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EMD Serono chief sharpens focus

Drug maker looks to pair speciality treatments, devices

Paris Panayiotopoulous, new CEO of EMD Serono, said, “Strategically, we’re in the right place.”

John Tlumacki/Globe Staff

Paris Panayiotopoulous, new CEO of EMD Serono, said, “Strategically, we’re in the right place.”

ROCKLAND — Setting his sights on drugs that can be sold to smaller populations of patients, EMD Serono’s new president says he will work to expand its “specialized therapies” franchise.

German-owned EMD Serono, which has 800 employees at its US headquarters here and a research center in Billerica, markets drugs to treat tumors, multiple sclerosis, and infertility. It is testing new experimental treatments for cancers such as soft tissue sarcomas and neurodegenerative diseases, while looking to pair them with devices and services.

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All of these drugs are geared to patients with less common diseases and high unmet medical needs — and they typically cost a lot of money.

“Strategically, we’re in the right place,” Paris Panayiotopoulos, named EMD Serono’s president and managing director last November, said in an interview. “Focus is important. We have been for over 40 years in specialty care and intend to continue on that path.”

Specialty drugs, which cost more than primary care medicines sold to a broader patient base, account for nearly half of all prescription sales, up from 30 percent in 2010. Analysts expect that share to rise to 60 percent by 2018, as drug makers capitalize on breakthroughs in understanding rare diseases and the genetic makeup of patients.

“Over the past decade, the trend has been away from primary care markets to specialists markets, not only for mid-sized players like Serono but for the larger players, too,” said Chris Leo, senior vice president at Back Bay Life Science Advisors, a Boston consulting firm. As examples, he pointed to research programs in cancer, neurology, autoimmune disorders, and rare diseases.

Leo said low-cost generic drugs have been draining market share from branded drugs in the primary care market, while many specialized drugs are too new — and too biologically complex — to yet face generic competition.

“It’s exceedingly difficult to get premier pricing in a market filled with generics,” he said. “And the specialist market needs a smaller, more focused sales and marketing effort.”

EMD Serono, the North American arm of Germany’s giant Merck KGaA, is one of the top five US companies focusing exclusively on specialty treatments. The German company grabbed a foothold locally when it paid $13.2 billion in 2006 to buy Switzerland’s Serono SA.

Merck also owns life sciences research tool supplier EMD Millipore in Billerica. Together, they have about 4,700 employees in the United States, including 2,200 in Massachusetts. That makes it one of the state’s largest life sciences employers.

On a visit to Cambridge last year, Merck Serono chief executive Stefan Oschmann made it clear his company is keen on investing in Massachusetts biotech startups and striking alliances with researchers at institutions such as Massachusetts General Hospital and the Broad Institute of MIT and Harvard. As part of that effort, Merck Serono set up an in-house firm called MS Ventures to scout for potential partners in the Boston area.

Panayiotopoulos, for his part, said EMD Serono expects part of its planned expansion to come from “inorganic growth.” Translation: He is open to buying smaller biotechs with specialized drugs in development, though he said there are currently no deals he can discuss.

Born in Greece and raised mostly in London, Panayiotopoulos, 40, has climbed rapidly through the executive ranks in the biopharmaceutical industry. He joined Merck Serono in 2004 and most recently headed its business in Japan. He was promoted to lead the North American operation, which accounts for roughly 20 percent of the company’s global revenues, after his predecessor, James Hoyes, resigned unexpectedly last September.

Merck Serono’s flagship multiple sclerosis drug Rebif, a leader in an injectable class of MS treatments known as interferons, has been facing tougher competition — and sluggish sales — as oral MS treatments, such as Tecfidera sold by Cambridge-based Biogen Idec Inc. and Gilenya, marketed by Swiss pharmaceutical giant Novartis AG, have gained traction.

In response, EMD Serono last year rolled out a device called Rebif Rebidose that makes it easier for many MS patients to inject themselves. More broadly, Panayiotopoulos said, EMD Serono is moving toward bundling its therapies with devices and services such as tests to determine which patients might benefit from its drugs. Such a move could make its products more profitable.

Robert Weisman can be reached at robert.weisman@globe.com. Follow him on Twitter @GlobeRobW.

Correction: An earlier version of this story had the incorrect name for the device Rebif Rebidose.

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