Richard Pops, Chief Executive Officer of Alkermes, explains how the company has established itself as a global, Irish-based firm.
The market forces shaping the biopharmaceutical industry are changing at an accelerating pace. Against this backdrop, management teams are engineering dramatic changes in their pharmaceutical businesses. Alkermes is no exception — we are taking steps to position our company to meet the evolving needs of healthcare markets around the world. Recently, we completed a transformational merger, establishing the company as an Irish-based global company, Alkermes plc, through the strategic acquisition of Elan Drug Technologies (EDT).
Seizing the opportunities presented by the changing and globalizing market for biopharmaceuticals and building on our strong foundation, we thought the time was right to make a bold strategic move to acquire EDT and fundamentally expand and accelerate our opportunities.
Any such move needs to be evaluated by a rigorous set of criteria consistent with the objectives of a business. Using our merger with EDT as an example, here are some of the ways to evaluate the strength of a strategic deal.
A base of financial value. First and foremost, a strong deal must demonstrate financial value. The formation of Alkermes plc was transformative from a financial perspective because it created a company with a clear path toward immediate profitability coupled with strong and expanding metrics for earnings growth. We communicated the financial picture of the deal to investors, including new financial, legal and strategic features as we became an Irish company, and more than 99% of our voting shares were in favor of the transaction.
Immediate synergies and growth. Often, the strongest deals have clear opportunities for near-term growth or synergies; in other words, an obvious way that one plus one equals more than two. In our case, in addition to true scientific synergies, there is a strong and growing revenue base from more than two dozen products. Among this product portfolio, we recognized and highlighted the opportunity arising from five high-profile commercial products. These are largely in the early stages of their product lifecycles and positioned for strong growth trajectories in large markets for significant diseases, like schizophrenia, depression, diabetes, and addiction.
A platform for leadership. Ideally, a major deal should bring together separate elements to establish the company as a leader in a given field or product area. A common track record can be traced through the strong history of both Alkermes and EDT for successful drug development and building pipelines of high potential drug candidates in CNS and other important disease areas.
Gaining strength, scale and scope. Strategic deals can help a company take a major step forward Ð in a way not possible with business as usual Ð to gain a new size and scale to be stronger and more competitively positioned in the market. We now have global operational scale and flexibility, with the expertise and financial resources to grow our product portfolio moving forward. The company has major hubs of operations in the US and Ireland, a portfolio of proprietary technologies within its R&D capabilities, and three major locations for world-class GMP manufacturing for complex drug formulations.
Springboard for future growth. An important aspect of strong strategic deal is the opportunities it opens up for future growth. Through the merger that created Alkermes plc, we have the resources to invest in the commercial portfolio and product pipeline that will serve as a springboard for long-term growth.
The goal of any big strategic initiative is to establish a new set of capabilities to open up possibilities for a more promising future. With our move to create Alkermes plc, we are building a new, powerful engine for near and long-term growth. This will have a positive impact on our business, as well as on patients globally who can benefit from our products. We recognize the accelerating changes in the healthcare marketplace, and within this evolving landscape, we remain committed to continuing to provide best-in-class products that provide high value to help patients and physicians.