We operate six development centers around the world—in North America and Western Europe. We just opened a sales office in
Japan and are moving headquarters to Research Triangle Park in North Carolina.
PharmTech» When you say you share the risk, what do you mean?
»Wheeler: We share the risk if we put time and effort into a compound that doesn't make it to market. We don't get the benefit of
the revenues from commercial production.
PharmTech» You don't take an equity stake?
»Wheeler: Not at the moment.
PharmTech» What are you seeing on the commercial side of the business?
»Wheeler: On the commercial side, we see the market to be $10 billion, including Japan, but not India, Australia, or the rest of Asia.
We have 7% of that market, which puts us second in the world in market share. We operate nine plants in five countries, excluding
two plants we're selling (one in Canada and one in Puerto Rico). The retail value of the products we produce is more than
$50 billion. We employ just under 5000 people, distribute to 85 countries, and manufacture all dosage forms.
We don't currently own much of our own technology, but we hope to do that in the future. We will encourage scientists in all
six of our development centers to file patents. We also expect to partner with academia.
PharmTech» What do you perceive to be the trends in commercial manufacturing?
»Wheeler: We divide that market into five segments, each with its own dynamic: Big Pharma, specialty pharma, generics, biologics, and
Depending on the company, Big Pharma outsources anywhere between 5% and 25% of its total manufacturing. Many companies have
established strategic outsourcing divisions and are becoming very sophisticated. Specialty pharma companies are growing scripts
faster than Big Pharma. About 200 companies classify as specialty pharma, and Patheon will focus more energy on this segment.
Generics represent a very large market. Over 60% of all US prescriptions are now written generically. It's a market segment
we can't ignore. Even though we've traditionally not worked closely with generics manufacturers, we are starting to establish
relationships with them. But of course, we don't want to help cannibalize business from our own customers, the innovator companies.
As a company, we practice portfolio management. That's why generics are becoming so important to us. They produce high volumes
of predictable products. It allows us to absorb our overheads and take on other, riskier projects.
For the biologics manufacturers who have traditionally produced proteins and peptides, we serve to fill out their capacity
in biologics. But we are starting to work with them to develop their small molecules as well.
Companies in the biotech space generally don't have their own commercial manufacturing capacity, so we can help them develop
their products. Also for the biotech companies, we can offer full service, from early clinical through commercialization,
and we do this for many of them.
PharmTech» What's your read on the markets in India and China?
»Wheeler: No question that they are large players in the active pharmaceutical ingredient market. The majority of the industry's intermediates
are now manufactured in India and China.
But the final finish step, the purification step, is still typically done in the West. For final dosage-form manufacturing,
however, I see slower movement toward China and India. China is a longer way off, given the well publicized issues with quality
and intellectual property. India is closer.
Combined, however, they don't have much more than 5% of the western (American and European) markets, and that might double
to 10% in the near term. They are the lower cost alternative, but I don't see them taking over the majority of the market
within the next five years.
PharmTech» Why doesn't Patheon have a finished-dose plant in Asia to service that market?
»Wheeler: We are considering a joint venture for development services in India. There is a huge amount of talent, and India can offer
a lower cost alternative. We want to test the waters—test the logistics of that relationship as well as the quality standards.
Patheon represents a high-quality brand, and we wouldn't want to neutralize our brand, but we do want to test the waters where
it makes sense.
We are also thinking about Eastern Europe, possibly Poland, for commercial manufacture.
Another dynamic I've noticed with regard to India is that Indian companies are now acquiring finished-dose facilities in North
America and Europe. In these cases, they're competing within our own cost structure. I say: Bring it on! I can be competitive
on that kind of playing field.