Interview: Michel Pettigrew, Ferring

Before Michel Pettigrew took the reins at Ferring Pharmaceuticals more than a decade ago he admits he didn't know much about the company, but what he did appreciate was its difference to big pharma. Throughout our conversation it's the Swiss biopharma's disparities that stick out; from the company's ownership structure to its strategy to to its philosophy of 'controlled entrepreneurship'. 

Pettigrew arrived at Ferring in 2001 with a solid big pharma pedigree. After four years at Procter & Gamble he spent nearly 23 years at Bristol-Myers Squibb, mostly in international positions. His time at BMS saw him spend eight years in Asia, another eight in Europe and the remainder split between the US and his native Canada.

From that solid big pharma route he moved 13 years ago to Ferring, whose headquarters are now situated in the town of Saint-Prex on the north shore of Lake Geneva. He began leading the group first as head of operations and then a year later as chief operating officer. Four years after that Pettigrew was appointed president, when an executive board was created to run the firm. 

Single-minded pursuit of progress
So, how does Ferring stand out within the industry? Pettigrew summarises this in three points: private ownership with a truly long-term view towards science, strong lifecycle management and its approach to its people.

Ferring was founded in two rented rooms in Malmö, Sweden by Dr Frederik Paulsen in 1950 as Nordiska Hormon Laboratoriet, and took on its present name four years later. The name Ferring comes from the close-knit community of people that hail from the island of Föhr, off the German coast of the North Sea, and who spoke Fering.

The company's present owner is Frederik Paulsen Jr, the son of its founder. As Pettigrew notes, in Ferring's case 'privately owned' really does mean 'privately owned'. “We have one owner who has a view of this company, that is very important. His attitude towards the company is that we want to make science progress. We don't have to be complicated, but we should do things that will help patients, ultimately.”

The absence of a potentially fractious family jostling for control of the company is clearly illustrated when Pettigrew notes: “[Paulsen] has basically given me a free hand to run and mould the company, keeping in mind his primary objective, and that is to provide the right level of service to patients in the form of different kinds of drugs to address different types of diseases.”

Pettigrew speaks admiringly of the “very long view on science” Paulsen takes. “In other words, the financial needs are secondary to the scientific results. So that was very attractive to me when I joined the company, and I can tell you after 13 years that Frederik Paulsen has really lived up to those expectations,” Pettigrew says. This too is a product of being truly privately owned, rather than, for example, answering to a private equity group, and allows for a different style of management.

A further difference comes from the company's product portfolio and the high level of lifecycle management that it requires. “If you look at our portfolio of products, we have several very old products that are viewed as branded generics, but where the entry from other companies is fairly difficult. And what we have done over the last 13 years is basically build up a very strong knowledge in the area of lifecycle management.”

But the company doesn't “go all out to” protect lost intellectual property (IP) rights, Pettigrew explains. “Our definition of lifecycle management is to keep on working on compounds and find either new indications for them, to develop new forms that will make it easier for patients to use or to come up with different dosage forms that will allow, again, the patient to feel much more at ease with the drugs themselves. Ultimately [we want] to find better ways to deliver the same high-quality product at a lower price, because, whether we like it or not, often governments mandate price reductions, and we have to be ready for this and maintain our financial margins.”

The third differentiating factor for Ferring is the company's “people approach”, says Pettigrew, though he acknowledges that it can be difficult to for people who don't work for the company to see this. “We have the Ferring philosophy, which says basically that people come first at Ferring. From an outsider perspective, it might be seen as, well, most companies have this. But in reality, at Ferring, we still run this company to a certain degree as if it was a family.”

Freedom to act
Ferring's approach to individual responsibility is amply illustrated by the dynamic between its billionaire owner Frederik Paulsen and company president Michel Pettigrew. They work closely to set the strategic direction of the company but Paulsen, for whom exploration is a passion, has given Pettigrew the freedom to lead - as evidenced by Pettigrew's casual reference, when we speak, to Paulsen's “big trip” to Antarctica. 

“On the operational side, he is not involved at all - he has given the freedom to operate to his management team. He trusts us and we've been working together now for 13 years, so he knows me quite well. He knows the management team. And he relies on them and their good judgement to make the right decisions.”

This freedom to operate can be seen throughout Ferring in its approach to what Pettigrew terms “controlled entrepreneurship”, the policy of allowing its managers to apply their local knowledge to the company's best advantage. “We give them the freedom to make acquisitions - under certain conditions, of course. But if you speak to some of our managers around the world, they will tell you that they feel that they have the freedom to operate as if they were entrepreneurs themselves,” Pettigrew says. “That's a great motivator, and it helps us attract very good people who want to move our company forward and will do what is necessary in their local markets to adapt either or current products or to bring in new products that are more appropriate for the market that they are managing.”

As an example of controlled entrepreneurship he cites an Argentinian infertility deal that, in order to meet the specific needs of that market, saw Ferring's general manager bolster its offering by working with local firms to acquire, in-license and distribute some of their products. “All of that was done locally,” Pettigrew explains, “and if you'd asked me which products they are, I couldn't even answer the question, because I don't get involved in that decision. My head of Latin America would get involved to help guide through the negotiations, but that would be it.”

A much larger example of the policy came in the wake of Ferring's 2005 acquisition of Bio-Technology General (BTG). It purchased the Israeli biopharmaceutical services company in order to fully integrate the growth hormone Zomacton, which had been licensed from BTG. “As part of the acquisition, we agreed to take a product that is called Euflexxa, which at the time was in the midst of going through the FDA regulatory process,” Pettigrew explains, adding: “We weren't too sure what we were supposed to do with this, because it's an area totally outside of Ferring's core knowledge.”

Nevertheless the company's local US management were keen to run with the treatment and, with head office support, brought the product to market. “Today it's a $155 million product and the local management have been extremely successful with this. So that's another example of controlled entrepreneurship.”

But Pettigrew notes that key to the policy is understanding that, as a global player - Ferring operates in 55 countries around the world - the company must not create problems for itself in one part of the world because of actions taken in another. “I would not see, for example, a general manager make an acquisition in the field of cardiovascular drugs, because that would not fit our profile at all and wouldn't make sense, so that does not occur.”

A global spread
Turning to where the company finds itself in 2014 Pettigrew points to three years of European growth, despite the very difficult pricing environment, and that's thanks to flexibility to respond to the market and managing the region from a reduced core of people in Switzerland. “In Europe, we are still growing, not at a very fast pace, but we are still growing. And I will tell you, compared to many big pharma companies today, that's quite an achievement.”

Increasingly the group's strategic focus is now on the US, China, Brazil, Russia and Asia given the opportunities Pettigrew sees in those markets. “When I joined the company, I would say 82 per cent of our business was in Europe. Today, our European business represents 43 per cent of our business, Asia/Pacific 20 per cent, the US 25 per cent and the Middle East and Latin America accounts for the rest.”

From this point of diversification Pettigrew looks forward this year to new product launches in Europe and the opening of a new headquarters and manufacturing facility (where the plan is build a fully integrated pharma company with a strong US footprint). After that comes his long-range planning, which will focus on how to grow Ferring into a €3bn company by the year 2020.