When Christian Hogg sets out to achieve something, he doesn’t hold back.
“We’re on a mission to try to be the first Chinese company in history to bring a drug innovation from discovery all the way through to global approval,” he says. “It has never happened in the history of China.”
As executive director and chief executive of Hutchison China MediTech Limited, known as Chi-Med, Hogg knows that he has a real chance of making this happen. And, as David Buik, Panmure Gordon’s senior market commentator, and Simon French, our chief economist, found out, Hogg’s drive was fostered at an early age by his family.
“My father was a successful businessman up in the borders of Scotland at a knitwear factory making cashmere sweaters,” he explains. “He had a factory with 300 people working for him, making these things and shipping them all over the world, and that inspired me. I worked in that factory as a young man and I saw the families that were being supported by his endeavours, and I thought you’ve got to contribute in that fashion.”
It’s safe to say that Hogg has exceeded his family’s expectations. As head of Chi-Med, an innovative biopharmaceutical company aiming to become a global leader in the discovery, development and commercialisation of targeted therapies for oncology and immunological diseases, he has overseen an impressive growth in the company’s fortunes since taking over in 2006.
Consider this. Over the past decade, Chi-Med’s share price in UK terms has risen roughly from 250p to £18 and change which is, as Buik says, a “phenomenal achievement”.
And, earlier this year, the firm raised $100 million on the Nasdaq. In a wide-ranging interview with Hogg, Buik asks if, in years to come, Chi-Med might return to the Nasdaq to generate capital?
“That $100 million is a relatively small fundraising amount for a company that is currently running four phase three clinical studies on seven drug candidates and, by the beginning of next year, we’ll have another three phase three global registration studies underway.”
Hogg concedes that there is a chance that money raising will be required in the future. But he adds: “We’ve always set ourselves up to not be a binary bio-tech company, one that is completely dependent on equity capital markets for funding. We’ve set ourselves up to have a cash generative business that can fund us through the down cycles in equity capital markets which come quite regularly. As a result, we tend to go to equity capital markets when the time is right.”
As far as acquisitions are concerned, Hogg points out that pharma is “a very expensive place, particularly in China”. He says: “We’ve spent 16 years establishing a terrific business in that market…So as I look at how to expand our business, I think there are ways to do it efficiently. Number one is through expansion of our existing products. We have over 200 product licences in China at the moment. Now, about ten of those product licences account for 90 per cent of our profit so there’s a lot of room for expansion of what we’ve already got.
“The second area is the innovation. We’ve now put the best part of $400 million into pushing this pipeline forward over the past ten to 15 years. If we’re able to successfully get two or three of those drugs approved in the next two or three years, that is enormous payback for that investment.”
Although Chi-Med is based in China, Hogg asserts that all of the company’s innovation is focused on the global market. He goes on to say that: “Our story is a good story. It’s been a gradual build over many years. But ultimately the proof of the pudding comes in getting a drug approved and then launching it successfully. That starts to play out over 2017 and into 2018.”
Ultimately, though, it all comes down to people. As Hogg admits: “None of these targeted therapies are going to cure anybody. What they’re going to do is extend the life of these patients.”
On the surface, that may not seem like much but, in context, Chi-Med’s drugs can extend someone’s life by months, even years.
“From my standpoint I always go back to innovation. I always go back to meeting un-met medical needs of patients. Ultimately that’s what we’re all about, to try and find solutions to a lot of these big problems.”