Solvay Steps Up

Surrounded by Georgia pines, Solvay's facilities on the outskirts of Marietta are a long way from the industry's hub in New Jersey. The stately campus is tucked away in a quiet world of its own, much as the company used to be.

But with four recent product launches and a new CEO at the helm, Solvay's pharmaceutical division is quickly coming into its own as an industry player.

In June, Harold Shlevin stepped up from his position as senior vice-president of business development and scientific affairs to lead the company after David Dodd's departure. Although the transition has been smooth, some say the two men are at opposite ends of the spectrum in both personality and leadership styles.

Shlevin is a fast-talking bundle of energy who has come to the interview well prepared and eager to discuss Solvay's progress. Building on an impressive career as a scientist and business professional for Searle, Ciba Geigy, Bausch & Lomb, and Ciba Vision Ophthalmics, Shlevin is new to the role of president and CEO. But with an insider's knowledge of the company, a passion for the industry, and an active appreciation for the people who make it happen, he seems to be a natural for the job.

When the company first approached him in early 1998 for a VP position, it actually had two openings: one for head of R&D and one for head of business development. "I had both backgrounds," Shlevin says. "They didn't know quite what to do; I was a bit of a quandary to Solvay." Eventually they asked him to take both jobs and he did. Shlevin says, "I think there's a logical synergy in combining R&D with business development because you have to source products no matter where they come from."

In the Works

During the interview process, Solvay sent Shlevin to its headquarters in Brussels, as well as to sites in Germany and Holland, to get a feel for the company. He was attracted to its "very mature, very classic European values, which are directed toward respect for the individual and valuing the individual's opinion."

"I hate to use the word paternalistic because Americans tend to believe it has a negative connotation," he says, "but they go out of their way to help their employees and their employees' family situations. There's a lot of loyalty in this company-it's a two-way street here."

By "they," he means Solvay SA, the Belgian parent company with divisions in chemicals, plastics, and processing and nearly eight billion euro in revenue last year. Founded in 1863 by Ernest Solvay, the old-world business still has board members who carry the family name and manufactures products that are used in everything from Jeep Cherokee bumpers to intravenous hospital bags.

The pharmaceuticals sector, once the smallest unit, has been the darling of the business, generating 25 percent of Solvay SA's earnings before interest and taxes (EBIT) and leading the other divisions with a 16 percent growth rate. In fact, the parent company's number-one priority is to step up pharmaceutical development and expand its pharma market share in the United States to one percent. Solvay SA has been willing to make a substantial investment in licensing compounds for the pharma division in a long-term effort to mitigate the cyclical nature of its chemicals business.

But rather than feeling the pressure, Shlevin is excited by the focus on his division. "I'm a big believer in setting your objectives right and holding people accountable for them, and I plan to build an organization that does that," Shlevin says. "Setting your objectives right means having people participate in the objective setting, so when it all comes together, they are an integral part of that process. And that's easy to do with a small to mid-sized company."

Solvay's product sales are evenly distributed among its therapeutic franchises-except for cardiology, which is a recent addition.

New Culture

When asked about his biggest challenge so far, Shlevin says without hesitation, "I'm a different kind of person than the previous CEO, a more down-to-earth kind of person. I'd love for our culture to reflect more of the values needed to build a successful business long term-which means a degree of accommodation between the needs of the individual and those of the business. If we can find an acceptable balance between those two, then overall our organization is going to be more successful."

Shlevin speaks passionately about the tight labor market and the need to create a working environment that will allow Solvay to recruit and retain the very best people. "I'm not happy about retention," he says. "It costs a fortune to hire and train new people, and what we never count is the value lost. It doesn't matter whether it's a trade or a commercial person or an R&D person. When an employee walks out of the organization, we lose more than just that person. We lose the relationships that person had both internally and externally that allowed them to function effectively."

As a first step toward creating an improved company culture, Shlevin sends a welcome letter to every new employee. Even in print, his excitement comes through with exclamation points and boldface and underlined statements such as "You Can Make a Difference Every Day." In 20-point type, the letter lists the company's core values: leadership, integrity, teamwork, initiative, courage, individual dignity, resourcefulness, enthusiasm, openness, and accountability.

"For employees to have ownership," Shlevin emphasizes, "whether in SOPs or review processes, and to know that they are truly in charge and that the company stands behind them-that's a big thing in my mind."

New Launches

It's no wonder he's worried about retention. In late 1999, to jumpstart a fledgling franchise, Solvay launched two cardiovascular products and added 600 primary care sales reps to its force.

Aceon (perindopril erbumine), an angiotensin converting enzyme (ACE) inhibitor, hit the market in October. At the same time, the company's wholly owned, but independent, subsidiary, Unimed-acquired in 1999-launched Teveten (eprosartan). Licensed from SmithKline Beecham for a global market, Teveten is an angiotensin-II receptor antagonist, a new class of hypertensives.

Shlevin describes the difference: "They're an interesting class because they are extremely safe. They work by a different mechanism than ACE inhibitors do. They work at the actual organ receptor site on the blood vessels and tissues, and as a result you get a differentiation."

Solvay's US pharmaceutical sales are rapidly catching up to its European presence.

In describing the relationship between Solvay and Unimed, Shlevin says. "While operating as separate entities, the companies have begun to use their combined commercial organizations through an internal copromotion. Both salesforces will carry Teveten and Aceon, making us much more competitive in terms of the mass out there."

The Male Market

Before the sales reps had time to catch their breath, Unimed launched a second major product in June 2000. AndroGel (testosterone) is a topical gel used to treat conditions associated with low testosterone levels in men.

Male hormone replacement therapy (HRT) is a relatively unstudied therapeutic market, but Shlevin believes that will change: "In time, we will see further data generated that will basically show that the replacement hormones in men-much like in women-affect other diseases. For example, estrogens today are used by women to reduce the propensity for osteoporosis and increase bone density. There's no reason why male sex hormones won't do the same thing. There is data that suggests they do, and we will see the issue of male osteoporosis grow with time."

With $25 million in sales in the first six months, AndroGel's success has surprised even Shlevin. "In considering that we have so few sales reps devoted to it," he remarks, "I think it was a phenomenal accomplishment." He believes the product benefits from a US environment that is ripe for quality of life drugs and is dissatisfied with existing testosterone therapies, which are predominantly patches or injectibles.

Shlevin is quick to dispel any comparison to Viagra (sildenafil): "AndroGel is not an instant gratification product. With Viagra, you get a physical response very quickly. Testosterone replacement therapy is a long-term thing. We have seen a lot of renewal prescriptions; and if the American population were as biased toward instant gratification as everyone has been led to believe by the responses to Viagra, you wouldn't expect to see that."

He also believes the male HRT market will expand with time: "It will require educating both physicians and patient communities about what constitutes low testosterone levels, which is very well described for women, but a lot less well described in males."

Beginning late next year, Unimed plans to participate in partial funding of a large Veterans Administration sponsored study related to testosterone therapies. The study will generate the data required to examine the multiple facets of the condition in long-term five- and ten-year studies to determine both the benefits and risks of HRT in men.

Although it seems like a natural for direct-to-consumer advertising, Solvay has no plans to pursue that line of marketing for AndroGel. "We toyed with the idea," Shlevin says, "and we have done some analysis that says we could, in fact, recoup the investment. But to do it, you've got to do it right. If you do it in a small way, spending $20 million, you won't make an impact on the market. Then it ends up being a waste." So far, the bulk of AndroGel's prescriptions have been written by primary care doctors, and consequently, both Solvay and Unimed's primary care sales reps will carry AndroGel.

Picking Partners

"You never know when opportunities are going to come up," Shlevin says, "and a bunch of things came together in 1999. It was totally crazy here."

In addition to the cardio product launches and the purchase of Unimed, the company also entered a co-marketing arrangement with Duramed for female hormone replacement therapies. Solvay reps now detail Duramed's Cenestin, a new plant-derived synthetic conjugated estrogen, and Duramed reps sell two of Solvay's female hormone products: Estratest (esterified estrogens and methyltestosterone) and Prometrium (progesterone). Including sales of Estratab (esterified estrogens), Solvay is now the second-largest supplier of HRT products.

A little deeper into the conversation, Shlevin indicates that the deal with Duramed is more than just marketing: "It's technically a co-marketing agreement, but we hope it will evolve into much more of a long-term partnership." Will Duramed be Solvay's next acquisition? Shlevin shrugs. "Only if they want to be acquired."

Last year's back-to-back launches and marketing agreements forced the company to train and send out contract sales reps. It is not an experience Shlevin wants to repeat. "We were not happy with the relationships they established with the docs compared to our own specialty groups," he says. "You get green reps with very little pharmaceutical experience, and you wind up training them, creating a huge lag time and slow start-up in the field. Fortunately, this past year we've been able to turn a number of reps into solid performers."

Patients First

Before the cardio and women's health products, the Solvay Group's main franchise was in gastroenterology. In fact, the company has been making Creon (pancrelipase delayed-release capusles) for the treatment of cystic fibrosis (CF) and chronic pancreatitis for more than 100 years. "The product is specialized," Shlevin says, "and very difficult to make consistently. It's derived from a pig's intestines, and we do some very specific things to it. For that reason, we will probably always manufacture Creon within Solvay."

Shlevin backs up that commitment with continued support for the Cystic Fibrosis Foundation. Solvay has served as a national sponsor of the foundation's Great Strides Walk and helps provide educational material support. The company also is in its eighth year of a program to award four-year scholarships to high school students who have CF. That commitment has totaled more than $1 million over the life of the program.

In Europe, the company holds a leading position in the treatment of irritable bowel syndrome with Dicetel (pinaverine) and Duspatal mebeverine), and the entire franchise accounts for 22 percent of the global pharmaceutical revenue. (See "Therapeutic Franchise," page 48.) Solvay's other main gastroenterology product, Rowasa (mesalamine), a rectal suspension enema and suppository, treats ulcerative proctitis, ulcerative colitis, and proctitis. (See "Focused Portfolio," page 42.)

Solvay also supports the patients who benefit from its mental health products. (See "Mental Health Commitment.") In addition to its long history of support for suicide-prevention associations, the company also manufactures Lithobid-at a loss. The slow-release lithium product reduces the acute mania and manic episodes associated with manic-depressive illness, also called bipolar disorder.

"My boss from Europe is on my case all the time," Shlevin says, "because we don't make money on Lithobid. But it's one of those products that we feel ethically and morally obligated to supply because of its extraordinary medical importance."

Solvay's biggest mental heath therapy is also its best-selling product overall. Luvox (fluvoxamine), the first selective serotonin reuptake inhibitor (SSRI) ever to be approved, is indicated for the treatment of obsessive-compulsive disorder (OCD). The product is the top therapy prescribed by psychiatrists to treat OCD and generated $228 million in global sales in 1999. Luvox is also the first SSRI indicated for the treatment of OCD in children and the first SSRI approved in Japan.

"When I was at CIBA," Shlevin recalls, "they got into a discussion about cultural identities in Japan and why people would not use SSRIs, attributing it to the fact that the Japanese don't want to admit that they are depressed. But all I can tell you is that Luvox is taking off like crazy in Japan."

In fact, a coalition of 1,700 sales reps from Solvay Seiyaku, Meiji-Seiyaku, and Fujisawa generated a growth rate of 22 percent during Luvox's first six months on the Japanese market. In Japan, therapeutic categories and approvals are unique, and consequently, the market there for Luvox is wide open.

Shlevin explains: "It's approved as a selective serotonin reuptake inhibitor, rather than for depression or obsessive-compulsive disorder, per se. The approval is based on its pharmacological uses and activity rather than on a therapeutic use and activity." All of which is fortunate-or effective marketing-for Solvay, considering that its US patent expired in June 2000, and generics are soon to follow.

Priming the Pump

As typical with companies facing generic competition, Solvay is developing a new Luvox dosage, a once-daily controlled-release tablet for OCD, and is seeking a new indication for the treatment of social phobia. Both of those projects are in Phase III clinical trials. Also in late stage trials are Estratest, for the loss of female libido, a combination product of Teveten plus a diuretic, hydrochlorothiazide, for hypertension, and hormone replacement therapies Femoston and Presomen for osteoporosis prevention in Europe. (See "In the Works," page 44.)

But it's the preclinical development that Shlevin gets worked up about. "In the mental health arena," he says "one of our most exciting compounds is an antipsychotic, 127090, which also has a lot of anti-Parkinson's activity, and that's in mid-to-late Phase II." To further expand its mental health franchise, the company is developing a new anti-depressant, DU125530, a 5-HT1A antagonist, and has two other chemicals in development to treat psychosis. Like numerous other pharma companies, Solvay is looking for a potential blockbuster treatment for Alzheimer's.

Shlevin laments, "Nothing has impressed us so far. Of course the problem is-and everybody has the same problem-we don't know what the fundamental genesis of Alzheimer's disease is. As a result, we have a big difficulty developing acceptable animal models, making it very difficult to select a compound and then have enough data to justify the risk of taking that compound into humans. We focus a little bit more on the genetic component and approach than some others do because of our relationship with genetics, but whether we will be successful, I don't know."

The most promising therapy in the pipeline is cilansetron, a 5HT3 antagonist for inflammatory bowel syndrome that has entered Phase III trials in the United States. Thanks to a flood of direct-to-consumer advertising, more patients are getting help for gastrointestinal problems, and the market-and competition-continue to expand.

But Shlevin makes a therapeutic market distinction: "If you look at some of the new products by Novartis and Glaxo, which have indications for treatment of inflammatory bowel disease, they are primary care products, not really gastrointestinal products. We focus primarily on the gastrointestinal specialist. If there is an opportunity for our product to expand into primary care, we will do it through a partner rather than by ourselves."

Knowing Your Niche

When asked about Solvay's future, Shlevin's vision for the company is clear: "I would like to see the business focus more on the core competencies, which to me are our abilities to conduct very successful relationship-based niche marketing and certain things that we do very well in R&D from a core competency standpoint. But we intend to rely more on CRO organizations for everything from clinical packaging-which has become its own science these days-to the conduct of clinical trials. Shlevin's goal is to create a lean and focused operation.

"We don't need to make a billion dollars on a drug to be successful," Shlevin says, "or even half a billion dollars. We really don't. To grow 10 percent a year when our revenue is roughly $1.5 billion is a heck of a lot smaller number than a $15 billion mega-pharmaceutical company trying to grow 10 percent a year."

Shlevin laughs as he launches into the next topic. "There's another issue that always comes up for Solvay, and you guys stimulated it a few months ago in Pharmaceutical Executive with that article about mergers and opportunities. There was a little table on the right-hand side of the page, and it listed 10��12 companies that were merger bait. Solvay was on that list, and it generated a bunch of phone calls to us from outside companies looking for an acquisition." To put it simply, Shlevin says, "We are not for sale, and the pharma sector is strategically important for the overall Solvay business."

What else is new with the company? "On the business development side for the US organization," Shlevin says, "We remain in constant search for opportunities to leverage our inherent skills within our specialized sales and commercial organization. On a global basis, we bought a company in Brazil, assigned some more alliance agreements in Japan, and licensed a couple of products back and forth in Europe. I think you will see us take off again with a renewed zeal next year."