Angus Russell: The drugs baron who manages without dealers

The Business Interview: Shire may be FTSE100-listed, but it's not part of the big pharma club, its chief executive tells Nikhil Kumar

At first glance, Shire might be mistaken for one of the group of top drug makers collectively known as "big pharma". After all, it sits with AstraZeneca and GlaxoSmithKline in London's FTSE 100 index of leading shares, earning billions in revenues from sales round the world.

But while Astra and GSK between them employ more than 150,000 people across the globe, Shire's headcount is just 4,100. Still, the business has advanced at an astonishing pace, making well-timed acquisitionsguided, above all, by a focus on relatively rare and sometimes life-threatening conditions treated by specialists. This drive has reaped some big rewards: last year Shire, which is set to post first-quarter results this morning, recorded more than $3bn (£1.8bn) in sales – well above the double-digit millions it turned over at the time of its listing in the mid-1990s.

Angus Russell, who took over as chief executive nearly three years ago, pins the origins of Shire's speciality focus on necessity as much as choice. In the decade or so before the listing, Shire, he said, had spent a great deal of money on research but had little to show for it.

"That's why they went public: the venture capitalists wanted to get the company profitable and move it forward faster," he explains. "At the same time, trying to move into primary care 14 or 15 years ago hadbecome a very expensive game where you needed tons of resources, particularly in the US market, to compete with people such as Glaxo and Pfizer and AstraZeneca. So that didn't seem viable either."

Faced with this dilemma, Shire turned to what at the time was an emerging niche. "What had happened around that period was the start of a subsection or subsegment of the industry which was based around what were called speciality pharmaceutical companies, which focused on these specialist products," Mr Russell says.

This tack suited Shire as it meant it could focus its limited resources on a small group of specialists, instead of cultivating ranks of physicians in the primary-care arena. And when it came to research, Shire sidestepped the much-beaten and expensive track of pursuing new breakthroughs. Instead, Mr Russell says, it hunted for smaller firms with promising drugs close to market.

"We found this little company with this product for a relatively unknown – it was known, diagnosed and treated but in a relatively small way – treatment for attention-deficit disorder [ADHD] in kids."

The treatment was Adderall, which swiftly became Shire's keyoffering. But this presented a new problem – the company becamedependent on Adderall, which over time lost its patent protection.

Shire's next move has becomeanother key characteristic of its strategy, buying up new technologies that can be used to improve existing drugs. In the Adderall case, Shire bought an oral drug delivery business that boasted proprietary know-how in the development of long-acting treatments to reduce the frequency of doses. This business had already produced an epilepsy treatment, giving Shire confidence in the technology while also boosting its product portfolio. The long-acting know-how was applied to Adderall, and the company came up with an extended release drug called Adderall XR.

Cue another problem. "Around 2001, we'd been out as a public company for five years, and whilst this strategy was working very nicely for the company, we'd found that unfortunately generic [manufacturers] had become more and more aggressive," Mr Russell recalls. "They weren't just waiting – which was their old model – for your patent to expire. They were now attacking your intellectual property within the period of patent."

Adderall XR is a case in point. Within a year of its release, Shire faced a patent challenge from a generic company. "Suddenly, within a year, you were back on the course, fighting to protect your intellectual property," Mr Russell says.

Faced with the prospect of constant battles with generic firms, Shire began looking for areas where the threat wasn't so pronounced. By now, the company had a broad portfolio of products extending beyond ADHD and across the key pharma markets around the world.

Once again, the focus on speciality drugs was the company's guiding principle, leading Shire to enzyme-replacement therapies that tackle the rare genetic disorders caused by missing enzymes. As such disorders affect relatively small groups of people, regulators offer special protections to encourage investment inresearch and development – something that appealed to Shire.

"In Europe and Japan, we're granted 10 years from launch, and in the US it's effectively 12 years from launch of market exclusivity which can only be broken if a new company finds a superior drug in efficacy terms. So, it can't be challenged by the generics – there's no patent to go after," says a smiling Mr Russell.

All the while, Shire continues to pursue its strategy of developing its existing portfolio. This morning, for instance, it will unveil clinical-trial data on the application of its Vyvanse ADHD treatment to schizophrenia, following similar moves to test for applications in depression and excessive daytime sleepiness.

But looking ahead, speciality firms such as Shire face challenges from the big pharma groups which until now have been content largely to overlook rare disorders. Doing their best to head off the threat posed by the dreaded "patent cliff" – when key drugs lose protection – big firms have been downsizing and seeking new avenues. Earlier this year, Sanofi-Aventis bought Genzyme in the second-biggest acquisition in biotech history, giving it a platform to exploit rare conditions.

So, is Mr Russell quaking in his boots? He acknowledges the new landscape, saying that the Genzyme deal will "be a great test case", but quickly adds that big pharma itself faces a challenge in adapting to new areas of treatment.

"In history, big pharma having bought these kind of businesses – and they've dabbled in some these before – hasn't gone well." He points out that, unlike speciality groups, the biggest firms' business model is built around economies of scale, massive resources and immense global reach.

"Our world does not operate on any of those levels," he contends. "We'll meet people from some of the other companies... and they'll say: 'So how many reps do you have to sell drugs like Elaprase [Shire's treatment for Hunter syndrome]?' And we'll say we don't have any. And that just shocks them instantly."

He smiles again, warming to the theme, and continues: "We have some commercial people who are what we call medical science liaisons, but they're highly trained, highlyscientific people because they need to have a dialogue with specialists. They're not a rep who goes in withvisual aids and gives five unique selling points."

We are back to where we began. Shire is big and profitable. But it's not big pharma as we know it.

Building for the future

Angus Russell was named as Shire's chief executive in June 2008, after spending eight years as the company's chief financial officer. A chartered accountant by training, he's a pharma industry veteran, having spent nearly two decades at ICI, Zeneca and then AstraZeneca.

Outside the office, his passion is architecture, with a particular liking for Frank Lloyd Wright, the American architect who designed numerous private homes across the US and the iconic Imperial Hotel in Tokyo. When he's not on a plane flying between Shire's offices around the world, he's also keen on cars, both classic and modern, which he collects.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs People

Recruitment Genius: Bookkeeper

Negotiable: Recruitment Genius: One of the world's leading suppliers and manuf...

Recruitment Genius: Multiple Apprentices Required

£6240 per annum: Recruitment Genius: Apprentices are required to join a privat...

Sauce Recruitment: HR Manager

£40000 per annum: Sauce Recruitment: This is an exciting opportunity for a HR...

Ashdown Group: Interim HR Manager - 3 Month FTC - Henley-on-Thames

£35000 - £40000 per annum: Ashdown Group: A well-established organisation oper...

Day In a Page

Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee
World War Z author Max Brooks honours WW1's Harlem Hellfighters in new graphic novel

Max Brooks honours Harlem Hellfighters

The author talks about race, legacy and his Will Smith film option to Tim Walker
Why the league system no longer measures up

League system no longer measures up

Jon Coles, former head of standards at the Department of Education, used to be in charge of school performance rankings. He explains how he would reform the system
Valentine's Day cards: 5 best online card shops

Don't leave it to the petrol station: The best online card shops for Valentine's Day

Can't find a card you like on the high street? Try one of these sites for individual, personalised options, whatever your taste
Diego Costa: Devil in blue who upsets defences is a reminder of what Liverpool have lost

Devil in blue Costa is a reminder of what Liverpool have lost

The Reds are desperately missing Luis Suarez, says Ian Herbert
Ashley Giles: 'I'll watch England – but not as a fan'

Ashley Giles: 'I'll watch England – but not as a fan'

Former one-day coach says he will ‘observe’ their World Cup games – but ‘won’t be jumping up and down’
Greece elections: In times like these, the EU has far more dangerous adversaries than Syriza

Greece elections

In times like these, the EU has far more dangerous adversaries than Syriza, says Patrick Cockburn
Holocaust Memorial Day: Nazi victims remembered as spectre of prejudice reappears

Holocaust Memorial Day

Nazi victims remembered as spectre of prejudice reappears over Europe
Fortitude and the Arctic attraction: Our fascination with the last great wilderness

Magnetic north

The Arctic has always exerted a pull, from Greek myth to new thriller Fortitude. Gerard Gilbert considers what's behind our fascination with the last great wilderness