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Julian Upton is Pharmaceutical Executive's Online and European Editor. He can be reached at email@example.com
Philipp Maerz, CEO of Allergopharma talks about how the company has evolved, his recent transition to CEO, and how he plans to expand in the allergy treatment market.
After serving in finance roles at major international companies such as KPMG, Deloitte, and General Electric, Philipp Maerz joined Merk KGaA, Darmstadt, Germany as Director, Mergers & Acquisitions in 2009. His involvement in Merck KGaA’s acquisition of Allergopharma in 2012 led to the offer of a business development role at the allergen immunotherapy company. In 2016, he was named Allergopharma’s Chief Operating Officer and in March last year became its Chief Executive Officer. Pharm Exec spoke to Maerz recently to review his achievements at Allergopharma, his transition to CEO, and how he plans to expand in the allergy treatment market.
Philipp Maerz: The COO role was really about global corporate commercial responsibility, and, for Allergopharma in particular, the CEO role is focused on the whole business. As you mention, as I was with the company for quite a while and I knew the pain points, which made it easier to step into the CEO role. I had a clear idea what we needed to change and where we are heading.
I think sometimes there is a challenge in not having a science background, because as CEO you need to be involved in daily operations in areas like biopharmaceutical manufacturing, quality control, analytics, etc., and understand what people are doing in those departments. But it works because I have a very good team around me and I really enjoy the broadness of role.
Since Merck KGaA took over the full ownership of Allergopharma in 2012, it substantially modernized and transformed the company, both from an operational and a cultural point of view. The company was very much a founder-led organization. The founder, Joachim Ganzer, built the company from scratch and led it for over 40 years; he very much shaped the culture and the whole set-up of the company. It was very founder-centric from a cultural leadership perspective-a very hierarchical, very patriarchal culture and mindset. In the modern pharma environment, you need modern leadership styles, so that’s what we have implemented over at the time. Also, Joachim Ganzer’s focus was on the German-speaking region, so from the beginning of my association with the company we have looked to expand significantly into other countries, such as Spain, China, and India.
The focus has been on really bringing the manufacturing and quality side of the business to an industry-leading standard, which I would say we have now achieved. It has had its bumpy moments, but over the last seven years it has worked pretty well.
As regards the integration with Merck KGaA, Darmstadt, Germany, the important thing is that we’ve never been really integrated into Merck. Usually for such a company, things are pretty centralized. Merck KGaA is responsible for the manufacturing of all pharmaceutical products and for all the manufacturing sites. My role is a pretty special because with Allergopharma it’s separate. All functions and all areas report into me and then I report it to Merck KGaA. Allergopharma was always standalone due to its history, but it also is now because in the context of the whole Merck Healthcare group, it’s a very small business.
Yes. From the operations’ point of view, we have very broad autonomy. But we have tried to make use of the Merck Group knowledge, experience, and technology where we can. We’re just wrapping up a large, new aseptic manufacturing facility, for example, and for that we have made use of Merck KGaA’s project management skills and tech transfer skills, etc., because this is not an activity that a company our size does all the time. It’s a basically once- or twice-in-a-lifetime event, moving a GMP-regulated, aseptic manufacturing process from one building to another. So that's where Merck KGaA helped in bringing us up to a very high level in quality, quality assurance, and so on.
It’s a very interesting industry. Ten years ago, allergen immunotherapy was a totally unregulated, named-patient industry. This is changing dramatically. Germany, for example, has initiated a regulatory process where all products now need to go through a back-registration, if you will, requiring full chemistry, manufacturing, and control (CMC) documents. Going forward, it will require clinical evidence about the efficacy of the drugs, so this will lead to a market shakeout at some point.
The industry is still highly competitive because of its past unregulated status. We see products and companies dropping out; it’s very dynamic on the product marketing side. But at the same time, particularly in Germany, which is the largest market for these products in Europe, allergic disease is increasing. More and more people have allergic problems and allergies to pollen or to house dust mites, for example. This has a strong socio-economic impact, with people missing working days or pupils missing school time because of their allergies. At the same time, physicians are not incentivized to use allergen specific immunotherapy; they don't get a lot of renumeration for it. Dermatologists keep telling us, for example, "Guys, we earn much more with Botox or with cosmetics than we earn with allergy immunotherapy."
When I took over the CEO role last year, we initiated a fundamental transformation plan. We’ve significantly changed our business model. We have optimized our portfolio, focusing on key products. We’ve also closed some unprofitable countries and halted some very complex projects. For the next year, we’re going to keep focused on reducing complexity and generating new products and profit growth.
We have also started an evaluation process on how to position the company on a stronger strategic foundation. The result of this was the acquisition of Allergopharma by Dermapharm Holding SE, a German pharmaceutical company.
There is potentially a lot of growth in this space, not so much in the mature markets like Germany, but in places like China, where we’re growing at 25% a year. This is where we’re going to channel a lot of focus going forward, building awareness around the disease and the treatments that we offer. Dermapharm, as an owner with strong strategic interest in the indication of allergic diseases, is a great partner for this.
Philipp Maerz will be speaking on the Commercial & Sales Stream at the upcoming eyeforpharma Barcelona (March 31-April 2, 2020).