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The World's Biggest Chemistry Set

July 2004 Interview with Dr Allen McClay ­ Almac Sciences Summary: After a weekend in retirement, Northern Ireland's Allen McClay decided he was not ready to exchange the boardroom for the golfing green. Instead, he picked up his mobile telephone, purchased the chemical synthesis division of his former company and got back in the pharma game. It's an exciting time for health care, McClay believes, and he wants to keep contributing.

Mention of the pharmaceutical industry and Northern Ireland together in one sentence is likely to bring one man's name up. Dr Allen McClay was born and bred in Northern Ireland, spending his entire career in the Province -- from his first job as a sales representative to his founding of Northern Ireland's first pharmaceutical company. Managing directors and taxi drivers alike know Allen McClay. Qualified as a pharmacist, McClay entered the pharmaceutical industry as a sales rep for Glaxo in 1955 where he spent the next 13 years. Then, in 1968, everything changed when McClay founded Galen -- now one of Northern Ireland's most successful companies, with stock exchange listings in London, Dublin and New York. After 33 years of incredibly successful, hands-on leadership, McClay retired as president of Galen in 2001 at the age of 69. A keen golfer, it might have been easy for Allen to slip into quiet retirement. Instead, Allen McClay did something remarkable. "I left Galen after 33 years with a good record," he says. "The company was a success -- we were the first £1 billion company in Northern Ireland. I retired on a Friday in September 2001 and after a restful weekend I went to a meeting on the following Monday with Professor Patrick Johnston from the Cancer Research Centre at Queen's University in Belfast."

The high science content of the meeting was, McClay confesses, over his head; but it started him thinking. "I spent some time thinking about what I was going to do with the last few grains of sand I had left in my hourglass," he says. "I hadn't done anything worth writing about and I didn't want to just play golf as it would simply become a chore. Instead, I came down to these business units here in Craigavon -- where I had started Galen so many years before -- and one was empty. A phone call later, I had leased the unit and, without power or lights, I up-ended an old oil can, sat down and started making some calls on my mobile phone. I had decided to buy myself a little chemistry set for Christmas." The chemistry set turned out to be CSS (Chemical Synthesis Services), a division of Galen that the company was keen to divest as its sights were set on the American market. It was a Christmas gift indeed as the acquisition was finalised in late December 2001. Rolls Royce pharma At the time McClay acquired CSS, it was a chemical synthesis and analytical services company catering to the pharmaceutical industry, with a focus on the preclinical phase of research and development (R&D) prior to the formulation of materials for human trials. However, McClay's vision was greater than just this one company -- he wanted to build a suite of companies that would provide a full -1-

service to the pharmaceutical industry, companies that could take a new chemical entity from preclinical through clinical trials to product launch. "I heard that Galen also wanted to dispose of its clinical trials services division, which at the time managed the packaging and preparation of clinical trial materials for 18 of the top 20 pharma companies in the world -- so I purchased it in May 2002." McClay has also purchased Interactive Clinical Technologies Inc. (ICTI), a company that designs, develops and implements IT systems for the support of clinical trials, and Pharmaceutical, Development and Manufacturing Services (PDMS), a product development and manufacturing service company. The Almac `group' now comprises four divisions, each an acquired company, under the ownership of McClay. It took more than £220 million to build this unique dream. "We provide a complete service to any size of pharmaceutical company," says McClay. "Our focus in the CSS division is on core chemistry and we have the best chemists. If a company has a molecule, first they will need a good synthesis route to prepare a few milligrams for early trials; then we have the ability to take this to the next stage using our development chemistry and pilot plants' assets to produce a few kilograms for clinical trials." A substantial part of Almac's work is for smaller biotech companies, those that need a partner such as Almac to provide the expertise they do not possess internally. "Some biotech companies may only consist of 40 or so people -- whereas many are rich in experience they are poor in resources. We can do everything for them; synthesise the molecule, scale it up, perform the formulations, even set up and run the clinical trials. We have done just that recently, taking a drug for a company all of the way from early stage, right through to manufacture and the market. We are running some important

trials at the moment, including one of the biggest currently under way -- a trial involving more than 45000 people," says McClay. Larger companies can also benefit from this kind of complete package. "Big pharmaceutical companies have built themselves up the hard way and have contained themselves -- they do everything from A to Z: their own research, production, marketing, everything. But now they are having to sell their factories. It is very difficult for a big company to stick to time deadlines; their people are used to losing a day here, a day there, and there is no easy way to control this. The power of subcontracting is that you put the company under the whip -- for us at Almac, we can handle the pressure as it is our main focus. Our processes are designed to manage it and deliver on time. "Only the largest companies with very full pipelines can afford to keep teams of people in place, and busy, all year round. When you outsource to Almac, you get an efficient, high quality and reliable service that brings results quickly. When companies seek the cheapest provider for a clinical trial, they forget that with a blockbuster, every day they gain upfront can earn them $3 million in sales. The last thing a company wants is a hitch in formulating a product or in clinical trials that can lose them weeks or even months. "For me, there are four Ps in business. The first is people and if you get the right people they'll produce the second: the product. You need the best scientists working in the best teams. The days of Fleming are over and teamwork is vitally important these days. Presentation of the product is the next important stage, as you have to show it in the best possible light. The final P is professionalism -- the days of the good amateur have long since passed. If you get these four Ps sorted, then you get the fifth P

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-- profit -- and you need profit to feed the engine. "Procurement officers of large pharmaceutical companies are always trying to get the best price but maybe they are missing the point; what you need is speed, reliability and quality. You can't get a Rolls Royce for the price of a Morris Minor," he says. Bringing back biotech Allen McClay has made a career out of always anticipating what the next big development will be and he certainly hasn't stopped predicting the future now that he has `retired.' "There is no doubt in my mind that outsourcing is the future. When GSK's director of R&D recently said they were going to outsource some of their R&D, it caused such a fuss that they recanted. But I have no doubt that, before long, pharmaceutical companies will be big, powerful sales and marketing machines -- when you're that big, you have to be sharp and this is the only way forward." McClay also sees the future of the pharmaceutical industry in biotech, biological products and diagnosis. "The big developments in the pipeline are nearly all coming from the biotech arena and I don't mean small start-up companies, but big pharma. You only have to look at Roche where more than 30% of their products are biotech-based. Compare the top 20 companies now with the list 10 years ago and you'll see Amgen and Genentech, two relatively recent entrants to the big pharma arena. In fact, Amgen, on a very small number of products, is already bigger than many of the other much longer established companies on that list. Amgen is bigger than Lilly on a very small number of products." Although McClay is not forecasting the demise of big pharma, he sees tough times ahead. As he says: "A company can grow to a

certain stage, but after that it can be difficult to find enough grass to keep you thriving. The market is always changing. Innovation isn't the advantage it once was. A few years ago, the first in a new class of products, such as Viagra for example, would have had a good run of exclusivity before the competition started to muscle in. Now you can't assume anything. Speed-to-market is crucial; that's why the fundamental strength of a company such as Almac can be so beneficial. We can get the product to market quicker for big pharma than can be achieved by internal processes. The big companies need mega products to survive and with the shift towards biotech-based products, I am not sure that model is the right one," he says. The time has long since gone when biotech was considered a bad word, says McClay. "There was a time when biotech companies would approach big pharma and be shown the door. That time is past and the big companies have been looking at biotech and the biotech area for some time, developing resources within their own groups. "It hasn't come full circle yet and as we emerge from an era where there have been some incredible leaps forward, there are still many products to commercialise," says McClay, "but biotech and biological products are a very substantial part of the future."

ALLEN McCLAY Born in Cookstown, Northern Ireland in 1932, Allen McClay describes himself as an overt Ulsterman educated locally at Derryloran Public Elementary, Cookstown High School and Belfast College of Technology. With a career that includes time spent managing a pharmacy in County Down, serving as a sales rep for Glaxo and founding Galen, McClay has also been closely involved with establishing other successful businesses. In 1976, he established Galen Research Laboratories; in 1983, Galen Research Laboratories set up Ivex Pharmaceuticals. In 1994 Dr McClay was awarded the OBE (Officer of the Order of the British Empire) in the Birthday Honours List for his contribution to the Northern Ireland Pharmaceutical Industry, followed by a CBE (Commander of the Order of the British Empire) in June 2000. Having forged links between Galen and Queen's University, Belfast (Northern Ireland), McClay pioneered the establishment of QuChem Ltd,

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a joint Galen/University company to provide specialist chemistry for the pharmaceutical industry. His McClay Trust -- administered entirely outside the interests of Galen -- is a charitable trust endowed on Queen's University personally by McClay for the advancement in teaching and research in the schools of chemistry and pharmacy. To date, the trust has donated approximately £2.1 million to strengthen research and teaching in the School of Chemistry. In 2001, McClay retired as president of Galen Holdings. Soon thereafter, he came out of retirement and has since negotiated the management buyout of the CSS, CTS, ICTI and PDMS divisions of Galen Holdings. In his spare time, McClay is a keen golfer and a member of Killymoon, Royal County Down, Royal Portrush and Down Royal golf clubs.

countless others could benefit from the therapeutic effects of the drug. "Diagnosis is going to become very technical, possibly too technical for general practice staff to manage. We will need medical specialists in diagnosis." This shift towards personalised medicine will also see a shift in the economics of health care, McClay predicts. "Some people apply what Colman said about his mustard to health care -- that his profit was left on the plate. In my opinion, it is much better to have a drug that is 100% effective in 60% of people, than to give the drug to the other 40% for whom it will not work. Even though fewer patients are receiving the drug there is no reason why profits should be affected. "Firstly, clinical trials can be smaller and more focussed, and therefore cheaper, and there will be cost savings in having a smaller market. Also, it will be more difficult for the generics to get in on the action as they would have to develop a diagnostic test, which would be expensive. "Prices would have to rise, but not necessarily double. It will take a while to educate governments, but when they realise the drugs are going to fewer patients and are very effective, they will see the savings. Sideeffects, after all, cost the National Health Service a lot of money. We can't continue to produce medicines that are only 40 to 60% effective. People expect the drugs to work; they expect a panacea, and now we might be able to give it to them."

ALMAC SCIENCES Following his retirement from Galen in September 2001, Allen McClay set up Almac Sciences, a suite of companies offering pharmaceutical support services to small biotech, virtual companies and multinational pharma companies. McClay acquired four of Galen's divisions: CSS, CTS, ICTI and PDMS. He also acquired ABC Laboratories, based in Coleraine, Northern Ireland. Almac and the affiliated companies owned by McClay provide complementary services within the production process. Almac is involved in the following stages of development: R&D: After synthesising small amounts of a new chemical

Leaving less on the plate The advent of the biotech era must be accompanied by a shift in perception about medicine, McClay believes. "Any pharmacologist will tell you that drugs are only 40­60% effective. In addition, in some conditions, diagnosis only runs at 40% or even less. If you take these together, only a relatively small percentage of patients are receiving an effective drug. If we're going to raise the profile of health care, this has to change. "Diagnosis and associated technologies are the key," says McClay. "At the meeting I had with Professor Johnston the day after I retired from Galen, we were talking about his remarkable work in chip technology for colorectal cancer. This is the future. Diagnosis will be crucial and our genes will dictate our therapy." This chip technology facilitates simple gene-based tests for cancer by testing cells from the tumours and enabling doctors to see how different patients will respond to chemotherapy, thereby offering the chance to alter therapy accordingly. McClay believes this diagnostic technology will not just mean that more patients will receive an effective drug, but that it will also lead to the reintroduction of drugs that had previously been withdrawn because of unforeseen side-effects. Screening out those susceptible to these side-effects means -4-

entity, clients prepare larger quantities to support lead enhancement, initial toxicology testing and other preclinical uses. During this stage, the chemistry used to prepare small samples is analysed and improved to deliver larger quantities of materials of adequate purity. Process Development/Scale-Up: Having identified the optimal lead compound for development, significant quantities are required for clinical trials. The initial chemistry route used to prepare small quantities is developed to deliver a process that can be scaled up, reproduced and is robust and safe. Formulation Development: This comprises the activities aimed at producing a pharmaceutical dosage form to deliver the active ingredient to the patient. Product manufactured at this stage will be used for clinical trials and stability studies. Clinical Trials: A successful clinical trial involves correct trial design, pack presentation, supply management, patient randomisation and accumulation of data and results. This process requires the services of specialist clinical supplies packaging and clinical research organisations. Manufacturing: Following these steps, a new product receives marketing authorisation. The commercial manufacturing stage of the process involves manufacturing the product to the requirements of the marketing authorisation and shipping the product to distribution centres.

journal. Now you get pages about it in the broadsheets. Health is news and people are hungry for information. It is an exciting time," McClay says. "I have been involved in health care for a long time and I want to feel that I might have contributed to people's health, that I have done something helpful and worthwhile." For more information about Almac Sciences contact: E-mail: [email protected] or log onto: Web: www.almac-sciences.com

The lead husky Leading the pack is the way McClay works and he sees many changes lying ahead. "I have always believed that you should try to be the lead husky, the one with his eyes fixed firmly on the horizon. If you're second husky, I'm sure you know what you can see," says McClay. "The changes in medicine and therapies in my lifetime have been tremendous. When I was growing up in the 1930s, things were very different. My sister died from diphtheria and it was a time when tuberculosis ravaged the country. "Medicine has radically changed and people take these developments for granted; no longer are they as reverent to, and awestruck by, the purveyors of medicines as they once were. Patients want information. In the old days, you could be lucky to see hormone replacement therapy mentioned in a medical -5-

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Microsoft Word - World's Biggest Chemistry Set.doc