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Sidebars : Feb 15, 2009 (Vol. 29, No. 4)

Executive Interview: Reinhard Vogt, Sartorius Stedim Biotech

All industries, including biotechnology, are faced with a drastically different economic environment from that of four or five years ago. To get a sense of how a key biotech supplier that operates on a worldwide basis views the current state of the global economy, GEN interviewed Reinhard Vogt, a member of the administrative board and executive vp of Sartorius Stedim Biotech. Vogt has extensive experience in management, sales, and marketing in a number of worldwide locations.

GEN What is the perspective of a major biopharmaceutical equipment and services supplier like Sartorius Stedim Biotech regarding this serious global economic downturn?

Reinhard Vogt: The biopharmaceutical market in the past has not been considerably impacted by economic upturns or downturns. If you look at the biotech industry’s development over the past year, there were already signs of a downswing in the last quarter of 2007, way before the financial crisis hit. The five largest biopharmaceutical companies forecasted only 5% growth in 2008 compared with two-digit growth in 2007.

Various factors were responsible for this relatively low growth as higher failure rates concerning new drug approvals, less commercial success for some biotech drugs than anticipated, and also, the warning letters issued by FDA that led to fewer prescriptions and less consumption of the drugs concerned. So there were other effects on the bioindustry than just the financial crisis.

Of course, with the financial crisis, there will be less money in the market, and financing of drug developments and clinical studies will become more difficult. Many biotech start-ups and even medium-sized companies will find it difficult to secure the needed financing because of the lack of venture and risk capital. Also, this is not the time to pursue IPOs. This situation may propel consolidation of the industry at an even faster pace as has already been observed in the recent years. The proposed acquisition of Wyeth by Pfizer is a good example of this. Leading biotech firms like Genentech and Amgen with a strong drug development pipeline will recover in the next few years, and we, as a supplier, can expect our business to increase as a result.

Generally, we can expect that the trend of restrictive and cautious investments in new manufacturing capacities and plants as experienced during the past two years will continue or even become more pronounced due to the financial crisis. However, this development also has positive effects for us as it is one of the key drivers for disposable technologies where we have positioned Sartorius Stedim Biotech as a key supplier to the biopharmaceutical industry.

GEN What are Sartorius Stedim Biotech’s plans for introducing new technologies and new products in 2009?

Reinhard Vogt : We will launch several  new disposable technologies including two new disposable bioreactor designs. If you look at marketing reports to see which technologies are expected to grow most rapidly over the next few years, it’s clearly disposable bioreactors and disposable chromatography. In both areas Sartorius Stedim Biotech has excellent and innovative technologies to offer.

Our philosophy has always been to distinguish between operational excellence and strategy, where I always say, operational excellence is to run the same race faster, and strategy is to run a different race. So in our strategic plan, we need clear positions where we differentiate ourselves from our competitors.

We have achieved this in the areas of cell culture and fermentation technologies. It all began in 2000 when we acquired B.Braun Biotech (BBI), the market leader for conventional fermentation technologies. The key for us, however, was not only gaining the fermenter itself, but the company’s engineering, automation, and software capabilities. All this expertise is also essential for disposable bioreactors technologies and designs, and we are now enjoying the real benefits of our acquisition of BBI and will continue to do so in the future.

In this respect, another key for us was the recent acquisition of Wave Biotech based in Switzerland. We already had a highly successful exclusive alliance with this company in place since 2006 and, hence, it was certainly important for us to secure this technology—the most established disposable bioreactor technology on the market. Together with our own developments, we will have the most comprehensive portfolio of reusable and disposable bioreactors in the industry.

GEN Where do you see possibilities for growth in the current biotech market?

Reinhard Vogt: Some people say biotech is only about monoclonal antibodies and recombinant proteins. But to us, vaccines and blood fractionation are extremely important. The vaccine industry is growing, and this particular industry is receptive to disposables because the volumes are much smaller than for other bioproducts, and vaccines are often manufactured during vaccine campaigns (e.g., before the flu season). Disposables also help eliminate the risk of cross-contamination and provide a high degree of flexibility.

With companies like Sanofi Pasteur, Novartis, GlaxoSmithKline, and Merck investing in new vaccines, and with several Asian firms making traditional vaccines for their local populations, you can see why the size of this market is increasing.

GEN You have spent a good deal of time working in Asia. Where do you see promising biotech opportunities in China and India?

Reinhard Vogt: There is huge potential in vaccines, especially in China and India where today, a tremendous number of people still have no access to vaccinations. Also, the market for human-derived plasma fractionations is growing in these countries. In this area as well, we have invested in new technologies and innovative process solutions in strategic cooperation with Bayer Technology Services and ProMetic.

In addition, investments in the development of monoclonal antibodies are made in Asia, mostly in India. Financially strong companies are investing in biotech in India, and this country also has skilled people who have been educated there and abroad in order to handle this challenge. It could well be that the next globally successful biotech company will come from India.

I cannot see a similar development in China yet. I suppose global biotech companies are also careful with investments in China because of intellectual property issues.   

Many countries in Asia are also building up capacities for contract manufacturing and research. Korea’s Celltrion, for instance, already has some of the largest contract manufacturing capacities in the world and plans to extend these capacity levels in the future.

Also, smaller countries such as Malaysia, Singapore, and Taiwan are building up capacities for contract manufacturing. So this is certainly another area of growth potential and, again, specifically in the area of disposable technologies.