20 - 26 September 2001

Icelandic interest

Robert Wessman, managing director of Delta hf, talks to Blanche Gatt
about encouraging cooperation between Iceland and Malta

Though light years away from each other in terms of climate and size, Iceland and Malta may not be that far apart in many other things. Their miniscule population of 275,000, it’s true, enjoy a territory that is more than 300 times the size of our island, but as islanders living in a small close knit society, they also share some similarities. A thriving nation, the Icelandic people power a traditionally strong economy, with a GDP per capita that ranks among the top 12 nations in the world. And as we also strive to catch up with our fellow islanders from the north, some astute players have noted the potential advantages that a cooperation between the two countries could bring to both.
I met Robert Wessman, MD of Icelandic producers of generic pharmaceuticals, Delta hf, recently, at the close of an exploratory visit that his company organised for a delegation of Icelandic investment professionals and bio-technology specialists. This publicly traded company purchased Pharmamed limited of Bulebel from its former Dutch principles in July 2001, in line with company’s ambitious expansion programme, and has since recognised the potential for myriad further opportunities for investment and cooperation in Malta. The visit was organised not only to showcase Pharmamed to investors, but also to increase awareness of Malta’s existence among the Icelandic business community and generate increased interaction between the two islands.
“Delta hf was established in 1981,” explained Robert, “and was then owned by some 50 or 60 shareholders. Two and a half years ago, we went to IPO on the Icalnad Stock Exchange, and now have 1300 shareholders, who have seen their share value rise continuously. Buying Pharmamed was part of our expansion plan, to ensure we further boost the value of shares.” In fact, he adds, “in the two years since going public, Delta’s capital value has increased from US$8m to US$60m. Last year we registered US$2.5m – this year it will be between US$4-5m.”
Delta is a generic pharmaceutical manufacturer, in other words, they produce medicines with the exact same compound as branded ones, but at a much cheaper cost to the consumer. They are able to do this because, naturally, they don’t incur any of the enormous expenses involved in research and development – the extent of their research is applied to working out the balance of components in each medicine to be able to mimic the medication precisely. It is a completely legal procedure, which is permitted under internationally complementary regulations, as soon as the 20-year protective period guaranteed under patent to the original developers runs out.
“For example,” said Robert, “our medicines are 100 per cent comparable pharmaceuticals. For example, we produce a generic version of the well-known drug Prozac. Ours is called Fluoxitin, and it is exactly the same – except in price, as it is much cheaper.”
Delta hf acquired Pharmamed in July this year, paying the previous Dutch principals US$10.5m. “This was a big investment for us, and our investment will continue to grow,” Robert explained. “We are now just in the phase of integrating the two companies and expanding the operations of the Malta plant to include a research and development centre. Since July both sides have been travelling back and forth between Malta and Iceland as we familiarise ourselves with each other.”
Part of Delta’s motivation in bringing the delegation of Icelandic investors here, was to showcase their own expansion, and whet the appetite of future investors. “However, that was not the only reason,” Robert said. “While there is no doubt that our investment in Malta is very important for us, we also see other opportunities here. From our experiences here already, we feel we can cooperate in a various fields – through the universities, for example, in telecoms – there are many areas in which Iceland and Malta could benefit greatly from increased interaction and cooperation.”
The delegation from Iceland was also joined by representatives of the Icelandic Foreign Ministry and other officials, and besides talks from our minister of finance and speakers from the MDC, the FOI and industrial representatives, individual meetings between complementary firms were also arranged. The majority of the group had just departed before my meeting with Robert, but, he tells me, they left very interested in what they had learnt.
“So many people in Iceland have never heard of Malta,” he added, “and this was an excellent opportunity for us to get them interested. I think we have achieved that – there was a very positive reaction from our participants, who were highly impressive with our set up at Pharmamed, as well as with the rest of the island.”
At present Pharmamed employs just over 215 people. New ownership, mergers and acquisitions from outside often bring upheaval in their wake, and I asked what Delta’s plans for this locally very significant manufacturer were. “Well,” he replied. “Delta hf is growing very fast, as I said before. Only last June Delta received an award for being one of the 500 most progressive and fastest growing companies in Europe. Our aim is to continue on this path of growth – and for that reason we have sent one of our best people to Malta to set up the R&D centre, where the Malta plant will now be developing the generic pharmaceuticals that we produce, as well as manufacture them.”
Does this mean Pharmamed will stop manufacturing medicines for NGOs, like the Red Cross, as it has done for years? “Not at all,” said Robert. “We made an agreement with the former owner that we would continue to produce for them
for the next five years, slowly reducing the
volume. However, we are very proud to supply medicines to the Red Cross, and though we will be reducing the volume of production for NGOs, in order to make space for our own requirements, the intention from both sides is to continue the arrangement.”
Malta was interesting to Delta hf because our patenting laws allow them to start developing the generic pharmaceutical after 15 years, though they are still barred from trading them for the full 20 years under patent. This means they can be five years ahead of competitors
in the same business who are restricted to waiting the full 20 years before embarking on their own R&D into the medicine.
“A patent in Europe expires after 20 years, and people like us are permitted then to produce the same medicine under a different name,” continued Robert. “This is a whole industry that makes a significant difference to consumers. In Germany, for example, buying our product reduces the cost to the patient by 60 per cent. That is clearly a significant saving for the patient, and makes a huge difference to them. The last three products we distributed to the German market captured up to 70 per cent of the entire German market share almost immediately, and have held it ever since. These three products were Lisonopril, heart medication; Lortadine, an antihystamine; and Ciprofloxasen, an antibiotic.”
Malta will be seeing a lot of unaccustomed travel to and from Iceland in the next couple of months, and Delta hf is planning to invest significant, though as yet unquantified, amounts in the creation of the R&D centre, as well the expansion of the manufacturing operation.
“What I feel about Malta,” concluded Robert, “is very much part of what I saw working at Pharmamed. The people there have all taken enormous interest in our business and have shown themselves to be very willing to participate in Delta’s future. Their contribution and cooperation as we define exactly what we shall be doing in the next few months has been invaluable, and I think we make a great partnership between Iceland and Malta.”