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Douglas Pharmaceuticals buoyant as it celebrates 50 years

Nerine Zoio 13 November 2017, 2:27PM
Douglas Pharmaceuticals buoyant as it celebrates 50 yearsScott Sherriff and Kent Durbin

Douglas Pharmaceuticals, New Zealand's largest drug developer and manufacturer, is celebrating its 50th birthday with  expectations of strong growth; living up to the legacy of founder Sir Graeme Douglas.

Sir Graeme, who started the Auckland-based company in 1967, died last September aged 87. 

Sir Graeme's entrepreneurial spirit found fulfilment in  the creation of the company which first sold his cough syrup Kofsin in pharmacies, including his own. 

Business continued to grow from there, with a manufacturing site for generic medication production being set up in the 1980s. 

A change of focus to exports was necessitated in the 1990s when Pharmac decreased prices on the domestic market and threatened the company's financial viability. 

Currently, the company is targeting annual revenue of $220 million this year - up from $160 million in 2016

The company's two divisions span pharmaceuticals and consumer care, with products ranging from prescription generics through to OTC pharmacy products, nutritional supplements, sunscreen, shampoo, beauty products and even compliance packing robots. In the last year, Douglas has doubled its investment in research and development and is investigating the "repurposing" of older drugs to treat different diseases in areas from oncology through to neuroscience. 

According to Mr Sherriff, Sir Graeme's eldest son, Jeff Douglas, has been running the day-to-day operations of the company since 2014, while the founder remained chair of the board and came to work four days a week, right up to his death. 

"In the last 12 months, Jeff has made a concerted effort to refine the company vision and boldly plan for the future based on his father's legacy," he says.  

Mr Durbin says the company has shown record performance in New Zealand over the past year, led by nutraceuticals and its agency retail businesses from which it distributes products in the country on behalf of international companies such as Pierre Fabre, Ego, Care Pharmaceuticals, Bio Oil, 3M and Smith & Nephew.

"Globally, it is doing extremely well and increasing its international footprint," says Mr Durbin. 

"Traditional markets in Europe, the Middle East and Southeast Asia are going very strongly, US sales are increasing and reinvigorated growth is taking place in Australia because of a dermatological joint venture over there."

Douglas Pharmaceuticals is also focused on building intellectual property both in pharmaceuticals and nutraceuticals. 

To meet this target, the company has increased third-party manufacturing as well as spending close to $50 million expanding the company's manufacturing capability over the past three years, Mr Durbin says. 

"This will increase volume at our FDA-approved Henderson manufacturing plant as well as increase the volume of prescription medicines with new and more convenient soft-gel capsule technology. This is still a rarity as few manufacturers globally can produce this technology for toxic products." 

The company also recently opened a development laboratory in Philadelphia for topical prescription medicines, and has doubled the capacity of its Fiji manufacturing facility. 

Following the interview, Mr Douglas told Pharmacy Today the Fiji manufacturing facility packs pharmaceuticals, manufactures the Clinicians range of nutraceuticals and executes third-party contract manufacturing. 

Drugs under development or on the market in soft-gel capsules include generic drug isotretinoin for severe nodular acne, paricalcitrol for kidney disease and dutasteride for benign prostatic hyperplasia. 

Further drugs are being ­developed 

Mr Sherriff emphasises the growing interest in repurposing at the company. 

"There is a sweet spot for Douglas to collaborate with academic institutions whereby we bring our drug formulation and development experience, along with financial capital, to the party. Together, we're able to find new uses for older drugs that have the potential to completely change disease treatment paradigms," he says. 

"While it's more high-priced than developing straight generics, it's not as expensive as developing a brand-new molecule. And the returns are lucrative if successful, with the added benefit of patent ­protection." 

Earlier in the year, Douglas Pharmaceuticals signed a research and licensing deal with the University of Manchester though its innovation company, UM13, to repurpose an HIV drug to prevent cervical cancer. 

According to Mr Sherriff, the research team approached Douglas Pharmaceuticals looking for product manufacture, but "we filled the gap when we realised the university was missing a commercial partner". 

The deal initially sees Douglas Pharmaceuticals funding research at the university to develop the cervical cancer treatment. The research is based on past investigations showing a drug used to treat HIV is active against humanpapilloma virus (HPV), which causes cervical cancer. 

"The company will then execute phase II clinical trials in the UK, after which it will manufacture the drug and drive further development, clinical trials and commercialisation on a global basis," says Mr Sherriff.

Mr Douglas says it will be a game changer if large clinical trials are successful. 

"We will own the intellectual property; the financial promise is significant for the sale of these products."

Another focal point of the company is finding consumer brands to invest in, after doubling revenue for the Clinicians brand it bought six years ago. 

The company also acquired the Phloe digestive health business in New Zealand about 18 months ago. 

As to the future, Mr Durbin anticipates the US will become its biggest market, overtaking the European Union, as new drugs Douglas has under development come to market. 

"This is because it gets the best margins in the US as regulations enable it to joint venture with partners going 50:50 on drug development, costs and profits," says Mr Durbin. 

Under European rules, Douglas Pharmaceuticals sells intellectual property for each drug and enters into an exclusive, five-year supply agreement that could render it open to replacement at contract renewal time. 

In Asia and the Middle East, it licenses the intellectual property and has supply agreements. 

The company's good work is not going unnoticed as is evident in it being recognised as the Supreme Winner at the 2016 AmCham - DHL Express Success & Innovation Awards. 


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