Shire tomorrow
Towards a global business.
There's no doubt that, in the near term, ADHD remains a hugely important aspect of our business. It's a relatively mature market-albeit with real possibilities for growth in both geographical and product terms- and one that we understand so well that it reduces our overall risk profile significantly from our investors' point of view. At the same time, as Mike Cola says, "Many of the opportunities we now have, are only possible if the ADHD franchise steps up to the plate. It's a generator of cash for investment in our future pipeline, and a platform for our international growth."
Expanding our business internationally is absolutely central to achieving our long-term potential. North America and Europe will always remain important markets for us, but most of the industry agrees that overall sales growth is likely to be limited in the next few years, even without factoring in the effects of a worldwide economic downturn. That makes opening up new markets for Shire outside these regions even more crucial. For example, in 2008 total pharmaceutical industry sales in the main European and North American markets grew by between 2% and 5%, while the eight key emerging markets of Russia, China, India, Brazil, South Korea, Mexico and Turkey grew between 12% and 13%, and now account for nearly $80 billion of annual sales. China is forecasting that 90% of its population will have universal healthcare by 2012, and 100% by 2020, which means a population equal to the US and Europe put together. Likewise Russia is putting huge new investment into healthcare, and spent $14 billion in 2008 alone.
The opportunities for us are clear, but there are risks to be addressed as well. Some of the new markets have a history of political instability, or laxer regulations on key issues like intellectual property. We need to manage these challenges actively, and develop a number of effective entry strategies for these valuable new markets. This might range from licensing our products in the near term, to gain a royalty stream, as we've done in Japan, to the use of an established distributor, to our own small office or representative office, as we are doing so successfully with HGT in markets like Brazil, Mexico and Russia. HGT now has over 1,000 people worldwide, an increase of 300 in only twelve months, and is already achieving its own stake in the overall Shire ambition of 25% of sales outside North America and Europe.
International expansion is one key route to growth; together with planned portfolio diversification, and new strategic alliances or acquisitions. One key challenge for Shire as a whole is how best to analyze all the new opportunities open to us, whether from our own research, or from acquisitions or partnerships with outside third-parties. The Shire Business Development group actively explores all these new prospects, and teams from Specialty Pharma and HGT work together to decide where the most promising might fit, depending on which business model is the most appropriate to exploit it. The result? A pipeline of at least 16 new product launches between now and 2015.
If we fulfil the goals we have set ourselves, 2015 will also see Shire as the most valuable Specialty biopharmaceutical company in the world, with number one and number two positions in all our key therapeutic areas. That's a huge ambition, and if we're to achieve it, we will need to take measured risks, for maximum returns. In HGT this could mean going into disease areas we've never looked at before-that no-one may have ever looked at before; in Specialty Pharma it may mean looking at possibilities that are in a slightly earlier stage of development, and having the courage to operate at the cutting edge, just as we're already doing with a product like INTUNIV. For everyone in Shire it will mean dealing effectively with the complex market and regulatory challenges that this will entail, while retaining the agility, bravery, and flexibility that has always been at the heart of our success.
Which brings us back to where we started. A combination of strong international growth and pioneering new therapies is how we'll achieve strong, sustainable growth for our shareholders; but it's also how we'll achieve our fundamental purpose and raison d'être: to help people with life-altering conditions lead better lives.
