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July 2016

Territory Watch:Look Beyond the Usual to Capture New Business

Executive SummaryThe majority of bio/pharma funding events in the U.S. during 2014 and 2015 occurred outside the high-profile hubs of the San Francisco Bay Area and Boston. However, contract research organizations (CROs) and Contract Development and Manufacturing Organizations (CDMOs) looking to capture new business will find substantial opportunities in geographically concentrated areas far beyond those more prominent regions. This white paper provides insights into identifying and winning new business in those well-defined, highly active, lower-profile territories.

The Key Question: Is It a Productive Investment of Human Resources to Establish Sales Presences Outside the Major Loci of U.S. Pharma Funding?The immediate answer to this question is cleanly “yes.” In 2014 and 2015, 895 bio/pharma funding events—more than one per day—were recorded within the U.S. by the PharmSource Lead Sheet (this excludes funding events by global bio/pharma companies). Of those, 166 events were located in the Boston area, and 155

1 Executive Summary

1 The Key Question: Is It a Productive Investment of Human Resources to Establish Sales Presences Outside the Major Loci of U.S. Pharma Funding?

3 The Challenge: How to Establish a Dominant Presence in Lower-Profile, High- Potential Locations

4 The Clear Solution: Reduce the Time Spent on Intelligence Gathering and Start the Process with Well-Matched Leads and Quality Contacts

4 Conclusion

Source: The PharmSource Lead Sheet

0%  

10%  

20%  

30%  

40%  

50%  

60%  

70%  

SF/Bay  Area   Boston   Other  

17%   19%  

64%  

Percentage  of  Funding  Events  by  Geographic  Loca9on    

Emerging Markets Outsourcing Report

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occurred in the San Francisco Bay Area. While these locations are unquestionably the major centers of bio/pharma funding in the U.S., the more valuable truth exposed by the numbers is that the two-thirds of U.S. funding events during this recent time-period occurred outside these well-known areas.

Most interesting of all is the fact that when you examine the PharmSource Lead Sheet data for those funding events that occurred outside the two major hubs, you discover that a majority occurred in geo-graphically compact regions:

• Companies in the Los Angeles-to-San Diego corridor executed 116 funding events for a total of $3.3 billion.

• The tri-state area (New York, New Jersey, Connecticut) also produced 116 funding events, raising $3.2 billion.

• Companies in the Mid-Atlantic region (Philadelphia, Baltimore, Washington) generated 92 funding events, raising a total of $2.4 billion.

• The Seattle-Vancouver corridor raised $777 million across 42 funding events.

These territories present a powerful combination of significantly high activity and relatively low CRO and CDMO salesforce saturation. A business development professional located in the geographic center of any of these regions would be within two hours driving time, or less, of a substantial volume of business activity.

In addition, a simple search of data contained in the PharmSource Lead Sheet reveals that three other geographically concentrated areas—Research Triangle Park (Raleigh-Durham), Toronto, and Dallas/Houston—enjoyed a notable level of funding activity. Although these areas could probably not support a dedicated business development representative, they did produce an average of 24 funding events

Boston

Philadelphia

Washington, DCBaltimore

Vancouver

SanFrancisco

LosAngeles

SanDiego

Seattle

Raleigh

Durham

Dallas

Houston

Toronto

Major center for bio/pharma funding

High concentration

Medium concentration

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raising an average of $300 million in 2014 and 2015, making them well worth the application of new business development assets in some form.

By contrast to the top regions, the PharmSource Lead Sheet reveals that opportunities created by funding events outside the top nine territories were far more geographically dispersed. For example, the Upper-Midwest region, encompassing 7 states from Ohio to Minnesota, generated only slightly more than the Seattle-Vancouver region, and only half the Mid-Atlantic territory. Similarly, the Mountain region, which stretches from Montana to Arizona, presented about the same number of opportunities as metropolitan Toronto. The same holds true for the Deep South.

The Challenge: How to Establish a Dominant Presence in Lower-Profile, High-Potential Locations The largest obstacles to developing business in new territories include a likely lack of familiarity with the active businesses in each region, difficulties in obtaining direct connections to company personnel, and the absence of ongoing relationships.

In addition, the picture of funding activity in any area can become skewed by a handful of relatively large funding events; even a single, sizeable event could distort the picture. The ability to extract and analyze geographic data on a more granular level can help guide more sophisticated business-development strategies. For example, to eliminate the possibility of distortion presented by one or more “mega deals” in any given area, the following chart reflects the regional distribution of funding just for events in which less than $100 million was raised:

Deals <$100 M$ Million

Number Dollars Average Deal

Boston 145 $ 3,022 $ 20.8

SF Bay Area 143 $ 3,060 $ 21.4

So Cal 108 $ 2,149 $ 19.9

NJ/NY/CT 108 $ 1,989 $ 18.4

Mid-AtlanticPA/MD/DE/DC/VA 86 $ 1,293 $ 15.0

Seattle/Vancouver 40 $ 470 $ 11.7

Source: The PharmSource Lead Sheet

While the ability to extract and filter accurate data in this way can help to inform the overall invest-ment of business-development resources, other obstacles still remain. In order to establish a meaning-ful presence in any given area, business-development professionals must “drill down” below even these more specific numbers, identifying individual companies, and then even deeper to obtain essential infor-mation, including physical addresses, current phone numbers and accurate emails for relevant personnel.

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The Clear Solution: Reduce the Time Spent on Intelligence Gathering and Start the Process with Well-Matched Leads and Quality ContactsA recent review of information obtained through geographic-filter searches of the PharmSource Lead Sheet data returned current pipeline details, active R&D expenditures, recent funding activity, and direct contact information for appropriate personnel at the following numbers of companies in those lower-profile, yet potentially lucrative, geographically concentrated regions:

Geographic Concentration Number of Companies

Tri-State Area (NY/NJ/CT) 381

Los Angeles-to-San Diego Corridor 296

Mid-Atlantic(PA/MD/DE/DC/VA) 269

Seattle/Vancouver 105

ResearchTrianglePark(Raleigh-Durham) 97

Dallas/Houston 74

Toronto 68

Reducing the time spent on gathering intelligence in new regions enables business-development per-sonnel to significantly speed the sales process. By making active contacts immediately accessible, CROs and CDMOs can empower their business development professionals to penetrate—and potentially dominate—new areas more effectively and efficiently.

ConclusionBusiness opportunities based on new bio/pharma company financings in geographically compact areas outside the most high-profile venues are truly significant. CROs and CDMOs can strategically focus sales resources in locations that present the rare combination of high opportunity and lower proximate competition. The challenges of learning the territory, identifying active opportunities and making quality contacts are easily overcome. And the possibility of establishing dominance in these lower-profile, poten-tially lucrative locales is far more achievable than in other, more prominent regions.

TofindouthowtoreceivetheweeklyPharmSource Lead Sheetspecifictoyourterritoryandsearchbykeygeographicregions,click here.

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This White Paper was Prepared and Published by PharmSource.ThePharmSource Lead SheetistheprovenBDresourceforCROs,CMOsandCDMOslookingtobuildtheirbusiness.Thisup-to-date,event-drivenresourcetracksandreportsonbothdrugandmedicaldevicedevelopments,includingfinancingannouncements.Itdelivershighquality,targetedinformationthathelpscompaniestoidentifyhard-to-findopportunities.Customizeddataselectionincludingcontactdetails,speedsthebusinessdevelopmentprocessfromstarttofinish.ThePharmSource Lead Sheetisaconstantlyupdatedsubscriptionservicethatpushesleadsdirectlytoclients,includingmanyoftheindustry’stop-performingbusinessdevelopmentteams.

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