simon-kucher & partners healthcare insights issue2 2016 print · 4 simon-kucher & partners...

Healthcare InsightsA publication for the clients of Simon-Kucher & Partners

Inside This IssueSummer 2016 - Volume 8, Issue 2

Pricing and reimbursement news from around the globe

Framework for eff ective tender management

How curative therapies are changing the nature of healthcare marketing

Dual branding in an evolving healthcare market

and much more...

Playing to win in a high-stakes game: The importance of eff ective tender managementBy Charles Gammal III, Chad McAuliff e, and Michael Zhu

An introduction to tendersThere is a global trend in healthcare procurement that companies must prepare them-selves for: the proliferation of tenders. Tenders are an aggressive means of purchas-ing that are already impacting multiple sectors of the life sciences market. Purchasers can use tenders to increase transparency and competition in a given market, thereby driving down prices over time. With the increased prevalence of tenders, it is more important than ever to craft and execute successful tendering strategies. By losing just a few tenders to one’s competitors, it is possible to create a number of problems that may take years to overcome.

- Continued on page 8

2 Simon-Kucher & Partners Healthcare Insights | Recent Developments in Global Pricing & Market Access

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Contributors Omar AhmadEric BachmanRehan BaqriJudith FleckeRebecca FordCharles GammalClementine LegrosChad McAuliff eRam SubramanianRachel XueMike Zhu

Cover StoryPlaying to win in a high-stakes game: The importance of eff ective tender management....1

P&R briefs........................................................................3

FeaturesParadigm shift? The 8 trends brought by curative therapies that may change the way we think about healthcare marketing .............................................................................................13

When one is not enoughThe power of a second brand in the evolving global healthcare market ...........................................................15

About Simon-Kucher & Partners ............................19

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3Simon-Kucher & Partners Healthcare Insights | Recent Developments in Global Pricing & Market Access

The need for further reform led to a proposal released in November 2015 and currently under consultation, which would create the CDF Managed Access Fund. This fund would be fully integrated into the NICE appraisal process, so that the CDF would become a transitional fund with clear criteria for entry and exit for qualifying drugs. A joint committee, the CDF Investment Group (governed by NHSE and advised by NICE) would evaluate all oncology treatments on their clinical and cost eff ectiveness. The proposal places the CDF as an interim “managed access” fund for new cancer drugs, paying for drugs that lack evi-dence at the time of market authorisation but show prom-ise of cost-eff ectiveness. At time of market authorisation, NICE would release draft guidance on every new treatment: “recommended for routine use (i.e. baseline NHS commissioning)”, “not recommended for routine use”, or “recommended for use within CDF”. In order to be “recommended for use within CDF”, a drug should show promise of cost-eff ec-tiveness but would not yet need to meet the acceptable NICE threshold for cost / QALY. The CDF would fund the treatment for a defi ned period (interim funding), while ad-ditional evidence from real-world use could be collected before NICE re-reviewed the treatment. This reform presents some interesting opportunities, but they are not without risk. For manufacturers, there is the possibility of market access immediately following market authorization, if cost-eff ectiveness or plausible potential for cost-eff ectiveness is determined by NICE. Compared to the status quo, it would be a more transparent and con-testable market access process managed by NICE and off ers the opportunity to improve the evidence package through real-world data collection (data that could also be utilized in other markets).However, risks for manufacturers implied in the proposal include strict cost control measures at the “managed ac-cess” stage via cost-caps, contingency provisions, and in-creased price pressure. There is also some risk for poten-tially damaging implications for international markets with an immediate “No” from NICE or unsuccessful evidence generation during interim CDF funding.The Early Access to Medicines Scheme leads the way in innovationThe Early Access to Medicines Scheme (EAMS), intro-duced in April 2014 as a mechanism for giving patients with life-threatening or seriously debilitating conditions ac-cess to innovative medicines prior to the products receiv-ing marketing authorization, is now in full swing, with a number of opinions issued over the past year. The Medicines and Healthcare Products Regulatory Agency (MHRA) evaluates EAMS submissions using a 2-step process: fi rst, qualifying drugs are awarded a

Recent developments in global pricing & market access

Germany: Major changes to AMNOG process

The German government and pharmaceutical industry have recently published the outcome of an industry-wide dialog, where the need for important changes to the AM-NOG process were discussed. Exactly how and when the Ministry of Health will implement these changes, however, is not yet clear.Potential Change 1: AMNOG rebates no longer publi-cally availableCurrent: Agreed upon discounts negotiated between manufacturers and the GKV-SV are publically available. Change: Agreed upon discounts will no longer be dis-closed and are only available for “institutions that require them to fulfi ll their legal obligations”. The nature of such institutions has not yet been defi ned.Potential Change 2: Free pricing in the first year after launch (exceptions apply if cap is exceeded)Current: Manufacturers are free to set the prices of their drugs for the first year after launch, with the negotiated discount taking effect after one year.

Change: If the product’s sales exceed a pre-specified threshold in the first year, the negotiated price should ap-ply before the end of the first year (e.g. via paybacks).

Potential Change 3: In-market benefit assessments (for pre-AMNOG products)Current: Products that were launched before 2011, when the AMNOG process was established, are not subject to AMNOG assessments.

Change: For specific cases, in-market benefit assess-ments should be possible. Such assessments should ap-ply only to very specific cases, e.g. where an existing ac-tive substance launches with a new market authorization and receives new data protection.

UK: The Future of the CDF: A longer term Managed Access Fund?

The Cancer Drug Fund (CDF) was set up in 2011 with a budget of £200m to fund high cost oncology treatments that were either not assessed by NICE or received a nega-tive NICE appraisal. In part because CDF funding deci-sions were not based on a rigorous cost-eff ectiveness evaluation, overall spending has swelled to £340m in 2015-16. In an eff ort to curb spending, 16 drugs were delisted in October 2014, and a further 16 were put for-ward for delisting in September 2016.


“Promising Innovative Medicine” (PIM) designation, and then each drug is evaluated according to its clinical risk/benefi t profi le in order to provide a scientifi c opinion. Dur-ing the scheme, the treatment must be provided free of charge by the manufacturer. The fi rst medicine to successfully navigate this process and be made available through the EAMS was Merck’s Keytruda (pembrulizumab) in March 2015. Through the EAMS, over 500 patients with advanced melanoma were able to access the drug for roughly 4 months prior to the European Medicines Agency (EMA) approval, which was granted in mid-July. Keytruda subsequently received a positive NICE appraisal for advanced melanoma in Octo-ber 2015 through a fast-tracked process. As of March 2016, the EAMS had received a total of 20 PIM applications and issued 8 positive scientifi c opinions (Table 1). Most unsuccessful applications failed at the PIM step, meaning drugs did not fulfi ll EAMS criteria of treating a life-threatening or seriously debilitating condi-tion with high unmet need and off er a major advantage over current tratment methods. The benefits of the scheme for patients and for the NHS are clear: patients get early access to innovative treat-ments in areas of high unmet need at no additional cost to the healthcare system. Pharmaceutical companies also stand to benefit from the scheme as it allows healthcare professionals to gain experience with new products and increases the chances of subsequent positive funding decisions. However, some have questioned the lack of a centralized fund and the disadvantages this creates for smaller companies, which have to bear the upfront costs and associated risks.

China: Issuing two new guidelines for drug pricing regulation and insurance scheme mergers

Payment Standard for pharmaceutical reimburse-mentIn late December 2015, China’s Ministry of Human Re-sources and Social Security (MoHRSS) introduced an initial draft of Basic Medical Insurance (BMI) Drug Pay-ment Standard Development Rules with a request for comments from manufacturers, pharmacy distributors, and provincial governments. The goal of this policy is to increase competition among drug manufacturers and en-courage cost-conscious prescribing at the hospital level. According to the draft, new uniform “Payment Standards” would be set on the basis of generic drug active ingredi-ent: similar to generic referencing that is widely used in many European countries. Pharmaceutical manufactur-ers will now have some freedom in drug pricing for ge-neric products. Up to three separate Payment Standards would allow for higher or lower drug reimbursement lev-els depending on the quality of the products. Manufacturers would be allowed to sell drugs at prices above the Payment Standards, but the delta would need to be paid by patients. If the drugs are acquired by hospi-tals at prices that are lower than the Payment Standards, the full amount will still be paid by the BMI in accordance with Payment Standards, and hospitals will keep the dif-ference. The policy seeks to encourage hospitals to pre-scribe low-priced drugs in this way, while also exposing patients to the diff erence in drug price and hospital re-imbursement level (i.e., patient is responsible for the dif-ference between the hospital purchase price and reim-bursed price). Experts believe that the implementation of Payment Stan-dards will not take place at the national level but may be rolled out through pilot programs at the provincial or mu-nicipal level in order to test the impact and potential for budget relief.

Merger of two basic medical insurance schemesOn January 12, 2016, the China State Council merged the Urban and Rural Resident Basic Medical Insurance schemes in an effort to promote more equal access to treatments and standardize drug payments. Previously, there were three separate medical insurance schemes: Urban Employee BMI (urban working resi-dents), Urban Resident BMI (covering mainly the young, seniors, and the unemployed), and New Rural Coopera-tive Medical Insurance (NRCMI, covering rural residents). Now, the Urban Resident BMI and NRCMI will be merged. In general, Urban Employee BMI has the best coverage

Product Indication Date granted

Pembrolizumab (Merck)

Advanced melanoma March, 2015

Nivolumab (BMS) Advanced melanoma May, 2015

Nivolumab (BMS) NSCLC June, 2015

Sacubitril/valsartan (Novartis)

Symptomatic heart failure

September, 2015

Osimertinib (AZ) EGFR + NSCLC December, 2015

Nivolumab (BMS) NSCLC February, 2016

Nivolumab (BMS) RCC February, 2016

Pembrolizumab (Merck)

NSCLC March, 2016

Table 1: Drugs that have received EAMS approval


of medicines and highest reimbursement levels for drug costs, whereas Urban Resident BMI and NRCMI have lower reimbursement levels and a less extensive list of covered products. Comparatively, the NRCMI has a very restricted formulary. The stated goal of the merger is to “push medical reforms forward, ensure rural and urban residents’ equal access to basic medical insurance, promote social justice, and boost people’s well-being”. The two urban schemes are managed by MoHRSS, while the NRCMI is administrated by the National Health and Family Planning Commission, meaning implementation would require administrative re-form of the two parent agencies.After the merger, the reimbursement level for NRCMI sub-scribers would be gradually raised to a unified standard with Urban Resident subscribers. In the past couple of years, nine provinces/municipalities (including Shanghai, Chongqing, Tianjin, and Guangdong) have run pilot pro-grams incorporating aspects of the merger by increas-ing the level of hospital and patient cost-consciousness through cost-sharing and putting into place certain drug reimbursement incentives. All provinces are expected to submit official merger plans by the end of this year.The merger may partly help address the abovementioned difficulties regarding the Payment Standard implementa-tion by setting unified reimbursement prices for rural and urban residents.

France: New framework agreement to improve pricing transparency

The Accord Cadre is the framework agreement signed between pharmaceutical manufacturers and the CEPS (French pricing committee) that defines pricing regula-tions for both hospital and retail drugs. The accord was first signed in 1994 by both the state and the pharmaceu-tical industry, and it is regularly updated. With the prior agreement (signed in December 2012) expiring in De-cember 2015, new negotiations commenced during the second half of 2015, and a new agreement was officially released in January 2016.The LEEM (France’s pharmaceutical industry associa-tion) emphasized that one guiding objective of this new Accord Cadre was to provide manufacturers with more clarity and transparency in order to limit unexpected con-flicts with pricing authorities. The resulting document is organized into six chapters and 36 articles and is more detailed than its predecessor in order to reduce some of the ambiguities that existed in previous versions. The main changes concern: Clarification regarding eligibility and application of the “5-year EU price guarantee”: The duration of the guarantee (equal to lowest price in EU-4) will be de-

creased/increased for…• Pediatric drugs: (increased by 1 year)• Previous cohort ATU (decreased by 7 months)• Indication expansion with ASMR I-III (and some ASMR

IV) addressing a significant new population vs. indica-tion which received the 5-year guarantee (increased by 1 year max)

• Indication expansion with ASMR IV-V (except some ASMR IV) addressing a larger population vs. indica-tion which received the 5-year guarantee (decreased by 1 year max)

The international pricing guarantee now applies to all types of drugs with ASMR I to III (some ASMR IV), and with a CEESP assessment and no major methodology reservations highlighted by the CEESP Price negotiations for T2A exclusion list drugs: Prod-ucts on the T2A exclusion list will now have price negoti-ations as do retail drugs (previously a notification, as with retrocession drugs). In order to reduce time to access of products on the T2A exclusion list (and respect the 180 days rule), the decision for inclusion on the list and the price publication will now occur at the same timePerformance-based contracting: Explicit CEPS open-ness to performance-based contracts Arguments used in price negotiations: Additional details regarding how manufactures may use additional arguments in negotiations (e.g. R&D investment )Measures to enable faster market access: For ex-ample, elaboration of the possibility to benefit from fast track price negotiations in some specific cases (e.g., ASMR V drugs if the manufacturer offers a price dis-count upfront, innovative drugs)Budget impact analysis in submission: Increased importance of budget impact analysis, with mandatory submission in certain cases This new Accord Cadre will apply until the end of 2018 (along with potential additional annexes in the future). Despite efforts made to make it more transparent, it re-mains unclear how some aspects will be implemented. A new committee, the Comité de Pilotage de la Politique Conventionelle (CPPC), has been created to monitor the process and it will be staffed with representatives of the LEEM and the CEPS.

Japan: 2016 drug pricing reform in Japan requires price cuts for “huge sellers”

The Central Social Insurance Medical Council (Chuikyo), part of the Japanese Ministry of Health, Labor, and Wel-fare (MHLW), has published the details of the FY2016


drug pricing reform. Among a number of other changes, a price cut for “huge sellers” is part of the reform and will be rolled out in April.The controversial new re-pricing rule for “huge sellers”, which will be created under the current “market expan-sion” re-pricing scheme, has diff erent price implications depending on annual sales. It will reduce a drug’s price by up to 25% if its annual sales range from ¥100 to ¥150 billion and sales exceed projections by at least 50%. A product will face a maximum price cut of 50% if the sales amount to over ¥150 billion and are at least 30% greater than original sales projections.The new rule is a strong signal that Japan is venturing to-wards even greater cost-consciousness. Its overall impact may be especially big on Gilead Sciences and Chugai Pharmaceutical, which will both face price cuts for several major products. The most notable target for the new rule might be Gilead Sciences’s hepatitis C drug, Sovaldi (so-fosbuvir). At its launch in May 2015, Sovaldi was granted an unusually high premium of 100% due to its level of innovation compared to current therapies, and its sales have been increasing rapidly since launch. The MHLW announced in an official gazette on March 4 that Sovaldi will see its price cut by 31.7% in April, and Gilead Sciences’s other hepatitis C treatment, Harvoni (ledipasvir + sofosbuvir), will face the same price cut. Meanwhile, Chugai Pharmaceutical’s cancer drug Avas-tin (bevacizumab) will receive a 10.9% price cut, which is partially offset by a 5% premium granted to reward its clinical usefulness.

USA: New payment limit program for Medicare Part B drugs

CMS has recently proposed a pilot program under its Center for Medicare and Medicaid Innovation (CMI) to measure the eff ect of a new Medicare Part B payment limit and “value-based pricing (VBP) tools” on the quality and cost of care for Medicare benefi ciaries. If approved at the end of 2016, this program will have far-reaching impli-cations on providers and manufacturers of Part B drugs.Current policyUnder Medicare Part B policy, providers of Part B drugs are required to purchase medications for their Medicare patients. After administration of the medication, providers bill Medicare and are reimbursed according to the follow-ing formula (the famous “ASP + 6%”):[Part B payment limit] = [Drug’s Average Sales Price (ASP) from two fi scal quarters prior] x 1.06However, after the sequester (a 2% cut on all calculated Medicare payments) was enacted in 2013, providers have since been receiving less.

Take an example of a product with an ASP of $100: • Medical payment limit = ASP + 6% or $106• Under Medicare Part B policy, the patient is re-

sponsible for 20% of the payment limit, or $21.20• Medicare is responsible for the other 80% of the

payment limit, or $84.80• Under the sequester, Medicare’s contribution is

reduced by 2%. 98% of $84.8 is $83.1• Medicare pays its reduced contribution, and the

patient pays his/her full contribution, leading to the provider actually receiving $83.1 + $21.2 = $104.3

As illustrated, while the Medicare Part B payment limit under the sequester is still ASP + 6%, the provider only receives ASP + 4.3%.New pilot programThe current payment limit has recently come under criti-cism for incentivizing providers to use more expensive treatments, as the absolute payment providers receive increases as the drug cost increases. To address this criti-cism, CMS has proposed a new payment limit of ASP + 2.5% + $16.80. Under the proposed pilot program, some providers will receive the old payment limit (ASP + 6%), and some providers will receive the new payment limit (ASP + 2.5% + $16.80) for all Part B drugs for 5 years, starting at the end of 2016/beginning of 2017.In addition, payment limits for specifi c drugs provided by a subset of providers within each group will be subject to “value-based pricing (VBP) tools”. VBP tools CMS is considering include:• Fixed reference pricing: Therapeutically similar prod-

ucts are grouped together, and the payment limit is determined based on the lowest cost product or the average cost across products. Patients are respon-sible for any additional cost incurred by using more expensive products

• Reduced or eliminated co-insurance for high value products

• Outcomes-based or risk-sharing agreements: CMS enters into agreements with manufacturers that tie the payment limit to specifi c treatment outcomes. If the agreed-upon outcomes are not achieved, the manufacturer provides CMS with a rebate, refund, or price adjustment

• Indication-based pricing: If a product has multiple in-dications, CMS determines an appropriate price for each indication based on published literature (e.g., ICER reports), which will ultimately aff ect the payment limit for that product in each of its indications


How CMS will implement each of the above VBP tools and for what products is still to be determined. CMS will allow 30 days of public comment for any proposed VBP tool, and implementation of any fi nalized tool will occur no earlier than 45 days after public notifi cation of the tool’s fi nalization.Important implications1) A significant number of Part B providers will receive the new payment limit for all Part B productsCMS plans to implement the payment limit portion of its pilot program for all Part B drugs nationwide. Under the pilot program, ~50% of all Medicare Part B providers will receive the new payment limit while the other 50% will continue to receive the ASP + 6% based payment limit. The providers in each group will be selected at random based on the primary care service area (PCSA) in which they are located.In addition, 50% of each payment limit group will be sub-ject to yet to be determined VBP tools for specifi c prod-ucts (Table 1). However, while 50% of all Medicare Part B providers will be subject to some form of VBP tools, this part of the pilot program will only apply to specifi c prod-ucts, and will therefore be much smaller than the payment limit part, which will apply to all products.2) The sequester will also apply to the new payment limitThe providers who will be subject to the ASP + 2.5% + $16.80 payment limit will actually only be receiving ASP + 0.86% + $16.53. Again, take an example of a product with an ASP of $100:

• The new Medicare payment limit for this product is (ASP + 2.5% + $16.80), or ($102.5 + $16.80)

• Under Medicare Part B policy, the patient is respon-sible for 20% of the payment limit, or ($20.50 + $3.36)

• Medicare is responsible for the other 80% of the pay-ment limit, or ($82 + $13.44)

• Under the sequester, Medicare’s contribution is re-duced by 2%. 98% of ($82 + $13.44) is ($80.36 + $13.17)

Distribution of providers

All Part B providers (100%)

Providers receiving ASP + 6% (50%)

ASP + 6% only (25%)ASP + 6% + VBP tools (25%)

Providers re-ceiving ASP + 2.5% + $16.80 (50%)

ASP + 2.5% + $16.80 only (25%)ASP + 2.5% + $16.80 + VBP tools (25%)

TOTAL 100% 100% 100%

Table 1: Distribution of Part B providers under the new pilot program

• Medicare pays its reduced contribution, and the pa-tient pays his full contribution, leading to the provid-er actually receiving ($80.36 + $20.50) + ($13.17 + $3.36) = $100.86 + $16.53

Combined with the sequester, the new payment limit will signifi cantly reduce payments for more expensive prod-ucts and will signifi cantly increase payments for less ex-pensive products. The more expensive the product, the lower the new payment will be compared to the old pay-ment (Table 2).

How the old and new payment limits will be aff ected by the yet-to-be-determined VBP tools will depend on CMS’s implementation of its chosen tools.If approved, CMS’s new Medicare Part B pilot program will have far-reaching implications on provider payments for Medicare Part B drugs. As CMS moves forward with this program, manufacturers of Part B drugs will need to be wary of two things:Provider contracts: The new payment limit combined with the sequester leaves little room for provider contracts. Due to the dynamics of ASP reimbursement, any discounts off ered to providers are essentially taken away from the margins of other providers. Since the new margins are so razor thin for high value products, this will make it very dif-fi cult to off er meaningful discounts to one provider group while not putting other provider groups underwater. Price increases: Given that it takes 6 months for Part B’s payment limit to increase as the result of a product price increase, this new payment limit combined with the se-quester leaves little room for product price increases. For products with an ASP greater than $5,000 per administra-tion, price increases beyond 1% would result in < 100% cost recovery for providers

Table 2: Comparison of the old and new payment limits

Hypothetical ASP per administra-tion

Old pay-ment limit (ASP + 6%)

Sequester-adjusted old pay-ment limit

Payment minus ASP

% cost recovery

$100 $106 $104.30 $1.70 104.3%

$500 $530 $521.52 $8.48 104.3%

$5,000 $5,300 $5,215.20 $84.80 104.3%

$40,000 $42,400 $41,721.60 $678.40 104.3%

New pay-ment limit (ASP + 2.5% + $16.80)

Sequester-adjusted new pay-ment limit

Payment minus ASP

Delta vs. old pay-ment limit

% cost recovery

$119.30 $117.39 $17.39 $15.70 117.4%

$529.30 $520.83 $20.83 $12.35 104.2%

$5,141.80 $5,059.53 $59.53 $(25.27) 101.2%

$41,016.80 $40,360.53 $360.53 $(317.87) 100.9%

8 Simon-Kucher & Partners Healthcare Insights | Features

Playing to win in a high-stakes game: The importance of eff ec ve tender managementContinued from page 1

ering “true cost and whole-life costing.”1 This metric con-siders the cost over the lifecycle of the product, but given the diffi culty in defi ning and calculating it, many issuers simply place a greater weight on pricing in the short-term, resulting in more immediate price pressure on the market.Considering the amount of business that can be at stake, an in-depth knowledge of the tender selection process has become increasingly important to the fi nancial health of life science companies.

Tenders are complicated by market-specific variations

In addition to the diff erent types of tenders that exist, there are also several factors that vary depend-ing on the given market (Figure 3). The issuing entity could have a na-tional or regional scope, such as AMGROS in Denmark or an Area

Vasta in Italy, or the tender could be a direct deal, such as contracting with a sick fund in Germany or a group pur-chasing organization (GPO) in the US. Even for the same product, there are variations in tender specifi cations with-in and across markets. For example, an HPV vaccine pur-chased through an open tender would be reviewed and approved by regional ministries across Spain, city-level local entities in Poland, and a national board in the Neth-erlands. To further complicate the process, tenders often vary in scope within a given market, meaning that the rel-

1 Eucomed, “Key principles of smart procurement for medical devices,” Oct. 10, 2014. http://www.eucomed.org/uploads/Modules/Publica-tions/20141020_eucomed-key-principles-of-smart-procurement-for-medical-devices-fi nal.pdf

The most essential element to eff ective tender manage-ment is understanding the rules of large tenders and con-tracting. For example, EU procurement law calls for ten-ders when the value of purchased goods by public or public-funded institutions exceeds € 200,000. However, tender-like situations are not confi ned to the public sector, and many non-public institutions purchase through con-tracting or “big deals.” Regardless of scale, tenders and tender-like behavior are quickly becoming a trend that suppliers are seeing more frequently in their day-to-day business with customers all over the globe.

As shown in Figure 1, the standard tender will include three main phases: the request for tender (RfT), the sub-mission of bids by competing suppliers, and the awarding of a winning tender. However, there are multiple procure-ment methods, each with their own specifi c rules and ap-plications (Figure 2). Generally, the most relevant and fre-quently used method in the EU is the open tender, wherein all interested suppliers are welcome to submit bids. All bids are then evaluated according to criteria set forth in the offi cial request for tender, with the review pro-cess generally focusing on several key elements, includ-ing price, quality, and safety. In theory, the goal is to fi nd the “most economically-advantageous tender” by consid-

COLO

URBOX

A request for tender is issued calling for bids

Key stakeholders discuss the offers and decide on wining supplier(s)

Suppliers bid to pro-vide the IV solutions

Figure 1: General outline of tendering process

9Simon-Kucher & Partners Healthcare Insights | Features

evant stakeholders to consider when tendering could range from public offi cials within a governing body to pro-curement directors at a local hospital. Additionally, the duration of tender cycles also varies, which can make it diffi cult to implement a long-term market pricing strategy. A thorough understanding of all relevant factors is essen-tial not only in knowing how to win tenders but also in answering the question of whether or not a tender is worth pursuing.

Importance of winning tenders and avoiding tender mismanagementWhile the benefi t of tendering is clear for the issuing en-tity, the process poses a number of risks to suppliers. Ac-cording to a study in 2012 performed by the European association Eucomed and the University of Twente, the

trend towards centralizing procurement can result in com-panies being excluded from their key markets for several years at a time. With fewer and more complex transac-tions, the tender process ultimately leads to longer sales cycles. If companies fail to win tender contracts, they can fi nd themselves “frozen out of the public sector market between tenders, often jeopardizing their ability to con-tinue operations.”2 Market exclusion is particularly an is-sue for small to medium-sized enterprises (SMEs), many of which can face serious fi nancial implications if they un-dergo a protracted period without business. Ultimately, this process can reduce market competition and even discour-age industry innovation.

Even companies that win tenders can face negative con-sequences if these tenders are not properly managed or have been won at a signifi cant cost. For example, an anal-ysis of a Spanish medical technology company reveals the impact of tenders on a business over time (Figure 4). In this case, the company had experienced a signifi cant growth in volume coupled with a steep drop in price in the short term. Since tender markets are, by their nature, largely or entirely price-driven, companies will often ag-gressively attack competitor tenders by undercutting pric-es in an attempt to secure market share. As with the Spanish Medtech company, this usually yields a minor de-cline in overall revenue in the short-term. Though the price decrease was a seemingly reasonable response to the competitive nature of tenders, it positioned the company as the source of price pressure within the market. This 2 Ibid

Open51%

Other16%

Restricted21%

Competitive Negotiation

12%

EU T VProcurement method

Brief description

Typical environnment

Open tender Bidding is open for all interested suppliers

• Open market with high number of similar providers with low off er diff erentiation

• Lack of market knowledge on procure-ment offi ce side

Restricted tender

Participation of suppliers is limited to those who have registered beforehand or who have prequali-fi ed

• Capacity exists to manage prequalifi ca-tion and supplier monitoring

• Limited number of fi rms can satisfacto-rily fullfi l the need

• Requires substantial list of registered suppliers to be developed

Competitive negotiation

The buyer approaches a small number of potential suppliers and negotiates for specifi c price or service arrangements

• Experienced purchasing offi ce with good access to market intelligence

• Limited number of relevant suppliers

Figure 2: Defi nitions of the most common methods of procurement (Management Sciences for Health 2012) Tenders used in the EU by value (2011 data from 2013 Annual Public Procurement Implementation Review)

Tender scope Tender duration Tender weighting

Tender authority Tender terms Tender stakeholder

Figure 3: The diff erent ways in which an open tender can vary


Set-up: Establish a winning tender organizationSustainable success with tenders begins with building an eff ective internal tender management organization. Sev-eral critical decisions need to be made at the outset, in-

cluding whether or not to partner with an external company to develop tender capabilities, as well as the degree of centralization in the organizational structure of tender management. One initial and very basic indicator in assess-ing a supplier’s tender capabilities is whether or not any company employ-ees have the words “tender” or “con-tracting” in their job titles. This can be a refl ection of the degree to which the company is appropriately prioritizing the tender process in their overall orga-nization.

Setting up a winning tender organiza-tion ensures that there is internal alignment within the company regarding tender responsibilities and protocols. The most critical element of establishing this alignment is the development of a formalized tender process that insti-tutionalizes the management plan and sets company-wide guidelines on how tenders should be managed. This can be achieved by implementing a standardized process map outlining the exact steps to follow in various tender situations, as well as an activity checklist for refer-

ence. Coordinating with the entire tender team is a necessary precursor to eff ectively developing and successfully implementing tender strategies.

Strategy: Archetype and prioritize tenders to achieve high-level objectivesThe process to develop a successful tender strategy begins long before a tender is issued. In fact, before a company even begins to con-sider how to win individual tenders, it must fi rst have a clear picture of what internal busi-ness objectives it hopes to achieve through the tendering process. These objectives can take shape both in terms of soft factors, such

type of positioning in a tender market can leave a com-pany vulnerable to retaliatory price cuts and can ultimate-ly induce a price war. The long-term results showed the detrimental impact of this approach, with the company facing a signifi cant drop in profi tability and an unhealthy erosion of market prices over time.

Crafting a successful approach to tender managementIt is critical for life science companies to ensure that they are equipped to properly handle the risks and challenges of tenders during the course of business. A thorough framework to achieve tender excellence focuses on three key areas: set-up, strategy, and execution (Figure 5).

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Figure 4: Tenders can have negative fi nancial consequences if not managed properly

Figure 5: A holistic approach to tender excellence

Tender executionTender strategy

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as being seen as the value leader or as having the premi-um product within a market, as well as hard factors, in-cluding clearly delineated goals for market share, reve-nue, profi t, and pricing. These high-level objectives must then be communicated throughout the tender organiza-tion laid out in the previous step, and they must be consis-tently referred to during the entire strategy development process. A company should always consider the utility of a tender and understand how it aligns with overall strate-gic goals.

With these aims in mind, a company will have a sense of direction that will inform its tender strategy going forward. Companies should then develop a thorough understand-ing of the diff erent classifi cations of tenders in each mar-ket and should be able to apply this framework when pre-sented with a potential tender. This allows companies to better determine the attractiveness of the tenders they are considering, as well as what kinds of tenders they would like to pursue going forward. Without an established method of tender evaluation and prioritization, a company will be inclined to compete for all potentially relevant ten-ders. While some might consider this to be a successful strategy, the most likely outcome is the mismanagement of precious resources on tenders that the company is un-likely to win and not prioritizing higher value tenders where the company has an advantage and “the real busi-ness” is at stake.

As described above, tender markets are often very price-focused, and as such, they can be susceptible to under-cutting, downward price pressure, and other competitive

tactics that ultimately damage the revenue potential of the market. For this reason, it is critical for a company to be mindful of its business objectives and maintain pricing discipline when confronted with these aggressive com-petitor moves. Sometimes it is more prudent for a com-pany to not decrease price in step with competition, or even to set a price at a premium to market price, because – though it may not result in the most competitive tender off er – it indicates a company’s directional price inten-tions to competitors. Competitors will take note of this price signaling and seize the opportunity to set increasingly higher prices when the tender is reissued, thereby gradually raising the market rate. It is important to note that this method of price setting can result in lost tenders in the short-term, and thus should be selectively practiced with low priority tenders with upward price po-tential. However, when applied correctly, this tactic can work to “guide the market” and move competitor pricing upward, benefi tting all players in the space.

Execution: Implement a successful tender strategyNow that a strategy has been developed, it is important to consider what actions to take when a tender is issued that matches the company’s pre-determined criteria. An effi -cient and well-thought-out process will free resources to focus on the most important part of a tender bid: the off er and price defi nition. The instinct of many companies is to try to throw everything they have into a tender with the hope that something will stick. However, when an entity issues a tender, they have a very clear set of defi ned needs and goals. Trying to sell the latest and greatest while inundating customers with tangential information will only distract them from the key aspects of the off er. A company should focus on eff ectively communicating rel-evant value messages to key decision-making stakehold-ers. For instance, clinicians will be focused on very diff er-ent aspects of a tender compared to administrators, but the administrators may be the most infl uential stakehold-ers in the purchasing process.

In fact, a company can help shape a tender to its advan-tage before it is issued by providing support and input to the issuing entity as the request for tender is being draft-ed. Ensuring that the tender specifi cations encompass a company’s critical value considerations will provide a dis-tinct advantage during the bidding and award process. In

Figure 6: One simplifi ed framework of key tender archetypes, based on the degree of market exclusivity and key drivers

Market exclusivity

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Value winner takes all

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Value driven


instances where the tender criteria is weighted heavily to-wards price and there is little to no perceived inherent product value, as with many commodity tenders, a com-pany should work with the tender authority and suggest off erings which may be of value to them that they are not already considering. These additional off erings should be grounded in a well-researched understanding of relevant stakeholder needs and priorities. Companies should aim to establish an iterative approach wherein they continually participate in tender shaping.

Evaluate the tender strategy after a decision has been madeThe last step in tender success is to monitor and learn. Did the company win? Did the company lose? Did the company even have a chance to begin with? A company should build off wins and learn from lost deals. Creating a tender database is perhaps the most useful approach in this situation, as these databases ensure that a compa-ny’s historical tender knowledge and experience is cap-tured and centralized in one location. This allows the or-ganization to improve its decision-making going forward by using a robust fact base, information which can prove essential when competing for similar tenders. Moreover, a tender database will allow the tracking of existing and fu-ture contracts, thereby ensuring both that internal and ex-ternal deadlines are not missed and that critical business information is retrievable independent of individual re-sources.

ConclusionFinally, it is important to keep in mind that the tendering process is dynamic, and just because a certain strategy was successful once does not mean that it will always be that way. The companies that have the most consistent success with tenders are proactive and forward-thinking, but the reason they can look to the future is because they have learned from their past. There are very few certainties in the world of tendering, but it is clear that in order to succeed in the changing tendering landscape, companies must learn to change with it.

For correspondence related to this article, please contact Chuck Gammal at [email protected].


For decades, pharma and biotech manufacturers have strived to develop transformative healthcare solutions. In the past, critics claimed the industry could not develop a cure because it would “break the business health maintenance model.” However, as the industry stands on the precipice of a new era with a new defi nition of “cure” emerging, these critics may be right and wrong at the same time.

Innovators have come forward to develop curative therapies, proving that the industry is interested in moving beyond maintenance therapy. However, global stakeholders are not prepared for the emergence of curative therapies, creating new, and previously unconsidered challenges. Dated funding and reimbursement systems along with the processes that support them are already strained by traditional maintenance therapy. This new dynamic has such far-reaching implications that the critics may be accurate in their view of how these types of innovations may push us past the tipping point and “break the system,” or as we now call it, “change the way business is done.” Below, we outline several trends that could substantially change the dynamics of healthcare marketing in the future.

1. Definition of cure: In the past, an interven-tion could be considered a cure if a disease was sta-bilized and not progressing while the patient contin-ued the treatment regimen. While these therapies are still valuable, a new definition of “cure” has emerged. Some therapies now offer a one-time course of treat-ment to eliminate the disease with no need for fol-low-up therapy. In these therapeutic areas, even the availability of these types of interventions raises the bar for all interventions. More than ever, stakeholders may increasingly think of “once-and-done” interven-tions for stopping, reversing, or eliminating a disease.

2. Marketing and competition: In an environment where patients have the option of a “once-and-done” curative intervention, the concept of competition is completely different. With traditional in-terventions, a patient may be on maintenance therapy for months or years, but at any time could switch to a new regimen. For maintenance products, pharma and biotech companies can market their products to cur-rently-treated patients and suggest that switching may have benefits. With a cure, a treated patient is no longer eligible for therapy because they will no longer have the disease. Assuming that the treatment rate exceeds the incidence rate, the prevalence will decrease over time and the number of patients deciding between poten-tial interventions and/or curative options will decrease until it matches the incidence rate. In the new curative environment, much of the marketing may shift focus toward patients who have not yet selected a curative in-tervention and away from patients who were previously treated.

3. Medical-cost offsets: In the past, healthcare marketers would demonstrate the potential cost-offsets generated by their intervention using models and simu-lations. Payers often felt these offsets were theoretical and struggled to identify the true cost savings to the system. With a curative therapy, it may be much easier to quantify the cost of maintenance therapy avoided and the prevention of costs related to disease sequel-ae. While traditional interventions could theoretically re-duce a proportion of these costs, a cure can by defini-tion eliminate all future costs. It is important to note that this creates specific new challenges for innovators, as currently some payers (especially in the US) are look-ing at the cost savings from an intervention with a focus on the next 2-3 years. In the US, this attitude emerges because patients frequently move between plans and

Paradigm shift? The 8 trends brought by curative therapies that may change the way we think about healthcare marketingBy Eric M Bachman


the payer may not recognize the longer-term savings from the upfront intervention cost. Payers may not yet be ready to think about spending a large amount of money in year 1 with large cost-offsets in every sub-sequent year of a patient’s life. This leads to another challenge…affordability.

4. Budget breakers: Global payers have built budgets that anticipate annual maintenance thera-pies, and their full budgets are spent on today’s in-terventions. When thinking of this maintenance ap-proach to healthcare, it becomes difficult to consider spending a substantial amount upfront in year 1 to eliminate spending on that patient in future years for a given disease. For example, European payers may not have the additional headspace in their budget to afford the curative intervention today, and US payers may not have the long-term perspective necessary to appreciate the cost offsets.

5. Long-term revenue: Historically, a new in-tervention could generate a revenue stream for 5, 10, or 15 years or maybe even longer depending on the situation. However, if there were a rush to cure all patients and the cost were paid upfront (as op-posed to amortizing or risk-sharing payments), the innovator could capture the majority of their revenue in the first few years post-launch. It is possible that rather than reaching peak sales and maintaining a flat or slowly-increasing revenue curve, revenue could begin to decrease very quickly a few years after launch. This would be true if the cure caused the preva-lence to decrease rapidly. If this were the case, the number of pa-tients initiating therapy each year would be closer to the incidence rate rather than the prevalence. It could be possible that the rev-enue erosion would be similar to generic entry in traditional markets, but caused by a decreasing number of eligible patients rather than reduced market share.

6. Generic entry Will there be any patients left to be treated by generics or biosimilars years after the branded launch if the brand eradicates the disease?

7. Price management: In the US pharmaceu-tical market, regular single-digit price increases have become the norm. When reflecting across industries for one-time-purchase breakthrough innovations, the highest price is typically at launch. Looking at

consumer technology, as an example, manufactur-ers decrease price regularly to capture customer with lower willingness to pay. For example, each new model of a smart phone has a high price at launch and only the most adamant users pay this price. Lat-er, the same smart phone is available at a lower price and appeals to a different user base. Purchasers in the first 3 to 6 months pay the highest price, and then the price is slightly reduced which opens a new wave of users willing to pay the new price, and so on until the market is saturated. This dynamic of decreasing price over time may fit the curative market in health care as well and could reshape expectations about how the intervention price evolves over time.

8. Unique payment models?: One op-portunity for innovators to address the challenges associated with the trends we described above, is to set up a payment schedule to space out the bud-get impact over time. In this scenario, the innovator would receive payments for a number of years after the patient is cured. This would better align the pay-ment for the curative therapy with the cost savings in the healthcare system. As an additional option, the agreement could also include a performance met-ric where uncured or refractory / relapsed patients would not have the future payments. While there has been much discussion about this idea over the last few years, the details of setting up these long-term

agreements has been a challenge. Are curative therapies so different that we need to rethink the global model for healthcare funding and reimburse-ment and how the industry operates? Perhaps.

These eight trends only begin to scratch the surface of how healthcare may evolve in the face of new curative therapies. In this era, as in previous ones, it will be the companies who

drive innovation and defi ne this future market that will emerge as leaders. At Simon-Kucher, we continue to monitor these trends and help our clients shape them.

A version of this article was previously published in Pharma Exec.

For correspondence related to this article, please contact Eric Bachman at [email protected].

This dynamic of decreasing price over time may fi t the curative market in health-care as well as could re-shape expectations about how the intervention price evolves over time


Overview Launching a second brand is a marketing strategy to address an unmet need distinct from the current brand. In the pharmaceutical industry there are several instances of manufacturers marketing a drug for diff erent indications as independent brands. However, in addition to the “new brand for new indication” approach, drug manufacturers have also frequently re-launched a drug as a distinct second brand within the same indication. As pharmaceutical companies look beyond core markets in search of growth, a second brand strategy can be a powerful means of maximizing value creation and revenue potential.

In this article we lay out fi ve objectives that make it worthwhile to pursue a second brand strategy. We provide case studies of companies that have successfully applied the second brand strategy and also highlight potential risks that should be addressed while crafting a dual brand strategy.

The Second BrandIn traditional business parlance, a second brand strategy typically implies that a company introduces a new prod-uct line to address a new market segment. Examples in-clude Levi Strauss introducing Dockers as casual-work-place apparel, Toyota competing in the luxury automotive market with Lexus, and Black & Decker launching DeWalt to serve the construction and manufacturing industry. In most cases, the new brand has a distinct value proposi-tion (quality, functionality, etc.) that positions it above or below the existing brand, if not in a diff erent market alto-gether.

Pharmaceutical manufacturers have also adopted the second brand strategy. The global healthcare landscape shows two adaptations of the second brand strategy in the pharmaceutical industry. The fi rst adaptation, also the more common strategy, is to market a drug for diff erent indications as distinct brands. Classic examples of this strategy are Pfi zer’s launch of Viagra® and Revatio®, where sildenafi l citrate is packaged in diff erent dosages for erectile dysfunction and pulmonary arterial hyperten-sion respectively, and Merck’s Propecia® and Proscar® that were introduced in diff erent doses of fi nasteride for treating male pattern balding and enlarged prostate, re-spectively.

The second adaptation is to re-launch a drug as a distinct second brand in the same indication. In many such in-stances, this leads to an interesting scenario where two versions of the same product are being sold in the same market to treat the same condition, albeit as diff erent brands with a strong price diff erential. As opposed to the Viagra® and Revatio® example discussed above, Pfi zer’s introduction in New Zealand of a chemically identical ver-sion of Viagra® as Avigra® but at less than half its price, is an example of the second adaptation of a dual brand strategy and is the focus of this article.1

Second brand strategy helps address risks of Emerging marketsThe second brand strategy is a powerful means of maxi-mizing value creation in emerging markets. A burgeoning population, increase in per capita income, rising health

1 http://www.cbsnews.com/news/the-name-game-why-pfi zers-generic-version-of-viagra-will-be-renamed-avigra/

When one is not enoughThe power of a second brand in the evolving global healthcare market By Ram Subramanian and Dr. Rehan Baqri


consciousness, and growing demand for global health-care standards have turned emerging markets into very attractive destinations for the pharmaceutical industry. How-ever, much of this enormous potential remains unfulfi lled, often due to regulatory barriers and weak IP protection. We discuss below fi ve reasons why pharmaceutical man-ufacturers pursue a second brand strategy.

1. Social ImpactDeveloping innovative therapies is a common goal of most pharmaceutical companies but they often face economic, logistical or regulatory hurdles2. Some manufacturers have adopted a second brand strategy to overcome these barriers.Sanofi Aventis tackled the rampaging menace of ma-laria in sub-Saharan Africa by launching a fi xed-dose combination treatment called ASAQ in partnership with the non-profi t Drugs for Neglected Diseases Ini-tiative. The dual brand approach enabled Sanofi Aventis to qualify for the WHO regulatory require-ments while protecting its commercial interest in oth-er markets. Gaining a place on the WHO Prequalifi ca-tion Program list allowed procurement and disbursement of ASAQ by UN and other international aid agencies resulting in tremendous utilization in public markets in sub-Saharan Africa. In private mar-kets, however, Sanofi Aventis sold the same drug as Coarsucam™, priced approximately three or four times the public price. In recognition of its malarial medicine ac-cess initiative, Sanofi Aventis was con-ferred with the prestigious 2010 Global Business Coalition Core Competence Award3. This is one of many examples that demonstrate how a second brand strategy allows successful alignment of social mission with fi scal responsibility to shareholders.

2. Capturing range of willingness/ability to payMost developing countries have strong economic segmentations with high vari-ance in willingness/ability to pay. Drug uptake is often reliant on the consumer’s

2 Review of corporate mission statements3 http://www.sanofi .se/l/se/sv/layout.jsp?cnt=B0ABE44E-8CA3-41A6-AB31-1B3DBD5AF4B7

ability to bear out-of-pocket costs. This is especially relevant in markets where the patient substantially pays for medications out-of-pocket. While some pa-tients may be willing to pay more for a particular brand other patients just do not have the ability to aff ord the same brand. Having two brands, one enjoying premi-um positioning and the other as a more aff ordable al-ternative, allows capture of sales on either end of the spectrum of willingness/ability to pay.

For example, in Egypt public health expenditure itself is low and has complex fi nancing mechanisms. This has led to more than 50% of total health expenditure coming from out-of-pocket at the point of service in public and private facilities4. Egypt also happens to have one of the highest prevalence of hepatitis C in the world. However, only wealthy Egyptians were able to aff ord Roche’s then breakthrough drug Pegasys® introduced in 2004, while the vast majority of patients were left untreated due to budgetary constraints of government and aid agencies. In collaboration with the Egyptian government, Roche launched a second brand of Pegasys® called Pegferon®, the same medi-cine packaged locally in vial form. This initiative fell in line with the government’s thrust for local manufactur-ing and was purchased in the public markets at a sig-nifi cantly lower price. In parallel, Pegasys® was main-tained at a price premium. This dual brand strategy in Egypt grew Roche’s Hepatitis C portfolio in Egypt

4 http://www.who.int/entity/countryfocus/cooperation_strategy/ccs-brief_egy_en.pdf?ua=1

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Figure 1: Impact of a dual brand strategy on Roches’ Hepatitis C portfolio in Egypt


from under CHF 10 million in sales to approximately CHF 90 million in less than 5 years (Figure 1).

3. Managing brand lifecycleManufacturers often introduce their own version of a “generic” when facing loss of exclusivity, to help miti-gate revenue erosion due to infl ux of generics. Intro-ducing a lower-priced version as a second brand, dis-tinct in packaging and placement, allows the manufacturer to retain the marginal market left for the originator drug while extracting some value from in-evitable cannibalization. The second brand can also benefi t from sharing the quality and trust-worthiness halo of the innovator company. In Indonesia, when Sano-fi ’s anti-platelet drug Plavix® was facing patent expiry in 2012, they intro-duced a lower priced sec-ond brand of generic clopidogrel. Strong eco-nomic growth in Indone-sia has led to an overall increase in per capita in-come but over 65 million people still live just above the poverty line, vulnera-ble to falling back into pov-erty5. Mindful of this strong economic segmentation in Indonesia, Sanofi did not discontinue marketing eff orts of its premium brand Plavix after patent expiry, but maintained it in the market along with the lower priced second brand. This dual brand strategy al-lowed Sanofi to successfully market both products in parallel, maximizing value from both segments and thus, cushioning the drop in revenue after the entry of generics.

4. Establish market leadershipOne of the biggest challenges multinational compa-nies have to overcome in emerging markets is to suc-cessfully crack the complex logistics of sales. To es-tablish market leadership in challenging markets, it is not enough to simply price the drug at aff ordable lev-els, but companies also have to ensure maximum uti-lization. Transcending the complexities of emerging

5 http://www.worldbank.org/en/country/indonesia/brief/reducing-extreme-poverty-in-indonesia

markets can be a tricky process. In the case of India, despite rapid development in infrastructure there are still considerable challenges in building and manag-ing multiple distribution channels. For example, ac-quisition, handling, delivery, promotion and educa-tion can diff er signifi cantly depending on whether the drug will be dispensed in the rural setting or at urban centers. Partnering with a local manufacturer can be an attractive option in those circumstances.AstraZeneca recently entered a similar distribution services agreement with Sun Pharma in India, where-in Sun Pharma will market the platelet aggre-gation inhibitor Brilinta® (ticagrelor) as a new brand Axcer®. Presence of both Brilinta® and Axcer® in the

Indian market allows Astra-Zeneca wider reach to pa-tients and physicians, estab-lishing its leadership in this space.

5. Managing intellectual property Intellectual property rights and protection are often inad-equate in developing and un-derdeveloped countries. Pro-visions in the Trade Related

Intellectual Property Rights (TRIPS) agreement allow India to grant compulsory licensing of branded drugs to generic manufacturers6. Under this provision, Bay-er was forced to allow Natco Pharma to produce a generic version of the cancer drug Nexavar® in return for 6-7% of sales in royalty. To avoid such government imposed alliances and perhaps also to get ahead of the biosimilars curve, Roche partnered with the Indian company Emcure to market a new brand of rituximab called Ikgdar®. Inter-estingly, this led to three brands of Roche’s rituxan in India, also including the low-price product Ristova®.

Potential risks to considerSeveral potential pitfalls also need to be factored while crafting a second brand strategy. Brand teams should pay close attention to the following risks:

6 https://www.wto.org/english/tratop_e/trips_e/public_health_faq_e.htm

One of the biggest challenges mul-tinational companies have to over-come in emerging markets is to suc-cessfully crack the complex logistics of sales. To establish market leader-ship in challenging markets, it is not enough to simply price the drug at aff ordable levels, but companies also have to ensure maximum utilization.

18 Simon-Kucher & Partners Healthcare Insights | About Simon-Kucher & Partners

• Not off setting product cannibalization adequatelyCompanies need to appropriately account for the risk of not making up lost revenues from cannibaliz-ing the premium brand. Pressure-testing the fore-casts for volume growth of the second brand is extremely important before venturing into a second brand strategy that could jeopardize the premium brand.

• Muddling the message to customersCompanies should ensure that sales and marketing eff orts for both brands are siloed from each other, and there is no muddling of the value story commu-nication with external stakeholders. This may require a separate sales force for the second brand. The fi nancial viability of potentially outsourcing the marketing/sales activities for the second brand or having a partner company take care of the second brand should be evaluated.

• Selecting the wrong partnerCompanies that decide to enter alliances to launch their second brand should be rigorous in their selection of potential strategic partners, making sure that there is alignment on vision, goals and standards.

Conclusion Launching a second brand can help pharmaceutical companies, especially in emerging markets, to overcome some regulatory, intellectual property, and access chal-lenges. A second brand allows manufacturers to take the lead in markets that are medically underserved and make a lasting social impact. Additionally it allows them to cap-ture a larger range of patient willingness/ability to pay by appropriately managing the brand lifecycle and success-fully navigating intellectual property challenges.

As pharmaceutical companies look beyond core markets in search of growth, a second brand strategy can be a powerful means of maximizing value creation and reve-nue potential.A version of this article was previously published in Pharma Exec.

For correspondence related to this article, please contact Ram Subramanian at [email protected].

A second brand allows manu-facturers to take the lead in markets that are medically underserved and make a last-ing social impact. Additionally it allows them to capture a larger range of patient willing-ness/ability to pay by appro-priately managing the brand lifecycle and successfully navi-gating intellectual property challenges.

19Simon-Kucher & Partners Healthcare Insights | About Simon-Kucher & Partners

About the LifeSciences Practiceof Simon-Kucher & Partners

Simon-Kucher & Partners is a leading strategy and mar-keting consulting company with proven expertise in pric-ing, market access strategies, product development, and licensing due diligence. Founded in 1985, Simon-Kucher & Partners has over 185 employees dedicated solely to Life Sciences in 16 offices across North America, Europe, and Asia, including offices in all major healthcare mar-kets. The firm’s Life Sciences practice supports clients in the pharmaceutical, biotechnology, medical technology, and animal health industries. Simon-Kucher & Partners has developed strategies for 24 of the top 25 pharmaceu-tical companies, the top five biotechnology companies, and 30 of the top 35 medical technology companies. We combine analytical rigor with strategic insights and em-ploy highly sophisticated methodologies that integrate quantitative and qualitative findings. Our recommenda-tions are based on empirical data, thorough research, and extensive experience.

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