As Alvogen CEO and chairman Robert Wessman points to a bar graph on a company presentation showing growth in revenues since 2009, it is difficult not to do a double take. Over the past five years, revenues have shot up 78% year on year, with 59% of the growth organic. Just since 2011, revenues have grown from $136m to $558m.

Established in 2009 as a contract manufacturer, Alvogen has gone through a rapid transformation since then, not only changing its business model but also moving into new geographic markets through both acquisitions and greenfield investments. Domiciled in Luxembourg and headquartered in New Jersey, with operations in North America, Asia and central and eastern Europe (CEE), the company develops, manufactures and distributes generic, brand and over-the-counter pharmaceutical products.

Widely spread

Centred around three major regional production and research and development hubs – in the US, in Romania and in South Korea – Alvogen now has commercial operations in 34 countries after a period of breakneck expansion. Its product portfolio includes a broad range of molecules for the treatment of conditions in the fields of oncology, cardiology, respiratory, neurology and gastroenterology. There are 350 marketed products and more than 200 in the development and registration phases.

North America is the company’s largest market, accounting for half of its sales. CEE and Asia make up roughly a quarter each. Key markets within those respective regions include Romania, Hungary, Serbia, Ukraine, and China, South Korea, Taiwan and Thailand.

“We have a very strong production and development centre in the US so we are investing quite a bit in R&D for the US market today. Our total investment in R&D is now about $80m to $90m, if we exclude biosimilars [a biological medical product]. A big portion of that is geared towards the US market, so we have very strong growth ahead of us in the US,” says Mr Wessman.

The original contract manufacturing business makes up only a sliver of the business today.

Industry shake up

Mr Wessman joined the company in 2009 and promptly launched the new business model. He had previously overseen a similarly quick and ambitious scale-up of Actavis, now the third largest pharmaceutical company in the world, as CEO. Fast evolution, and nimble decision making, is necessary in a pharmaceuticals market that is changing rapidly. The growing importance of biotech products and so-called ‘biosimilars’ are just two of the trends shaking up the industry.

“If you look at the industry as we have been operating it for the past 20 years, the current pharmaceuticals we are selling to people are all chemical-related or chemical-originated, but if you look at the biggest products going forward, the biotech industry is becoming the biggest part of the pharmaceuticals [sector],” he says.

This change has big implications, not just for pharma and bio, but for the healthcare industry as well. “Biotech products are completely different from the chemical molecules or the ‘small molecules’ as we call it because it’s much more targeted therapy. Most of the biotech products today are either for cancer or arthritis – so it’s much more targeted,” Mr Wessman explains. “If you take a small molecule cancer drug, you are kind of attacking the whole body which creates all sorts of side-effects. In biotechnology it’s very targeted therapy, it’s therapy where you target the cancer cells and the side effects are much, much less.”

The issue with biotech products, he points out, is that they are much more complicated and expensive to develop.

Rather than just riding the biosimilars wave, Alvogen has opted to dive right in. Already selling US generics major Hospira's biosimilars in central and eastern Europe, the company plans to develop and manufacture, through Icelandic sister company Alvotech, its own biosimilars at a still-in-construction 12,000-square-metre facility at a science park at the University of Iceland in Reykjavik, due to be completed in the first half of 2016. The products should come onto the market in 2018, when several pricey biosimilar drugs will be coming off patent.

Iceland calling

In Iceland, Alvogen currently employs 50 people but this number is set to quadruple. “Globally we have closer to 3000 people, so the headquarters and the maturity of the operation is outside of Iceland, but with the big investments we are doing now we expect to hire an additional 200 people in the next 24 months, so we’re actually becoming very active and busy in Iceland," says Mr Wessman.

"Overall the project now has four products in it, plus the plant, so the total investment will be, with the current pipeline, about a $450m to $500m investment. I think this is by far the biggest investment in Iceland after the big collapse in 2008.”

Apart from his own familiarity with the market, Mr Wessman says Iceland beat out competitor country Malta for the investment because of its current absence of patents for these products as well as its educated workforce.

The focus for the moment remains on North America, Europe and Asia. Other markets, such as Latin America, show promise, but will have to wait. “It has been tremendous work to set up our operations in all of those countries,” says Mr Wessman. “I don’t see that we will add another 34 countries in the next 48 months, but we will focus more on building a critical mass in the places we have already established.”