csl report Global Vision for CSL By Robert Gottliebsen Print...

csl report Global Vision for CSL
By Robert Gottliebsen Print this article
Watch the Brian McNamee interview
Hear the Brian McNamee interview.




Brian McNamee is one of Australia's longest-serving chief executives, having been in charge of CSL since 1990 — four years before the former Government enterprise was privatised and listed on the ASX. He has transformed what used to be the stuffy Commonwealth Serum Laboratories into a global leader in the blood plasma business and a player in the burgeoning market for flu vaccines.

In today's interview with Robert Gottliebsen*, McNamee says he expects CSL to get up to 15% of the global flu market.

Robert Gottliebsen: What are the most exciting things that are going to happen between CSL between now and 2010?

Brian McNamee: I think we’ve got some tremendous opportunities. We think that the plasma business is doing very well, ZLB Behring. We’ve got flu to take to the world and of course we’re very excited about Gardasil and HPV royalties that are coming forward.

And what’s the outlook for plasma?

We’ve got a lot of very good things happening in plasma. We’ve rearranged the supply chain so we’re a low-cost producer. We’ve got very high-yielding manufacturing plants and, finally, we’ve got a lot of important new developments in plasma moving to liquid IVIG and also some of our specialty products. We’re moving to take them around the world so lots of reasons, I think, to be positive about the plasma business.

With the ZLB Behring, you’ve also developed a global distribution business.

We have. We are very strong … we have subsidiaries, commercial subsidiaries, in 26 countries. They market themselves specialty products. They’re another point of leverage inside the organisation as well as potentially partnering with other companies.

Will you use that distribution business for flu?

Absolutely. These people have tremendous commercial skills. There’s a lot of overlap between the way in which flu products are registered, the way in which they’re distributed into markets, and even in some countries the way they’re purchased — so with the flu there’s another quality growth opportunity for the company.

Brian you’ve got some big competitors in the flu business. The French, Glaxo and other giants. Do you think they’ll let you in?

We’re quite confident that as the market grows and the recognition of the importance of flu. Regulators are also recognising they want diversity of supply chain and so we provide geographic as well as true diversity as a company, and then finally we’re a low-cost producer so we know that we can be competitive. We have an existing capability and I think that our market share aspirations are very reasonable and I think consistent with a market that will tolerate our entry.

What sort of market share are you looking at?

We sensibly are looking at a global market share about 10–15% … some markets higher than others. I think we’ve said we’d like to take 15–20 million doses to the US, a little less into Europe and some into Asia. It’s reasonable [based on] our balanced view of the northern hemisphere.

Now if those big companies won’t let you in, there’ll be a price war?

Well I just don’t think that’s a very likely scenario. We’ve operated here in Australia for a long time in flu. We have six competitors. I think it’s a market that recognises that whatever pain they can inflict on us in the short term would be much greater for themselves than it would be for us in trying to keep us out. I think that growing the pie will be the objective of the other three major participants.

Let’s turn to the Merck HPV venture. How big is it going to be and will it be there by 2010?

Well look certainly analysts are forecasting and we certainly concur that preventing cervical cancer is a huge medical breakthrough and a significant market opportunity, potentially in the billions, and certainly Merck hopes that they’ll be first to market the US. We believe also in Europe that they can be the market leader with anything up to two-thirds to three-quarters of the sales in that market and that sales can commence this calendar year. So I think we’re all very optimistic about the future of this vaccine and what it’s going to do for medicine and women.

So by 2010 you could be receiving well above $100 million a year?

Certainly we’d be hopeful of that, and I think if the market’s as big as some forecast it could be, yes, above that number.

Brian how much will you spend on R&D by 2010?

Well certainly in the next few years I’m looking to take the R&D budget from $150 million to $200 million. I think that if our success continues with flu, with Gardasil, with HPV royalties and plasma business, certainly I’ll be looking to grow that budget so certainly north of $200 million would be a reasonable aspiration I think at that point in time.

And that research is designed to provide you with the products to continue the growth beyond 2010?

That’s the corporate objective: to try and develop now some breakthrough innovative medicines often based out of science we’re doing here in Australia. This is our centre of biotech innovation here at Parkville, and we’ll globalise that through our commercial network ZLB Behring. It’s really the long term, 10-year goal of the company to really be a successful specialty biopharmaceutical company.

You like taking risks don’t you?

I think we are a great believer in having the courage of our convictions. We believe that CSL has some great people, great internal science and skills that are truly internationally competitive and we’re willing to back our judgement that we could compete with the best and win and I think we’ve demonstrated that so far.

* Robert Gottliebsen is a business commentator with The Australian.