In the battle to survive and grow in the recent challenging years for the pharma industry many companies have completely overhauled their business strategies.
Some companies have switched their therapy area focus, spurring a growth in rare diseases and personalised medicine, while others have divested non-growth products and business areas or overhauled their R&D approach by championing collaboration.
For Abbott the answer was to go one step further, and not just create a new strategy or culture, but to create a new independent company with a focus on research-based pharmaceuticals that would be better placed for growth in a new healthcare environment.
The result was AbbVie, which launched on the stock exchange in January 2013 with 12,000 employees and an estimated $18bn in annual revenues – headed by arthritis blockbuster Humira (adalimumab), the world’s biggest selling drug for 2013.
It was a bold step for Abbott, a company with a 125-year heritage in healthcare, but it’s one that seems to have paid off with AbbVie boasting a promising pipeline of new products, while Abbott has remained a significant player in other aspects of healthcare, including generic and nutritional products, medical devices and diagnostics.
A local impact
The launch of AbbVie has been a major global effort, but it’s on a localised level where it is possible to see the real impact of this new business. The transition has been particularly successful in the UK where AbbVie was awarded 2014 Company of the Year at PMEA, the awards run by PME publisher PMGroup, just one year after launching in the country.
Overseeing the company’s introduction into the UK market has been Matt Regan, who has been general manager for AbbVie in the region since its launch in January 2013 when he moved from his position as general manager for Abbott’s pharmaceuticals business in Norway.
Regan describes the recognition of the company’s achievements at PMEA as “very satisfying”, especially considering the short lifespan of AbbVie so far, although the success should not be entirely unexpected.
“I think it was quite a brilliant strategic move to separate Abbott at the time into two separate, independent companies,” says Regan, who spent over a decade at the company, including spells in Ireland, Switzerland, Latvia and Sweden.
“In terms of execution and the completion of the separation, it was very smooth and very well planned with great cooperation from people on both sides.”
Creating a culture
One of the main positives of spinning out AbbVie as a new company rather than retaining its operations within Abbott is the opportunity to create a new culture specific to AbbVie that runs through the business and its employees, according to Regan.
“It’s something that we talk about here, that culture will eat strategy for breakfast,” says Regan. “We really want to make sure that we build a really strong culture, a culture where people are motivated and inspired in the morning when they jump out of bed and go to work because they’re inspired to work for the company.”
That culture is being built on key issues in the pharmaceutical industry, including the increasingly prominent and expected institution of transparency.
“We want a very transparent organisation,” he says, “a non-hierarchical organisation where people ask a straightforward question and they get a straightforward answer. “
Employee development is an integral part of the new AbbVie too, says Regan, acknowledging the split put a “big demand on our talent pipeline”.
“So one of the important things for us is to really nurture our talent and make sure that we’ve got a really robust talent pipeline actually.”
A patient focus
The main element of AbbVie’s culture going forward though is the patient, as seen in the comments made by PMEA judges when awarding AbbVie with its prize last year.
“AbbVie put patients at the centre of everything they do, and go to great lengths to understand and fulfil their needs,” they said. “It is pioneering sustainable healthcare initiatives and driving the organisation to be both brave and innovative, which has resulted in a positive impact on patients, customers and, ultimately, the company’s success.”
These comments tie in with Regan’s priorities for the company in the UK.
“From day one, we always spoke with the leadership team in the UK, and indeed internationally as well, that we wanted to be a different kind of a biopharma player.
“Different to us means that we really put the patient at the centre of everything that we do and that everything that we do is about making the maximum impact on our patient. And then we also feel that if we do that well and if we do that consistently, that we’ll also be successful as an organisation and as a business as well.”
This is a really great example of biopharma coming out with a cure
Going forward this increased focus on the patient will impact the way AbbVie conducts its business, according to Regan, including the launch of a specific AbbVie Care division.
“What we want to do is move beyond just being a provider of medicines to be more holistic in understanding the patient journey and understanding what it will take to make sure that these medicinal interventions are leading to improved patient outcomes.”
Collaborations
In the UK one of the main pathways for AbbVie to support the patient journey is improved collaboration with the NHS, especially when it comes to chronic diseases.
“The demands on the system are higher than they ever have been,” says Regan. “So I think one of the key things from our perspective is looking at new models of care. We have to think about how we can work together and co-create some of these solutions.”
The industry will need motivation to ensure any new model can have a lasting impact, however.
“I think we need the right kind of incentives in place to encourage uptake of innovative, cost-effective therapies, but also where you can move patients out of the hospital and into the community and into the home.”
AbbVie’s partnership ambitions also include working more closely with patient groups, including an ongoing pilot with the Hepatitis C Trust that involves a buddying system for people with hepatitis C virus (HCV) to help navigate the care system and make the most of new treatments.
It’s a scheme that Regan is proud of and one he sees as having a real impact on the lives of patients. “A lot of HCV therapies in the past have been quite aggressive with a heavy side effect profile so people have fallen out of the healthcare system, or they say, ‘You know what? I really don’t want to go through that and I’m going to live with this disease irrespective of the consequences because the side effects are not something that I can live with.’”
“By building a relationship with someone who’s been through the system these people can learn to reengage with their healthcare professional, and understand that new therapies are less harsh.”
A revolution in hepatitis C treatment
The hepatitis C market has indeed seen a boom in innovative new medicines that allow for a simpler, shorter oral regimen without the side effects of pegylated interferon.
Gilead Sciences has emerged as the leader in this field with Sovaldi (sofosbuvir) and Harvoni (sofosbuvir/ledipasvir), both of which have already made billions of dollars.
However, AbbVie is set to make an impact in 2015 with the launch of its own interferon-free regimen for hepatitis C, a combination of Viekirax (ombitasvir/paritaprevir/ritonavir) and Exviera (dasabuvir), that is likely to offer a serious challenge to Gilead’s dominance.
“This is a really great example of biopharma actually coming out with a cure,” says Regan, speaking generally about the new treatments on offer. “The public health impact from these new treatments is absolutely immense because you’re actually taking patients out of the system. And that is quite revolutionary – this is opening up a completely new era for patients.”
“And obviously the NHS saves on downstream costs associated with HCV, such as liver disease and the prospect of liver transplants. Liver disease is still one of the biggest killers in the UK and it’s the only one of the top five that’s actually not decreasing.”
A failed takeover
Looming over all of this for a large chunk of 2014 was the prospect of AbbVie taking over UK-based pharma company Shire in a deal agreed in July that was worth $55bn.
However, later changes to US tax rules on international operations made the bid a less attractive one for Chicago-based AbbVie, with the company officially killing the deal in October after shareholders voted against the move.
Demands on the NHS are higher than they have ever been so we must learn to work together
Despite the scale of the potential merger, Regan says it was a case of business as usual when it came to AbbVie’s operations in the UK: “We have a responsibility to the patients that we serve and we just wanted to continue to keep all of our organisation fully focused on the job at hand. Even if the two companies were to agree, there would have been a lot of steps to go through before anything became a reality, so there was minimum distraction.”
And business as usual means maintaining a healthy relationship with Abbott, perhaps an inevitability considering the two companies’ background and the shared location in Maidenhead.
“I think there will always be a strong relationship because obviously we share a heritage. Over the last couple of years there has been nothing but co-operation from both sides.”
AbbVie continues to stride forward as an independent firm, however, including moving to a specific building separate from Abbott. “Probably over time then we will diverge, but in a very natural kind of way.”
