Interview: Trevor Smith, Takeda

Takeda has undergone a substantial transformation over the last year following its October 2011 acquisition of Swiss branded generics and OTC specialist Nycomed.

This period of evolution has continued, though on a smaller scale, during 2012 with three further deals, worth a total of around €1bn. But it’s the addition of Nycomed to the Takeda fold that will be key to the Japanese pharma company’s future.

For Trevor Smith, Takeda’s head of commercial operations for Europe and Canada, one of the most important changes the €9.6bn acquisition of Nycomed brings is to enlarge Takeda’s footprint in Europe and the emerging markets.

We’re reorganising our capability to make sure that we are competitive in launching new products

It gave Takeda complete geographical coverage in Europe – a big difference from a year ago when the company had a presence in just 13 countries. But the swelling of its ranks also gave Takeda an extra impetus, Smith says. “The acquisition of Nycomed in Europe and Canada increased our revenue by two and a half times. So we had substance in Europe, rather than trying to build from a much lower level.”

He adds: “In Europe and Canada it’s a growth story [of] five new products over the next two years – up to 20 over the next five years.”

A blueprint for the future

But expansion on this scale doesn’t come without its challenges, not least because it takes place against an industry-wide backdrop of substantial and sustained job cuts.

Few, if any, in the industry are immune to such pressures and Takeda is no exception, announcing in January plans to cut 2,100 jobs in Europe by 2016, though this was at least in part in response to the enlarged firm’s shifting business model.

“We’re reorganising our capability to make sure that we are competitive in launching our new products and that we meet the needs of a changing healthcare environment,” Smith explains.

The significance of this lays in the evolving nature of Takeda’s portfolio. “The products that we’re bringing to market are largely in different therapeutic areas than the ones we’ve had in the past.”

“So in designing our own blueprint for the future we’ve been able to reconsider what resources we need to bring a different portfolio of products to the market and that’s been the basis on which we’ve reconsidered the size and shape of our organisation.

“We haven’t been forced into a situation where it’s been head count reductions for head count reduction sake.”

Confronting mortality

Significant cuts may be on their way over the next four years, but Takeda and Nycomed have perhaps already come through the hardest parts of today’s pharmaceutical environment.

“Both companies had to come to terms with their own mortality pre-acquisition,” says Smith. “Major products were about to lose, or had just lost, their patent exclusivity.”

For Nycomed this meant loss of exclusivity (LOE) on its blockbuster gastroinestinal drug pantoprazole and the consequent need to reorganise its business.

Takeda’s problems in this area were more widespread. The company was heavily reliant on four major brands and as the deal gained momentum all of them had either gone off-patent or were about to.

Ulcer drug lansoprazole and prostate cancer treatment leuprorelin already faced generic competition and before the deal was completed Takeda’s diabetes drug Actos (pioglitazone) lost exclusivity in January 2011. A year later Takeda’s anti-hypertensive Amias (candesartan) followed suit.

Smith has served Takeda for more than 12 years now and, having worked through this period, there’s a certain amount of relief in his voice when he says that having ‘bottomed out’, both Takeda and Nycomed could concentrate wholeheartedly on the shape of their future growth.

Many of the new products that will drive this growth have come from Takeda’s internal development efforts, aided by its Millennium subsidiary, itself acquired in a 2008 deal worth $8.8bn.

Looking at the combined company’s prospects now, Smith points to “a very interesting and diverse pipeline of products coming through”.

Its late-stage pipeline includes three phase III candidates for which he expects big things. There’s prostate cancer drug orteronel (TAK-700) and vedolizumab for Crohn’s disease and ulcerative colitis, and then the atypical antipsychotic lurasidone. The latter was in-licensed last year from Dainippon Sumitomo Pharma Co and is in late-stage trials for schizophrenia and bipolar.

Even closer to market is Takeda’s monoclonal antibody treatment for Hodgkin’s Lymphoma, Adcetris (brentuximab vedotin), which was recommended for European approval in July and which Takeda expects to launch later this year.

Meanwhile, the company recently won approval for a brace of new products in Europe after regulators gave the greenlight to its short bowel syndrome drug Revestive (teduglutide) in September and approved iron deficiency anaemia treatment Rienso (ferumoxytol) in June.

European challenges

But what sort of an environment will these products face in Europe? Smith is under no illusions as to the current state of the market.

“It’s tough for everybody and there are surprises from time to time. The key is to try and have a good handle on your plan. What can cause you the biggest pain are the assumptions you build in – whether they’re overly optimistic or too pessimistic. It’s about having an appropriate flight path between your assumption and reality.

He admits to “a few surprises that have been not very pleasant, particularly in Italy and Spain”. Asked if, like other pharma companies, Takeda has had any problems receiving payments in those two countries, Smith answers that “most of that pressure on our portfolio seems to come through products that sell through hospitals”, which is a relatively small section of Takeda’s business. “But, yes, we’ve got the same issues with payments as everybody else and we’re trying to address them, as is everybody else.” As with patent expiries and staff cutbacks, it would seem that this feature of the European healthcare landscape is another industry-wide issue.

Less predictable but no less pressing for Takeda was the way Actos was dealt with in France, where its use was suspended after concerns were raised about links between the diabetes drug and the risk of bladder cancer. France’s AFSSAPS, which has since been dissolved, acted quickly – some might say hastily – having been criticised heavily for its role in the 2011 Mediator scandal, which saw Servier’s diabetes drug remain on the market for over a decade after it had first been connected with heart problems.

German authorities quickly followed AFSSAPS in suspending Actos, but six months later an EMA investigation concluded the diabetes drug could still be prescribed, albeit with updated safety information.

The affair clearly still rankles Smith. “They overreacted,” he says of the two countries’ regulators. “An appropriate response would have been to undertake the investigation or to stand by and wait for the results of the Article 20 evaluation that was being done by the European authorities.

“Having said that, if the local authorities genuinely believe there’s an issue of patient safety, then they have to do what they think is right at the time. But I think now we can look back and see that it was probably an overreaction.”

The company, and the rest of the industry, will face challenges of a more sustained nature in Germany, where the 2011 introduction of AMNOG and the G-BA test has caused more than a few pharma marketers to question their assumptions about Europe’s single largest market.

“What’s happening in Germany with AMNOG etc changes the whole environment and our business is affected in similar ways to everybody else’s. There’s a lot we don’t know, so we’re still watching the situation play out. Everyone’s looking at the products that are locked in discussions at the moment and starting to scenario plan for their own products,” says Smith.

Germany is, he says, “highly significant” for Takeda’s business going forward. “So success in Germany isn’t optional. We’ve got to be successful in the implementation of our transition plans in Germany, and be able to launch the product portfolio that we know should be particularly successful in that country.

“Germany traditionally has been one of the first countries that you would go to. I think it’s likely to remain that way, but we’ll be vigilant. We need to be looking at that, and reassessing that, to ensure that it’s still the right thing to do.”

These deliberations have particular significance for Smith because Takeda is going through the process now with its new once-daily hypertension drug Edarbi (azilsartan medoxomil), which gained EU approval in December 2011. Having chosen to launch it first in Germany in January, Takeda is now in the middle of the formal process whereby its price is confirmed.

Takeda’s rebirth

Despite the challenges of the European pharma landscape, and having seen his company ‘confront its own mortality’, Smith is confident about the future.

“We’re moving into some different therapeutic areas with some exciting new products in areas of high unmet medical need and our expectation is that the business has a growth trajectory to be excited about,” he says.

From among its product pipeline Smith picks prostate cancer drug orteronel (TAK-700), vedolizumab for Crohn’s disease and ulcerative colitis, and atypical antipsychotic lurasidone as having the most potential to reach blockbuster status. But Takeda’s future, he says, won’t be solely dependent on its blockbusters.

“I think what we’ll see is that the company is going to be built upon a number of the new products reaching blockbuster status, and a larger number of products that are not quite of blockbuster status, but just below that threshold,” says Smith.

With his hopes high for the company over the next decade, Smith says this period will see “the rebirth” of the organisation thanks to the newly-diversified range of product areas in which it now operates.

The Interviewer
Dominic Tyer, managing editor of PME and PMLiVE