How to become a healthcare heavyweight

By Julia Puppe, Editor

Bayer bought Schering in June 2006 with the intention to become a global healthcare heavyweight. As part of the integration process, the combined Bayer Schering pipeline has been evaluated and set for success. NGP spoke with Dr Andreas Busch, Head of Global Drug Discovery, Bayer Schering Pharma, about R&D after the merger.

How to become a healthcare heavyweight
Acquisitions, mergers, collaborations – everyone’s doing it. Bayer, for example, who bought Schering in June 2006 in a deal worth nearly €18 billion. The intention: to become a global healthcare heavyweight. As part of the integration process, the combined Bayer Schering pipeline has been overhauled and set for success. Julia Puppe spoke with Dr Andreas Busch, Head of Global Drug Discovery, Bayer Schering Pharma, about R&D after the merger.

Bayer was amongst Germany's biggest pharmaceutical companies even before it won the battle for Schering. The 144-year-old company, best known for the invention of aspirin, last year beat Merck’s offer and attempt to create a new German super pharma company.

Though Germany’s largest pharmaceutical company, Bayer ranks only 16th globally. The merger, it is hoped, will help to create a healthcare heavyweight of international standing – especially after the recall of its anticholesterol treatment Baycol over safety concerns in 2001 left Bayer struggling to recover from the setback.

On the back of the Schering acquisition, positive results haven’t been a long time coming. The turnover of Bayer HealthCare last year rose 47 percent to €11.7 billion. As another payoff of the purchase, the pharmaceuticals business was up nearly 84 percent to €7.5 billion.

A look at the other side of the coin reveals around 6100 job-cuts worldwide, including 3150 in Europe, 1000 in the US, 750 in the Asia, Pacific and Japan region as well as 1200 in Latin America and Canada. Bayer announced that 30 percent of the overall synergies would come out of R&D.

Reorganisation
Dr Andreas Busch, Head of Global Drug Discovery, Bayer Schering Pharma, was appointed in February 2007 to oversee the reorganised Global Drug Discovery activities. Responsible for all aspects of drug research right through to proof-of-concept clinical trials in man, Busch’s division cooperates very closely with the Global Development teams, headed by Dr Kemal Malik, who take over responsibility for later-stage development until the products reach the market.

“The integration process has come along successfully,” says Busch. Glancing at the blue Bayer Schering Pharma lettering on the building across his office, he adds: “We are fully operational and act as one company. Although there remain things to be done, we are in many aspects back to normal, which is a great achievement given the short time.”

The trained pharmacologist and physiologist is proud of what his company and its people have achieved. The acquisition of Schering was the largest transaction in Bayer’s history. “Over the past few years, we at Bayer have had the chance to develop a unique competence in dealing with change and working through the complexity associated with significant shifts in both our organization and our portfolio. It is quite remarkable when you consider that in the last three years at HealthCare alone we have not failed in our commitments – even though almost 3000 people have joined the company and almost 13,000 have left it,” Busch explains.

In 2004, Bayer bought the over-the-counter (OTC) drug business of Roche. Last year, it spun off most of its chemicals business in the new publicly listed company Lanxess. “Our integration machinery has had to deal with significant change and has gained the necessary competence to run the technical process. As a result, we have been able to apply our experience to the current process, and the integration of Schering is running not only smoothly but actually ahead of schedule. It really is a model for such a large integration process,” says Busch confidently.

Future goals have been set high at Bayer: to be a powerful company, one of top ten pharmaceutical specialists in the world holding a strong position in the biologics field. To achieve this, Busch’s division and the Global Development organization have spent a considerable amount of time and energy reviewing its R&D pipeline, processes and capabilities with external consultants and independent scientific leaders to shape its R&D strategy and focus on those areas and projects with a high probability of success – from both a scientific and commercial perspective. The process was concluded this spring and the new strategy is currently being implemented.

Saving money
R&D functions have been consolidated with fully integrated organizations at three sites: in Berlin and Wuppertal, Germany, and in Berkeley, US. Besides significant savings in infrastructure, this comes down to one important strategic consideration: it allows the co-localization of therapeutic areas according to relevant needs and ensures that the therapeutic areas compete for the technology platforms on a global basis. “Against the industry trend of setting up research centers in a satellite approach, we believe that our site configuration is highly competitive, and that it not only is more cost-efficient but also supports the productivity of our organization,” says the 44-year-old.

“We also reduce our cost base by focusing on the most promising activities and operating in the most efficient organizational set-up and processes. Our theme in the portfolio-review process was ruthless prioritization and identification of those areas and projects with strategic fit and high quality. By selecting the key programs and re-defining our research strategy, we can cut our R&D costs without compromising our productivity,” Busch points out.

Combined pipeline
In the course of the reshuffle, Bayer has dropped 20 development projects. Busch: “Our current pipeline is the result of a thorough evaluation process in which we have spent a lot of effort evaluating both the scientific background and the commercial feasibility of our programs. In order to be able to resource the most promising projects adequately, we have discontinued those projects which we believed lacked strategic fit or had limited commercial potential within the framework of our strategy.”

Losing out, for example, is PTK/ZK, an orally active angiogenesis inhibitor which blocks all known VEGF (vascular endothelial growth factor) receptor and platelet-derived growth factor receptor tyrosine kinases. Co-developed by Schering and Novartis, and studied for colorectal cancer, it failed two phase III clinical trials in 2005.

Leukine, the company’s white blood cell growth factor, which has been investigated for Crohn’s disease, also failed to meet study endpoints. Busch, leaning forward in his seat, explains: “To further develop these compounds, significant investments would be necessary which we believe could be better spent on our other assets. Our resources are limited and we need to prioritize what we do. The combined pipelines have put us in the comfortable position of being able to choose the best programs, and we have gone through an intensive process to make the best of this.”

Looking at Bayer Schering’s combined pipeline, there are plenty of promising compounds. The company keeps 50 potential new drugs in development, out of which 14 are in phase I, 17 in phase II and 20 in phase III. A further nine projects have already been submitted for marketing authorisation.

Promising compounds
The most exciting assets, Busch believes, are the anti-coagulant rivaroxaban and the company’s cancer drug Nexavar. “With Nexavar, our initial strategy was to develop the compound in very difficult-to-treat-tumors with high unmet medical need, such as renal and liver cancer. Nexavar is already being marketed in renal cell carcinoma cancer, and we have recently demonstrated its potential in hepatocellular carcinomas. This is truly exceptional, because no therapies are available in this indication. Moreover, we are continuing our efforts in melanoma and big-tumor types, such as non-small cell lung cancer and breast cancer. Overall we are becoming increasingly excited about the success we see with this compound.”

Rivaroxaban is a new, oral direct Factor Xa inhibitor. Busch believes that it has the potential to redefine the anticoagulation market. In the first phase III study, it proved to be superior to the therapy standard enoxaparin in preventing venous thromboembolism in patients undergoing orthopedic surgery. “These results are exciting,” emphasises Busch, “as they indicate that rivaroxaban may better meet the needs of many patients undergoing orthopedic surgery. It is an important step for this category that a once-daily, oral medication has demonstrated better efficacy in preventing venous thromboembolism (VTE) than the current standard of care, while also displaying a promising safety profile.” Busch hopes that other RECORD trials (REgulation of Coagulation in major Orthopaedic surgery reducing the Risk of DVT and PE) will underpin the evidence. He expects to file for approval in this indication in Europe later this year.

A huge success, Bayer Schering pioneered MS treatment by being the first in the market with Betaferon. “In this field, we are working on Alemtuzumab, a humanized monoclonal antibody directed at CD52 antigen which is expressed on lymphocytes,” says Busch. Alemtuzumab is currently on the market for chronic lymphocytic leukemia, but CD52 is expressed at high levels in lymphocytes, which play an important role in the pathogenesis of multiple sclerosis. “Encouraged by impressive phase II results, we are now planning the phase III program together with our cooperation partner Genzyme for later this year.”

Another highlight from Bayer Schering’s pipeline is VEGF Trap-Eye for the treatment of age-related macula degeneration (AMD), which is being co-developed with the US based biotech Regeneron. Busch: “We have seen interim results of our phase II program. It opens up the potential for less frequent dosing, which would be a major advance for patients and a differentiator from existing therapy. It should be remembered that these patients receive injections directly into their eyes, and less frequent dosing with the same degree of efficacy would undoubtedly be a significant patient benefit.” The initiation of phase III was announced last month.

Another indication in which Busch believes his company has generated a world-class pipeline is cardiology. Three compounds recently achieved proof-of-concept. Two of these are target soluble Guanylate Cyclase (sGC). “First is our sGC Stimulator for the treatment of pulmonary hypertension, which we believe could be a combination partner of choice for patients on pulmonary hypertension therapy. It could enter phase III next year. Second is our sGC Activator for which the lead indication is acute decompensated heart failure. In this indication, it could also be a first-in-class treatment. We plan to enter phase IIb this year, and we see a very significant differentiation potential to existing therapies as this compound offers an effective therapy with a promising safety profile.”

The third compound that recently received proof-of-concept is Bayer Schering’s Adenosine Agonist, which effectively targets several cardiovascular diseases. Its lead indication is stable angina pectoris and atrial fibrillation. “It is also an example of a compound with great differentiation potential, as it decreases the heart rate without pro-arrhythmic potential; it doesn’t influence the blood pressure either. We plan to move into phase IIb next year,” says Busch.

Refocussing R&D
Busch shows great enthusiasm for his division’s programmes. Committed to its success, he describes Bayer Schering Pharma’s refocused R&D strategy. “There are two important questions which we have addressed: where do we focus our activities in the future and how do we approach R&D?”

In therapeutics, Busch’s division decided to concentrate on areas with high medical need to support Bayer Schering Pharma’s specialty strategy in the long term. Down from eight, the company is now engaged in four therapeutic research areas from target discovery to launch: cardiology, oncology, women’s healthcare and diagnostic imaging.

“The focus is based on a very diligent therapeutic research-area assessment including thorough analysis with key opinion leaders. We have selected those areas in which we have competitive resources, both internal and external. Furthermore, it has taken into account which of the therapeutic areas generate cross-border scientific synergies. We prefer to think beyond boundaries and to explore the full potential of particular areas,” says Busch, illustrating: “Let’s take cancer, cardiology and gynecology, for example. These areas share numerous mechanisms and compounds, which we are now addressing. The consequence will be that the leverage of common mechanisms will provide value maximisation potential. It will also help to mitigate risk and to reposition several of our compounds to appropriate indications. Currently, approximately 30 percent of our research portfolio relates to common mechanisms, and our approach will help prioritise the early research portfolio in the future.”

Besides re-focusing the company’s core areas, substantial efforts have been put into creating a new organization and implementing an R&D process which allows the division to pursue a higher level of productivity combined with improved quality. “We have established a proof-of-concept organisation with very strict progression criteria. It will enable us to increase our development candidate output while cutting the cost per new medical entity. We have set clear targets and will be delivering 10 innovative, high-quality drug candidates per year by 2010,” predicts Busch.

Challenges
It’s not just coincidence that the Bayer Schering merger process is running smoothly. The integration of two large organizations with a long-standing history is, Busch is quick to admit, a huge effort and involves enormous complexity. Corporate cultures have to be adapted, and Bayer Schering have set up a project to address this. The company has defined how processes should be carried out and how people should work together. The roll-out was recently initiated, and workshops will run worldwide to ensure the message reaches everyone in the organisation. The success of this program, Busch believes, is crucial and will determine his company’s business success in the future.

Personally, Busch adds with a change of tone, he has experienced something else as a major challenge: “We had to take tough decisions which – irrespective of the outcome – go far beyond numbers. Although Bayer Schering Pharma offers our employees substantial opportunities, it is not always easy to get there. Despite all professionalism, one cannot and should not disregard the human factor, and I have found this to be the hardest aspect.”

Future
What lies ahead? Collaborations, Busch says, will continue to play a crucial role in Bayer Schering’s research strategy. “We are already running partnerships and collaborations on all levels across the value chain with leading academic research institutions as well as industrial partners. One example is our PET (positron emission tomography) imaging network, where we successfully collaborate with Stanford University and the ETH Zurich. Our concept here is to focus on real partnerships with shared goals creating a ‘win-win situation’ for both partners.”

In his experience, key success factors include a stringent analysis of the strategic fit, consistent operational management of the project, potential value of the relationship, and alignable cultures. Busch: “Taking this into account, we are systematically extending our network in academia and evaluating partnering opportunities. Strategic collaborations where we are preferred partners for academic institutions will play an important role in the future.”

Looking at Bayer Schering’s future drug discovery efforts, these will be focused on delivering innovative therapies in the company’s four focus areas. “We are already recognized as a strong competitor in diagnostic imaging, and our new focus on the highly innovative field of molecular imaging will help us use our expertise. In women’s healthcare, our research is re-focused towards gynecological therapies, particularly towards fibroids and endometriosis. This enables us to extend our business franchise in two areas of very significant unmet medical need.”

The new strategy, Busch is hopeful, will also make his company’s oncology research more competitive and enable it to achieve significant innovations over the next ten years. In addition, his division will continue to capitalize on its cardiology expertise.

“Over the next years, we will deliver new medical entities, particularly in cardiology, oncology and molecular imaging. During this time, our research will be risk-balanced by life-cycle management and applied research. In the long term our goal is to be the recognized innovation leader in cardiology, gynecological therapy and molecular imaging and to be amongst the top innovators in oncology.”

Dr Andreas Busch
A pharmacist by training, Dr Andreas Busch worked at several research institutes in Germany and the United States before starting his career in industry by heading cardiovascular research at Hoechst Marion Roussel in 1997. He continued along this path at Aventis and Sanofi-Aventis. Two years ago, he joined Bayer HealthCare to head Discovery Europe for the Pharmaceuticals Division in Wuppertal before becoming Global Head of Research at Bayer Pharma AG. Besides being a researcher, the 44-year-old is also a passionate soccer player.