The next challenge for pharmaceuticals

Article except from the magazine "Dossier Lombardia" distribuited with the newspaper "Il Giornale" on
30 September 2014

In a close look at the Italian pharmaceutical industry, which is facing critical issues but also has room for growth. Massimiliano Del Frate explains the current situation and the most likely future scenarios.

Excellence as an essential goal is the only possible perspective for Italian pharmaceutical companies wanting to make the most of the know-how gained from centuries of tradition. This is especially the case for large companies such as Milan's Mipharm, which aims to become one of the most important players on the international market. Mipharm was founded in 1998 on the initiative of Cav. Lav. Dr Giuseppe Miglio, former Chairman of Sandoz Italy and first head of the Novartis group in Italy (a merger between Sandoz and Ciba-Geigy), with a management buy-out by the Novartis Group of the former Sandoz Milan plant: one of the first start-up business operations in Milan and one of the few that has been successful. After having also worked for a decade marketing drugs under its own brand in 2009 it sold the business side to Sandoz, and formulated a new Business Model, becoming a centre of excellence in contract manufacturing, in Special Services, and in technological innovation with its patented technologies. "We have succeeded in a few years - explains Massimiliano Del Frate CEO of Mipharm - in establishing ourselves as a global leader in the competitive contract manufacturing of drugs market, producing branded speciality, generic and OTC products. Key to this success is our ability to combine manufacturing excellence and innovation, providing customers with new formulations. Our goal today is to present ourselves as a market leader by making best use of our business model to ensure a high level of service to customers that sell in Italy and abroad."

How do you see the future of the pharmaceutical market?

"The pharmaceutical market is rapidly evolving, especially with regard to new emerging countries that are becoming increasingly important. The US and Japan remain the first and the second-largest markets for sales, but for a few years we have seen other countries climb the global sales rankings, thus increasing the need for quality medicines. China, for example, is growing and will soon become the third largest market worldwide. Then following behind we have countries like Brazil, South Korea, India, Mexico, Russia, Turkey and South Africa. In this context of global internationalisation it is increasingly important for governments and consumers to combat the presence of counterfeit (false) drugs. With this in mind, we were among the first to invest in serialisation, a technology that can trace the journey of a medicine through the supply chain to the end user to ensure that the drug purchased is not counterfeit."

To what extent has globalisation highlighted the need to combat counterfeit drugs?

"The serialisation of pharmaceutical products is a current issue and a hot topic globally, which arises from the need to be able to trace medicines unambiguously to combat counterfeiting and ensure the safety and traceability of each product along the entire supply chain, from producer to end user. Our company is endowed with a system (equipment and software) that can "serialise" the products manufactured. We have embarked with one of our major customers on a joint project to comply with Chinese serialisation regulations (in force since 1 January 2014) in order to export to China. Serialisation is now required in Korea and, from 2016, will be needed in amongst others California (US) and Saudi Arabia. Given that other countries, including Europe, are also gradually introducing this legislation, the know-how that Mipharm has already acquired puts us in an advantageous position, as one of the first Italian companies equipped with this innovative technology."

How does Mipharm fit in the global contract manufacturing market?

"Today, pharmaceutical companies are concentrating their efforts into the research and manufacture of products marketed worldwide and into new technologies. This trend creates new opportunities for the contract manufacturing of classical, generic and niche products on the technological level and for particular markets. In this scenario, a company like Mipharm has successfully managed to combine creativity, flexibility, and customer-oriented service. Indeed, Mipharm merges Swiss tradition with Italian creativity, giving it the unique and proven long term ability to supply the Italian, European and global markets, from the US to Japan, China and other Far Eastern countries. Mipharm currently manufactures products that are exported to five continents, with a vast customer base ranging from local mid-sized companies to large multinationals."

How did you structure your company?

"Mipharm is organised into three divisions: production, special services, and innovation and technology. Production takes place in Milan, with a capacity of about 40 million units and uses the most modern technologies, a result of a strategy of investing significant resources in the constant updating of production technologies. The site boasts four approvals by the Food and Drug Administration (FDA), the US body that oversees the authorisation procedures required to export pharmaceutical products to the United States. These are for the Nasal Spray, Potent Drug, and Packets and Packaging production departments. Mipharm produces and packages a wide spectrum of pharmaceutical products and forms in compliance with European GMP and US FDA standards: nasal sprays (FDA approved department); Potent Drug (FDA approved department), sachets (FDA approved department), creams, suppositories (Alu-Alu, PVC peel-off), and slow-release pellets. It also has a packaging line (FDA approved department) for solid dosage forms in blister packs, bottles and tubes."

Renato Ferretti

The strategy of change

The essential nature of the business is captured in its continuing transformation: to meet the changing needs of the market. Founder and president of Mipharm SpA, Cav. Lav. Dr Giuseppe Miglio, has not only made change the basis of its business philosophy, but an actual business practice. "In our strategy, for example, - says Miglio - it was important to combine specific skills with the personnel aspect, so we decided on a constant rejuvenation of management. Indeed, my rules involve setting up a medium- to long-term renewal project by passing it through the hands of new people. Their different mentalities and ways of doing things allow for real change. Otherwise we repeat the same things and there is no real transformation. The world is changing so fast that we are obliged to keep up with it. And it is change that always provides the opportunities of the new and different. However, in order to implement effective innovation we need a vision of the future, which in other words means learning to look at the forest and not the individual trees." Dr Miglio then expanded the theme to cover Italy as a whole. "If Italy wants to escape from the suffocating situation in which it finds itself, it must stop thinking and producing like it did 30 years ago. You just need take a trip around Germany to realise how different their mentality is, how they have such a modern way of seeing business. Yet our country has an interesting domestic generics market, because while the German market is 70% generic drugs and the UK 80%, in Italy it's just 20%. So, there is room for improvement. However, product quality is the decisive factor for exports, which is why 19% of our employees work on quality. To be competitive you need superior quality. This is how we aim to become Italy's number one manufacturer of quality generic medicines."

The FDA guarantee

The Food and Drug Administration (FDA) is a supervisory body on food, medical and healthcare products marketed in the United States. New products need to be approved by the FDA before they are placed on the US market. Although its remit is limited to the United States, the FDA's rigour is recognised worldwide. "Mipharm - says CEO Massimiliano Del Frate - boasts four FDA approvals (last FDA inspection in September 2013) for the following production areas: Nasal Spray Solution (1998), Oral Potent Drugs (2003), Sachet line (2008), and Solid form packaging in bottles and tubes (2013). With high quality standards and a high capacity and flexible production, Mipharm offers itself as a Centre of Excellence for contract manufacturing and the development of new products and technology platforms."