How to start a pharmaceutical company

The little one among the pharmaceutical giants

Was for 17 years Ernst Wolensky worked for an international pharmaceutical company until he decided to start his own company. With the comparatively small company ERWO Pharma, the Viennese-born has been concentrating exclusively on the Austrian market for five years and also has a large part of his products manufactured in this country. In an interview with derStandard.at, Wolensky talks about initial difficulties in founding a company, career opportunities in the pharmaceutical industry and the appeal that a small company can have over a large corporation.

derStandard.at: How do you feel as a small among the big ones in the pharmaceutical industry?

Wolensky: Very good. (laughs)

derStandard.at: How did you get into the industry?

Wolensky: Before I founded the company, I worked in the pharmaceutical industry for many years at the international Nycomed group. I started right after my medical degree, and I liked it so much that I didn't turn around at all. I also finished at a time when there were no vacancies.

At university, I worked with a database specialist who at the time created a field service control program for Nycomed. He told me that they were looking for a doctor there. And then I thought to myself, I'll take a look until a rotating position becomes vacant. But when the time came, I already had 20 employees there. And that went on step by step: At first I was only responsible for the medical department, then I got marketing and then other countries.

derStandard.at: You were then at Nycomed for a total of 17 years.

Wolensky: Yes. At the end of 2006, the owners of Nycomed bought Altana, which was much more represented in the countries I looked after than we were. And it was clear that if the deal goes through, I'll lose my job.

But I was treated very fairly, just as I know it from the pharmaceutical industry. They tried to find me another job in the company. But I didn't want to move to the head office or open up new countries. I was always on the road for over 100 nights a year, I hardly saw my little daughter. So we have agreed that I will leave Nycomed.

derStandard.at: Then how did you come up with the idea of ​​starting your own company?

Wolensky: I had the abbreviation "ERWO" in my company email address. And my colleague, the Swiss managing director, then said: "If you start a company, call it ERWO. That sounds so good." That's when the idea came up for the first time, before that I didn't even think about it.

derStandard.at: What were the biggest starting difficulties?

Wolensky: The worst of all is when you have a personal assistant for 17 years and then write your first letters yourself. After folding it up, my name was not visible in the window of the envelope. By the time I did it, the letter was so wrinkled that I threw it away.

What I still miss today is the exchange, especially at management level. I'm often alone, I just don't have a team of specialists behind me. The advantage of this is that I now have to do with a lot of areas. The fact that I used to be preoccupied with just one topic for weeks no longer exists.

derStandard.at: Building a team shouldn't have been that easy. After all, working for a start-up company is a huge risk.

Wolensky: Of course, new always means risky. And I had to ask myself how I can minimize the risk of my counterpart. I made sure that I could sell good, well-known products. And I did the same with the employees, brought in good, familiar faces, some of whom were already in the pension. You have a lot of experience and a lot of contacts. And in the pharmacy they were happy: "Nice, you're back." This created a good basis.

derStandard.at: What arguments do you use to ensure that potential employees appeal to you and not large companies?

Wolensky: I can offer young people the opportunity to take the first steps in my small company, after which they can always change. I am of the opinion that they have to get out at some point. It would not be appropriate for someone to start at ERWO Pharma and retire at ERWO Pharma.

Otherwise it is the case with us that the job is very broad, you have a lot of personal responsibility. And at large corporations, you are trained in the field service in such a way that the same message arrives in all countries. You have to put your own personality aside a bit. In Austria, however, individual solutions are also possible, and that certainly appeals to a different type of person, someone who, for example, has very good communication skills.

It is also the case that you know yourself in the industry because it is very small. You know me and my experienced employees, and then you trust the project. I have just hired another employee, in my mid-50s, who was a field service manager in another company. He accepts that he earns a little less, but he can do more with his experience.

derStandard.at: Can you convince younger people too?

Wolensky: We have a product manager who just graduated from college and celebrated her 21st birthday. She already looks after four products with sales worth millions.

For young people it is certainly also attractive that you can make mistakes with us. That can happen. The only thing I think is unforgivable is not communicating a mistake.

derStandard.at: Is there a specific reason why you are focusing on the Austrian market? After all, you worked internationally before that.

Wolensky: I have often dealt with the Austrian market. Here there is a low price level for drugs and relatively high ancillary wage costs. In Switzerland, for example, I simply get a lot more money for an investment. And if there is a larger market such as Germany, then it is better to invest there. So I was never able to invest adequately in Austria, many good drugs never came onto the market here.

That bothered me a lot. I thought to myself, if you were only responsible for Austria now, if you didn't have this bundle of decisions behind you and thus could make decisions very quickly, then that must be great. Nycomed then gave me start-up help, and I was able to buy out a few products right from the start.

derStandard.at: In principle, the pharmaceutical industry is not doing so well. For example, the state is making more and more cuts in the health sector. How has the industry developed in recent years?

Wolensky: It used to be that you presented a product with a corresponding price level to the health insurance companies, and then everything happened relatively quickly. Access is now more difficult, nowadays it takes about 400 days for the products to be refunded.

You have to imagine that patent protection for drugs is 20 years. It takes an average of twelve years for a molecule to be turned into a product that can be brought onto the market. So you only have eight years for marketing. With SPC (Supplementary Protection Certificate, note) you can extend this for up to five years. This is what you get when the indications of a product expand. Either way, it's a relatively short period of time, and then you have to wait a long time until the products are refunded. So you can see that the risk for the pharmaceutical industry has become higher.

You also have to get by with fewer sales representatives. And the generic and OTC area, i.e. self-medication, has grown.

derStandard.at: Has the global economic crisis had an impact on the pharmaceutical industry?

Wolensky: Not at all. The only thing I can think of is that there may have been a slight decrease in lifestyle products in the self-medication area.

derStandard.at: What career opportunities do you currently have in the Austrian pharmaceutical industry? And what kind of training is required? The industry is relatively small, and some large corporations have withdrawn.

Wolensky: A distinction has to be made between the research department and the sales department. Large pharmaceutical companies are for the most part only active in the second area. There are still small development units in Austria, at Nycomed or Baxter, for example. And then there are a couple of biotechnology clusters, including one in Graz. With a degree in the natural sciences, you can certainly contribute well.

derStandard.at: How is it in sales?

Wolensky: As I said, staff will be cut. In any case, you need a degree in the natural sciences or have to pass a pharmaceutical representative examination. It's really very difficult, in my opinion it's equivalent to studying. Otherwise, according to the Medicines Act, you are not allowed to visit doctors or pharmacists.

derStandard.at: Which fields of study does this concern?

Wolensky: Pharmacy, Biology, Human Biology and Medicine.

derStandard.at: How is it in the marketing area?

Wolensky: Of course, any form of marketing training is desirable. We are also happy to study economics.

derStandard.at: Are you looking for new staff?

Wolensky: We have just hired a new product manager and a new sales representative, so not at the moment. But we are right in the middle of this restructuring process in which the retirees are actually retiring. That will happen in the next two years, then I will need new personnel in product management and in the field. The goal is to hire five new employees in the next five years.

derStandard.at: The pharmaceutical industry has a reputation for being relatively lucrative. What are the average salaries?

Wolensky: In my opinion, people are paid more on average than in other industries, but the difference is no longer that big.

derStandard.at: Can you give some rough numbers?

Wolensky: Young product managers without professional experience start with 35,000 euros gross per year. But you have to consider that there is still a variable part. In this case, premiums can amount to up to 15,000 euros.

derStandard.at: What percentage can the variable part make up?

Wolensky: It depends on the position. In administration this is more like five percent, in sales it can be up to 40 percent.

derStandard.at: How is it with employees with many years of experience?

Wolensky: An experienced sales representative receives around 70,000 euros gross annually, plus a variable part. A marketing manager in a large company will receive around 100,000 euros a year plus bonuses. Of course, people pay more there than in a small company.

derStandard.at: What do you expect from the pharmaceutical industry in the next five years?

Wolensky: Patents will expire on many well-known products, so the generics companies will see great growth. I believe that the era of blockbuster products, i.e. products with a large volume, is over. It is advancing into ever smaller, ever more specific segments. The big companies will also be more concerned with rare diseases, diseases that are less common.

In Austria, in my opinion, nothing will change in terms of the territorial protection of pharmacies, and the OTC market will continue to grow. There will certainly also be increases in the area of ​​mental illnesses and allergies. (Kim Son Hoang, derStandard.at, 3.9.2012)

Ernst Wolensky From 1990 to 2007 he was a top manager at the international pharmaceutical company Nycomed, which has since been taken over by the Takeda company. In March 2007 he founded the company ERWO Pharma, which focuses exclusively on the Austrian market. In the OTC segment, it is now one of the top 15 companies among Austria's 280 pharmaceutical companies.