19 May 2004

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The new meaning of orange: Actavis

As of last week, long-standing Bulebel-based pharmaceutical company Pharmamed, was re-christened Actavis (Malta) with its new bright orange livery. Since its takeover by Icelandic company Delta more than two years ago Pharmamed has seen its role transformed from an exporter of medicines to the third world, to an important player within the newly-branded Actavis Group. CEO for Actavis (Malta), Steinthor Palsson talks to Kurt Sansone about the growth prospects of the Malta plant and its central role within the overall strategy of Actavis to become a leading international producer of generic drugs

Why did Delta decide to invest in Malta more than two years ago?
There are a couple of reasons. Firstly, the Group wanted to increase its production capacity. Delta had a relatively new factory in Iceland and it started exporting into Europe. It was a successful venture that meant the Group required more production capacity because the Icelandic factory was reaching its capacity limit. Pharmamed in Malta was suitable as an export base into Europe.
Secondly, the patent situation in Malta is favourable because of the legal framework and also because many of the big pharmaceutical companies in the past, did not register their patents in Malta. Similar to Iceland they saw this as a small insignificant market.
This situation allows us to develop new generic drugs, produce and stock pile products so when the patent expires we will be present on the European market from day one. That is very important because competition is harsh and if you are the first to market you are more likely to gain market share.
The third reason for choosing Malta was a good English-speaking workforce.

Since coming to Malta, the Group has embarked on an aggressive investment programme. What are we talking of in terms of quality and human resources?
We have increased the quality level of the company. We have been upgrading the buildings and facilities because being a pharmaceutical company we have to adhere to strict standards. We also have been looking into our systems: the way we do things. The situation was relatively good at Pharmamed, but we have been investing a lot in improving the quality of systems and procedures.
We have also been investing a lot in our people through training. When we closed the sterile operation last year, we kept all the people on board. We did not need them then but we trained them and now they are contributing to our growth.

What is Actavis hoping to achieve with its strategy to re-brand all its subsidiaries under one name and vision?
If you look at our recent past you will see that this Group has been growing quite fast. Our growth has been both organic and through mergers and acquisitions. We now operate in 25 countries, in five continents and have 7,000 employees worldwide. We had many local companies with their own brand or name, so it was becoming a huge flora of all types of names. The competition out there is harsh and to keep on being successful we have to focus on our strengths and establish a strong market position. The mission is to become a leading international generic pharmaceutical player and to achieve this we consider it necessary to have one name and act as one company behind one vision.

What are the prospects for Actavis in this highly competitive pharmaceutical market where large brand names have long been established?
If we look at the last few years Actavis has seen tremendous growth mainly through the development of new products. We have a strong sales network and we have been acquiring companies. What we are saying is that the pharmaceutical market is growing and we should be likely to do well in the future if we build on our strengths, which are a good sales network, low cost manufacturing sites, high quality and generic drug development.

During the launch of the new brand name last week you mentioned the fact that the population in the West is ageing and that the cost of healthcare is spiralling. Why are these two factors critical for growth?
Governments would love to see the cost of medicines go down because this has a direct impact on people’s taxes. In many places the healthcare system is usually subsidised by government. Generics are cheaper drugs and so are very much appreciated by public health services.

What role does Actavis Malta have in the overall strategy of Actavis Group?
We have been investing to comply with the highest quality requirements. So today we have been approved by health authorities in Europe and also by the Group’s customers in Europe.
Today, most of the business in Malta comes from the EU markets, which is different from the situation only less than one year back when Pharmamed’s main clients came from third world countries. This means that the products we produce now have higher value added. The Group strategy sees the Malta plant as the main supplier of the Group into Western Europe.

This is a very ambitious vision for the Malta plant. What does the future hold?
We could say there is a bright future for Actavis Malta within the Group. Our role is to grow and take on more of the EU business, which is one of the most valuable markets in the world. This means more investment will come Malta’s way. It also means more jobs.
We also aim to develop at least three new generic products in Malta, which is very important for us. And to achieve this we have built up a good team of around 30 people in the research and development division.
Actavis Malta also takes care of the sales into new markets for the Group, namely North Africa and the Middle East where Maltese sales and marketing personnel are selling our products. We see Malta as the ideal place to penetrate these new markets not so much because of the distance more so because of the know how here. The people in Malta know the languages and the culture in these markets more than any others in the markets in which we operate today.

Over the last few years we have seen a number of pharmaceutical companies set up shop in Malta. It has been one of the few growth areas for the island’s economy. How harsh is the competition for human resources?
This is a sector that Malta Enterprise wanted to promote. They have attracted pharmaceutical companies and are making good progress. We see this as good for us in the long term because customers look to Malta and see the island as a pharmaceutical centre of excellence. This is beneficial to the country and our business in the long term.
In the short term it could affect us negatively because with new companies setting up the competition for human resources grows. A number of companies have opened up over the last two years and very few people have left us, maybe not more than you can always expect. We have been talking to Malta Enterprise and the government on the importance of building up a human resources pool for the future through the education system and some action has already been taken.

Do you see any synergy between the industry and the education system?
I think it is important for industry to work together with the education system by assisting, especially at the beginning. People can be trained within the companies. I see this as the only way forward.

What has changed after 1 May with the EU becoming a single market of 25 countries including Malta?
We can release our products directly to all the other EU countries. If we were to operate outside the EU we would have to have our products re-tested by someone inside the EU thus increasing the level of bureaucracy. EU membership has helped us to shorten the distance between us and our customers and costs have gone down. We have easier access to the market.
Customers in other EU countries now know that we operate in the same regulatory environment as they do and so can be assured of our high standards. That is also beneficial when dealing with countries in non-EU markets because they see us as an EU country with the high quality standards normally associated with the EU.

What is Actavis Malta hoping to achieve in terms of turnover?
What I can say is that Actavis Malta is growing very fast. In the past almost all our business was with the third world. Now we are producing new products and we have an ambitious plan in place to bring over more new products to market in Western Europe. We are selling products with higher value added and will continue to do so in the future. We expect to see our revenues multiply.

The Actavis Group is listed on the Icelandic stock exchange. Are there any plans to list on other stock exchanges around the world?
The Group is currently working on its listing on the London Stock Exchange.

Copyright © Newsworks Ltd. Malta.
Editor: Saviour Balzan
The Malta Financial & Business Times, Newsworks Ltd, Vjal ir-Rihan, San Gwann
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