What's the Deal at Solvay? - Pharmaceutical Executive


What's the Deal at Solvay?

Pharmaceutical Executive

Pharm Exec: One interesting thing about Solvay, the umbrella company, is how diversified it is. What are the yin and yang of diversification? At what point is it a benefit, and at what point does it become too complex to manage?

Werner Cautreels: Solvay used to be exclusively a chemicals company. And then in the 70s, with the oil crisis, the company wanted to find a business segment that was not so cyclical. That happened to be pharma. A couple of years ago, few pharmas were diversified. Today, we are extremely rewarded for having this model.

In the past we were criticized for having such a model, but if you're diversified, you can weather the storm better. So we are very happy with this hybrid system. But each of the segments has its own challenges, and we cannot become complacent. We always have to be thinking about the long term.

There have recently been reports that Solvay is looking for a buyer for its pharmaceutical business. Why now?

The "why now" is only because the Financial Times wrote an article—it is just an ongoing process.

Where the article was misleading is that it suggests we would be in a defensive mode if somebody made an offer, which is not true. We are in the driver's seat. That's what we are doing in this R&D transformation. And it's not just theoretical because we have bought a diagnostic company [Belgian biotech Innogenetics]; we have changed the organization. But we have to raise more resources, so we go through this process.

How has Solvay changed since the 2005 acquisition of Fournier?

We used that acquisition to rethink our strategy. On the R&D side, we refocused. We had been working in too many areas, and so we put more of our resources into cardio-metabolic, neuroscience, influenza vaccines, and pancreatic enzymes. We stopped research into women's health, pediatrics, and gastroenterology—although we're still supporting our products already in those markets.

We reduced our manufacturing footprint, from 13 plants to five. The only things we want in-house are [areas where we have] specific knowledge or added value. General manufacturing aspects we are doing better and cheaper through strategic outsourcing.

About two years ago, I created a special management team with younger people, and told them to redesign the company. I had previously done that when I was at Sanofi—only back then I was on the younger side! Out of that came a plan, which we call Transformation 2015. We had to think about where the industry is going in the long term, and make the changes needed now, in the short term, to be able to address those challenges.

So we have identified six driving factors in the industry: Stakeholders, Regulatory Requirements, Transparency, Personalized Medicine, Ratios (as in the amount you have to spend on product sourcing as opposed to commercial efforts), and Size. There's nothing absolute about size. It's about market share, R&D, product sourcing, and so on. We made a plan for each of these pieces. For example, on Stakeholders we now run a number of our trials completely through patient associations; on Personalized Medicine, we acquired a diagnostics company.

Another change is that we do not have an R&D group anymore. We have a research group that is looking for new compounds—at least 50 percent from outside—but the D in our R&D doesn't exist anymore. We replaced it with what we call Market Access Organization, which combines clinical development/regulatory, strategic marketing, health economics, drug safety, and a number of other aspects, so that we can address what the stakeholders in each market will ask us to deliver.


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