“I am interested to solve complex problems,” said co — founder and President of Biocad Dmitry Morozov. — It is interesting to seek funds from those diseases which cannot be cured at the present stage of development of science, for example in the field of Oncology. The more complex the disease, the less chance to cure it — so I find it interesting”. With RBC Morozov talks in Moscow city: where the company rents a small office for meetings with partners. Basic office Supplies in St. Petersburg. Frost moved there a few years ago to build the company of their dreams.” Biocad now includes two factories and three research centres. The company’s portfolio of 17 generic drugs, five of five biosimilar and original drugs in various stages of development — more than 40. According to “SPARK-Interfax”, in 2014, Biocad revenue amounted to 8.4 billion rubles., net profit — 4,8 billion rubles (data for 2015 yet).
Morozov founded the company now owns only 30%. In may 2014, on purchasing 70% of Biocad announced Millhouse Capital of Roman Abramovich and one of Russia’s largest drug manufacturers “Pharmstandard”. Millhouse Capital owns 50% of the company, the amount of this transaction was not disclosed. And “Pharmstandard” for 20% paid $100 million (3.5 billion rubles at the exchange rate on the date of payment). Based on this sum, it turns out, all Supplies could be valued at $500 million (Vedomosti, citing a source close to one of the parties to the transaction, reported that Millhouse Capital bought a share based on a lower valuation; the company spokesman John Mann declined to comment on the RBC acquisition cost).
Bloomberg in 2013, saying that a controlling stake of the company is for sale, citing close to the deal sources say an even higher rating Biocad: from $750 million to $1 billion.
Over the past ten years on the Russian pharmaceutical market had several transactions with comparable amounts of money, says the managing partner of Novus Capital (advises M&A transactions) Alexander Lobakov. But none of these sold over the years, large companies do not specializiruetsya on the production of biotech drugs.
A cure for boredom
“The pharmaceutical industry will be to develop rapidly in the nearest century, so I decided to invest in it,” says Morozov. In 2001 he at that time co-owner of the Bank “CentroCredit”, “bored” from the Bank, which did not bring him satisfaction, sold a stake in the business and have invested with a partner about $8 million in a pharmaceutical factory and its own research center.
Business partner was Andrew Karklin, whom they met when frost bought the aluminium assets, says the businessman. CJSC “Biocad”, according to the register, 25 July 2001, in equal shares established Dmitry Morozov and Tatiana Dubrovskaya. Dubrovskaya, according to Morozov, the civil wife Karklina. Contact Karlinym RBC failed.
Originals and copies
Work on innovative medicine begins with basic research: at this stage of 10 thousand molecules selected one on the basis of which can be obtained new medication. Preclinical and clinical trials carried out consecutively at the cellular level, animals and humans. Registration of the finished drug takes several years. The first years after the market launch of innovative medicine (also called an original) is under patent protection, after which other manufacturers may produce generic medicines and biosimilars of this drug.
Generics are manufactured by chemical synthesis. The biosimilar is the same as the generics, but the chemical and biological origin. Unlike the generics biosimilars are not exact copies of the original drug.
Partners began production at the suburban plant of dietary supplements the content of bifidobacteria. Preparations for the normalization of the intestinal microflora is sold under the brand name of “Bifidumbacterin”. In 2004, according to IMS Health, its sales amounted to about 3 million rubles., and then went down. According to Morozov, the project was unsuccessful and Biocad was forced to close it. Gradually started the production and medicines, and first in 2005 brought to market the original drug — antiviral “Genferon®”.
At some point interest Karklina to participate in the project, according to Morozov, is cold. In 2011, the share which, as Morozov says, was controlled by the partner, acquired Gazprombank (Bank statements from 2011, this asset is not mentioned). Accurate package size and the amount of the transaction was not disclosed, refused to name them frost and now.
In 2013, it became known that a controlling stake of Biocad for sale: according to Bloomberg, was interested in buying American giants Pfizer and Amgen. Morozov calls among the then candidates also Israeli Teva Pharmaceutical Industries. The question of the buyer, according to Morozov, coordinated and with him as one of the shareholders of the company. “I proceeded from the understanding, with whom I and my team will be comfortable working,” he explains. I want to create a company of your dreams with pleasant to me people.” So 70% of Biocad has appeared to “Pharmstandard” and structures of Roman Abramovich (according to “Vedomosti”, a part of their package, sold them and Morozov). Representatives of Pfizer and Teva declined to comment, Amgen and Gazprombank queries on the RBK not answered.
For Abramovich pharmaceuticals is not a new industry, and “Pharmstandard” — not a foreign company. It Millhouse Capital in 2003 on the basis of the five plants created the holding company “Pharmstandard”, and in 2008 sold it to Victor Haritonin and Yegor Kulkov. Now Abramovich pharmaceutical assets in Russia, said the representative Millhouse John Mann.
Stake in Biocad, according to Mann, is a promising investment for the company that used to invest “in technologies of the future”. “Pharmstandard” considers the purchase a “financial investment pursuing strategic objectives,” said the company in 2014. To obtain a more detailed explanation about why they appreciated Biocad in five annual proceeds from buyers failed: assistant Haritonin told RBC that the company will not communicate on the subject of Biocad, the queries in “Pharmstandard” remained unanswered. “We need to look at the potential market and what share in it the company could theoretically take in the future” — the analyst of BKS Marat Ibragimov. “Pharmstandard and Millhouse paid for exactly the potential of Biocad, he said.
What kind of potential I saw in Biocad Roman Abramovich and Viktor Haritonin? RBC surveyed market participants and analysts say the three main versions. First — investments in innovative drugs that Biocad expects to bring to market in the next few years. Second — investment in generics and biosimilars, which the company brings to market now. And finally — the transformation of a competitor in the struggle for delivery under government contracts in a partner.
By 2010, when frost moved to St. Petersburg, Biocad already had a factory in Krasnogorsk district of Moscow region and R&D center (research & development) in Chekhov. In the Northern capital of Biocad, according to Morozov, invited the then Governor Valentina Matvienko, offering the choice of several plots to create a new production.
A year later, Biocad opened in the SEZ of St. Petersburg (from 36 residents of zone 12 belong to the biomedical cluster) R&D center, invested about 120 million rubles In 2013, it has launched a first phase of the plant (investment amount of 330 million rubles, including borrowed funds), which produces not only medicines, but also raw materials for them — substance. A year later the company opened its third R&D center, investing in a more than 200 million rubles.
“In St. Petersburg we got access to talented young people from different universities,” says Morozov. — Previously, these people were simply nowhere to take. In Moscow, I would have spent much more time creating machines talent: the capital’s young people do not want to go to the lab.” Now three R&D center Biocad include 17 laboratories, staffed by about 350 people. The average age of employees of Biocad, according to Morozov, 28 years. One of the R&D centres in St. Petersburg deals with the study of small chemical molecules and the other two are in St. Petersburg and in Moscow — biological molecules. Biocad, according to Morozov, is engaged in the full cycle of drug development.
All costs of Supplies for product investments in the development occupy more than 70%. In 2015, Biocad spent on R&D 1.2 billion rubles. “We have five or six years are costs, conduct clinical research, keep staff — lists Morozov. — Naturally, all these costs fall in the cost of the final products”. In world practice the cost of developing an innovative drug is up to 90% from its price at the pharmacy, says the CEO of RMI partners, which manages projects company rosnanomedinvest and novamedica) Vladimir Gurdus.
In the portfolio development at Biocad is now more than 30 original drugs, however, until clinical trials while heard only four of them. One of the drugs will come to market this year, and in 2018 the company plans to launch two or three original drugs every year that promises frost. He expects that drugs, now under development, patents will receive more than half.
Competition in the class
The amount of investment in the development, which calls Morozov, differ from the attachments of the world’s pharmaceutical giants even at times, and by orders of magnitude. For example, Janssen, a pharmaceutical subsidiary of Johnson & Johnson, in 2014, invested in R&D $6.2 billion Average cost of developing an innovative drug is €1.25 billion, and the period of its withdrawal to the market — 14 years, said in an interview with RBC, the co-Chairman of the Board Janssen Joaquin Duato.
Biocad in 2013, brought to market its innovative drug “Algeron” for the treatment of hepatitis C. the Development took five years and cost about $5 million At the time it was cutting-edge technology, but now the development of this level for us, “kindergarten”, Morozov admits: “We took a known molecule, made it a little bit differently and got the original drug”. Such developments, he explains, are referred to as next-in-class: this is a new drugs in its class, with improved properties of existing ones. These drugs also belong to the innovative and protected by patents. “A fully innovative products in the category of first-in-class are essentially new drugs that are on the market yet was not, — explains the difference Vice President, business development of the company “Growth” Milos Petrovic, former head of the Russian subsidiary of the Swiss Roche. — Next-in-class are new molecules, but their mechanism of action is already clear”. To create a cure for the next-in-class and is much cheaper and takes less time: it is tens of millions, and three to five years, says Petrovich.