King Without the Crown - Pharmaceutical Executive


King Without the Crown
While most of pharma tries to convince the world that R&D is the number-one priority, one specialty company boasts that it has no lab.

Pharmaceutical Executive

His first big hire was chief commercial officer Steve Andrzejewski, a 40-year-old MBA who was running commercial operations at Endo Pharmaceuticals. Before Endo, Andrzejewski was vice president of new products for Schering-Plough, where he's largely credited with Claritin's rise to the top of the antihistamine charts. Andrzejewski gives off a whiz-kid vibe: He speaks with immense authority, but his face, behind glasses, is boyish.

As head of King's commercial efforts, Andrzejewski is responsible for making sure the company's approach to R&D is not just a money saver, but also a moneymaker. Under King's old strategy—after it added the R&D subsidiary, but before Markison & Co. joined—there was no linkage between business opportunity and R&D.

The company functioned as "more of a pharmaceutical M&A shop than a focused corporate entity," says Remi Barbier, CEO of Pain Therapeutics, one of the companies with which King recently entered a partnership (see "The Pain Deal," left). King tended to in-license drugs without regard for therapeutic areas or relevance to its scientists' fields of expertise.

Creating a more strategic in-licensing program has been Andrzejewski's main mission. Under his direction, the company has moved from its historical model of acquiring mature drugs in late stages of commercialization to pursuing products in late stages of development. It's also started taking better care of products that the former management team never groomed to full potential.

One goal is to decrease susceptibility to patent expirations. Under its old model, King would acquire drugs that were about to go off patent or that already faced substantial competition from me-toos. Many of its important drugs—Altace (ramipril), an ACE inhibitor ($554.4 million in 2005); Skelaxin (metaxalon), a muscle relaxant ($344.6 million); Levoxyl (levothyroxine), a thyroid hormone replacement ($139.5 million); and Sonata (zaleplon), for insomnia ($83.2 million)—are about to face generic competition. These four drugs accounted for about 63 percent of King's revenue in 2005.

King's efforts to acquire new drug candidates and support existing products both center, in large part, on positioning itself as a partner of choice. The deal King cut in November 2005 with Pain Therapeutics exemplifies its strategy of going after drugs in development. The companies joined forces to develop and commercialize abuse-resistant painkillers, the most promising of which is currently in Phase III trials. King entered a similar deal in August 2004 with Palatin Technologies to develop and commercialize bremelanotide, in Phase II for erectile dysfunction, and for potential treatment of female sexual dysfunction.

To realize the full potential of existing products, King is forming partnerships like the one it did with Arrow International Limited in February 2006 to commercialize new formulations of Altace. Under the agreement, King has intellectual-property and technology-licensing rights to novel formulations of the drug, and Arrow has manufacturing and supply responsibilities. King made an up-front payment to Arrow of $35 million, and will make additional payments to the company of as much as $75 million, plus fees for the manufacture and supply of new formulations.

King also is approaching this element of the strategy by upping promotional efforts on some of its drugs, such as Thrombin-JMI, a topical hemostat used by surgeons to stop bleeding. Although Thrombin is facing potential branded competition, King considers it worth the investment. Markison calls hemostasis an "under-penetrated" market in which physicians will continue to prescribe Thrombin as awareness of the drug improves. Thrombin had never been promoted under the company's previous management team, says Andrzejewski: "To this day, surgeons are like, 'Well, I think I've heard of it, but I'm not sure.' It's a lot of opportunity that we can continue to go after." King's hospital sales force of 112 reps is promoting the drug.

Breaking It Down


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