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Simple formula helps T-bird couple build thriving pharmaceutical enterprise

When Melbourne-based drug maker Mayne Pharma decided to expand into Austria in 2005, the multinational company put its trust in a local startup with no history of success.

Helmut Kaisergruber and Sabine Möritz-Kaisergruber, the Thunderbird couple who launched Astro-Pharma with a friend after 15 years in the pharmaceutical industry, still aren’t sure what they said to win the Mayne contract. The partnership hinged on a 30-minute presentation the couple made in Munich after driving from their home in Vienna.

Helmut and Sabine knew the odds were stacked against them when they stepped into the boardroom and saw a dossier on the table from one of Austria’s largest pharmaceutical companies, a family business with 100 years of history. At least one other large Austrian company was in Munich to apply for the same partnership.

“The competition was huge,” Helmut says. “But we decided to give it a try anyway.”

Then the meeting started, and the couple discovered a new challenge. The Mayne executives sitting around the table spoke English with an Australian accent that neither Helmut nor Sabine could understand.

“I never had experienced anything like that,” says Helmut, who lived and worked in the United States for three years before returning to his native Austria. “At Thunderbird we had Chinese and Indian classmates who were sometimes hard to understand, but English was never their mother tongue.”

Sabine, a German native who grew up in Munich, earned an undergraduate degree at Auburn University in Alabama before enrolling at Thunderbird. Overall, she had five years of experience in the United States, but she couldn’t decipher the Australian accents any better than her husband.

“A lot of times,” Sabine says, “I just gave an answer in general and hoped that I hit some point they were asking.”

The married partners had spent weeks preparing for the presentation and were careful to keep the focus on how they would help Mayne sell its products in Austria.

“The message was, ‘We are young, we are hungry and we are eager to do it better than the others,’” Sabine says. “The other companies showed what they represented in the Austrian market, but they didn’t show those Australian people what they would do for them. And that’s what we learned at Thunderbird, to really focus on your customer and really try to show them their benefit.”

The presentation ended, and the couple headed for home unsure of how well they had communicated their message. Then their phone rang, and a long-term partnership started that continues today through Hospira, the U.S.-based company that acquired Mayne in 2007 for $2 billion.

Astro-Pharma has grown since then into a thriving company with three main business units. Besides the work with Hospira, the company sells in vitro fertilization products owned by Swiss-based IBSA and hospital antibiotics acquired from U.S.-based Eli Lilly.

Friends and relatives called the couple crazy when they quit their executive positions in 2003 to launch Astro-Pharma, but they had confidence they would find their niche.

“I walked away from a very good job,” Sabine says. “But that’s what made me so confident that I could do it on my own, because in that job I almost did everything.”

Helmut liked the idea of being his own boss. “The life as a solider in the industry — somebody who takes orders — was becoming more and more unbearable,” he says. “Finally we said, ‘If we cannot make it with our experience, then probably nobody can.’”

Looking back, he says his only regret is that he didn’t try the path of entrepreneurship sooner.

Know the industry

The couple knew from the beginning that the pharmaceutical industry had high barriers to entry. Companies that handle prescription drugs must navigate complex government regulations and meet rigorous standards of accountability.

“Any vial that you deliver, you need to be able to say within minutes — in case of a recall — who received the batch,” Sabine says. “You need to convince the Ministry of Health that you have the processes in place.”

Sabine, who already had a doctorate in economics and business, had to take classes and pass exams before Astro-Pharma could receive its Austrian license.

With that hurdle cleared, the company turned its attention to finding its niche in a cluttered market. Both knew the industry well, which helped them navigate their options.

“We played around with all sort of ideas,” Helmut says. “We looked at food additives, marketing services and consulting. We didn’t know what exactly we were going to do.”

He says the company turned down three projects in the first year because they were not good fits. Then a breakthrough came in 2004 when Sabine called a former co-worker at Lilly.

He had just left a meeting in which Lilly had decided to divest itself from the hospital antibiotics business, and he offered to sell the formula for four products.

“You basically purchase the cooking recipe,” Sabine says. “It’s a huge file with all the raw materials described and all the processes to make the finished product.”

The only catch was that the products came with low profit margins, which meant Astro-Pharma would have to find a reliable manufacturer who could produce the antibiotics inexpensively. On the up side, acquiring products from an established company such as Lilly would give Astro-Pharma quick credibility.

Sabine, Helmut and their third partner, long-time friend and pharmaceutical wholesaler Herbert Baldia, considered their options and decided to take the gamble.

Helmut spent the next several months looking for the right manufacturer who could produce the antibiotics at the right cost and quality. He traveled to Spain and France before finding a partner in northern Italy.

The Mayne deal emerged at about the same time that Astro-Pharma started selling the Lilly antibiotics.

“I knew that we would be successful,” Sabine says. “But I never thought it would happen so quickly.”

Treat people right

Help came along the way from an assortment of friends. Helmut credits some of the early success to luck, but the couple also reaped the benefits of treating people right and nurturing relationships of trust.

“Thunderbird made me aware of the importance of networking,” Sabine says. “If you treat people well, sometimes it comes back to benefit you many years later.”

The first friend to step forward was Baldia, a pharmaceutical entrepreneur who brought medical and scientific expertise to the company.

Sabine says the long-time friend, who shares Helmut’s passion for skiing, invested in the enterprise because he wanted the challenge of trying something new. Today, all of Astro-Pharma’s distribution is done through a wholesaler facility that Baldia operates near the Danube River in Vienna.

“Bringing in that third partner was the best thing we did,” Sabine says. “We didn’t know back then how important that was.”

Other friends also took an interest in the startup.

One person helped with the registration process. Another helped with the company logo and Web site design. And a friend in the advertising business designed the PowerPoint presentation that helped Astro-Pharma impress the Australian executives from Mayne.

“We always knew people who were experts, and they were always willing to help us,” Sabine says. “Even without asking for payment.”

Former co-workers also joined the young company as its first employees. And pharmacists at big hospitals who knew Helmut and Sabine from their corporate days signed up as Astro-Pharma’s first customers.

Sabine says one hospital pharmacist called between Christmas and New Year’s Eve, shortly after Astro-Pharma started producing the Lilly antibiotics. “I still have 30,000 Euros that I can spend this year,” the woman said. “If you want, I can purchase your antibiotics.”

“We got so much help from so many different people,” Sabine says. “When you start your business, if you don’t have people in key positions helping you, it’s very difficult.”

Beware of debt

Starting a business without money is also difficult.

Helmut and Sabine lived for more than a year without income, and Helmut didn’t always sleep well during this period. But rather than going into debt, the couple survived on life savings they accumulated during 15 years of living within their means.

“We are contrarian to the U.S. way of thinking,” Helmut says. “We never took on any debt. We both had very comfortable jobs, but we both were conservative.”

They watched friends buy big houses and go on expensive vacations, but they refrained. Helmut says this allowed them to buy their first house from savings with no mortgage.

“One or two years ago, people would have called us crazy and said, ‘Those people aren’t maximizing their opportunities,” Helmut says. “But we have seen lately in the economic crisis what can go wrong with too much leverage.”

The company had to approach banks to finance the purchase of the Lilly licenses in 2004, but Helmut and Sabine have paid themselves conservative salaries since then to expedite the loan payoff.

By 2009 the company had little debt, and Helmut and Sabine were running calculations to see if they could start paying themselves their old salaries. “I think we easily can do that,” Helmut says.

Maintain balance

Many people warned the couple about the toll the business would take on their marriage. But Helmut and Sabine had worked together at Lilly and were confident they could remain friends and partners.

“You really need to think about whether you want to spend 24 hours a day with each other,” Sabine says. “In the beginning, we spent the entire day crammed into one little office, and you really have to appreciate each other very much.”

The couple, who graduated one year apart at Thunderbird, met at Lilly when Sabine applied for a job at the same company that recruited Helmut. They talked briefly at the company headquarters in Indianapolis, Ind., but didn’t start dating until several months later.

Today they enjoy teasing each other, riding bicycles together, sailing together, playing tennis together and spending quality time with their two children, Alexander and Moritz. When the family dines out, Helmut and Sabine like to order different dishes so they can swap plates halfway through the meal and experience twice the variety.

“We’re laughing a lot,” Sabine says. “And sometimes we shout at each other.”

She says one key for the success of their partnership has been the ability to find the right balance between work and their personal lives. “When we sit down for dinner, we don’t talk about the company,” Sabine says. “We have so many interests that we share besides work.”

Helmut agrees. “Most importantly,” Helmut says, “we were never in danger of becoming workaholics.”

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