Vetter - a world market leader: “We put ourselves in our clients’ shoes"
We talked with Vetter, an independent international specialist in the aseptic filling of syringes, cartridges and vials, about the reasons for its international success.
We talked with Peter Soelkner, Managing Director of Vetter Pharma International GmbH. Soelkner has been with Vetter since 2008. Prior to his current position, Soelkner was the head of Key Account Management at Vetter before going on to work for Sartorius Stedim Biotech USA. The sales specialist has a chemical engineering degree and an MBA from Columbia University, NY.
Vetter has been growing with breathtaking speed since the mid-1990s, and has appeared to be unaffected by financial and economic crises. What has led to the success of the Upper Swabian company that started out as a pharmacy and became a global leader?
Peter Soelkner, Managing Director Vetter Pharma International. (© Vetter)
Vetter is an important strategic partner for companies in the pharmaceutical and biotechnology industry. We have used our key account management approach to always see our projects from our clients' perspective. When we are working on projects we always try to take into account our customers' views. We need to understand the critical success factors of our customers in order to be successful ourselves. Our company offers market-oriented solutions that are based on high quality and specialist knowledge in the aseptic filling of drugs. We also have a great deal of know-how in the production of aseptically prefilled drug-delivery systems. In the past, we have always taken new directions and seen challenges as opportunities. We have concentrated our activities on innovation and growth markets such as the prefilled drug-delivery systems market. Our company vision led us to abandon the field of tablet packaging as well as own pharmaceutical products and concentrate fully on aseptic filling.
I am sure that your company has gone through numerous phases and strategies on its way to becoming an international leader. Can you briefly tell us about these phases and strategies?
Vetter concentrated on the international dimensions of the pharmaceutical and biotech sectors at a very early stage and adapted its activities accordingly. We have always oriented our activities to the requirements of our international clients and we established a subsidiary in the USA as early as the 1980s. We have also always continuously invested in modern production sites and ensured that we work according to the latest international standards, and in accordance with the standards of regulatory authorities. We have responded to the requirements of the American FDA, the European EMA and other international regulatory authorities. We gained FDA approval for the first time in 1988 and successful annual inspections have followed ever since. This was key to entering the US market and over time we have since expanded our international business continuously and organically.
What are Vetter’s most important markets? Which new markets have you tapped into during the process of internationalisation?
Around 90 per cent of our prefilled drug-delivery systems are sold abroad. Vetter’s major customers are in the USA where they constitute a market share of more than 50 per cent, and the EU. Japan is another lead market in the global pharmaceutical and biotech market. Recently, we have also expanded our activities to the pharmerging (eds. note: pharma + emerging) markets in the BRIC (eds. note: BRIC is an acronym referring to Brazil, Russia, India and China) countries.
Vetter established its first foreign production facility near Chicago (USA) in 2010. Why did you establish this facility and how important is it for your company’s internationalisation strategy?
The establishment of the production facility in suburban Chicago was an important step in our internationalisation process. We saw it a strategic investment. More than half of Vetter’s customers are located in North America. And, importantly, two thirds of all products that are in clinical development come from North America. What I mean is that it is important for companies to be present in the markets they serve, fishing in the ponds where the fish are.
Are new markets such as those in the BRIC countries also of interest for Vetter?
Market development in BRIC countries is definitely of importance for us. I believe that these markets will continue to grow in the two-digit percentage range. Some of our clients that already sell products to BRIC countries contract Vetter for the production of prefilled systems. This year, we once again had visits from the Brazilian and Russian regulatory authorities. We are currently working on the possibility of getting more active in the Russian and Brazilian markets and making contact with customers of national importance in those countries. This is a great business opportunity for us.
What are the challenges faced by a company when it seeks to develop markets in threshold countries?
Threshold countries are not a homogeneous group; just look at the considerable cultural differences between India and China. We have to deal with different regulatory requirements. On the other hand, the demands on quality and price in these countries differ considerably from what we are used to on the global market. We are of course also faced with the challenge of protecting our own knowledge and know-how. The communication pathways and decision structures in companies based in the BRIC countries are different from those of our clients in North America, Europe and Japan. We need to adjust our strategies to the specific situation in each country.
The Vetter family expanded its commitments in the Indian market in the wake of internationalisation (eds. note: it participated financially in Gland Pharma Ltd., a leading contract manufacturer involved in the sterile filling of drugs in India in 1996). We have not heard anything about possible plans to expand Vetter’s business to China. Is Vetter not interested in the Chinese market?
Markets such as India and China offer huge potential for the future. We are currently evaluating concrete possibilities for expanding into Asia in general. In principle, Vetter pursues the approach of breaking into more developed markets and moving on from there. We are currently pursuing initiatives of this kind with great success in South Korea.
For a (bio-)pharmaceutical service provider like Vetter, the Chinese market is not simple, in particular as far as regulatory issues are concerned. Normally, you can only place on the market products for which you own a licence. This kind of practice is not part of the normal structure of a contract manufacturer. However, progress is being made in the regulatory landscape and we need to closely observe these developments. We have not written China off as a potential market, but we need to observe the market closely before we are able to take further action.
The pharmaceutical and biotech world is generally regarded as fast moving. What requirements did you have to take into account in the 1990s? Were they different from the challenges that you face in 2010 and now? Are there any new challenges you expect to be confronted with in the years to come?
View of the new Vetter production site in the Illinois Science + Technology Park in Chicago. (© Vetter)
The pharmaceutical and biotech sectors are undergoing relatively dynamic development on the one hand and on the other are continuing to follow long-term trends and developments.
The 1990s were characterised by globalisation and the markets opening up to international competition. Over the last ten years, international trade has expanded to many more countries, including threshold countries such as China and India.
The competition for international market shares will become more intense at the same time as greater opportunities for entering new markets will arise. We will take these developments into account and continue expanding globally. Another sector that emerged in the 1990s is biotechnology. 50% of all drug substances are in some way or another related to biotechnology. This trend will continue in the future and we will have to adapt our strategies to the demands in about five or ten years' time.
Companies that decide to construct high-tech production facilities must be able to anticipate future trends in the pharmaceutical and biotech world. How can companies avoid getting involved in a game of Russian roulette?
Market growth dynamics follows clear tendencies. Vetter knows the market very well, understands the trends and knows what the company’s target groups are. We are observing the sector and exchanging thoughts and opinions with other experts and decision-makers. This is our basis for our strategic partnerships with our clients. Our clients develop medium-term planning scenarios and tell us what is necessary in order to guarantee supply to the market. We adjust our investments accordingly. This gives us planning security and enables us to be a sustainable company. 19 out of the 20 big (bio-)pharmaceutical companies in the world are Vetter clients. We know all these clients pretty well, and we also know the senior decision-makers. Our business is very much based on trust considering that companies contract us to produce prefilled drug-delivery systems worth billions of euros. We learn about the basic mainstreams and put together a clearer picture from this information. I would therefore say that we are not playing a game of Russian roulette, but that our investments are very much on a broader basis.
1993 was the year that the German Health Minister decided to cut medical costs. As a result, Vetter was forced to reduce its workforce as some of its pharmaceutical clients were put under financial pressure. In the following years, more measures to cut medical costs have been put in place, but Vetter managed to triple its number of employees and build capital-intensive production sites. With all this in mind, do you think the German market is still important for the global player that Vetter has become?
The sector is international. Germany is still part of the world market. The German market is still of importance for us. But the German market cannot be looked at in isolation; it is part of the EU and is also subject to European approval procedures. The Regierungspräsidium (eds. note: Regional Council) in Tuebingen, which oversees regulatory affairs in our region, must follow EMA standards which in turn are decided by the EU. Our base is Germany and the Upper Swabian region. And we are clearly very much committed to our homeland. We will make further investments in Germany, which we regard as a production market of high technological standard. Compared to 1993, Vetter is now much better positioned. More than 90 per cent of Vetter’s revenues are generated outside Germany.
What trends and markets will become important in the not-too-distant future? And what preparations is Vetter making or will Vetter make for the future?
The homecare industry is increasing in importance. This sector is of great interest for our clients, particularly in view of innovative and user-friendly drug-delivery systems for which we want to offer suitable solutions. In addition, we are registering another increasing biotechnological trend: the majority of drug products that are produced with biotechnological methods can currently only be administered using injection systems. We are concentrating on orphan drugs and personalised medicine. Internationalisation is continuing and the pharmerging markets will gain ground. In the medium-term, i.e. five years or slightly more, we will concentrate on the USA and Europe. We are also observing a trend towards the harmonisation of approval procedures.
Is there a limit to Vetter’s economic growth?
We would like to grow organically in the future, just as we have done in the past. And we want to do so hand-in-hand with our clients. Our main goal is sustainability, both economic and ecological. We have always been true to these principles. We will continue to grow and we see a positive trend ahead of us.
The interview was carried out by Walter Pytlik, BioRegionUlm.
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