1 small is beautiful.. winning in the highly competitive generics market
TRANSCRIPT
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Presented by
John Beighton
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How to grow without losing the “spirit” of what creates value
The AMCo case study…
An entrepreneur’s dilemma
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Unique business model with industry leading margins and cash generation, replicable across geographies and therapeutic areas
Optimise existing portfolio and acquire niche products
Acquire and develop difficult-to-make niche products which are below the radar of larger pharma companies with attractive margins and growth opportunities
Leverage market knowledge
Local presence in selective markets will enable successful product commercialisation (e.g. pricing, portfolio optimisation, market insight, leveraging distributor network, etc.)
Apply asset light model
Network of CMOs and distribution partners enables high flexibility and efficient capital utilisation, while driving costs down and securing stable long-term supply of goods and services
Use low cost supportLow cost Centre of Excellence for support functions in India (e.g. RA, Supply Chain, Finance, IT, Quality, HR) ensures high-quality support and cost effectiveness
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Unique business model underpinned by three critical enablers
Cash generating engine based on asset light, highly profitable business model enables organic and inorganic growth opportunities
AMCo has an embedded entrepreneurial mindset with fast decision making and the ability to implement quickly
Financial strength
Entrepreneurial mindset
Right size and scalable
Large enough to commercialise multinational product portfolios, while staying nimble and agileReplicable business model across geographies and therapeutic areas
9Commodity Gx Differentiated Gx (DGx) Branded
specialty
Exte
nt
of
geog
rap
hic
div
ers
ificati
on
Global generics companies with strong presence in commodity Gx; strategic focus on specialty Gx
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Mid-sized commodity generics players moving up the value chain into differentiated products and mature brands
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4 Focused R&D players with deep expertise in specific technology platforms; limited front end presence; partner/sell products to large players for marketing/devt
Large R&D companies with broad range of branded innovative products being sold across the world
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Mid-sized Specialty Pharma companies with therapeutically-focused innovative pipelines
7Commercially-focused players,
with primary expertise in a single market
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NCE / NBE
Selectiveglobalisation beyondlocal markets
Mostly local
Mostly Global
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Development- focused co’s, finding new,
local customer solutions
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Five strategic Business Action Plans (BAPs) can be derived from the overarching strategy
Leverage AMCo's unique business model to expand in other attractive markets and to broaden niche product portfolio
Strategic BAP Description
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Strategic Growth
International Excellence
Operational Excellence
Compliance and Reputation
Integration and Culture
We will increase revenues through Portfolio Optimisation, acquisition of products and infrastructure, and through new products launches
We will increase revenues through establishing direct market presence and developing internal expertise to support the International markets
We will ensure customer satisfaction by ensuring that product is reliably supplied when required
We will remain compliant and ethical with all our stakeholders, whilst also being adequately structured to support rapid growth plans
Fast and effective integration is critical to support long-term growth and our people are key to supporting it
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Strategic Growth
• Portfolio Optimisation – registering existing AMCo products into new markets where the product isn’t currently registered or sold, and using the existing manufacturers to make the product (at least 40 submissions made in 2014)
• Product Development – creating new products with a contract development partner, whereby AMCo retains full ownership rights to the product, and freedom to choose who to manufacture the product
• In-Licensing – buying the rights to sell a third party’s product in a defined territory, and agreeing for the licensor to supply the product to AMCo for an agreed period of time (typically 5 years)
• Product Acquisitions – buying the permanent rights to own an existing product, in a defined territory (sometimes global e.g. Fucithalmic). The seller may wish to continue making the product, but more often would require AMCo to find a new supplier within 2-3 years
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Background: The In-market value chain
Marketpotential
a) Sizing the opportunity
b) Product selectionc) Dosage / form
adaption
Coverage
Medical Promotion- by Salesforce- Controlling Salesforce / “Managing margin”- Selling discounts- Creating promotion materials- Telesales
Regulatory
a) Registration of new products
b) Pricing regimec) Legal frameworks
Pricing Distribution
a) Supply chain optimisation / no stock-outs
b) Order taking / invoicing / collection
c) Box shifting
I II III VIIVI
a) Price elasticityb) Competitive
environment
The diagram below represents a break down of the in-country value chain and the indicated key strategic drivers / actions related to each part.
Sales Marketing
Geographic coverage of- Hospitals- Doctors- Wholesalers
a) Specialist conferences / KOLs
b) E-marketing (B2C for OTC)
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Reporting Data analysis
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International Excellence
AMCo offices/direct presence
Distributor network
Target markets – direct presence
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Five Distinct go-to-market approaches for AMCo
Unmanaged box shifting
Strong distributor
AMCo Implant
AMCoPresence ‘light’
AMCoPresence ‘heavy’
Marketpotential CoverageRegulatory Pricing Distribution
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Sales Marketing
IV V
Distributor
Joint AMCo / Distributor
AMCo
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Distributor
Distributor
Distributor
Distributor
Drivers to increase sales Additional costs
– More “managed service” – Higher margin to distributor
– Broader coverage– More products to market faster– Price increase– Volume initiatives– Focus
– Personnel costs– Potential 3rd party Sales Resource
– Closer to activities– Additional focus
– Office– Regulatory costs– Tax implications
– AMCo salesforce– AMCo marketing
– Direct labour
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Distributor5
AMCo 3rd Parties
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Operational Excellence in an asset light context
Critical Success Factors• Flexibility and having options for supply
• API• Finished dosage form
• Dual (or triple) sources for key products and APIs• That are registered and maintained in the MAs• That remain in a validated status
• Strong Supplier Relationships• Contractual protection
Results in a low risk supply chain