Former Shire CEO Shakes Up Galderma as IPO Decision Looms

(Bloomberg) -- Flemming Ornskov led Shire’s expansion into rare diseases before the drugmaker’s $62 billion sale to Takeda Pharmaceutical Co. in 2019. Now he’s plotting a new course for a skincare business that Nestle SA gave up on.

Ornskov, who took the reins of Switzerland-based Galderma two years ago, said in an interview that he’s “doubling down on science,” accelerating research spending and adding dermatologists and medical specialists as the company prepares for a potential initial public offering.

Taking on companies ranging from drugmaker Sanofi to cosmetics giant L’Oreal SA, Ornskov is betting people will pay more for innovative products. He’ll need to navigate tough competition and fast-changing trends as he seeks further growth in the consumer health, prescription and aesthetic medicine markets. Former owner Nestle struggled to keep Galderma’s profit stream running as key patents expired, eroding sales.

The food company divested the unit in 2019. Ornskov said he thinks Galderma is in a better position now. New offerings, international expansion and efforts to move more of its business online have driven results this year, he said.

“People are willing to pay a premium if you give them a premium product,” he said. “When consumers have many choices, you want to say to them, ‘If you get our products, they are scientifically based. They are differentiated.’”

Galderma also may be nearing a turning point. Banks have been appointed to explore options including an IPO, Ornskov said, confirming a Bloomberg report in August but declining to give more details. People familiar with the matter said in September that investment firm EQT AB may seek a value of 20 billion Swiss francs ($22 billion) or more, which would be double the sale price from two years ago. 

An IPO is possible in the second quarter of 2022, likely on the Swiss exchange, another person familiar with the matter said.

Shire Parallel 

An EQT-led consortium that includes the Abu Dhabi Investment Authority acquired Galderma in 2019 for 10.2 billion Swiss francs. Now Galderma, which reported about $3 billion in sales in 2020, is carrying out the biggest revamp of Cetaphil moisturizers in the brand’s history and developing experimental medicines for a range of skin conditions to widen its lineup. 

Ornskov, Danish by birth and a doctor by training, said Galderma this year sees double-digit growth in sales and profit as the company and its partners prepare to launch almost two dozen products ranging from wrinkle-relaxing injection Alluzience to acne treatment Twyneo. He’s also boosted R&D staff by more than 25% since taking over. 

The pipeline should allow the aesthetics division to achieve revenue growth at least in the high single-digits annually as sales in the prescription business are hit by expiring patents, according to a July report from Fitch Ratings. 

The company, founded in 1981 as a L’Oreal-Nestle joint venture, has been busy with clinical research. Last week, Galderma pointed to mid-stage tests showing antibody treatment nemolizumab reduced symptoms for patients with atopic dermatitis and prurigo nodularis, while it’s also targeting other skin conditions such as rosacea. 

The strategy at Galderma, Ornskov said, is similar to one he’s embraced before. At Shire, he shifted to cutting-edge treatments for rare illnesses that command high prices. 

“When I started as CEO at Shire, rare diseases was a minimal part of the business,” he said. “Even my board was probably skeptical.”

The shift eventually attracted Takeda, which had ambitions to expand in the lucrative U.S. health market, making Shire a prime target. The Japanese drugmaker began examining Shire’s assets more than two years before striking the deal.

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