then worked at BMS for 23 years. During that time, he worked at various positions and lived in Indonesia, Japan, Malaysia, Denmark, Paris, and Brussels, and as president of Ferring, in Switzerland. "I'm probably the oldest person at Ferring, which itself is just 69 years old," he laughs.
"Globes": When you began working at Ferring 18 years ago, did you already know that the aim was to make it a $2 billion company, or did you think mainly about the next step and survival in this tough market?
Pettigrew: "When I came, I wanted to make Ferring a $10 billion company, but the tools at my disposal were limited. The company had very few products in its pipeline. We knew that we'd have to grow and invest in our future at the same time. My decision was to upgrade the existing products - give them new features and convert them for new markets. Our bestselling products today are the oldest ones, some of them 25-30 years old. Most companies stop maintaining such products, because they want to invest in products with a patent and larger profits. But our products, which had no patents, brought us to where we are now. We became experts in managing the product's life cycle."
"We have to emphasize the patient's experience"
One of the examples is Pentasa for treatment of colitis. "When I joined Ferring, the company sold 500-milligram capsules, and patients had to swallow 8-10 capsules a day for their entire lives, and those weren't small capsules, either. The patients hated it," Pettigrew says. "After several tests, we realized that instead of capsules, the ingredient could be sold in something like a small bag that could be consumed twice a day with food, because it contained twice as much of the ingredient. We then reformulated the ingredient and made it possible to add active ingredient in each gram, until we reached a situation in which it could be taken once a day.
"Other companies may say, 'That's nice, but in the end, it's not that important if the drug is taken once, twice, or eight times a day; the main thing is that the product works.' Once a day has a critical advantage, however - compliance with the prescribed treatment. The prices of products may have fallen, but users take them for years or their whole lives, and we're retaining our market share."
Pentasa does not market in the US now. "At the time, we were too poor to carry out clinical trials by ourselves for the new versions of the product, and our partners in the US chose not to do it. I think they missed an opportunity, but it's their decision."
Another example is Menopur, a product for fertility treatments that has become easier to inject and prepare at home. "When we think about products that will be sold for many years, we have to emphasize the patient's experience. If the patients are satisfied, they will return to you," Pettigrew says. At the same time, the company takes care to show results. "We took a chance and did a marketing clinical trial that compared Menopur with its leading competitor, Gonal-F, which is sold at a high price. The results were very good for Menopur, and the doctors' attitude changed," he says.
"The name BTG was significant"
In 2005, Ferring acquired BTG, which was a production site for growth hormone and other products. "Savient Pharmaceuticals, BTG's parent company, made an offer to sell us the company," Pettigrew remembers. "At the time, we were their marketing company in Europe and Asia. When they asked us the first time, I wasn't enthusiastic about the idea, but after a while, I became convinced. There were three main reasons for this acquisition. With respect to the product, which we were already marketing, full integration seemed to me to be the right thing to do. The second reason was our desire to develop in biotechnology - to create drugs within living cells - a manufacturing method that has become a common approach in the development of new drugs, in contrast to chemical synthesis. BTG had complete capabilities in this area. The third reason was that the company had a product that had already been approved in the US, but hadn't yet been launched - hyaluronic acid, which to this day is an important product for us."
BTG was sold for $80 million plus additional amounts for milestones and royalties. "Before making the acquisition, it was important for us to make sure that the company's leadership could take it forward and was compatible with our leadership," Pettigrew explains. "It was important for me to leave BTG a degree of independence. We chose to keep its name, because it had a reputation in the Israeli market."
Israel is not a big market for these products
"The products were marketed under the Ferring brand, and for me, BTG is now in integral part of Ferring, but for existing and potential employees, the BTG name had meaning. Keeping the name signaled our intention to preserve BTG's culture, and that's what we did. We also increased the work force. We made a big acquisition in Scotland in recent years, and we took the same approach there."
BTG currently has 300 employees. $15 million was recently invested in expanding the company as part of Ferring's decision to manufacture biotechnology products exclusively in Israel. Dov Kanner, an Israeli, is responsible for relations with startups in the early stages. "He is based in Israel, and employs a group of scouters who search for technologies, both in Israel and elsewhere. It isn't easy to choose the one product that will succeed out of a hundred or more, but fortunately, Dov has a very good understanding of this in both his assessment of what will succeed and his understanding of what suits us."
Focus on microbiome
Ferring currently focuses on fertility, urology, and gastroenterology. The company recently made its first acquisition in microbiome (intestinal bacterial composition) - Rebiotix. The company was founded following the success of fecal transplants designed to replace the bacterial composition of the intestine, which managed to cure clostridioides difficile infection (CDI or C-diff), a severe infectious disease. Rebiotix developed a cleaner off-the-shelf version for fecal transplants with live bacteria. The product is already in Phase III clinical trials. In Israel, Ferring invested in MyBiotics, which makes "good" bacteria in the intestine more resistant.
"We believe that microbiome products will affect many other diseases," Pettigrew says. "There is evidence that the intestine is really responsible for our gut feelings - that the intestine and the brain are connected through the nervous system, and that intestinal bacteria can also indirectly affect diseases identified with the nervous system. Time will show how practical this approach really is."
Pettigrew says that he is not concerned about also entering the intensely competitive cancer field. "We come to this sector with a profound understanding of the urological market, so expanding into the urological-oncological area isn't such a big leap for us," he says.
The company's product in this area, which is in Phase III clinical trials, competes with products currently in the pipeline of Israeli company Urogen Pharma (Nasdaq: URGN), whose chairperson is Prof. Arie Belldegrun. "Our product is genetic therapy, and Urogen's is improved chemotherapy. There will nonetheless be competition, but the market is huge. We believe that our product is the best. Time will show who will reach the market and who will triumph in it," Pettigrew declares.
These products are very innovative in comparison with the improvement of existing products - the approach that spearheaded your growth.
"There's a limit to how much you can improve something that already exists. Today, we have more money to invest in truly innovative products. Back then, we didn't have a choice. But we won't neglect the emphasis on the patients' user experience."
What is your vision for what lies ahead?
"I believe that you have to reinforce strengths, not just improve your weaknesses, so I hope the main growth in the future will still come from fertility, urology, and gastroenterology. In the US fertility field, less than 10% of the women in need of treatment receive adequate treatment. It is a question of access to treatment, and also the quality of the treatment. Both of them have to be improved, as well as the convenience."
If we are talking about access, do you agree that drug prices are excessively high?
"The cost of drug development is still the leading reason for the price of drugs. It can't be changed right now, but that's not the whole story. Criticism is mainly of drug prices in the US. The US bears the cost of drug prices, and essentially subsidizes other countries. Prices of drugs in Europe and Asia will have to rise in order for prices in the US to fall, and it's justified. It's a process that can't be avoided. At the same time, in the US also, the insurance companies are the ones who collecting the payments. The list price isn't really the price that they pay, because they get various reimbursements from the drug companies. The consumers get back very little of this amount, so that some of the complaints should be directed to the insurance companies.
"Ferring being a private family company gives us an advantage. This approach affects our desire to operate in many countries, including those that don't produce an immediate profit. I feel that this approach also trickles down to employees in the company. We treat them as human beings. If someone isn't suitable for one job, maybe we can switch him or her to another job."
Will the big data revolution that will make it possible to collect information about from the real world about drug activity help reduce development costs?
"The databases being assembled disturb some of the large drug companies, because they are likely to make it possible to detect which drugs have the most effect in the long term. We may discover that the old drugs on which the patents have expired are the best."
Published by Globes, Israel business news - en.globes.co.il - on March 5, 2019
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