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Pharm Exec speaks to James Burt, Accord Healthcare’s executive vice president, Europe and MENA, about the company’s vision for the UK and Europe post-Brexit, the challenges of retaining the company’s culture amid major growth, and the current landscape for generic medicines.
Accord Healthcare, which acquired Actavis UK and Ireland in 2017, is one of the fastest-growing generic pharmaceutical companies in the UK. It aims to become a Top 5 pan-EMENA (Europe, Middle East and North Africa) generics company by 2021 and has developed a specialty products commercialization capability. In a period of Brexit anxiety, Accord’s recent investment in a 22-acre, state-of-the-art pharmaceutical site in Fawdon, Newcastle, which was closed in 2015 by Sanofi, stands as a major vote of confidence in the UK’s future as a science and manufacturing base.
Pharm Exec spoke with James Burt, Accord Healthcare’s executive vice president, Europe and MENA, about the company’s vision for the UK and Europe, the challenges of retaining the company’s culture amid major growth and a robust M&A strategy, and the current landscape for generic medicines.
James Burt: We have a lot of confidence in the UK science and manufacturing base. I’ve operated global and regional businesses for many years, and while you can find lower-cost bases in Europe, quite often they come with some challenges. I’m very happy to have that manufacturing site located in Newcastle. It has a huge heritage and some very well-trained staff, who we have managed to reinstate after many had lost their jobs. If we’d tried to build the site somewhere else it would have been a far greater investment. So I feel much better about “recycling” the Fawdon site, which will have a more international, export focus and neatly complement our Barnstaple, UK site, which currently produces about 10 per cent of the UK’s medicines. The UK has seen a lot of off-shoring over the last decade, and I think we were at risk of losing certain key capabilities and our strategic national asset base to deal with things like pandemics. We see Newcastle as an essential part of our supply chain. Aside from drug production, we’re doing a lot of packing, and that’s to enhance our rapid response to market exigencies.
Our strategy is very well-honed for Europe. We’ve always had a go-to market strategy through our generic products, originally injectable generics. We’re one of if the not largest supplier of generic chemotherapy in Europe, which has allowed us to build infrastructure and support it with revenues. We’ve since moved into further retail generic activities, and invested very heavily in a pipeline of novel products. We have made some really interesting breakthroughs in cancer care. Our strategy is very much to use the infrastructure we’ve built for generics to evolve for that specialty pharma model.
I joined Actavis originally to set up a global hospital division. That gave me great exposure to the different healthcare systems around the world, in particular the oncology area and injectable generics. I stepped into Intas [Accord’s Indian parent company] in 2010. Back then it was a start-up, frankly; although it had an Indian “promoter”, the company barely had a year’s sales in Europe when I joined. It was tiny, it had less than 50 staff, and it was yet to post a profit, but it was really entrepreneurial and exciting. From there we rapidly set up one of the biggest footprints in Europe for generic drugs. Now, eight years on, we operate in just about every country, we have around 1200 staff, and we’ve outperformed every peer. So I’m very proud of what we’ve built.
In the early days, I was into everything. I had bandwidth to know what 35, 40 people were all doing in detail and I could be very involved in every decision. As the company has grown, my role has morphed into being there for the strategy setting and making sure that is well communicated and inculcated in the company. I also to act as a figurehead, taking part in face-to-face activity with the leading stakeholders, also setting the cultural tone and behavior of the organization. I am still there for the big-ticket decisions, certainly if there is any M&A activity or changes in material part of the organogram.
It’s the million-dollar question. Communication is essential, giving everyone very clear direction so that they can make their own decisions to support that direction. We’re working at the moment on a brand refresh to make sure people are very clear on what it is that we do and why we do what we do. You have to have a degree of skepticism about bureaucracy. We have to make sure we are always compliant and, of course, quality is the number-one key success factor that we’ve always recognized. But for me it is about having enough processes and systems without throwing the baby out with the bathwater and creating a Kafkaesque bureaucracy.
As for M&As, all the research says that cultural misalignment is the biggest cause of their failure. We have become a more proactive with our M&A strategy. But I would emphasize that we are not led by the strategy; the M&A strategy supports the strategy we are trying to execute as a company. M&A is there to fill gaps or to shore up the delivery of that strategy. We’ve hired in a team of ex-investment bankers and we have created a very tight integration management office. What that allows us to do is build a pipeline of M&A targets. We have a very clear framework as regards what type of target will help support our strategy, and we start to engage with potential counter parties pretty early on, getting familiar with them and getting to know them.
I’ve been really lucky in the trust that the parent company has placed in me. Intas took a view quite early on that was a bit different to a lot of their peers in that they hired specialists in the areas where they were opening businesses, rather than dispatch somebody from the domestic market to oversee them. There are certain aspects that we run globally for economies-of-scale and cohesion reasons, but there’s quite a lot of regional variety in our strategy as group and that allows me to be very autonomous. My principal boss, Binish Chudgar, vice chairman and managing director of Intas, has been fantastic in giving me a lot of autonomy.
The story of generic medicines is the greatest story never told. I want to sing it from the hilltops; it drives me potty that people don’t recognize the value that the industry brings. If you look at the change in life expectancy over the last 100 years, a girl born in 1841 could live to about 43 on average, today it is double that. It is said that antibiotics alone added 20 years to average life expectancy. The biggest way to improve lifespan and quality of life is to give people good access to modern medicine, which is what we do. Without the end of patent monopoly, there would be no incentive for the next medtech to be created; we all know that healthcare systems could not afford for that to happen. In the UK, Accord is the biggest supplier of medicines. Something like one in six prescriptions in the UK is filled by one of our products; collectively, the industry saves the NHS something like £13.5 billion a year. That can fund the next wave of medicines and a lot more besides. And yet the average cost of a pack of medicines we sell in the UK, about month’s supply, is £1.30. We should be proud of what we accomplish in terms of improving people’s health outcomes.