NEWPORT PHARMACEUTICALS INTERNATIONAL
Background
Newport Pharmaceuticals International Inc. was established in 1968 under the laws of California, USA. The Company quickly became a leader in the development of immunology products. R&D investment exceeded 200 million dollars in 15 years.Newport stock was traded in Wall Street by NASDAQ. These were highly volatile securities due to the risk linked to the development of new drugs.
In June, 1985 the price per share increased 29% when it was disclosed that the prestigious New England Journal of Medicine would publish a clinical multicenter study reporting encouraging effects of Isoprinosine ® in patients infected by the VH1 virus.
The organization of the company included the R&D and headquarters located in Newport Beach California with subsidiaries in San José, Costa Rica and Dublin, Ireland. San José handled operations in Latin America and Asia. Dublin made shipments to European and Arab countries.
Isoprinosine ®, the company’s main product was patented in the United States in 1969. Health registration and trademark approval were obtained in more than 80 countries. Intellectual Property (IP) rights are Newport Pharmaceuticals most important asset.
In 1982, Isoprinosine ® received the renowned “Le Prix Galien” in France. Isoprinosine ® was considered the main therapeutic innovation introduced in the French market.
In 1988, the Directive Group changes as well as the Company’s strategy in the United States. Newport stopped being a research and development company and entered the “mail order pharmacies” market. The new corporate strategy sought to reduce the Company’s dependence on its star product Isoprinosine®. The tactic used to reach the Company’s goals was the acquisition of several “mail order pharmacies”.
In 1990 Newport sales increased by 55% and the firm became the fifth most important “mail order pharmacy” of the US market according to market share with revenues reaching $60 million per year. The Company was prepared and became an attractive merger or acquisition target. In the United States this pharmacy market dispenses 6% of the 1.8 billion physician-issued prescriptions.
In 1993 the company name changed to Systemed, Inc., to reflect the activity developed in the North American market more accurately: Diversified medical services. Stock was traded by NASDAQ under the SYSM symbol.
In April of 1994, Merc & Co, the leader of the “mail order pharmacies” market acquired SysteMed Inc. Merck-Medco paid $3 per share. The full amount of the transaction was $67.0 million equivalent to approximately 50% Systemed Inc. sales ($152 million). The exit strategy was successful.
In June, 1996, Merck-Medco, sold the Latin American and Asian operations to the management group of Newport Pharmaceuticals de Costa Rica. A reorganization and diversification process started immediately at Newport Pharmaceuticals de Costa Rica. The main strategic objective was to make a vertical integration of the company: laboratory, distribution and pharmacies. Point-of-sale control was fundamentally important. Vertical integration makes brand positioning easier, and guarantees a dynamic evolution of the products manufactured at the pharmaceutical facilities, thus facilitating new-product launch and allows direct contact with the patient.
As of December of 2009 Isoprinosine ® is commercialized in more than 60 countries and is prescribed for several immunodeficiency-related diseases. Accrued unit sales of Isoprinosine ® exceed $3 billion tablets. No adverse event has been reported associated with using the drug.
The strategy used has been successful: by the end of 2009, according to IMS data, Newport Pharmaceuticals ranks as the number 17 laboratory in the Costa Rican market, surpassed only by the worldwide giants of the pharmaceutical industry (Big Pharma). More than 400 laboratories participate in the market. In Central America it is also the leader in the J5V class (antiviral drugs excluding vaccines) according to IMS data.
NPCR exports to several different countries throughout Latin America and Asia. The product portfolio marketed by NPCR includes drugs from different therapeutic classes: antibiotics, analgesics, antihistamines and decongestants, anti-inflammatory drugs, antifungal drugs, anorexigenic drugs, multivitamins, antidepressants, hematinic drugs, cough suppressants, immunostimulants excluding vaccines, gastrointestinal regulators, proton pump inhibitors, antiulcer drugs, bone resorption inhibitors, bronchodilators, etc.
According the vertical integration strategy, in 2003 Newport acquired the distributor COFASC.
By late 2009, COFASC is ranked fifth among distributors in the Costa Rican market (IMS data).
Finally, vertical integration demanded dynamism in pharmacy opening in Costa Rica. By the year 2000 Cadena de Farmacias Sucre only had 2 pharmacies. In 2003, 18 pharmacies recorded sales for $8.2 million and in late 2009, 58 pharmacies sold $28 million. The mean annual growth rate was 23% between 2003 and 2009. In just 6 years, Cadena de Farmacias Sucre became the market leader.
Construction of a new laboratory began in January, 2010 and was successfully completed in September that same year; these new facilities meet all health requirements. Approximately $4.0 million were invested. This new plant meets all GMPs with an expanded production capacity that will allow for new business opportunities.
The business model will continue to get stronger in the next few years with the launch of new products, recruitment of new businesses in COFASC and the opening of new pharmacies.
