Country Report: Switzerland

November 1, 2016

Pharmaceutical Executive

Volume 36, Issue 11

Switzerland’s formidable pedigree as a pharmaceuticals powerhouse and hotbed of scientific innovation is often overlooked. But indeed these elements serve as major linchpins of the Swiss national economy, as the country continues to punch above its weight on the global stage for health affairs and medical-science advancement.

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A Leader Among Giants

Most people's perceptions of what the locals fondly refer to as 'Sonderfall Schweiz' ('special case Switzerland') conjure up images of an adamantly neutral country with a fiercely independent streak, of chocolate box architecture, cuckoo clocks, snowy mountain peaks, the G-rated Matterhorn and jewel-bedazzled glitterati. What is all too often overlooked, however, is the country's formidable pedigree as a pharmaceuticals powerhouse and hotbed of scientific innovation.


Scientific Impact of Research by Country

Indeed it is no exaggeration to say that the pharma and life sciences industries act as one of the linchpins and mainstays of the national economy employing some 356,000 people – tantamount to one in twelve of the entire working population. "Moreover, aside from pharma's obvious contribution as a major employer, we export goods worth more than 70 billion Francs (USD 70.93 billion) bringing our net trade balance in at around 40 billion Francs (USD 40.53 billion), by far the highest of any country in the world," grandly attests Thomas Cueni, the secretary general of the Association of Pharmaceutical Research Companies, Interpharma. Nor do positive statistics stop there.


Pascal Strupler, director general, Swiss Federal Office of Public Health

"We are also a high value-added industry with the average pharma job paying around 600,000 Swiss Francs per year (USD 607,986) which is more than 3 times the EU average," he notes. That's not to mention that the local industry is also booming: attaining 5.3 per cent growth last year and hauling in a total value of 5.4 billion francs (USD 5.5 billion).


Thomas Cueni, secretary general, Interpharma

Even more importantly, the country has been steadily building up its kudos as an enterprise-friendly haven and dynamo of innovation in which pharma companies can blossom and prosper. "Today we rank as the second most popular destination worldwide for innovators to carry out R&D, and house two of the world's elite pharma players in Roche and Novartis ... barely a century ago Switzerland was one of the poorest countries in Europe, land-locked and deficient in natural resource endowments, and yet we have succeeded in turning all that around by leveraging intellect as the critical resource that unleashed us to flourish," recounts Jürg Utzinger, director of the Swiss Tropical and Public Health Institute. Little wonder then that the country today boasts 4 times more global Fortune 500 companies per million inhabitants than any other nation.


Jürg Utzinger, director, Swiss Tropical and Public Health Institute

Then there are a whole host of other factors that mark the country out and enable it to punch well above its size in terms of global health affairs and the advancement of medical science. One could mention the fact that Switzerland enjoys the distinction of being the first country to adopt a 'foreign health policy' or that it plays host to the World Health Organization and other international health institutions to the point where Pascal Strupler, director general of the Federal Office of Public Health (FOPH), claims Geneva as "the capital of health."


Daniel Küng, CEO, Switzerland Global Enterprise

 

EUROPE'S BRAIN

One notable trend in recent years has been the sheer volume of multinationals – whether big pharma, specialty outfits or biotechs – electing to base their European headquarters out of Switzerland. MSD, Novo Nordisk, Takeda, Amgen and Biogen are all cases in point, while another eye-catching development has been Bayer's 2015 decision to repatriate the management of its Global Consumer Health division from the US to Basel. As such, Switzerland can credibly be considered the "nucleus and brain" of many pharma firms' European activities. In accordance with the same logic, the country is fast becoming a popular choice for well-esteemed non-European actors to establish a first foothold on the continent. One of America's most renowned biopharma success stories, Celgene, constitutes one such example of an iconic pharma brand identifying Switzerland as a natural first stepping stone for launching and rolling out their 'Europe and beyond' overseas expansion strategy.


Tuomo Pätsi, president EMEA, Celgene

"Switzerland was actually the obvious choice for kick-starting our international operations because the local ecosystem is so perfectly geared up to supporting a highly specialized activity like ours," reveals Tuomo Pätsi, Celgene's president for Europe, the Middle, East and Africa (EMEA). "When you're engaged in the business of high-end, sophisticated products, your overriding priority is actually to ensure that you have a secure, reliable environment at your disposal and easy access to top talent in different functions and we are convinced that Switzerland excels on all of these fronts," he explains. "Indeed many of our peers have no doubt undergone similar thought processes and reached the very same conclusion, because it can be absolutely no coincidence that so many other big-name pharma actors are simultaneously so deeply embedded here."


Dr. André T. Dahinden, general manager Switzerland & Immuno-Oncology BU Europe, Amgen

Others strongly concur. "The Swiss research, chemicals and life sciences arena is pretty much like its railway system: that is, high-tech, well organized and dependable," muses Amgen country manager, André Dahinden. "The infrastructure, itself, is really second to none which is a huge plus factor," agrees Biogen Switzerland's managing director, Natascha Schill, when pressed to explain what makes Switzerland so attractive for big-ticket investments and regional leadership. "Geographically we are positioned right at the beating heart of Europe with great connectivity by train and air to many of the most valuable and significant European pharma markets...and then there is the ready access to clean water and reliable electricity all of which are going to be tremendously important if you're planning to put in any kind of high-end R&D capabilities where you'll be developing and handling complex medicines such as biologics that are sensitive to changes in temperature and pressure," she reasons.


Dr. Natascha Schill, managing director, Biogen Switzerland

HOTBED OF INNOVATION

One pull factor is, without doubt, Switzerland's especially fine reputation for research impact and innovation generation. According to the yearly European and Global Innovation Indices, the country ranks as a world-beater for innovation, demonstrating particular strength in the volume of patent applications registered, the number of scientific studies published in international journals, and in its overall high employment ratio for knowledge-intensive activities. "Switzerland represents an extremely fertile ground for scientific findings ... we boast some of the very best researchers in the world and crucially possess all the relevant skill sets at every level from PhD holder to machinery operator so cover the entire spectrum of functions across the R&D value chain," proclaims Walter Steinlin, president of the Federal Commission of Technology and Innovation (CTI), the government agency responsible for the promotion of science-based innovation.


Walter Steinlin, president, Swiss Federal Comission of Technology and Innovation

"Our exceptionally high performance today in terms of research impact is partly down to our historical legacy as a nation: Switzerland was never blessed with natural resource wealth, so its people instead had to rely upon their brains and technical competencies as a top-notch service provider in order to survive," reflects Robert Riener, head of the Department of Health Sciences and Technology at ETH Zurich, the Swiss Federal Institute of Technology. "Nor should we underestimate the effect of our rather distinctive national education system in which only 20 per cent of students go on to university, with the remainder instead undergoing apprenticeships in which they develop, through intensive practical work, a particular skill over a three or four-year period," he adds. "What this system means for Switzerland is that the country is made up not just of academics, but also people that possess the skillsets to produce things; people not only driven by intellectual skills, but also by the technical know-how when it comes to production."


Robert Riener, head of the Department of Health Sciences & Technology, ETH Zurich

This is certainly something that the pharma industry seems to appreciate. "You have to remember that as a biopharma pioneer, we operate in a very specialized and technologically complex field that requires ready access to a highly skilled workforce. Switzerland, with its dual education system and multilingual, multiethnic talent pool, most definitely provides this human resource asset at a point in our lifecycle where we are looking to continually ramp up our workforce. Moreover with its lengthy tradition in pharmaceuticals, this country offers a wealth of talent not just in skilled academics and scientific researchers, but also in the very categories of experienced craftsmen and lab operators that we will be seeking to propel the company forward, and all of this was instrumental in our original decision in the mid 2000s to relocate our International headquarters from Paris to Zug," notes Biogen's Natascha Schill.

 


 

For his part, Celgene's Tuomo Pätsi very much concurs. "As a leading actor in biologics, we appreciate the fact that Switzerland offers an excellent enabling landscape that fosters innovation and a truly international, high-skilled and multilingual human resource pool across the full range of job categories. For a firm of our caliber and bent, this all matters a great deal." In the words of Kari Sarvanto, group CEO of Primex Pharmaceuticals, "Given that the Swiss hold all the requisite know-how, employing experts is easier here than anywhere else in the world!"

The statistics would certainly appear to back up these assertions with the latest Interpharma figures demonstrating that, last year, the association's 24 members spent no less than 6.9 billion Francs (USD 7.0 billion) on in-country research and development (R&D) between themselves, more than twice as much as they achieved in sales Swiss revenues. This high level of financial investment thus underscores the importance of Switzerland as a cutting-edge research centre and magnet for innovation related activity.


Kari Sarvanto, Group CEO, Primex Pharmaceuticals

"We consider Switzerland to be a trailblazer in innovation-friendliness and this is something that we are very keen to leverage and contribute to. R&D is an incredibly important part of our activities, particularly as we seek to gain entry into new fields. Even though we are a US-based global player, there is a clear appreciation at our global management board level of the world-class research and science being conducted in Switzerland and we see collaboration with leading academic institutions and actors here as absolutely essential to our future success," reveals AbbVie's general manager, Olaf Weppner. "It is therefore no coincidence that we have established a strong unit here to run our clinical trial programs, most of which are performed in-house and are collaborating with more than 40 sites in Switzerland, running 20 different clinical development programs," he adds.

Carolin Hillebrand, country manager of Israeli neuroscience specialty outfit Neurim Pharmaceuticals, is even more ebullient about Switzerland's superlative innovation capacity. "The development of our highly acclaimed, star product Circadin, the only IP-protected product providing a prolonged release formulation of melatonin for insomnia, came about as the result of an immensely fruitful collaboration with Basel's Centre for Chronobiology, one of the world's leading centers of excellence for melatonin research," she recalls. "The innovation mindset over here is simply breathtaking," she gushes. No surprise then that Switzerland enjoys the distinction of hosting Neurin's only affiliate outside of Israel and one of the company's key production sites.


Olaf Weppner, general manager, AbbVie Switzerland

NURTURING SCIENTIFIC ADVANCEMENT

Innovation, of course, does not occur in a vacuum, but requires careful cultivation and a supportive ancillary enabling ecosystem. Fortunately this is something that Switzerland displays in abundance. "Switzerland is dense with innovation in medicine, pharmaceuticals, and biotech and is proactively prioritizing and developing dedicated hubs and clusters that sustain the momentum. For a forward-looking, research-driven company like us, we consider it fundamentally important to be maintaining and even strengthening our local footprint so that we can gain exposure to and actively collaborate with all these universities, centers of excellence and start-ups that form the fabric of the Swiss scientific community," firmly declares Janssen's managing director, Ludo Ooms.

"Nor should we fail to acknowledge that the Swiss government is also an efficiently run, business-friendly administration with an enviable track record in problem solving ... that does not mean that we always agree with their decisions, but objectively speaking and in comparison to other European frameworks this is without doubt a system that rewards innovation and therefore one that is strategically very relevant to Janssen," he continues.


Carolin Hillebrand, general manager Switzerland, Neurim Pharmaceuticals

"Despite its relatively small size, Switzerland is blessed with an incredibly accommodating local landscape that genuinely promotes and encourages ideas creation. With the proportionally dense number of high quality institutes in Zurich, Basel and Geneva all quite close to each other, ensuring an easy sharing of knowhow and cross-pollination of expertise, the country has fast become one of our key locations for conducting clinical research. When you add the fact that Switzerland also enjoys an effective and stable legal system in which it is easy to collaborate with the different stakeholders; and when you take into account the manner in which the country is innovation-prone – with population, patients and doctors alike all demanding access to latest generation therapies – then you end up with an incredibly healthy mix, that also doubles up as a great environment for recruiting patients into highly complex clinical trials," enthuses Amgen Andre Dahinden.


Swiss Innovation System compared to EU

Others are equally complementary about the Swiss propensity to instill an ethos that nourishes creativity and the spirit of innovation. "Switzerland is a phenomenally interesting country in terms of progress in medicine and frontline science, with some of the very best thought leaders in the world, which is why we've made it our business to integrate ourselves into the innovation networks that can be encountered here," exclaims BMS vice president and general manager, Michelle Lock. "Recently we have placed large investment behind our in-country R&D capabilities and the result has been simply outstanding: across our worldwide operations, the highest recruitment for oncology centers per capita of population now takes place here," she reveals.

Certainly the full force of the state and civic apparatus at the different federal, cantonal and municipal levels seem to have been mobilized to deliver a helping hand. At the national level sits the Federal Commission of Technology and Innovation (CTI), an agency of the federal government responsible for the promotion of science-based innovation that was originally established back in 1943 with the mission of turning science into value and economic wealth in order to mitigate Switzerland's deficiency in natural resource endowments and reliance on imports. "Five years ago we were transformed into a formal commission with the financial firepower to deploy government appointed funds and by 2018 we will have become an even more independent legal body," notes CTI president, Walter Steinlin. "In keeping with Switzerland's liberal economic values, our purpose is let industry get on with the task of commercializing basic research and only to intervene and step in when we identify a lost opportunity ... we see ourselves not as some great state machine micromanaging the Swiss economy, but rather as a catalyst for opening up opportunities that fertilize the ground for innovation," he clarifies. In this way his agency lubricates the conversion of scientific ideas into economic growth through seed investment, start-up incubation and the promotion of specific projects within existing firms that are proving difficult to carry through.

 


Ludo Ooms, managing director Switzerland-Austria, Janssen

Another part of the glue binding Switzerland's innovation-friendly ecosystem is scienceindustries, the association representing the Swiss science-driven industries. "Our main preoccupation is about spurring on entrepreneurial innovation by influencing the framework conditions for science-grounded companies. Right now, we are pulling out all the stops to increase confidence in science-based industries, to ensure the continuity of competitive conditions for Switzerland as a premier location for research and production, and to guarantee that we maintain an attractive local market and platform able to serve the world with best-in-class, high value-added products," clarifies Beat Moser, the association's director general.

Meanwhile, at the regional level, entities like the Basel Chamber of Commerce are hard at work trying to fill in any outstanding gaps and unblock any bottlenecks hindering innovation across their spheres of influence. "One of our headline projects has the specific mandate of developing and rolling out a life sciences strategy across the region which entails implementing a common Life Sciences Cluster Initiative including the establishment of incubators and a dedicated innovation park," details the Chamber's director, Franz A. Saladin.


Michelle Lock, Biopharmaceutical vice president and general manager Alpine Region, BMS

He too is very keen to point out that his work is not about duplication of activities, but instead precisely calibrated to complement and leverage activities already being carried out so as to ensure maximal effect. "We would never attempt to create an innovation park for cancer research because oncology represents one of the core businesses of local heavyweights Roche and Novartis and they would never be willing to conduct that sort of thing outside of their own facilities; but we are always on the lookout to bring together the different stakeholders from academia, pharma, micro technology, IT and biotech to kick-start a joined-up approach to other therapeutic areas and life science fields that are not so well developed and where the industry is not yet so deeply engaged," says Saladin.

So too is there plenty of support for innovation-minded SMEs in specialist matters such as intellectual property (IP) protection. In recognition that small to medium sized enterprises "form the very backbone of Switzerland's economy," comprising two thirds of total jobs across the country and playing an essential role in injecting new ideas and fresh thinking into the marketplace, the Swiss Federal Institute of Intellectual Property (IPI) has arranged itself to offer up a useful resource and broad array of services and assistance. "Many of the big players in the pharma arena are all too well aware of the IP system because it forms part of the bread and butter of their normal drug development efforts; however, we respond to a vital need on the part of small to medium sized enterprises ... while many entrepreneurs are focused on getting to market as quickly as possible, we raise awareness regarding the importance of the intellectual property aspects and collaborate closely with universities in order be able to connect with researchers and start-ups early on," elucidates the IPI's director general, Catherine Chammartin.


Beat Moser, director general, scienceindustries

"It's not just about ensuring that budding entrepreneurs are properly protecting their creations, but also about educating those same individuals in how to conduct trademark research. For a small fee, SMEs, individual inventors or researchers at a university can spend up to a day with one of our patent experts in their specific technology sector and by the end of the visit, the client should have a better understanding of the IP protection system, be familiarized with searches in patent databases and be in a much stronger position to be able to evaluate whether his or her invention is new and worth protecting," she continues.

All of these attributes coalesce to form a fiercely effective enabling environment in which innovation can blossom and flourish. As Jean-Daniel Gerber, chairman of the board of the Swiss Investment Fund for Emerging Markets (SIFEM) shrewdly observes, "the country, on a per capita basis, boasts the greatest number of Nobel Prize winners in the world, but from that, 50 percent of those prize winners hold a birth certificate that does not come from Switzerland" meaning that it is the innovation-inducing characteristics of the country rather than merely the Swiss population that is to be most commended.

MANUFACTURING PROWESS?

Innovation is one thing, industrial manufacturing quite another. Perhaps most astonishing of all has been a growing proclivity to treat the small mountain nation as a stellar destination for drug manufacturing. Alongside the familiar ongoing investments of homegrown giants, Novartis and Roche, in maintaining a full manufacturing presence, the thundering pace at which major international pharma companies have demonstrated a willingness to invest in new or upgraded fabrication facilities has been deeply impressive, if not even a little disconcerting to outsiders.


Dr. Franz A. Saladin, director, Basel Chamber of Commerce

Biogen, for example, last year announced that they would be erecting a brand new biotech plant in Luterbach, in the canton of Solothurn to the tune of some 1 billion Euros (USD 1.1 billion), their largest ever such manufacturing investment. Meanwhile Celgene, who have just celebrated their tenth anniversary in Switzerland, have been spending big on extending a major hub near Lake Neuchâtel dedicated to producing solid-form manufacturing for its worldwide markets. At the same time, UCB Farchim have been busy bringing on-stream one of the largest microbial derived pharmaceuticals plants in the whole of Europe, an investment of some 500 million Swiss Francs (USD 505 million) that became fully operational earlier in the year and now boasts a capacity of a massive 45,000 litres of nominal volume fermentation.

When these developments are considered alongside some of the slightly older assets still in full swing – such as Janssen's facility in Schaffhausen – it is easy to assume that the much feared economics of de-localization has passed Switzerland by entirely. How, then, is it that a country so notorious for its high labor prices has been able to sustain such activities in an era of globalization where industries crossing frontiers in the quest of lower operating costs has very much become orthodoxy?


 

"It's certainly true that Switzerland is an expensive place to operate, but it is other factors, aside from wage prices that validate our decision to conduct the manufacturing from here in Schaffhausen," discloses Janssen's Ludo Ooms. "In terms of our in-country manufacturing footprint, we possess a highly sophisticated biologics plant employing around 1200 personnel and producing only high end, high value, complex products, 90 percent of which are then marked for export ... our priority therefore must be firmly about maintaining the right conditions and talent to perform these operations to the necessary level of standards," he explains.

Nicolas Hug, UCB Farchim's head of Industrial Biotech CoE relays a very similar message about superior quality and dependability trumping running costs. "The challenge for manufacturers today is to be able to guarantee supplies by building a robust global network that is able to deliver both flexibility and security of supply ...when you treat patients that are suffering from complicated diseases like epilepsy, one of the worst things that can happen to them is suffering a disruption in their treatment plan and UCB has thus made it its industrial mission to ensure that this never happens with our therapies ... we take great pride in both the excellence of our product quality and the resilience and robustness of our network and our Swiss fabrication facilities are an important component part of this high quality, secure manufacturing and supply network."


Dr. Catherine Chammartin, director general, Swiss Federal Institute of Intellectual Property

In this way, there does seem to be a niche in which Switzerland-based manufacturing can prove competitive within the context of global production and supply chains. "When it comes to efficiency, biopharmaceutical facilities have to be able to handle and deal with a number of unknowns regarding the quantity of output and potential disruptions ... there is always a tendency to either build something too big or too small, given you have to make decisions over a five-year period. Therefore, it is fundamental to have a dependable apparatus in place that allows you to either ramp up, or slow down, your manufacturing output according to any fluctuations in supply and demand," reminds Hug.

Despite Swiss President Schneider-Ammann's repeated warnings about the "creeping threat of de-industrialization" to a nation with a strong legacy and heritage in both artisanal craft and mechanized fabrication, Interpharma Thomas Cueni remains unconcerned for the local pharmaceuticals sector, which he assesses as "highly resilient" and "very much the exception to any such trends."

 


Nicolas Hug, head of Biotech COE and Bulle site general manager, UCB Farchim

"Our pharma sector's weight when it comes to the country's trade balance has only increased in recent years and though the cost of manufacturing within Switzerland may well have increased over time, thus rendering us nominally less competitive, the likes of Roche and Novartis with their extensive global footprint have a natural advantage and find any such cost more than offset by the strength of the dollar and the euro," he analyses. Moreover, "when you ask a CEO how relevant the high local operating costs are to their eventual investment decision-making, the reply is almost always that they assign more attention to the level of productivity ... I even remember the former CEO of UCB in 2014 claiming that their new biotech plant in Bulle ranks as their most productive manufacturing plant in the world," he recalls.

Cueni's point about labor productivity is that so long as investors are able to make similar profit margins at high wages as they used to do at lower wages in the sense that these higher wages are met with a corresponding increase in productive output, then investors will have no reason to leave the country. Only if higher wages do not lead to increased productivity and profit margins start to fall will investors start considering alternative host nations where they can attain better margins.


Pharmaceutical Market in Switzerland by Value (in USD per annum)

Nothing can disguise the fact, however, that there are other options for pharmaceutical developers that can deliver advanced supporting infrastructures, but at lower operating costs. Ireland is an example of an alternative European manufacturing destination, which will likely hold greater appeal to bulk fabricators. By way of competition, 9 of the top 10 global pharmaceutical companies already maintain integrated manufacturing operations there, no doubt attracted in by the low tax rates and a cost of labor that ranks 11 out of 27 EU member states.

For some, the perceived disadvantage of operating in a high cost environment actually becomes a "hidden strength" that has kept the local industry, lean, efficient and on its toes and well orientated towards cutting edge innovation and real value creation. According to Beat Moser of scienceindustries, "exposure to this high cost environment has forced in-country pharma outfits to focus on innovation that enables them to create high value added products" and "it is only through permanent innovation that they can afford to stay."


Celegene's EMEA Headquarters in Beaudry. Credit: Celgene

Any company exporting the pharmaceuticals that they have manufactured also has to grapple with the ever-appreciating value of the local currency. "The increase in the value of the Swiss Franc has compelled us to be more creative, and more innovative... somehow our companies are succeeding in maintaining their markets shares in the international market, even though their products have become more expensive," notices Daniel Küng, CEO Swiss Global Enterprise, Switzerland's export promotion agency.

"Pharmaceutical products in proportion to the total export volume within the life sciences industry, have increased massively over the past 3 decades, from 20 percent, to over 80 percent today and this shift is very much down to the fact that it is they that have properly understood the challenges and opportunities of being active in a high cost country and have adopted clear innovation strategies well ahead of other competitors," confidently asserts Moser.


Pamela Alexa, country manager, Pfizer Switzerland

This reputation can, of course, be highly advantageous when endeavoring to project a brand abroad. "I have to say that being based out of Switzerland and exporting our products truly has been instrumental to the success that we have attained in forging the global new generation business that we are today," enthuses Kari Sarvanto, group CEO of Primex Pharmaceuticals, an innovative and fast-growing specialist in anesthesia and intensive care products. "Given that Switzerland has a formidable reputation for quality and credibility, being a Swiss company, we are more reputable than we would otherwise be when we take our products abroad and especially into emerging economies ... manufacturing our products under such a context really does serve as a stamp of quality."

MINNOW IN VOLUME, COLOSSUS IN VALUE

All too often overlooked as being small and puny, Switzerland's domestic pharma market actually has much to recommend it to investors. "The Swiss market itself may seem relatively small in terms of volume, but performs pretty well in terms of value... when all is said and done, it turns out to be a rather important market for us in percentage value terms," affirms Celgene's Tuomo Pätsi.


 

Indeed, though the country's population stands at a mere eight million, recent statistics from the Luxembourg Association of Banks and Bankers (ABBL) demonstrate that Swiss citizens, alongside the Luxembourgers, enjoy some of the highest per-capita purchasing power in the world. With a national purchasing power of around EUR 348.5 billion (USD 383.1 billion), someone in Switzerland on an average salary can generally buy some 47 percent more common goods and services than their counterpart in New York. This means plenty of ready money to be spending on health for an ageing nation whose average life expectancy is now pushing the 83-year mark, one of the very highest in the world.


 

As might be expected, the affluent mountain state's national healthcare system is also flush with cash. When compared with other OECD countries, Swiss healthcare expenditure comes in at 11.1 percent of gross domestic product (GDP) placing it in second alongside the Netherlands, and only behind the United States. While the country has one of the most expensive healthcare systems in the world, it also offers high-quality outcomes and widespread access to latest generation medicines.

Of the some 71.2 billion Swiss francs (USD 72 billion) expended on Swiss healthcare last year, around 42 percent was paid for via insurance schemes. A further 32 percent was then financed directly by the public purse (federal, cantonal and municipal), with much of that figure accounted for by cantonal payments to inpatient facilities. Out-of-pocket-payments, meanwhile, constituted approximately one fifth of the total amount.


Dignitaries at the groundbreaking of the Biogen Solothurn facility. Esther Gassler (Government councillor of the Canton Solothurn), Michael Ochsenbein (mayor of Luterbach), John G. Cox (executive vice president, Biogen), Johann N. Schneider-Ammann (president of the Swiss Confederation), George A. Scangos (CEO, Biogen), Roland Fürst (president of the Government Council of the Canton of Solothurn), Suzan G. LeVine (US ambassador to Switzerland). Photo credit: Biogen

 

UNORTHODOXY RULES

One of the much-lauded attributes of the Swiss healthcare system is its openness to cutting-edge therapies. Almost every actor has their own story to tell about successfully launching innovative products on the Swiss market prior to their placement across other realms.

"We were extremely pleased to have had the opportunity to launch Xeljanz, the first oral JAK inhibitor treatment for rheumatoid arthritis, in Switzerland as early as 2013. This is an incredibly important innovation in our inflammation and immunology portfolio, building upon our strong tradition of developing patient-centered therapies and caters to patients who demonstrate an inadequate response or intolerance to existing therapies or who preferred an oral treatment," asserts Pfizer country manager, Pamela Alexa. "Switzerland was one of the first markets in which we were able to launch this breakthrough product and we are still waiting to be able to launch within the European Union. As such, our Swiss affiliate very much represents a model of excellence to our counterparts around the world," she stresses.


Gaëlle Méaude, operations director, Théa Pharma Switzerland

Similar stories abound. "In Switzerland, just like in the US, we received speedy approval for Arnuity, a long-acting inhaled corticosteroid for asthma treatment that provides physicians with a once-daily treatment option delivered via our Ellipta inhaler ... we are still awaiting, however, licenses in the rest of Europe which is a shame because this really does deliver great therapeutic improvements for patients," admits GSK general manager and vice president, Daniel Breitenstein.

Others speak excitedly about the frequency of launches that they have been managing to sustain. "BMS has a pipeline volume of which we can be very proud and that makes a market like Switzerland all the more important, because it's the sort of place that we can anticipate new approvals and be preparing for growth; in the last 18 months my countries, that is the Alpine Region, have successfully executed no fewer than 17 product launches," observes BMS vice president and general manager Michelle Lock.


Dr. Daniel Roth, general manager, A. Menarini Switzerland

Part of this speediness may well account for the fact that Swissmedic, the Swiss agency for the authorization and supervision of therapeutic products, engages in detailed scientific exchange and maintains a close relationship with the United State's Federal Drug Authority (FDA), which is often regarded as the "gold standard of health regulators." In that sense, Swissmedic can demonstrate quick reflexes and a greater responsiveness than say the European Medicines Agency (EMA). The quick approval of Pfizer's Xeljanz is perhaps a case in point. "We are able to utilize exactly the same data and product submission from our FDA dossier to secure the Swiss approvals," confirms Alexa.

Other examples come from the sort of systems and processes that Swissmedic has incorporated. Indeed "Swissmedic enjoys the distinction of being the first regulator after the FDA to introduce an accelerated approval process, and to this day remains highly competitive in terms of fast-track approvals," acknowledges Interpharma Thomas Cueni.


André Lüscher, general manager, Gilead Switzerland

There is one minor downside, however. With its distinctive regulatory framework and the fact that it is not integrated within European Union structures, Switzerland does present additional complexities and inconveniences for pharma firms seeking to navigate the domestic market access and reimbursement protocols. Because this entails wholly different dossier filings and price negotiations, many companies find themselves having to set up additional parallel offices in cities like Zurich that are dedicated solely to Swiss affairs and administration process.


Andreas Bosshard, general manager, Mepha-Teva

"We always look at Switzerland separately when it comes to drug development and product launches due to their having an idiosyncratic system with its own regulator, timelines and hoops to pass through that can at times differ quite markedly from the EU norms applied throughout much of the rest of Europe ... This isn't a negative in itself, but it can create uncertainties that we have to account for and factor in whenever we do business with the local market," concludes Lilly's general manager, Michael Cobus Meyer.


Dr. Andrea Michael Meyer, general manager, Sanofi Genzyme Switzerland

THE SWISS EXCEPTIONAL-ISM

"Market access can be quite a complicated process, because you're dealing with different actors rather than going through the regular European Commission channel and centralized European procedures ... basically we report directly to Swissmedic, which is not affiliated with the EMA, for marketing authorizations and deal with the Federal Office of Public Health (FOPH) for reimbursement applications," outlines Gaëlle Méaude, country manager of Théa Pharma.


 

Indeed, in Switzerland, medicines are not automatically covered by mandatory insurance once Swissmedic has granted marketing authorization. Before reimbursement is possible, pharmaceutical companies first have to apply to the FOPH for inclusion in the so-called 'Specialities List,' which is compiled based on the recommendations of the Federal Medicines Committee following thorough scrutiny over efficacy, suitability and cost-effectiveness. Furthermore, the price of a reimbursable medicine is not determined by the free market, but instead fixed by the state through a detailed calculation process that takes into account the ex-factory price, sales and value-added taxes and references to a basket of nine European markets, namely: Austria, Belgium, Denmark, France, Finland, Germany, Great Britain, the Netherlands, and Sweden.

"Perhaps one of the most significant challenges we encounter in Switzerland relates to this distinctiveness of the system," admits the general manager of Menarini, Daniel Roth. "A recent example springs to mind where the local regulatory authorities were demanding completely different labeling for some of our products to what was being required in the EU ... of course we managed to adapt and fulfill these requirements, but naturally this entailed a degree of delay when trying to complete the product launch."

Others point out that the Swiss set-up can also risk being "too rigid and fragmented" for a therapeutic world that is in the midst of unprecedented change and evolution. "The Swiss health system, like many around the world, still struggles to value the benefits of a curative treatment against the long-term costs of a chronic nature such as advanced liver disease," suggests André Lüscher, general manager of Gilead. "The case of securing authorization for Sovaldi, a truly game-changing cure that does away with the need to even conduct liver transplants, demonstrates the difficulties they have in handling a truly disruptive medical innovation when their system in, in my opinion, much better geared towards processing incremental innovation for chronic diseases," he argues.

Celgene's Tuomo Pätsi also echoes these sorts of concerns when contemplating the direction that medical discovery is heading and the ability of the regulatory system to keep apace. "Advancements in medical science now dictate much greater levels of cooperation than was previously the case. In Immuno-oncology, for example, success is often achieved through combination therapies and no single enterprise possesses a monopoly on knowledge," he analyses. However this opening up of the drug development process also raises the prospect that the Swiss market access regulatory strictures will require further reform, an issue that he hopes the Swiss authorities will be able to get to grips with speedily.


Actelion's global headquarters in Basel

"It's not merely industry actors that have to start adjusting to these emerging realities, but also the regulation frameworks themselves. In many instances, pharmaceutical companies are legally prohibited from discussing their pricing policies and market access strategies with others that could be perceived to be their competitors, but this is hardly appropriate for joint-innovations," he warns. "As one of the forerunners on combination innovations for multiple myeloma, Celgene is especially eager to discuss these sorts of issues with the relevant Swiss authorities well in advance so as to mitigate any possible interruptions in market accessibility," he concludes.

 

GENERICS: BEGINNING TO TAKE OFF

For many years Switzerland's generics market was down in the doldrums. Brand loyalty has traditionally been strong and there was a prevailing sentiment that Swiss doctors, under little pressure to resort to low-price alternatives, gave preference to well-esteemed brands. The latest figures from Interpharma, however, signify that old habits are beginning to change: reimbursable generics achieved sales of 637 million Swiss francs (USD 644 million) in 2015 which represented growth of in excess of seven per cent on the year before. Growth in volume had meanwhile leapt up a full 13 per cent.


Martin Naville, CEO, Swiss-Amcham

"Switzerland remains a fairly special market because there is free choice for the patient, for the pharmacist, and for the doctor ... nobody is ever forced to take a generic," points out Andreas Bosshard, general manager of Mepha-Teva. "Here, the patient chooses whether to take an original or a generic and whether to take Mepha or another brand. There is only a ten percent co-payment so the patient does not necessarily feel the price difference either. Therefore we have to convince the customer through top quality, a good brand, and reliable services," he analyses.

This is precisely why Teva has taken the unusual step of persevering with the Mepha brand a full five years after having acquired the company. "Teva is a strong international powerhouse, which offers more than a local company could ever even aspire to in terms of product, pipeline, professionalism, and patent know-how. Mepha, a home-grown firm, by contrast, has been known domestically for over 60 years and is familiar not only to doctors and pharmacists, but also to patients with about 70 per cent of a given patient pool instantly recognizing the brand name ... we were thus extremely careful to balance the spirit of the local brand with the strengths of an international company," emphasizes Bosshard.


Jean-Paul Clozel, CEO, Actelion

Meanwhile the jury remains out on the future of biosimilars locally. Considering Switzerland's fine pedigree in biologics and the fact that many of the strongest biopharma companies are now well underway in trying to establish a foothold in the emerging field of biosimilars, one might logically expect the future to be rosy. Not necessarily so according to Amgen's André Dahinden. "This is obviously something that we are monitoring very closely to see how that particular market segment develops. It will depend a lot on the speed of innovation coming through, and the regulations regarding both biosimilars and generics. Today, even the best biosimilars are often outpaced by even better originator drugs and as long as the Swiss population continues to desire the best cutting-edge products, and the industry is able to continue to deliver new innovations at a price reflecting its added value, the Swiss biosimilars market will probably not mature at the same pace that we might see in other countries," he forecasts.

GROWTH SPOTS AND NICHES

Diseases of the circulatory system – in particular ischemic heart disease, high cholesterol and cerebrovascular ailments – remain the most common triggers of morbidity in Switzerland with the latest epidemiological profiling of the country demonstrating that they accounted for roughly a third of all deaths in 2015. Naturally the CVD segment thus constitutes a popular focus area for many pharma companies present in the market. "Our fastest growing products are in cardiovascular where we have been scoping in on hypertension, angina pectoris and heart failure," confirms Daniel Roth, general manager of Menarini.

"Incidence of hypertension remains one of the most frequent conditions encountered in this market and, if left untreated, leads to secondary illnesses so we are proud to be as one of very few firms that can locally offer a full product range from a mono to a triple combination therapies," he reveals. "We are also preparing to launch a novel treatment for chronic hyperuricaemia which has entered our portfolio courtesy of a licensing agreement with a Japanese entity ... At Menarini we consider it fundamentally important that our Swiss affiliate, despite being outside the EU, is nevertheless included in such deals," he adds.

After cardiovascular, cancer ranks as the second leading cause of morbidity in Switzerland with the most deadly category, lung cancer, claiming in access of 3,200 deaths year on year. Though known for being an intensely competitive and crowded local market segment, not least because of heavy participation from local giants Roche and Novartis, international firms are continuing to invest big. "For BMS, it is extremely important that we continue to invest in our immuno-oncology platform. This platform has unequivocal benefits to the general population and revolutionizes the way that cancer is being treated," asserts Michelle Lock. She evaluates that, "several years ago, BMS was perhaps not quite as integrated in Switzerland as it could have been," but affirms that this is all changing and indeed envisages a significant rise in the company's ratio of European-wide sales once the requisite reimbursements for melanoma and lung cancer product, Opdico, are secured.

Meanwhile, Andrea Michael Meyer, general manager of Sanofi Genzyme, sees the "sustained strong performance" of his oncology portfolio as one of the key contributors to "the year-on-year double-digit growth" that his affiliate has been experiencing. "This is definitely an area that we'll be seeking to leverage further," he avows.

Another area where he identifies strong potential for action and high in unmet need is the 'rare diseases' niche. "A disease is considered rare in Switzerland if there are five or less diagnoses per year from a total of 10,000 people, and our calculations indicate that there are between 6,000 and 8,000 such diseases in the country affecting roughly seven per cent of the population or 862,000 people," he elaborates. The main complication of operating in such a segment is that many such diseases are misdiagnosed or diagnosed late because of lack of physician awareness. "It's certainly true that many of these rare diseases for which we possess therapies display broad symptoms, overlapping with many other aliments," he concedes. "We are thus working hard to raise awareness around these diseases and the key symptoms that can trigger an exclusion diagnosis because the time between first symptoms and a diagnosis still takes much too long in Switzerland." Meyer is confident that Sanofi Genzyme is well positioned to respond to the unmet need. "Rare diseases and a strongly patient-centric approach are very much part of the DNA of our company and we have also crucially been able to retain much of the original biotech atmosphere and energizing can-do attitude that will be so fundamental to our continued success," he affirms.

Ophthalmology represents yet another therapeutic area that appears to be enjoying a growth spurt. "There remains great potential in two areas in particular, glaucoma and dry eye, due to the age demography of the Swiss population and there are also environmental and lifestyle changes that are taking place that will surely ensure that there remains a dynamic dry eye market," analyses Théa Pharma's Gaëlle Méaude. "We offer two different kinds of products: service products, primarily intended for diagnostics, a relatively small market, but an important service for eyes doctors; and then we have our technologically innovative products, where our ambition is to have almost exclusively preservative-free products," she explains. What makes the Swiss market especially interesting for Théa has been the rising demand for the latter. "Studies demonstrate that the proportion of Swiss patients asking their doctor for preservative-free products is higher than in most other European markets," she explains and as such one of her company's key innovations Monoprost®, the first and only preservative-free latanoprost, treating patients with open angle glaucoma and ocular hypertension has been enjoying great success. "Next year we intend to launch our second preservative-free product in the area of glaucoma," she promises.

PATHWAY TO SYNERGY

How then, overall do we consider Swiss pharma in terms of its comparative standing and place in the world? "In the 1990s, all the talk was of the Swiss pharmaceutical industry going west. The assumption was that the large Swiss companies would pack up and move to the US ... Today such companies do maintain a significant presence in North America, but our relationship with our number one competitor in terms of attracting innovation has actually proved to be much more synergistic that all that," evaluates Interpharma Thomas Cueni.

Some argue that what Switzerland excels in is rather a subtly different, but complementary style of innovation. "We could certainly improve in terms of disruptive innovations. Switzerland does not have any companies like Amazon, Skype, Facebook, or Uber. Where we do perform well is in strong incremental innovations: in scientific findings, and in the diligence and strength of execution. We have perseverant, reliable, and intelligent people with strong skills in producing things," assesses CTI's Walter Steinlin.

For him difference can even be a virtue. "Although people often benchmark themselves to Silicon Valley, I do not think that Switzerland should become like a California. While more innovative compared to Switzerland, in terms of unemployment and social disparity, it is not something we should aspire to. We should be happy having resolved upon our own kind of fruitful and productive ecosystem," he argues.

Actelion's founder and CEO, Jean-Paul Clozel, strongly reiterates this sentiment. "To be perfectly frank with you, I firmly believe that Switzerland is blessed with an even better biotech scene than Boston or California. From day one when you enter Switzerland, you know that this is not about the domestic market. You rapidly understand that you have to be open to the whole world. In the US, you have a lot of companies who are present exclusively in their home market. In Switzerland you have four different cultures united in one country, with four official languages: German, French, Italian and Romansch. As for Actelion, we have 46 nationalities working here in Switzerland. Over five centuries the country has been able to integrate different cultures into the fabric of society and all of those bring something to the table and you end up with something very unique and special. I am utterly convinced that Actelion's own success story simply could not have occurred anywhere else."

FLY IN THE OINTMENT?

Whether this highly-prized feature of Switzerland's make-up remains in place over the long-term is now quite uncertain subsequent to a referendum decision in 2014 in favor of placing limits on immigration. A great worry of many in the local science and medical communities is that the country will ultimately become less open as a consequence of this vote. "The area that I am most concerned about in Switzerland is in respect to free movement of people ... we are an international company, and we need to be able to source and attract external talent to fulfill our human resource needs," affirms Janssen's Ludo Ooms.

Martin Naville, CEO of the American Chamber of Commerce is equally strident in his opinion. "A real priority and that of my members is to ensure that Switzerland remains a country with open borders ... all our major growth industries rely heavily on foreigners and 24 percent of our population today is not Swiss-born."

Noting that the pharma industry has most to lose from a restriction on free movement from Europe, Lilly's Michael Cobas Meyer urges his peers to be more steadfast in their opposition. "From our industry perspective, it is important to defend the good relationship Switzerland has with the EU and in particular the legal framework which is in place through bilateral agreements. Industry has an important role to play in being more vocal about the importance of retaining our close trading and cultural relationship with the EU."

Perhaps the most damming assessment is that delivered by SIFEM's Jean-Daniel Gerber. "The real risk is that we would be excluded from Horizon 2020, the biggest European Union research and innovation program. We might become just another third country for the EU, like the US, or Japan or post-Brexit Britain. This would be extremely damaging to our economy. Research does not depend purely on money, but on different people working together. Finding a solution to this relationship will be key to Switzerland's future, providing stability and predictability to businesses that want to invest here," he counsels.

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