The head of Lundbeck in Canada talks about the stigma of mental illness that still exists in the country today, and how CNS companies like Lundbeck are working with stakeholders to help overcome this problem, so that sufferers of depression are treated as though they have a disease.
Your experience in Lundbeck covers the markets of Latin America, the United States and Canada. What have been the key developments over the last ten years in terms of Lundbeck’s evolution in this region and how it has developed?
Lundbeck has transformed from a primarily European company into a much more global company. Part of that expansion was into the Americas. Lundbeck Canada was initiated in 1995. I established Lundbeck Mexico in 2000 and then Lundbeck Latin America was established a year later. The organization has since expanded into the US and Canada.
The biggest differences between these regions are the healthcare systems. Mexicans pay for most medications out of their own pocket, with the exception of catastrophic diseases where hospitalization is required, and for the sector of the population who cannot afford to go to a private physician. It is very much a private and smaller market compared to a public healthcare system. In contrast, the United States has some of the highest per capita spending in the world on healthcare, where insurance plays a major role in the marketplace. At the same time, it has access to the most advanced innovations in healthcare, much sooner than many markets do. Canada is an interesting mix, with an active private insurance market, which varies from therapeutic area to therapeutic area. For example, half of people suffering from depression are covered by private insurance, 40 percent are covered by the public healthcare system, and 10 percent pay cash. In Canada we have a complex situation where we need to deal with the government and private healthcare providers.
You established both the Mexican and American subsidiaries. Why did Lundbeck send you to Canada?
I did establish the Mexican operation, a great source of pride and accomplishment, and helped with the setting up of the Latin American subsidiary. Lundbeck had collaborated with Merck in the US to develop Gaboxadol for the treatment of insomnia. During that process, one of my roles was not only to work with Merck but to also establish the organization – the systems, office, and hiring staff – all the things you need to do to make a functioning pharmaceutical company. Unfortunately, after two years, the medication that Lundbeck and Merck had tried to develop did not meet many of research goals. Senior management took the decision to end the development of that compound. The decision was also taken to stop the establishment of the subsidiary. That project for me was unfortunately not successful. Even though the establishment of the American subsidiary and cooperation with Merck went very well, the drug did not meet all of our hopes and expectations. At that time, I was asked to take over responsibility here in Canada.
What was the mission upon coming here?
Canada is a very important market for Lundbeck globally. It is the eighth largest market in the world and from a Lundbeck perspective it falls within the top five markets in terms of importance. At the time, a subsidiary had not yet been successfully established in the US so it was important to continue to grow the business in Canada to its full potential and to ensure readiness for the future.
What is the perception of mental illnesses in Canada and has Lundbeck Canada been actively involved with stakeholders to increase public awareness?
Upon arriving here, I thought there would be less stigma in Canada than in Mexico and Latin America. In reality, there is still much stigma, and the attitude to depression can be quite cynical. There are still many who do not recognize depression or other mental illnesses for that matter as actual diseases. In that sense, there is still so much more to be done. Lundbeck believes in partnering with organizations who have a similar mission as ours to overcome these challenges. Lundbeck is actively engaged with the Mental Health Commission of Canada and a group called Partners for Mental Health, raising awareness with the public about mental illness and to help people in society recognize such things as the fact that depression is not a weakness, it is a disease just like diabetes. Lundbeck has committed $2.25 million over a three-year period with Partners for Mental Health to support them in their efforts to change how Canadians think, act and feel about mental illness and that investment seems to be working very well as they are making huge strides towards accomplishing their goals. This organization has programs to raise awareness among the young, and has just recently concluded a campaign on mental health in the workplace in order to increase awareness of mental health issues among employees.
How significant is Lundbeck, as a flagship CNS company, in terms of shaping Quebec’s innovative landscape?
Lundbeck chose to establish itself in Quebec in 1995 due to the favorable environment that the province offered at that time. The company has worked very closely with many of the major universities in this area on the development of medications, such as Cipralex for depression, or Ebixa for Alzheimer’s. Many universities have been instrumental in helping Lundbeck finish the development process here in Canada, specifically Quebec. In that sense, being in Quebec is an advantage. More recently however, the environment has shifted slightly. For instance, the elimination of BAP-15, legislation that allowed for additional coverage of a medication post-expiration of a patent, has resulted in some losses. The industry understands that there is a budget issue in Quebec as there is in many parts of the world, and wants to be part of the solution. I think it is important to note that in being part of the solution there needs to be excellent dialogue between the government of Quebec and the industry. The decision to terminate the BAP-15 was disappointing in terms of the way it was done. Although the industry knew that this might have to happen at some point, it would have been more constructive if there had been more dialogue and better preparation. In business you do not like surprises. Lundbeck did not expect this decision to happen so soon and in that way the subsidiary was hurt substantially in terms of loss of sales and revenues, and many other companies were hurt as well. That has precipitated in decisions to cut back on expenses and human resources. Fortunately, Lundbeck did not have to do that. In the future I would really like to ensure better correspondence and avoid abrupt decisions without dialogue, and this message has been communicated. I understand that the government is under a great deal of budget pressure. Lundbeck wants to work with them to deal with those issues. The last thing Quebec should want is an unintended consequence. If those actions continue, the pharmaceutical industry may determine that operating in Quebec may not have the best environment to do business.
What is the strategic importance of companies like Lundbeck in Canada?
Lundbeck is one of the few companies that has a real focus on brain diseases. In recent years, a number of companies decided to walk away from the mental health area completely. That is of huge concern to Canada and Quebec because the treatment of mental illness is very important. This is an age of an information economy. Canada in particular needs information workers. Mental health issues impact these people more. There is the concept of absenteeism due to depression or anxiety or bi-polar disease. That is a high cost for business in general. There is also the concept of “presenteeism”, meaning people who are at work but are not functioning at an optimal level. That is going beyond simple competencies; their brains are sick and are not able to process information at an optimal level. That costs industry in Canada billions and billions of dollars. Eventually it leads to people leaving work, which has a huge impact on the economy and finances of companies, provinces and insurance providers.
Other companies have walked away from mental health because it is so much more difficult to develop medications in this area. There are studies demonstrating that it can take up to 35 percent more time to complete the development of clinical studies with medications for brain diseases, and the success rates are lower. Many companies have publicly stated they will no longer invest in this area. I think it is quite significant that Lundbeck has chosen to stay in this area and it is very important for Canada specifically. Lundbeck Canada is generally considered to be among the top five subsidiaries for Lundbeck globally, and right now given where we are in the product life cycle versus other affiliates, Canada is in the top three. Lundbeck Canada is therefore very important for the overall organization. This country is quite advanced in mental health treatment compared to many markets. The Lundbeck organization also looks to Canada for emerging treatments, therapies and metrics for the treatment of mental health issues.
Today, Lundbeck has less of a focus on the blockbuster model, and more of a focus on having more products on the market on a yearly basis, more acquisitions and partnerships with academia. How is that implemented here?
It is being adapted in many different ways. Lundbeck has a very robust pipeline, with as many as eight compounds that could come to the Canadian market in the next five years. There are some challenges in terms of moving from a one or two product company to a company with eight products. These include logistics, regulatory approvals, market access, marketing and public affairs. Each of these areas have prerequisites for launching a product, such as importing, packaging, registering, market access with public authorities, and developing applications for doctors. Lundbeck Canada therefore needs to start thinking differently. The company needs more resources per dollar of sales than previously, which means more jobs. This is great for Quebec, great for Canada, and creates more work to bring new innovations to the people who need them.
What is your strategic vision for Lundbeck Canada over the next few years?
Lundbeck Canada’s vision for the future is to double its business over the next five to ten years. With the incoming pipeline, there is a possibility that some research compounds will not turn out as expected. I see the opportunity for substantial growth in Canada, and this is very exciting. Lundbeck continues to invest human and economic resources in Canada. The affiliate has been very fortunate in terms of growing business; since I have come here, the affiliate has grown from 150 to 230 employees.