Whether in HGT or Specialty Pharma, our challenge going forwards is to leverage our existing sales infrastructure, and grow revenues at the lowest possible cost.

The phrase often used for orphan drug sales is an 'advocacy model'. In other words an approach in which sales tend to be generated in response to active demands from patients and a small number of highly-specialized physicians working in regional and national centers of excellence and telling us what their treatment needs are. In practice this means that HGT has a very cost-effective sales infrastructure-for example, it only needs ten sales representatives across the whole of the US. HGT can also open sales operations in new markets at low cost, that can generate returns, and comparatively high volumes per sales person employed. As the maximum global turnover for each drug will probably be in the range of $300-$500 million.

Specialty Pharma, by contrast, will always generate higher absolute sales volumes than HGT, and needs more conventional sales structures as a result. While HGT salespeople are often trained scientists or medics in their own right, Specialty Pharma sales people have a more traditional sales background.

Specialty Pharma has a much wider range of sales approaches, from those that resemble the big pharma format, to one closer to that which HGT might take. At one end of the scale there are around 43,000 specialists treating ADHD in the US, and Shire has 550 salespeople in the US, backed up by an extensive program of investment in medical education, and public information targeted directly at the consumer in the US. At the other extreme a drug like XAGRID is closer to the orphan model, and has around 36 sales reps who target a small number of specialist haemotologists. FOSRENOL, our treatment to reduce high phosphorus levels in late-stage kidney disease, is somewhere in the middle, with around 60 US reps, and a similar number in Europe.

US sales of FOSRENOL did not grow quite so quickly from its 2005 launch as we had expected, but the European roll-out is progressing extremely well. The US launch of LIALDA, our ulcerative colitis treatment, has been so successful in the US that it is now positioned to be the market leader in its segment, which has proved the value of the Specialty Pharma model. It's already been launched in Canada, Germany, Ireland and the Netherlands, under the brand name MEZAVANT XL, and there are filings in place in Australia and fifteen approvals in Europe.

Whether in HGT or Specialty Pharma, our challenge going forwards is to leverage our existing sales infrastructure, and grow revenues at the lowest possible cost. One way we're already doing this is by using HGT's overseas representative offices as a bridgehead for the Specialty Pharma business. As Joseph Rus, Executive Vice President of Market Alliance and New Product Development, says, "Specialty Pharma will typically enter a new market through a distributor arrangement, and then take over its own sales a few years later, once volumes reach an appropriate level. At that stage the sales infrastructure already in place for HGT can be a really valuable shared resource."