Change of course in Reig Jofre. The low price of regulated medications, antibiotics and injectables where appropriate, forces the Catalan laboratory to bet on the biotechnology business. “We seek profitable growth in an inflationary environment,” he defends Ignasi Biosca (Barcelona, 1968), its CEO since 2006, in an interview by video call. The top manager of this family pharmaceutical company founded by his grandfather clarifies that, more than therapeutic areas and development of its own products, they will focus on manufacturing for third parties, such as the agreement with Johnson & Johnson between 2020 and 2022 for the production of doses in Europe. against covid.
In 2023, the listed company that enters the Ibex Small Cap index on Monday, with 1,323 employees, recorded the best year in its history by billing 316 million euros, 17% more than in 2022, although this year it expects lower growth due to inflation. Its Barcelona plant, in consortium with CZ Vaccines, of the Zendal group, was designated in 2023 by the European Commission as a strategic capacity reserve: it must preserve 30% of its production to manufacture vaccines in cases of health emergency.
Q. The company announced this year a change in strategy to reduce the weight of generic drugs, why?
R. The best way to make profitable the investment we have made in the facilities and our know how is by maximizing the margin generated: we have to abandon low-profit products and manufacturing and concentrate on those with greater profit. The company has been growing significantly in recent years, but we are looking for profitable growth in the new stage, not growth for the sake of growth.
Q. Can you give an example?
R. In injectables, the point is to jump from chemical-based and off-patent medications towards the strategic migration of innovative, biotechnology-based products. Not so much as our own products, but rather offering CDMO (contract manufacturing) services to third parties to accompany them in their development process, regulatory approval and industrial scale of production.
Q. Like the alliance reached with J&J for the production of its covid vaccine in Europe?
R. Exact. It was a two-year contract, from the end of 2020 to the end of 2022.
Q. Do you already have any agreement of this type signed or in conversation?
R. We are very discreet with the contracts we have with our clients due to confidentiality clauses, we do not tend to share or announce them.
We are agnostic regarding therapeutic areas, we want to master the technology
Q. The company recently announced an investment in Leanbio.
R. We have announced the joint investment with Leanbio of 6.8 million to set up a plant for the development and production of biotechnology-based active ingredients and biosimilars, in Sant Quirze del Vallès, in Barcelona. We want to manufacture the active ingredient in this facility and fill and finish the injectable product in our Sant Joan Despí plant. [también en dicha urbe]. It is a company that already has more than 10 years of experience developing and producing biotechnology-based medicines, but it has been doing so in small quantities in the Barcelona Science Park.
Q. You also increased your participation in the firm from 10% to 24%. Will it go further?
R. If the project is successful and we manage to reach a successful conclusion, scheduled for the end of 2025 or beginning of 2026, we will seek these paths of greater integration.
Q. What areas will you serve?
R. We are agnostic regarding therapeutic areas. Our commitment is to technology, we want to master the technological process behind it and then adapt to the needs of any therapeutic area, which we leave in the hands of the companies; The global trend is towards specialization.
We are going to suffer a serious supply problem of those drugs whose price has fallen below the profit threshold
Q. What weight will biotechnological production have?
R. In our plan for the next five years we anticipate that, at the end of that period, we will be producing more biotechnology-based medicines than chemical-based ones, which today accounts for more than half. We have regulatory requirements that are increasing and that increase our prices in an inflationary environment: raw materials and salary costs do not stop rising. That is why we have to focus on the production of higher margin medicines. In pharmacies, a pack of gum is more expensive than an antibiotic: a pediatric suspension, with a syringe or spoon, costs 1.53 euros, the same as 20 years ago. We are going to suffer a serious supply problem of certain drugs whose price has fallen below the profitability threshold.
Q. Has there been progress regarding the sector’s demand to upwardly review the price of regulated drugs?
R. No, they tell us that there is concern, but there has been no progress. It is a problem that affects not only Spain, but also all of Europe. An alliance of critical medicines has been created, it is a good exercise to identify them, but, meanwhile, global demand increases and there are countries, the BRIC [Rusia, China, India, Brasil]who are willing to pay more for them.
Q. Isn’t it contradictory when there is concern about antimicrobial resistance?
It is not compatible, when we find ourselves in an inflationary environment and with an unexpected problem that requires investment in research, in superbacteria, in the controlled use of certain medications. We cannot bet on having the cheapest price, set in the year 2000, as well as on investment in industrial fabric, research, absorption of labor costs and the problem of resistance to antibiotics. A new policy is required, a review of the reference pricing system, especially for those medications that are identified as critical.
From 2024 we want to invest again and not focus only on debt repayment
Q. What is the growth forecast for this year?
R. We will continue to grow, it will continue to be healthy, but, perhaps, it will be somewhat less than that of 2023, which was 17%. It may be close to the low double digits or the high single digits. Inflation continues to rise in Spain and salary adjustments have been important in 2024 to recognize that effect.
Q. Do you contemplate layoffs?
R. We do not want to do it, we hope to be able to absorb this increase in costs with growth, especially international. But if a company earns less, it has to spend less.
Q. Regarding debt, what are you doing to reduce it?
R. In 2023 it stood at 55.8 million, which is 1.6 times the ebitda. It is a reasonable and comfortable level for the company. In fact, we understand that we could end up getting into more debt. From 2024 we want to invest again and not focus so much only on debt repayment.
Albert Garcia
Q. How is international expansion going towards Eastern Europe?
We do this together with our specialty products division, focused on dermatology and osteoarticular pain, and consumer products. In 2021 we opened a subsidiary in Poland to market our osteoarticular pain product and now our focus is Czechia and Slovakia. In dermatology, we have launched a treatment against fungal infections in onychomycosis and nails in Spain, and during 2024 it will arrive in Portugal.
Q. In May, the company’s participation in the European macro-project for the industrialization of new therapies Med4Cure was known. Can you tell us what you will be working on?
R. I am very excited. It is an IPCEI, an important project of common European interest, launched by the European Commission to identify and invest in areas where Europe may be underrepresented. We are going to work in two areas: to look for alternatives, from a research point of view, to fight against resistant bacterial infections and to develop capabilities and knowledge to offer emerging therapies, such as cellular therapies. [Incluye 14 proyectos de 13 empresas y está dotado con 1.000 millones de dinero público y 5.900 de inversión privada y en el que participan seis Estados miembros, entre ellos España].
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