Interview with Etienne Jornod, Executive Chairman of the Vifor Pharma Group

“We’re confident of growing every year up to 2025.” Etienne Jornod, Chairman of Vifor Pharma, says why the potential for Vifor’s kidney-fighting drugs is far from exhausted.

For about sixteen months, Vifor Pharma has been a pure play pharmaceutical company. In an interview with “Finanz und Wirtschaft,” Chairman of the Board of Directors Etienne Jornod says what progress Vifor Pharma has achieved and what the future of the company is.

Mr. Jornod, Vifor Pharma and Galenica Santé have been going in different directions since April 2017. Are you satisfied with the performance of Vifor Pharma so far?

I’m very satisfied. With the money from the IPO of Galenica Santé on the market, we were able to buy Relypsa, which brought us Veltassa, a rapidly growing product and at the same time our own US distribution organisation. In 2017 we achieved all our goals. In 2018 we are also on track. Everything is going as planned.

What are you particularly proud of?

Today, we have unique expertise in working in emerging health care markets. Thanks to our partner, Fresenius Medical Care, we also have excellent market access in the field of dialysis. We can administer our products to patients directly through the Fresenius Medical Care clinics. I’m proud of that.

How important is the partnership with Fresenius Medical Care for Vifor Pharma?

It is very important. We would not have the pipeline we have today without this partnership. Everyone wants to partner with us, partly because of the unique market access via Fresenius Medical Care. In addition, thanks to Fresenius Medical Care, we now have a high profile among nephrologists.

But that also makes you dependent on Fresenius Medical Care …

Fresenius Medical Care is also interested in the partnership because of its 45% stake. We also bring a lot of expertise in the pharmaceutical sector and numerous innovations to the benefit of dialysis patients. I would say it’s a win-win situation for both patients, Fresenius Medical Care and Vifor Pharma.

Which of the products you currently have in the pipeline will be sold through Fresenius Medical Care’s dialysis centers in the future?

A significant proportion. This approach is consistent with our goal to build a portfolio in nephrology. The partnership with Fresenius Medical Care is just one part of our overall strategy.

By 2020, you want to achieve sales of CHF 2 billion with Vifor. Are you still convinced that you can achieve this goal?

Absolutely. There is no reason to believe that we will miss the target.

Will you continue to grow after 2020?

We have excellent products, unique knowledge and unique contacts in nephrology, the iron market and the cardiorenal area. I am therefore confident that Vifor Pharma will grow every year until at least 2025. We have grown for 22 years thanks to the same entrepreneurial spirit. We can go on doing this. We are currently working on a plan to further increase sales after 2020.

Which products will support growth after 2020?

We expect both Ferinject and Veltassa will each generate sales of CHF 1 billion. That’s just a matter of time.

But they don’t have time on their side. Ferinject’s patent expires in Europe in 2023. In America, the expiration is in 2026 with a patent extension.

Although Ferinject is not based on antibodies, nevertheless, the structure of the drug is extremely complex. Therefore, as with biosimilars, the health authorities will require generics manufacturers to undergo extensive pre-marketing clinical trials. The hurdles for the generics companies are so high. That’s why we believe Ferinject has potential even after the patent expires.

Even without competition from generics, you still have to make a major effort to achieve CHF 1 billion of Ferinject sales. How can you make it even more popular with the doctors?

Sure, Ferinject is not a self-starter, as some anticancer drugs are. We must always educate people about the medical consequences and physical problems caused by iron deficiency. In numerous studies, we therefore also show that the treatment of iron deficiency offers significant medical benefits for patients. That’s exactly what our core competency is.

At Veltassa you are even further away from your long-term goal. The remedy for hyperkalaemia in renal and cardiac patients only achieved sales of around CHF 50 million in 2017. How do you progress at Veltassa?

Veltassa is even less of a self-starter than Ferinject. We have to educate doctors about the dangers of hyperkalemia. We are convinced that Veltassa will become a blockbuster. Veltassa is currently growing slightly faster in the US than Ferinject did at its launch.

Since the beginning of this year, Roche’s EPO product Mircera has also been sold to other dialysis centres. What is the demand from these clinics so far?

Again, I can say with a good conscience that we are on track. I cannot give you concrete numbers right now. However, we will tell everyone more at the half-year results.

Mircera may be threatened by new oral medications. How do you handle this risk?

At present, it is not clear if these products are as good as EPOs and what efficacy and safety they will have. They are still in development. However, for safety’s sake, we have in-licensed a similar product from the biotech company Akebia.

AstraZeneca also wants to become the leading provider of drugs for kidney disease and cardio-renal diseases. How do you defend your position against this powerful competitor?

Our products are very good. For example, Veltassa has an excellent safety profile because of its physicochemical properties and mechanism of action. We have the partnership with Fresenius Medical Care. We fear no competition. On the contrary. I think it’s great that such a big company has a similar vision to us. This shows us that we are on the right track.

Suppose Veltassa did not live up to expectations. How quickly could you lower the sales and marketing costs for the product?

We could do that very quickly. But we do not want to do that. Even if sales did not increase as quickly as planned, we believe in the patient need and thus the long-term potential of Veltassa. Therefore, cost reductions in sales and marketing are not up for discussion.



Vifor continues to offer legendary investor potential
Warren Buffet once said: Those companies that have an unbreachable moat around them will be the companies that will bring sustainable profits to the investor. In other words, they will be able to defend their competitive advantage for a long time. Vifor Pharma is likely to be a company with this kind of defence. The company has a unique position through its presence in the dialysis market through a partnership with dialysis centre operator Fresenius Medical Care.

While most pharmaceutical companies have to rely on expensive sales and marketing departments for doctors to prescribe their medications, Vifor Pharma is not just a drug manufacturer, but has the advantage of Fresenius Medical Care [to boost] prescriptions in certain therapeutic areas.

In addition, Vifor Pharma is interested in becoming a licensee for other pharmaceutical companies’ products, giving them access to dialysis patients for their products. The product that is currently benefiting most from this type of partnership is the Roche EPO Mircera, which Vifor Pharma has the rights to.

The second core competency of Vifor Pharma is the marketing of products for kidney diseases outside of dialysis. Since most pharmaceutical companies have neglected the therapy area in the past, doctors are also often unaware of the consequences of diseases such as iron deficiency and hyperkalemia. With Ferinject, a fast-acting iron compound, the company, along with its marketing partner Daiichi Sankyo, has succeeded in raising the awareness of physicians in recent years. Since then, sales have risen sharply (see chart 1).

Now Vifor Pharma wants to repeat this successful strategy with Veltassa against hyperkalemia. Analysts are convinced that this product will also show strong growth (see chart 2). Vifor acquired Veltassa through the purchase of the company Relypsa. The money for this came from the sale of the pharmacy division Galenica Santé in 2017. At that time, Vifor Pharma traded a low-growth business for a potentially high-profit business (see chart 3). The shares remain worth buying, even if the P / E for 2018 is around 95. Earnings per share will rise rapidly over the next few years, according to analyst estimates, to reach a level in 2019 or at the latest by 2020, ahead of the sale of Santé (see Chart 3). The estimates are based on Vifor’s targets, which are projected to generate sales of over CHF 2 billion in 2020 and high triple-digit million EBITDA.


The person

Etienne Jornod began his career with Vifor Pharma in 1975. At that time, the company was still called Galenica, and was mainly a pharmaceutical wholesaler. Since 1996, Jornod has been executive chairman of the company. He transformed Vifor Pharma from a drug wholesaler into a diversified corporation with its own pharmacies, proprietary ingredients and distribution centre. Among other things, Vifor Pharma developed the two iron products Venofer and Ferinject. The 65-year-old father of four lives in Bern and is a passionate fan of Neuchâtel Xamax. Born in Neuchâtel, Jornod is delighted to see the club back in the Swiss Super League.


Click here to view the original interview in German on the Finanz und Wirtschaft website