Sergio Vella

After a year which saw employment in the pharma industry contract slightly – mostly as a result of the acquisition of Arrow and then Actavis by Watson – there is good news for the sector.

During the first quarter of 2014, Malta Enterprise approved a substantial expansion project for one of the pharma companies which will push up employment levels.

But the sector is soon to face one of its most challenging resurrections as the Bolar Provision (see box) will run out in 2017, taking with it all the benefits it offered generic companies.

Sergio Vella, managing director of Actavis, is not concerned. This is something the company has been preparing for over the past years and he admits that while the Bolar Provision may have been one of the main factors that attracted so many companies over the years, there are many other benefits that Malta offers to keep them here.

“The package that Malta offers is very strong. Pharmaceutical manu-facturing still has a lot of advantages, one of the main ones being the strong technically-prepared workforce. Around 99.8 per cent of our workforce – we employ some 800 out of the 1,163 employees in the sector – are Maltese, and they are all very high-calibre, whether graduate or technical.

“In the past there used to be gaps in the skills supply, particularly for graduates, chemists and to a lesser degree pharmacists and technicians. It took a bit of time for the educational stream to catch up with what the industry required. But we were able to progressively replace foreigners with Maltese,” he said.

“One thing that we never did was poach from other companies, as we believe that this just creates a vicious inflationary circle. So we preferred to work with the university and with Mcast to solve the root problem.”

The Maltese plants are also leaders when it comes to operational complexity.

Manufacture of pharmaceutical products and preparations

“It is the easiest thing in the world to churn out high volumes of one product, but what we do here is handle 2,300 product codes at Bulebel with 800 others at Ħal Far – representing the different dosages and formats of 55 chemical entities. We are very flexible and are able to change from one product code to another very quickly, which means shorter lead times, crucial in this industry,” Mr Vella said.

This is one of the reasons that Malta is often chosen out of Actavis’ 30 centres to handle new pro­ducts, even though the actual R&D unit here was closed a year ago.

Of course, the flourishing industry also benefits from clustering. For example, a local printing press invested heavily to be able to deal with the very specialised requirements for drug cartons and leaflets, and companies like Express Trailers not only offer temperature-controlled trucks but also back-up warehousing with full supply chain management.

“Having services and suppliers on your doorstep is very beneficial, as every single thing helps with our flexibility,” Mr Vella said.

What could the Maltese pharma sector look like beyond the Bolar Provision?

Mr Vella believes the best option would be to expand the range of products, which is now mostly single oral doses such as tablets and active pharmaceuti-cal ingredients.

Services and suppliers at hand are very beneficial, as every single thing helps with flexibility- Sergio Vella

“Most of us here should consider moving up the technical value chain into things like biosimilars, and drugs for diabetes and oncology. Of course, the challenge would be to ensure that the human resources will be available for this – which means that action has to be taken sooner rather than later,” he said.

His words have already been taken to heart by the university and the head of the pharmacy department, Lilian Azzopardi, said a lot was already being done.

“With the global changes in the pharmaceutical industry and the innovations in medicines, the pharmaceutical industry is moving towards development and production of advanced therapy medicines such as biosimilars and stem cell therapy.

“This trend is expected to be seen also locally, with the local pharmaceutical industry manufacturing and distributing biological agents which are being used as medicines. This change also brings about a change in the processes required for the procurement and monitoring of the effectiveness and safe use of medicines, a process referred to as pharmacovigilance. The newly- launched PharmD programme will address these innovative clinical aspects,” Prof. Azzopardi said.

However, skills are not enough. Costs need to be competitive, with Mr Vella warning that while companies were constantly working to reduce the cost of converting raw materials into the finished product, the government had to ensure that labour and electricity costs were contained. “We agree with the Chamber that the government should see whether it is feasible to reduce the electricity tariffs for industry before 2015.

“But the government also needs to look at the very significant transport costs and ensure that the premises cost remains under control.

“Looking at external factors, the reduction in state aid intensity is a concern and it could have an impact on investment decisions, as companies will do their homework and go wherever is most advantageous,” he said.

But for the moment, Actavis is all systems go. It will open a new state-of-the-art warehouse adjacent to its facility in Bulebel next month, to be able to cope with the production which has trebled since 2005.

“Pharma is changing and evolving, but there are a lot of positives. All the stakeholders just need to concentrate on the sticking points to keep it all going,” he concluded.