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Greece: Classical Thinking For a Modern Industry

01.08.2008 / Pharmaboardroom

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Greece’s contributions to health are world-renowned, whether physical through its Mediterranean diet and climate, or mental as the genesis of western philosophy and mathematics. Less well-known, however, are its modern-day activities in the pharmaceutical industry, where the blossoming market is distinctive for its diversity despite a small size of 11 million people. Between innovating MNCs and fast-growing locals, catch-up policymakers and the companies and institutions helping their competitiveness, and the vertically integrated alongside the niche players – all underlain by the classic Greek entrepreneurial spirit – the re-emergence of the Hellenic pharmaceutical industry is paving the way for the country’s global recognition on an entirely different scale.

In the global fight for pharmaceutical supremacy, Europe’s multitude of heterogeneous markets plays an understandable second-fiddle to the dominant homogeneity of North America. In the past 15 years, R&D investment grew just 2.9 times in Europe, compared to 5 times in the US. Europe accounts for some 30% of world pharmaceutical sales and generates less than one quarter of new medicines, compared to North America’s 48% and two thirds, respectively. Taking a global perspective, however, it’s evident that bigger trends are at work beyond a pan-Atlantic head-to-head. Comparing aggregate pharmaceutical plant openings and closings, the picture gains resolution: in the past five years, a net loss of 16 in Europe, one in the US – and a net gain of 13 in Asia. Although many people look to Europe’s big five for the innovation necessary to stem this changing tide, countries like Greece – with high per-capita healthcare expenditures amounting to 10% of a €250 million GDP, and a bumper crop of companies expanding internationally whose workforce exceeds 11,500 – offer an alternatively appealing opportunity.

It’s no secret that Greece is going through a strong economic upswing. Even with the investment and development frenzy from the 2004 Athens Olympics long gone, GDP growth exceeding 4% has outpaced the Eurozone average for the last decade, with the end result that the population’s prosperity is converging, with per capita income figures moving impressively from 64% to over 80% of its more developed European peers. With a strategic geographical position at the crossroads of Western & Eastern Europe, Middle East, and Africa, Greece is poised to take full advantage of the confluence of its natural and economic strengths. Whether this potential is realized, however, depends as much on the will of the Greek people as the resolve of the policymakers driving much-needed change in legislative and regulatory frameworks.

Career diplomat, former mayor of Athens, and current Minister of Health and Social Solidarity Dimitris Avramopoulos, while speaking at the AMCHAM Healthworld 2008 Conference, stated clearly that “Greeceneeds to streamline its National Health System and increase spending in the sector. These should be among the government’s top priorities.” This comes as a simple and straightforward message to a sector that is more than willing to listen. An advocate of private sector health services, which have seen a rapid growth in market share figures above 10% in the first half of 2008, Avramopoulos contends “that private health services have contributed through competition, improving service.” However, with hospital debts reaching €2 billion – despite a 2005 account reconciliation – and decision-making power fragmented across ministries as seemingly irrelevant as marine affairs, private sector actors will be looking to the government as a role model going forward.

In fulfilling its part of improving the national healthcare picture, pharmaceutical companies imbued with the Greek entrepreneurial spirit, historically manifested in such luminaries from Aristotle Onassis to Stelios Haji-Ioannou, are evident in the sector. Continuing this tradition, entrepreneurs like Lavrentios Lavrentiadis, the 35-year-old scion of Alapis, are floating capital and acquiring players throughout the value chain to become European leaders in pharmaceuticals, the Lavrentiadis alone spearheading 40 acquisitions in the past decade alone. Indeed, the proof is in the numbers: 300 pharmaceutical companies, 130 wholesalers, 30 pharmaceutical cooperatives, and more than 10,000 pharmacies; impressive considering a population of only 11 million. Stefan Stefanidis is in a good position to attest the entrepreneurial attitude of his fellow countrymen. As former President of Boehringer Ingelheim’s Greek operations, and of the EU affairs committee of the Greek Pharmaceutical Association (SFE), he was responsible for bringing BI’s manufacturing facilities to Greece, which remain as the last vestige of MNC-owned production in the country. Stefanidis illustrates the defining Greek character trait with an anecdote: “If you stand in Athens’ busy Constitution Square and call out loudly, ‘Mr. President!’, 50% of the crowd will turn around and answer, ‘Yes?!’ When Greeks hear this, they respond, ‘Why only 50%?’ to which you must reply, ‘Because you called for Mr. President. The other 50% were women!’”

However, this attitude by itself is not enough, and requires an attractive and stable business environment upon which to thrive. Dionysios Filiotis, an entrepreneur himself as General Manager of the international joint-venture Pharmaserve-Lilly, as well President of The Hellenic Association of Pharmaceutical Companies (SFEE), which represents 90% of the market’s value, remarks that “we must look carefully to the future and at the opportunities, benefits, challenges, and problems each modern country will be faced with. The Greece of the future must ensure immediate access of its citizens to the benefits of the continuous evolution of science. Achieving this goal means consistent implementation of a policy, which unlike the practices of the past, will allow for the streamlining and unobstructed operation of the pharmaceutical market.”

A key player in streamlining these practices is the National Association of Medicines (EOF), the fully-autonomous body under the Ministry of Health and Social Solidarity headed by President Vassilis Kontozamanis, who describes the association’s objective as “to increase the effectiveness of health care system in Greece. Our main activities involve processing the bureaucracy and streamlining the Greek policy to the European one, provide the Greek patients an immediate access to any pharmaceutical product, removing social or economic barriers to the Greek pharmaceutical care and ensure the quality” of medicines delivered, pointing to the abolishment of the Positive List by Law 3457 in 2005, and the regular pricing bulletins implemented in its place, as providing the necessary means to market access consistent with a modern healthcare system.

Adding another facet to the plan, the government is addressing such issues in initiatives like the Competitiveness Operational Programme, part of the National Development Strategy. Prime Minister Costas Karamanlis shows a cautious optimism in projecting the program’s success. “In order, however, for this national effort to bear fruit we must adopt the philosophy of rewarding those who are excellent and highly capable. We must adopt the philosophy of a constant evaluation in a meritocratic and transparent way of universities and research institutes, of professors and students.” Karamanlis reinforces the state’s unambiguous support for this progressive philosophy, emphasizing that Greece, in the 21st century, “must rely on Knowledge and Research with people at its center, and Science, Technology and Culture as its incentives.”

One of the most effective levers in realizing this endeavour is the General Secretariat for Research and Technology (GSRT), charged with strengthening, via competitive R&T programmes, the research activities of research and productive institutions in sectors which are deemed significant for the Greek economy and the improvement of its citizens’ welfare. Professor Ioannis Tsoukalas, General Secretary for Research and Technology, notes GSRT’s role is only getting bigger as time goes on: “With the rapid development of technology and the dawn of the new millennium (the era of Homo technologicus) the GSRT is called upon to play a role of exceptional importance. Today, the need to intervene and coordinate research is an urgent matter for the competitiveness of the Greek economy.

“Since its formation the GSRT has designed, administered and implemented research projects, continuously improving the process of evaluation and funding, in accordance with international standards. It has also initiated the process of evaluating the research bodies under its auspices by committees of experts from Greece and abroad, in order to make the most efficient use of funds available for R&T.” This is no small task given the relative dearth of funds available to support such initiatives. Compared to the 3% of GDP earmarked for R&D investments in the US and Japan, Greece invests just 0.7%, although this figure is planned to double in upcoming years as Greece meets its Lisbon Accord commitments, which call for all EU members to meet the 3% target with the goal of making the EU the most competitive and dynamic knowledge-based economy in the world by 2010.

In the specific domain of pharmaceuticals, investments in R&D were a phenomenon pushed to the back of mind for many years. Following a period of price freezes and counterintuitive public policy, formerly strong MNC investment turned to persistent disinvestment throughout the 1990s, causing remaining production facilities to almost exclusively consist, to this day, of contract manufacturing and branded generics. This fact necessitates an organization like The Panhellenic Union of Pharmaceutical Industry (PEF), whose General Director Mark Hollandezos emphasizes that “PEF represents branded generics industries, not just simply generics. We see that as an important distinction that represents the value-added certainty and familiarity with a trusted product.” As an industry whose foundation they are built upon, Hollandezos considers “generics as a crucial part of the solution to the expenditure problem,” but remarks that “this cannot be done by market forces alone. We need a comprehensive policy that would promote the use of branded generics in public hospitals and social security plans. Additionally, there should be incentives to the Greek pharmaceutical industry to help realize more research and development. In recent times, the climate for R&D in Greece was almost hostile, to the point that a research orientation was at the bottom of the agenda.”

There is, thankfully, hope for the future. “Today things are changing. We believe that there are research areas, that although are not top-level research, can be fruitful and efficient. In pursuing this type of research, we would like to see more collaboration with academia,” and under the auspices of GSRT and PPPs, the incentives are ripe for the taking. Although there may be some wait before these incentives bear fruit, in other areas, so far Greek companies have been picking from the tree in a powerful way.

Locals: Reinvesting, re-emerging, and reaping the rewards

It’s little wonder Greece is home to so many successful pharmaceutical companies, and looking at the objective data, it’s easy to see why. Hara Kousoulakou, Research Officer at the Department of Health Economics of the Foundation for Economic & Industrial Research (IOBE), explains that “the industry has high turnover and increasing profitability, and offers a four-fold return on capital compared to the other economic sectors.” In addition to the financial attractiveness, Mrs. Kousoulakou points out that another strong point of the pharmaceutical industry is “its highly educated personnel, as well as the fact that the industry continuously invests in the training of the employees. Therefore, the Greek pharmaceutical industry has a positive effect on the national economy, as it contributes both to GDP and employment.”

One of the largest contributors to both GDP and employment in the pharmaceutical industry in recent years is Pharmathen. The company has seen exponential growth since Vassilios Katsos, President & CEO, took the helm in 1993, and with current annual turnover of €90 million expected to increase to €150 million by 2010, no end is in sight. In contributing to the employment side of the equation, Katsos says “today Pharmathen has slightly less than 100 people in R&D and this probably represents 60% of the total amount in the Greek pharmaceutical industry, and will be looking to add even more in the coming years” to cope with a second facility in the final stages of completion, and a third larger project comprising €40 million of investments. This latter sum is earmarked for solid dosage facilities, which will be fully operational before Q2 2009, and are currently under construction in the northern Greece.

With such a relatively high share of Greek R&D investment, it’s natural to be sceptical of the company’s ability to meet the future human capital demands required for such an operation. Fortunately, Katsos assures that Pharmathen “already began the recruitment process in 2006 to ensure new recruits share the company mentality and the work itself,” maintaining the corporate focus around the company’s three pillars of R&D backward integration, strategic selection of products with developmental barriers, and international markets.

Indeed, this latter pillar has become a cornerstone of the industry, leading many insiders to characterize Greece’s branded generic output as having the quality of Europe and the prices of Asia. Mark Hollandezos elaborates: “Today Greek industries export in more than 60 countries, at competitive markets as those of other members of EU, the USA and Australia. We develop branded generics products using Greek know-how, we create jobs, we invest in high technology and we carry out feasible forms of research.”

Despite performing all four of these aforementioned activities, and a history stretching back over 75 years to its origins as a pharmacy in the now-suburb of Athens, Patras, it wasn’t until the third generation became involved in the business that Specifar seized a market opportunity to focus on the pharmaceutical sector in earnest a mere decade ago. As a relative latecomer to the pharmaceutical industry, Chief Executive Officer and President Titos Vasilopoulos, says “there was a lot of price pressure from the Greek government during the 1980s, which resulted in many Greek companies closing their facilities. At that time [founder] Periklis Vasilopoulos decided to diversify into other healthcare businesses, such as medical devices and buying a private clinic.”

 

Ironically, the success of these projects and Specifar’s consequent large market position dampened the attractiveness of focusing on pharmaceuticals. “As a result, pharmaceuticals played a smaller role in Specifar until the mid to late 1990s, at which time the company recognized the growing importance of generics in Europe. The Greek generics industry was small at the time, but it was a strategic decision to begin building up manufacturing capacity and serving European needs of many companies. Specifar started building its current facilities in 1998 and construction was completed in 2001, after which point there was heavy R&D investment to build up development mainly for generic drug licensing to companies across Europe.” As a consequence, Specifar now counts over 400 marketing authorizations in all European countries and also in countries as diverse as Canada, South Africa, and Australia.

Identifying the strategy behind this rapid growth in less than 10 years, Vasilopoulos points to heavy investments in manufacturing facilities, funded by the profitability of Specifar’s non-pharmaceutical companies. The end result? “Specifar has changed from being a small, local Greek company to an international presence exporting all over the world.” But these investments are far from over. “Being so successful in R&D, as well as exports, Specifar chose to build additional facilities to meet present and anticipated demand. This facility will occupy an area of 27,000 sq. m. and will begin development later in 2008, to be finished by 2010 with the aim of meeting demand with significant capacity for the many contracts and product launches on the horizon for 2011 and 2012.”

Mark Hollandezos echoes this optimism for the industry and the members of PEF. “There is great hope for the future if coordinated action can be implemented. Many leaders of Greek pharmaceutical companies are second generation owners that represent a new breed of people, who have been highly educated, with international experience, and are ready to take on the advance.” In addition to this asset, “another advantage is our great scientific base, people who are very well trained abroad, as great researchers and scientists, and their will is to come back if they can find adequate opportunities.”

One company creating such opportunities is HELP S.A. Evangelos Zekkas, HELP’s Managing Director, stresses that “Human resources are one of the most important pillars in HELP’s strategy and they represent a very strong focus for the company. HELP counts on a well-integrated network of specialists among the Greek and international scientific community, and thanks to its good reputation within the pharmaceutical industry and an admirable track record of achievement, the company is currently able to attract a vast number of expertise from the national community and beyond.”

As more and more Greek companies are discovering, with a booming industry on the home front, many top-tier professionals, once feeding a diaspora attracted to larger markets with better career and salary potential, are choosing to stay in Greece or return from abroad. “Moreover, recent national economic growth has increased the power of local companies which permits them to have stronger bargaining power in recruitment policies. Currently, Greek firms can offer adequate incentive to the Hellenic expatriate scientist and compete on the same levels as other pharmaceutical companies abroad in the search for talent. This, combined with the desire of Greek emigrants to return to their own nation, has widely benefited national players and, presently, HELP has the possibility to enrol many experienced and well-educated scientists in different research fields.”

Having recently invested €6 million to modernize and implement its manufacturing facilities and increase development capability doesn’t hurt, either. HELP “has built up its brand through a continued presence in different countries while expanding in Europe.” Of course, this is easier said than done. Zekkas continues, “Increasing market share in sophisticated countries, as those in Europe, requires brand recognition and innovative products. For these reasons HELP built a pilot plant and laboratories,” which are dedicated to new drug delivery systems development, with the intent of scaling up pilot plant discoveries. “And of course, it is HELP’s intention to enlarge its partner network, both locally and internationally,” concludes Zekkas.

 

Entrepreneurial spirit, from sailing to selling

Unlike the Greek success stories above, Rafarm’s innovative investments have been driven since day one by the strength of a singular entrepreneur, Nikolaos Rassias, the company’s Founder, President, and CEO. Commenting on the ideas behind the company’s success, Rassias notes, “My vision was, and still is, to create something good for this sector and for Greece. In going from a single production plant of 1,200 m2 to over 10,000 m2 spread across three plants, this vision is being realized.”

Along the way to realizing this vision, Rassias has been personally acclaimed, with the former pharmacist at Evangelismos, Athens’ biggest hospital, and proprietor of a Peristeri pharmacy covering one of the country’s biggest territories, recently receiving a lifetime achievement award from the University of Athens.

Under the guidance of his entrepreneurial abilities, Rassias has ensured Rafarm “puts quality as #1, because procedures and guidelines are tougher every year. The company’s international activity, in itself, forced positive changes in this regard. The basic criteria when dealing with MNCs are quality and competitive prices. The issue is to have both.”

In staying on the cutting edge of automation and technology, Rafarm’s newest facilities are equipped with BMS (Building Management System). The only Greek pharmaceutical facility so endowed, Rassias explains that “Every single room of the building is equipped with sensors linked to a CPU from where it is possible to monitor and modify temperature, humidity and air flow and pressure.” Additionally, a €4 million investment dedicated to quintupling the company’s sterile area to 850 m2, whose new production will consist entirely of products for export.

This commitment to state-of-the-art excellence has been reflected in attracting international partners, with 2007 exports at 10% paling in comparison to even more ambitious figures in the coming years. “In 2008 and mainly in 2009, this balance will move toward 25-30%, based on a conservative estimate from more than 35 contracts already signed in the last years. Since 2004 Rafarm has doubled sales, and in the last ten years Rafarm has tripled sales, and exports will play an important role in keeping up this momentum,” Rassias notes.

However, Rafarm is not a one-man show, with Rassias having enlisted the competent help of his two daughters and son-in-law Aris Mitsopoulos to guide the company into the future: “The new generation is working very well and plays a big role in the company’s success, in concert with excellent production, registration, and regulatory managers, in addition to all-around excellent human resources. Rafarm has already reached 180 employees, and is still growing. When the company started I was personally doing everything, from preparing the files, filling boxes to production. Rafarm has come a long way, and its success will continue well into the future.”

Thalia Koukidou, General Manager of IMS Hellas Ltd., is in a good position to comment on Greek entrepreneurial spirit. Being educated abroad academically, and then professionally through stints at Novexal and Boehringer Ingelheim, her existing knowledge is supplemented by her day-to-day interactions as a leader in providing data and consulting services to the top companies in the Greek market. “Greeks are very entrepreneurial, don’t see obstacles. First they have a desire and express: ‘I will do it’ – and then, as a second step, one way or another, find a way to accomplish their dreams. This of course results in Greeks having difficulties to follow and work with rules. Because of this independence, people in Greece make their means fit their desires, rather than the other way around.”

Alexandros Lamnidis, Executive Director of the American-Hellenic Chamber of Commerce offers some impressive statistics to back up the more qualitative claims to Greek entrepreneurial proficiency. “1.1 million Greeks, or 16% of the total population, are directly linked to some form of entrepreneurial activity. Of these, 600,000 are established entrepreneurs, and 540,000 are at an initial stage to begin.” This is in addition to the 965,000 people who plan to start an entrepreneurial activity in the next three years.

For a concrete example of this attitude in action, look no further than the President and CEO of Farmanic-Chemipharma S.A. Kostas Pachis. While not uncommon for older, more established companies to acquire nimble start-ups, Farmanic-Chemipharma’s proceeded the other way around. Pachis explains the situation: “Farmanic was founded in the early 1960’s with the intention to operate in the traditional side of the pharmaceutical industry, manufacturing its own products, importing others, and having a traditional approach to the company business units such as sales marketing and R&D. In 2004 the company was positioned as a mid-size company operating basically in the generics market with a good reputation among the Greek scientific associations and the medical community.

”On the other hand, Chemipharma started in 1998 and the company had an impressive track record of achievement during its brief history. Thus, in 2004 the company was able to acquire and merge with Farmanic. With top management perceiving the importance of the complementary assets put in place and the good reputation acquired over four decades by Farmanic, the firm decided to maintain both names for the new company.”

Outlining the merged companies’ philosophy going forward, Pachis remarks “Chemipharma had from the beginning a very traditional approach to sales and marketing. As the former CEO of the company, I was personally responsible for the sales force,” as well as finding a “middle ground” philosophy between originals and generics, drawing inspiration from Aristotle in defining the key to success.

It the four years of building up this traditional approach, it took the same amount of time to boast some impressive statistics in re-establishing traditional drug sales, for example, the drug Allopurinol, which in the four years after the production license was acquired went from 100,000 to 700,000 units annually. Marking such growth clearly requires a strong sales focus, and Pachis’ hands-on philosophy seems to be working, with the sales force still directly reporting to the founder for their daily activities. Despite this constant close contact, Pachis is clear on where he places his trust. His people “represent one of the main assets and success factors for the company. Therefore, Farmanic-Chemipharma is keen to attract a very skilled work force and provide them the necessary training they need to operate successfully and effectively,” providing the nearly 150 employees, a continuously growing figure at annual rates of 30-35%, with 30 days of mandatory training per year.

 

Multinationals, capitalizing on the Greek mentality

Despite their home turf advantage, local companies do not have a monopoly on the country’s entrepreneurial mindset. Says Philippe Meyer, President of AstraZeneca S.A., “AstraZeneca builds strong leaders who know where they want to go in the business.”

As a French expatriate with previous experiences in Southeast Asia, Meyer logically affirms that “AstraZeneca believes difference is an asset and employs people with different backgrounds able to successfully operate in formal and informal settings, and manage activities in an effective, yet friendly, manner. For this reason AstraZeneca attracts the best professionals with the right mindset, leading capabilities and teamwork qualities. In addition, AstraZeneca works via cross-functional projects with a strong brand orientation, rather than with departmental labour division, which works particularly well in Greece as people have a very strong entrepreneurial mentality.”

Since arriving at the company, Meyer’s was tasked with organizing the Greek corporate structure. “When I joined the Greek subsidiary there were three business units, and the first challenge was to align these very clearly, while more recently the company has introduced the R&D and a strong medical department to ensure innovation, help the marketing department to increase medication quality and strengthen brand awareness.” Among these brands include AstraZeneca’s flagships, Symbicort and Crestor in asthma and lipid management respectively, which Meyer describes as “unique products which represent first-in-class interventions capable to deliver unique value to end users and significantly improve their well-being.”

Pascal Apostolides, Managing Director of Abbott, has established a corporate structure so inclined towards development that, much like the Greek myth of Icarus, it’s a victim of its own success, with employees developing so well that they pursue opportunities elsewhere – a fact that Apostolides does not necessarily mind.

Abbott’s strong focus on teamwork and empowering people ensures the company always tries to fulfil the potentialities of its professionals and design a career path adequate to their skills and personal qualities. However, not everyone can become a GM, within the company, but the training and the managerial skills you can learn working in the company is a unique asset on the market and presently – besides our top executive – many of the previous collaborators cover managerial positions in other pharmaceutical or diagnostic firms,” says Apostolides.

Although there may be some churn accounting to these rising stars, turnover is exceptionally low, even by industry standards of 12-15%, at a mere 1.9%. This figure is mirrored in company’s upper echelons, where during the past 60 years, Abbott has counted only six Managing Directors. “This also reflects company policy to cultivate talent internally, and as a consequence of this experienced a stable and efficient managerial style which strongly contributed to the company’s success.” This commitment is reflected in the company’s desire to bring clinical trials to Greece, in coordination with EOF’s Kontozamanis, who remarks that, in addition to reducing procedural delays in clinical execution, “Greece has excellent research centre and private companies are renowned worldwide for their ability to deliver complex and sophisticated outcomes.” Abbott, Apostolides says, is “truly committed to increase the level of investments in clinical trials, not only in phase four but chiefly in phase two and phase three. In this regard, Abbott recently obtained the authorization to run two chemical trials in oncology, which together with immunology and vitamins represent the largest part of Abbott’s activities in the local market.”

Astellas Pharmaceuticals SA, a $22 billion company formed by the merger of Japanese giants Fujisawa and Yamanouchi in 2004, has been guided since its inception by General Manager George Laitmer, who was recruited from more than a decade-long career in start-up positions in Russia. Despite his worldly management past, Laitmer demurs on the importance of international experience per se, noting “In my personal opinion I do not think that a country, geography-wise, can deeply influence managerial style, because after achieving a certain position within the company, managers are forced to be related to the international market and to consider all the potential opportunities and threats that might arise overseas.”

“What really defines a managerial style is the experience and phases gone through; for instance I do not think a CEO can properly handle the different phases of a company without facing and surviving crises,” which were certainly more prevalent during Laitmer’s tenure in post-Communist Russia than in present-day Greece.

“In my personal life I have been working in every department across many countries occupying different roles and acquiring the necessary skills to properly manage a business unit.” Although this business unit comprises a diversified portfolio, Laitmer says “the aim is to focus on niche areas with a small prescriber base, and the ongoing project pipeline already shaping the business.”

 

Carve out a niche, focus, and prosper

Dimitris Demos, General Manager of DEMO S.A., speaks about niche markets from a place of authority, as one of the largest Greek companies, specializing in hospital injectables. “In fact, the local pharmaceutical firms are deeply specialized in niche products or market segments, which in turn facilitates cooperation and partnership among the different companies,” which has allowed them to “internalize the managerial best practises and acquire the necessary know-how to compete on a global scale with the most advanced companies in the industry.”

“In the past 20 years most of the Greek companies were small and unspecialized, producing several drugs in small quantities, from tablets and capsules, to gels and injectables, but the relative knowledge and the level of expertise behind it was low. At a very early stage, DEMO realized that because of its small size it could have never been able to be a quality player without specialization,” summarizes Demos.

 

And specialize it did, assessing the market opportunity that resulted in the current production of hundreds of millions of ampoules for the hospital injectables market per year, in “a segment with high product development barriers where the company had a breakthrough technology which allowed it to have a competitive advantage.”

DEMO and Novo Nordisk are not alone in niche focusing in the Greek market. This trend is most notable in local companies, and is even more striking in companies like Pharmathen, Gerolymatos the health, beauty, and care company, and Adelco Pharmaceutical and Cosmetics S.A. who are all vehemently vertically integrated. President of the latter, Evangelos Colocotronis, says that “Adelco generally controls the entire value chain and all the phases are developed in-house, in order to have a better control over the information flow and keep the quality standard required. On the other side, although in-house products register better performances on the market, they require a higher level of investment, the risk is higher and it takes longer to penetrate the market and reach and adequate level of consumption.

“Adelco is the Greek leader in the cure of otitis and is the producer of the unique composition of Paroticin. Furthermore, the company’s portfolio includes some unique combinations of different compounds entirely produced in-house.”

Being a stand-alone leader, it’s not long before the international community catches wind. Colocotronis notes, “the internationalization process for Adelco went through different stages according to the know-how acquired and the level of partnership in which the company was involved. In fact Adelco has been both an importer, as well as an exporter whenever possible to sell its Greek-developed product abroad. Adelco has become an R&D partner, as a taker from multinationals to support their first stages of international expansion, and as a giver when relating to less developed countries.”

 

Education and awareness: public responsibility, private burden?

Although Greece is a rapidly modernizing country, there are still many areas of improvement. Where the most crucial of these areas lie depends on who is asked: pricing and reimbursement, once critical issues for the country, causing over €4 billion in lost revenues through parallel trade in 2005, have since dissipated with the adoption of Law 3457, stipulating drug pricing with a 2+1 scheme, requiring prices be the average of the two cheapest EU-15 countries, plus the cheapest from the new EU-10.

For some, it is the importance of broad public information that will be driving the biggest changes going forward. In April 2008, Minister Avramopoulos launched the Thorax advertising campaign targeting youth in an anti-smoking initiative, to nip the problem, which already contributes to one of Europe’s highest rates of cardiovascular difficulties, in the bud. In the private sphere, Novo Nordisk’s “Changing Diabetes” bus is trying to ensure the wheels keep going round and round on the road to change.

For others like Hara Kousoulakou of IOBE, the problems are internal, with government needing to look within, and adopt sound economic evaluation procedures comparable to the UK’s NICE, that will be the most effective. Regardless of the direction taken, it will take a mix of government energy and private know-how to effect the needed changes.

 

Commenting on the particularities presented by the Greek market, Norbert Schmidt-Gollas, Managing Director & Senior Bayer Representative for Bayer Hellas AG, says “Bayer is present in its usual therapeutic areas of Animal Health, Bayer Schering Pharma, Consumer Care, and Diabetes Care; however, there are some significant differences.”

One of these most important is in women’s health, a focus area for the company and an understandably touchy subject in a country counting 97% Orthodox Christians. “In Greece, oral contraceptives have a very low penetration rate. At 1%, there is great room for improvement, especially considering the potential to reach levels seen in markets like Turkey at 12%, or Germany at 40%. Obviously, with an area like women’s health, it is important to be realistic in anticipating the timelines in changing mentalities; it is not something that can be done overnight, but rather a gradual process that relies on the transmission of properly accurate and tactful educational materials to the general public. To begin, Bayer has sponsored a soft advertising campaign, without branding or product promotion, to raise awareness about the benefits available to Greek women who wish to take a proactive stance towards contraception.”

Schmidt-Gollas is sensitive to the kinds of social and moral concerns associated with educating the public about contraception. As a result, Bayer recently commissioned a research study to determine the sources of influence in women’s choices regarding contraception, and Schmidt-Gollas remarks that “some startling statistics were uncovered. Firstly, the average number of abortions expected by a Greek woman before the age of 30 amounted to six or seven. Secondly, her decisions are largely influenced by her peers and hearsay, in addition to her mother, who in turn is influenced by tradition and religious teachings. It is clear that in the face of conventional wisdom and unsubstantiated but emotionally powerful teachings, Bayer will have a challenging but rewarding effort ahead in moulding attitudes toward bringing women’s health issues to the forefront in Greece.”

In addition to these women’s health issues, Bayer is also trying to educate the government and responsible authorities to create a better business environment. “In Greece, while the environment has improved, there are many things still being done to impede innovation. Prime issues include the adoption of modern technologies and their successful implementation, and streamlining public regulation, reimbursement, and pricing systems. At the hospital level, there is a lack of information and data, as well as an estimated €2 billion debt from hospitals towards pharmaceutical companies, and payable length reaching 600 days, which are unacceptable figures for such a modern market.”

What would this mean from Bayer’s point of view? “Firstly, reducing the fragmentation of power between various ministries and other stakeholders. Secondly, improving access to information and data, such as hospital expenditures, for which there is still no data on the Greek market. Thirdly, improving computerization and IT systems, and implementing these in a sensible and efficient manger. For Bayer, change is chance, and having a reliable business environment is the most positive change to positively contribute to human health in Greece.”

Bayer is not alone in adapting to a sometimes challenging environment. Supporting the companies in this environment requires adaptation in turn as Thalia Koukidou notes, “IMS strategy in Greece has evolved gradually to the current stage because it was necessary to adapt to company profiles in the pharmaceutical market in Greece, which has often created difficulties, especially from the financial point of view,” alluding to Schmidt-Gollas’ €2 billion figure. “Today, one of the pillars of IMS Hellas’s strategy is the focus on its customers. In fact, in a changing environment such as this one in Greece, a consultancy firm should always be able to serve the customer needs in the different circumstances in which they are involved. IMS is today the best service provider in the Greek pharmaceutical industry.”

In a similar vein, the most practical way to success in coping with the market, according to Neofitos Landis, Country Manager of Cegedim Dendrite, the world-leading CRM and SFE solution provider, points to the key factor his company calls “‘business quality and satisfaction with clients.’ In fact, the pharmaceutical industry is made up of very demanding clients, and when firms invest in a CRM solution they want to be able to deploy this solution to the maximum and increase the effectiveness of their operations.”

The possibility of making data and IT solutions available directly to the government offers a very pertinent, yet indirect, way of addressing the aforementioned streamlining issues. Speaking to the feasibility of such an approach in Greece, Landis remarks, “Cegedim Dendrite already provides integrated solutions to public authorities in other countries outside Greece and it will be easy to adapt these solutions to the local market as we already have the required know-how. However, presently there is no evidence of interest from the local authorities. Nevertheless, the company perceives the business environment could turn more favourably as the public system needs to be restructured and become more efficient. In addition, the creativity of our employees, the company level of expertise and the accumulated knowledge permit Cegedim Dendrite to continuously upgrade its offers and serve different customers from the pharmaceutical industry and beyond.”

 

Greek biotechnology, from olives to oncology

At a basic level, it is simple to educate with facts supporting biotechnology research in Greece – with over 5,000 species of flora and fauna, the country’s biodiversity makes it a natural choice from which to specialize. Philippe Meyer, President of AstraZeneca, describes the role biotechnology plays in the global giant. “Aging populations, biological expansion, and early patent expirations force pharmaceutical firms to focus on new target clusters, increase investment in R&D, and launch new products on the market. Most MNCs are facing these problems and to overcome them, AstraZeneca took the strategic decision to invest in biotechnology, the most promising emerging market, by enlarging its proprietary pipeline and through external acquisition, for instance with the recent buyout of MedImmune,” an acquisition pushing AstraZeneca’s into the top 10 leading biotechnology companies worldwide, with 25% of the company’s current product portfolio dedicated to the sector.

“According to these market strengths, MNCs could benefit by installing an R&D center in Greece as local scientists are highly educated, professionally reliable and among the leaders in biotechnology. However, MNCs generally set up operational facilities where the realized comparative advantage maximizes investment payoffs.”

Genesis Pharma is one such company that has sprung up to fill this MNC void. Founded merely 15 years ago but with revenues already exceeding €200 million, the company specializes primarily in importing products from MNCs. Created by former executives from MNCs, it represents a seemingly obvious yet shrewd market manoeuvre, and is the largest of few biotech-focused Greek local companies. Otherwise, it is up to MNCs like Merck-Serono to provide examples of other specialized biotech-focused companies in the Hellenic market.

Yiannis Vlontzos, President & Managing Director of Merck A.E. Hellas, summarizes some of the difficulties of the field in the country: “Biotechnology in Greece is not only represented by the pharmaceutical industry, with other sectors like agriculture and energy being proactive in this field. The country has one of the world’s leading levels of expertise among researchers and academics, although the scientific community has not yet received the necessary recognition it deserves from the international business world. This lack of recognition leads to deficiencies in funding and direct investments in research and innovation, that in turn make it difficult to increase the country’s visibility in the international arena.”

However, he is not one to sit back without recognizing the efforts made to address this lack. “To enhance the national position and finally achieve the recognition the Greek scientific community deserves, the government undertook several initiatives, such as the foundation of a biotech cluster in Thessaloniki and the intention to increase R&D investments to 1.5% of GDP. Private companies appreciate such efforts even though higher international participation and public involvement is still needed.”

One of the most important such initiatives is the Foundation for Research and Technology, Hellas (FORTH), which since being established in 1983 has growth to one of the largest research centers in Greece. Functioning under the supervision of the GSRT and the Hellenic Ministry of Development, FORTH consists of seven Research Institutes located throughout Greece, with headquarters located in Heraklion, Crete. Although the foundation’s research and technological directions cover major areas covering a wide swath of scientific, social, and economic interest, one core activity area lies in the Institute of Molecular Biology and Biotechnology (IMBB), headed by Harvard graduate and Research Professor George Thireos, leading research in diseases like malaria.

“FORTH has a very well-established cooperation with hospitals and private clinics, and is very active in malaria research where the company has two ongoing projects belonging to the European community scientific network coordinated by the WHO. These malaria projects are mainly focused on disease transmission prevention through mosquitoes and plasmodium, and represent pioneering initiatives not only in Greece but also among the international research community, as there is still much to be done to defeat this terrible illness,” Thireos says.

Continuing Thireos’ explanation of the organization’s commitment to biotechnology, Alkiviades Payatakes, Director Administration and Chairman BD, notes “FORTH’s mission in healthcare is to contribute with research to improving living conditions” foremost of which include developing tools for clinical genomics interface, and a new centralized bio-bank in Athens which will represent a leading institute in the field.”

Payatakes echoes Vlontzos’ appeal to the government in encouraging innovation through PPPs: “The government set some incentives to promote cross-sector cooperation and more and more initiatives will be implemented in upcoming years. FORTH is leading efforts to promote cooperation and networking through many initiatives such as PRAXI – a technology transfer network voted the best network in Europe 2002 by the company’s international partners – and the new biomedical research institute in Ioannina, which will soon be completed, and the idea of a new bio-cluster which has been accepted and now the project is in the design phase.”

Although Greece lacks a strong PPP tradition, some success in spin-offs, most notably with the technology company FORTHnet, suggest that persistence pays off. Payatakes also considers the “new generation” of Greek executives, with greater international experience, is less reluctant to extend cooperation with public authorities, research centres and academic institutes. Payatakes says that “In fact, although PPPs in Greece are not easy and require a mutual understanding among those involved, the local scientific community is highly qualified and private companies should be aware of the joint venture opportunities and the business potentialities behind them.”

With such potential in biotechnology, and indeed with potential across many possible areas, is it time for Greece to choose a focus? Although biotechnology, fuelled by the successful realization of PPPs, is an uncertain bet to lead the charge, there is a multiplicity of paths to follow. Companies like Pharmathen, investing heavily in branded generics production and development, seem to be the dominant model, but specialized niche players from DEMO to Novo Nordisk are thriving as well. Perhaps, as long as the Greek entrepreneurial spirit remains throughout the pharmaceutical industry, it matters little where its sails may guide. Does Greece have what it takes to succeed? “I personally believe the country has the possibility to do so,” concludes Payatakes.

 

Biospray, changing times, changing size

A case study in adaptability and perseverance, the Biospray success story can be traced to current President Freideriki Zikidi, who took over during a rough patch three decades into the company’s life, in 2002. “Although I had prior business experience outside the specific field of pharmaceuticals, I made a decision to take over the management and go forward.”

Her first step was to invest in Biospray’s professionals, and in doing so “immediately employed Mr. Bourlis, who since 2002 has been Biospray’s General Manager, and together we form a good team. At the outset, I told him: ‘You go forward and I’ll be behind you.’”

Rounding out this management team was George Florakis as plant manager, and George Kalogeras, who joined the company with over 12 years experience at GSK. With the right people in place, Biospray’s focus has since been on its core export markets of Cyprus and Yemen, with some business in Africa in addition to newer additions in countries like Romania, Bulgaria, Albania, Azerbaijan, Turkey, Malta, and Syria, with a special focus on inhaler products, about which Zikidi notes, “This inhaler product is our flagship, and represents a movement from the ranks of a small into a medium-sized company for Biospray.”

With this tightly knit team, Zikidi says, “Quality is Biospray’s number one job. We make a good product based on specifications in a GMPs environment, but go further to put as much as possible behind our brand,” with both ISO 9000 and 14001 to back it up.

Zikidi concludes, “Biospray has been around for 40 years, and has been a pioneer in the Greek pharmaceutical industry. The company believes in investing in new technology, having the right people, and is optimistic that it will achieve its goals – and that any other company will do well to join us in cooperation.”

 

Novo Nordisk’s sweet (but not too sweet) success

“Diabetes is one of the major diseases in western world. Nevertheless, it is generally overlooked by the authorities and many citizens because it is a silent killer…” Olympios Papadimitriou, Country Manager Novo Nordisk Hellas Ltd., sends a strong message regarding the niche focus of Denmark’s leading pharmaceutical company, present almost 30 years in Greece.

Novo Nordisk is making a real change in diabetes by providing a new generation of insulin preparations that offer a significant advantage to diabetics.” In doing so, the company “does not only offer products, but services, ideas, and education to all stakeholders involved in diabetes treatment in order to change the course of diabetes today in a dramatic way.”

Greece is an attractive market for a niche focus on diabetes, a disease exacerbated by the population’s frequent hesitation to reduce risk factors and implement positive preventive behaviours. With a full range of fully-reimbursed products, Novo Nordisk is the only company on the market in Greece – and globally – that offers an entire range of modern preparations.

“At the current time, diabetes rates are constantly increasing and the government, pharmaceutical companies, and society as a whole should be aware of the risks involved, to be well-informed about cures and ways to prevent this illness, as the effect on the national health care system is substantial, both in terms of financial costs and social issues,” says Papadimitriou, and refers to Novo Nordisk’s directly applicable global campaign named Changing Diabetes, presently ongoing in Greece.

 

 

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