Matt Emmens: Shire Pharmaceuticals chief focuses his attention on drugs deficit

The Interview: Chief executive of Shire Pharmaceuticals
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The Independent Online

Isn't it just a matter of cutting down the E numbers in their diet and instilling a bit of discipline in class? Surely we don't want the UK to go the way of America, where a generation of kids are drugged into good behaviour with the likes of Ritalin and Adderall, and where abuse of these drugs is so serious a problem it has become a sub-plot in Desperate Housewives?

Enough of the hyperbole, says Matt Emmens, the chief executive of Shire Pharmaceuticals. "The observation I would give you is that the people who say ADHD is not real don't use data, and the people who say it is real use data. There have been a lot of studies to say that between 5 and 7 per cent of kids in any population, of any race in any country, test the same for it."

You can hear the sceptics crossing their arms and saying "Well, he would say that, wouldn't he?" Mr Emmens' company makes nigh on 50 per cent of its sales from Adderall, $550m (£305m) so far this year. It is a product whose soaraway success over the past decade has taken Shire into the FTSE 100 and into position as the UK's third-largest drug maker.

The Pasadena-born marketing man has been at the helm since March 2003 and says that, while the Brits have always been more doubtful about the prevalence of ADHD than people in the US, the medical establishment here is in no doubt about its existence or seriousness, and he has seen a notable lessening in public scepticism, too, since he took over.

Adderall is not on sale here - European regulators have never liked its combination of ingredients - but Shire certainly intends to launch a new generation of ADHD medicines, including a new hard-to-abuse product, in the UK.

"These drugs are not about quieting kids up. It is not that teachers can't stand their behaviour so they drug them. It is about allowing them to be successful. Ask someone who has ADHD, has Adderall benefited them? Do their grades improve? Do people who don't have friends in their teens all of a sudden have friends? Does their behaviour in class and at home improve?"

The new ADHD medicines sit among a portfolio of upcoming drugs that also contains treatments for some rare genetic disorders and colon ulcers, six of which are set to be launched next year. The emergence of this pipeline has dramatically changed perceptions of Shire, and the shares are up 30 per cent this year, among the best FTSE 100 performances. Mr Emmens spent his first year organising some fiddly internal restructuring and a second year trying to tie up acquisitions, but he is looking and sounding chipper these days, confident in the story he has to sell the City. "We were an Adderall company two years ago, and I think now we are a real pharma company," he says.

If there is one key event in that transition it is the £800m acquisition in April of Transkaryotic Therapies, a Nasdaq-listed biotech company that made treatments for rare genetic disorders. The deal went down like a lead balloon when it was announced and poorly explained in a hasty conference call with analysts and fund managers. At the time, Mr Emmens put his unconvincing performance down to lack of sleep as the deal negotiations went on through the night.

Now he says: "You can't explain that business in 15 seconds on a call with people trying to buy or sell. You have to do it one on one, you have to do it methodically. I found the questions about that business to be so diverse that I wouldn't know how to make one presentation that answered them all.

"People said TKT was 'a loss-making biotech'. I wouldn't invest in that either. A loss-making biotech? That sounds horrible."

Shire's initial 10 per cent share price plunge was reversed, as investors came round to Mr Emmens' view that TKT's technology will provide it with low-risk, niche drugs which can be sold at very high prices. "I think a good or a great deal is often not appreciated - and that is why it is a good deal. If it was appreciated it would be expensive."

He is dismissive of the public criticism from the Scottish fund manager Britannic. "Waste of money, they said. Loss-making business. Chemical roulette. And against our strategy. I asked them, what exactly is our strategy? They had bought on momentum, they didn't know what the strategy was. I said it's exactly on our strategy: specialist products, sold by small sales forces calling on specialist physicians."

Mr Emmens says the attraction of Shire to him was its mid-size, and that seeking a post at one of the world's bigger pharmaceuticals groups would be "like being captain of the Titanic. Maybe you could do a merger, but you can't fundamentally change the fact that they are becoming large and inefficient and less profitable".

His decision to move to Shire from a German rival, Merck, in 2003 came at a traumatic time for Shire, whose much-loved chief executive Rolf Stahel had been ousted in a boardroom dispute over the geographical focus of the company. Shire has its headquarters in Basingstoke but most of its operations are in North America, and Mr Emmens originally promised to move to the UK. "When I joined the company it was assumed I would live here - I was quite excited about it actually. When we started doing strategy it became apparent that I would spend more time travelling to the US than I would do here, due to the nature of our business and the distribution of our folks, and because most of the restructuring we would have to do was in North America." His three children are also in the States, two of primary school age with his ex-wife in Denver, and a 26-year-old daughter in Virginia.

The US is also where the lawyers are, and Mr Emmens has had to spend a lot of time with them as Shire tries to defend its patents on Adderall, which most analysts forecast will face copycat competition after a courtroom showdown beginning in January. If a copycat version is allowed on the market, Adderall prices will certainly collapse. US parents, insurers and healthcare authorities might very much like that. Mr Emmens' task is to delay that until Shire's new products have established themselves.

Pharmaceuticals companies expend a great deal of brainpower on tactics for maintaining their monopoly positions, and Shire is trying every tactic in the book. It is pretty pleased with itself to date. It has filed extra patents on the way Adderall is made and is suing the generic drug makers for infringement of that and other patents. And it is asking regulators to insist that the generics firms conduct human trials before being allowed to launch. This last tactic is "pretty elegant", Mr Emmens says with a smile.

He has experience of this sort of battle, having worked in the joint venture between Merck of the US and Astra of Sweden which developed Prilosec, an ulcer drug which became the world's best-selling medicine. AstraZeneca managed to tie up the manufacturers of generic Prilosec in the courts for nearly two years after the core patents expired, thanks to a plan put in place many years before.

"After you've spent hundreds of millions of dollars developing a product, it seems to make sense to protect it," Mr Emmens said. "There are a lot of personal blood, sweat and tears in drug development, and you should patent everything you thought of. I'm very proud of what we did there. Prilosec was a breakthrough medicine that helped millions of people that would have had to have stomach surgery. Ulcer surgery just stopped. It's not all about money. We do things that are good for people. That was a great time in my life."

Drugs chief's rise to the top

Age: 54.

Salary: £1.4m last year, including a basic salary of £545,000 and £437,000 for relocating to Philadelphia.

Education: BSc in business management at Fairleigh Dickinson University, New Jersey.

Career: Sales and marketing roles at Merck of the US from 1974, followed by chief executive of the Astra Merck joint venture from 1997-1998. Moved to the unrelated Merck of Germany in 1999 as president of its US operations and then its global prescription pharmaceuticals business. Became chief executive of Shire Pharmaceuticals in March 2003.

Personal: "Single but attached". Three children.