Nycomed's New Horizons

2009 sees Håkan Björklund enter his eleventh year as CEO of Nycomed. When he came on board in 1999, the company was a small, primarily Scandinavian operation. With the acquisition of Altana in 2006, it was propelled into the major league, becoming one of the world’s 25 biggest pharma companies. Now headquartered on the outskirts of Zurich, Switzerland, the company employs over 12000 people worldwide and in 2007 boasted a net turnover of E3.5 billion.

But after a decade of this remarkable growth and buoyant ambition, is it now time-as it clearly is for many industries-for Nycomed to endure a downhill slope? Certainly, the economic crisis has made the company, which is privately owned by a consortium including Nordic Capital and Credit Suisse DLJMB, think twice about its tentative plans to go public. Björklund isn’t unduly worried about the credit crisis, however: “Over the 23 years I’ve been in the industry, I’ve never really seen pharma sales being affected by an economic downturn in the western world,” he says. “We’re probably one of the industries that will be affected the last and the least.” But he does concede that this downturn is unprecedented and “you cannot go public in a situation where the stock market is down 10 percent one day and up 8 percent the other. The current volatility of the market makes it very difficult and very unattractive.”

His bigger concern is the imminent patent expiry, in the US and Europe, of Nycomed’s best-selling product, the gastroenterological treatment pantoprazole. By 2007, pantoprazole (Protonix in the US), a product inherited from the Altana acquisition, was the leader in 22 proton pump inhibitor (PPI) markets, bringing in sales of E1.7 billion. But at the end of that year, Teva and Sun Pharmaceuticals muscled in with a generic version, dealing a blow to Nycomed’s US sales. Nycomed sued-the US patent on Protonix isn’t due to expire until 2010-but the episode served as a stark indication of what lies ahead for the drug.

In the major European markets, pantoprazole’s patent expires later this year and Björklund admits that “this will certainly have a bigger impact on our sales than the credit crisis.” Nycomed and its partner Wyeth have now initiated its own generic version in the US, and, for the moment, continues to see better-than-expected sales in other territories. Also, Björklund reminds us, “a large part of pantoprazole’s sales-over 40 percent-is in markets where the patent has already expired or where there never was a meaningful patent.” But it is clearly time to look towards new products and new models to secure Nycomed’s future fortunes.

One of the most promising products in the company’s pipeline is Daxas (roflumilast), a chronic pulmonary obstructive disease (COPD) treatment that showed very positive results in Phase III trials last year. Björklund explains: “We’re all very excited about Daxas because it is the first oral anti inflammatory treatment for COPD; it’s one of first new drugs developed for the disease in many, many years.” If it lives up to expectations, Daxas could indeed be huge-COPD is the fifth biggest killer disease in the world. Nycomed is planning to submit Daxas to the US and European regulatory authorities by the middle of 2009. “It’s not going to be as big as pantoprazole, but it will be a very big drug for us,” Björklund says.

Big Issues
Nycomed’s ambitions are no longer focused on growing significantly larger. Indeed, in the present end-of-the-blockbuster climate, it looks like the smaller (and specialist) companies are better placed for survival. Björklund says that while the Altana acquisition gave Nycomed access to new territories and to a much larger R&D portfolio, he is well aware that “it’s actually an advantage not to be too big.”

All the same, the company is now four times as big as it was four years ago, and, as CEO, he must have felt the challenges of that expansion as keenly as he saw the opportunities. “It has of course changed things,” he says. “The sheer size of it is different and the number of subsidiaries we have today is much larger, which of course means that my travelling has increased significantly.” He also realised that moving from managing 3000 to 12000 people in one leap involves putting a lot more faith in delegation. “It’s important to give managers the freedom to run the business. You could say that, inevitably, you have to be a little bit less involved in the details.”

Björklund has always taken pride, however, in allowing Nycomed employees to take as much responsibility as they can. “I strongly believe that part of our success has been our culture of giving people the freedom to do what they’re supposed to do, the responsibility to take their own decisions, wherever they are in the organisation,” he says. “And if you can motivate people this way, they become more enthusiastic, more efficient. If we have 12000 people in the company and we get them so motivated that they are 10 percent more efficient-and that doesn’t mean they spend 10 percent more time at work-then we have effectively added 1200 people to the company at no extra cost. And they will be happy people!”

After ten years at the helm of one company-a pretty good innings in anyone’s book, whatever the industry-there is also the question of how Björklund keeps himself motivated. “What really excites me is getting new products on to the market,” he says. “I have a great interest in both the R&D and the sales side. I also find the emerging markets very exciting.” Indeed, in 2007, the company saw its strongest sales growth (20.9 percent) in Russia and the Commonwealth of Independent States (CIS), with good progress also made in Latin America, Canada and Australia, (territories whose doors were opened by the Altana acquisition). Expansion in Asia is now on the cards, too.

But it seems to be as much the looming uncertainty of pharma’s (and the global economy’s) future as the day-to-day challenges of drug development and marketing that continues to fuel Björklund’s passion for his work.“We’re living in interesting times, and even before all this, it was clear that the pharma market was changing,” he says. “It’s pretty exciting to be a part of that.”

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