CPH Pharma was the oldest running pharmaceutical company in Portugal until its acquisition by Grupo Ferrer in 2008. Since then, the company has continued to thrive in the marketplace despite recent challenges. José Silva, general manager of Ferrer Portugal, highlights the affiliate’s unique traits and partnerships in the industry, and discusses its key strategy for acquiring and maintaining these partnerships.
What are the specificities of Portugal as it relates to Ferrer’s priorities?
Given Portugal’s proximity to Spain, this affiliate is natural for Ferrer. Furthermore, CPH Pharma has worked with Ferrer for the last 20 years. Before the acquisition, almost 80 percent of CPH Pharma’s sales came from Ferrer’s products. In any case, Portugal parallels Spain in many ways in terms of how Ferrer reacts to the market. Essentially, Ferrer Portugal is an arm of our Group headquarters. The difference between Spain and Portugal is its research priorities: Spain might establish a research center, whereas our research would be with hospital activities like clinical trials. We also try to take advantage of some financial benefits from health authorities with such activities, which Spain has allowed us to do.
Portugal has immense research capability as seen with various institutes, universities, and hospitals. Specifically, what partnerships does Ferrer Portugal engage in with these groups?
We can develop some activities with research centers. For instance, we recently established a partnership with an important research institute in oncology with some of the principal products of investigation of Ferrer. This focus includes cancer diagnostics as well as personalized medicines. In the future, this subsidiary will have similar partnerships, though it depends on the orientation Ferrer decides for Portugal, which still has many problems for investors. We do not have a clear vision for the future yet because the health authorities constantly change policy, which is difficult for companies to manage. We would have plans for the next few years, but tomorrow something could change those plans immediately. If you invest in a partnership and the situation subsequently changes, that partnership might not work.
What were the biggest challenges in terms of integrating CPH Pharma into Ferrer?
It was an easy integration because of CPH Pharma’s previous experience working with Ferrer. We knew their people, the processes and the products. We also have a similar culture and our relationship with them is very good. CPH Pharma did not have to change direction or orientation to merge with Ferrer; rather, a simple modernization was required to be aligned with the organization.
Despite a severe recession, Ferrer has chosen to stay in Portugal. Why did you choose to maintain an affiliate?
This affiliate is truly important for Ferrer, as it is the second biggest affiliate worldwide. Ferrer Portugal has an important presence with many of the organization’s best products. We have very important sales volume for the company, and Portugal is an interesting market for the Group. Contrastingly, we are also problematic because when Ferrer intends to launch a product in Portugal thinking that it will be reimbursed and provide sales, it is frustrating when this does not happen. These are the main problems in recent years. We have two or three important products that Ferrer has not launched in Portugal because we do not have reimbursement. It is quite difficult for headquarters to understand that a product being reimbursed across Europe might not happen in Portugal. It is not quite so easy here.
What specific measures did you take to adapt to this newfound reality?
Ferrer has reoriented and launched reimbursable products directly without reimbursement. We have also launched medical devices that do not have to deal with reimbursement issues. We have made many cuts on expenses, trying to maintain products in standby, waiting for the political environment to allow us to launch them in the near future with reimbursement. We have downsized the headcount slightly, and we have tried to rationalize all expenses.
How is Ferrer’s portfolio represented in Portugal?
We have in Portugal almost all the interesting products that Ferrer has in Spain. But we also have some products that Ferrer does not have in Spain. Some of the company’s more interesting products are results of partnerships in Spain, but this affiliate also has local partnerships from before Ferrer’s acquisition. One of the principal products we have here is with a Japanese company, and this does not exist in Spain. We have another product for pain management that Spain also does not have.
Could Portugal’s growing biotech sector be an outlet for more partnerships?
I consider all possibilities for selling good products in the Portuguese market or other markets. As this affiliate is trying to have some focus, I do not intend to concentrate in this sector. I aim to have the business focused on our core areas and will try to provide products for which we can demonstrate value to partners who know the market very well.
If we can be strong in two or three sub-markets, it is more interesting than having many potential markets and being in everything.
As Ferrer’s second biggest affiliate, how could this serve as a platform to other areas like PALOPs?
If Ferrer had a different orientation for African markets, it could be important. For now, the Group has the international market divided into different areas with different responsibilities for these countries, and we do not have an important role nowadays for PALOPs. We are not an export affiliate. We intend to concentrate on our own market. We do have some contacts with potential business in Angola—we give this information to Barcelona and they make the business based on their business strategy.
What differences have you found between running CPH Pharma and Ferrer?
There are no big differences. There are strategic differences but that took a long time to develop. We have two arms of the business: commercialization of products and distribution for other companies. For the future, we will concentrate only on our core business, which is the commercialization of Ferrer products, and thus we will no longer distribute. That has been the only major difference so far.
How has Grupo Ferrer’s diversification of business helped you rely on continuing growth during the crisis?
More diversification allows for more capacity to answer to challenges. But in Portugal we do not have this diversification; this affiliate only focuses on therapeutics with medicines and devices. Our chemical division, for example, is not part of the Portuguese strategy.
What is most important to know for companies looking to invest in Portugal?
Portugal can be an important opportunity for some companies, mostly for generic companies. Our authorities are very strongly focused on developing this market and some local companies have reached very interesting sales in the generic market. Some companies intend to invest and to have production in Portugal despite being a small market, but with export activities. In any case, I would say that Portugal can be an important country for investment in the pharmaceutical area, but the authorities must be aware that the situation in Portugal is starting to become very dangerous for some companies. In the future some multinational companies may leave Portugal, and this is a risk for the whole sector and for patients. We know nowadays the difficulties to treat a patient based on financial reasons. We can allow this for some time, but not forever. This is certainly a dramatic vision of the situation, but the risk of Portugal returning to the third world, in terms of therapeutics options, exists. We need to change the structure to avoid this.
What is your vision for the next five years?
I would like to have a positive business in Portugal that can contribute to the Ferrer Group, and to have an important presence in our core therapeutic areas. I would like to be one of the most important companies in Portugal in the pain area, which I believe we can achieve. We can also have an important role in cardiology, and Ferrer Portugal could be one of the principal players in this business.
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