What Will the Generic Industry Look Like in 10 Years?
1
T he generic industry is going to look very different in 10 years’ time. In this fierce marketplace, it is easy to make the mistake of planning based on the status quo; building strategies and forecasts that assume the industry of today will be the industry of tomorrow. Often there is little ready opportunity to consider a different future that requires evolving industry dynamics and the inclusion of emerging trends. If you are open to seeing them, great, but unfortunately many executives are struggling to manage the stresses of an aggressive, fast-evolving market. Whether it is a resistance to change, lack of insight, fear of the unknown, complacency, pressures of near term returns, or lack of expertise, it is time to take the time to take an imaginative view of a wide-ranging future. Be on the lookout for indicators. There is information, advice and partners available to help plot a path through this minefield. And it is a minefield. These 10 potential game changers will force companies to consider their growth strategy, product selection and fundamental business models in a different way. 1) BIG PHARMA’S GROWING INTEREST IN GENERICS Over the past five years, more than 20 significant deals and acquisitions have been made in the generics industry; and this is just the beginning. There is a growing use of globally-recognised brands in emerging markets which can help to gain market share and a utilization of large-field force infrastructure to drive demand for branded generics. By building know-how of the generic industry, companies can provide a platform for biosimilars and further increase interest. Challenge: Do you partner? How do you compete? 2) BIOLOGIC PATENT EXPIRY As of now, 75% of blockbuster drugs are biologics; however, an estimated $62 billion in brand sales are expected to be exposed to generic competition by 2020. Development costs for biologics are 25 times that of small molecules, but often require a fundamental learning curve for marketing. Challenge: How do you get into biosimilars? 3) NEW COMPETITORS Emerging market players are beginning to seek export revenues. In a growing market like China, with 7000 pharma facilities, government directed consolidation will create manufacturing powerhouses. Thailand, Indonesia, Pakistan, and Ukraine should also be on companies’ radar as new competitors. Other emerging trends include API companies starting the process of forward integration and contract manufacturing organizations developing their own products, as well as wholesalers evolving into having their own manufacturing capabilities. Asa Cox is the founder and CEO of Generic Pharma 2.0. He has been involved in the generic pharmaceutical industry for 15 years; his work experience covers both technical and commercial aspects of the industry. Please contact Asa via email at [email protected] Ten Potential Industry Game Changers GENERIC by Asa Cox Challenge: Do you know who might take away your future business? 4) PREVENTATIVE HEALTHCARE Emerging markets are eager to improve their healthcare systens, but want to avoid many of the problems of that the Western populations have faced in the past. There is a significant move towards building healthcare systems around exercise, diet and neutraceuticals, as well as connecting health insurance premiums with preventative activities or lifestyle habits. Expect changes in this field as Big Pharma moves into health management services as a move to protect itself from generic drug competition. Challenge: Should you be planning a move into prevention? 5) DISEASE-MANAGEMENT SERVICES The kind of personalised medicine that is emerging involves a patient’s total care: prevention, diagnostics, treatment, maintenance and palliative care. Payers will work with partners who can offer this complete service and a full portfolio. For generics, this will mean serious consideration needs to be given about portfolio selection and non-drug offerings. Or face being cut out. Challenge: How do you select your pipeline? Can IMS data predict the future? 6) POWER OF PAYERS The power of payers lies in the fact that insurance companies control drug-supply chains and pricing, while pharmacy chains own drug approvals and have exclusive supply contracts. Tighter government controls, along with fixed margins for commodity medicines, will change the face of the industry, as well as the fact that patient groups can bargain down drug portfolios with competing suppliers. Challenge: Are you developing the right relationships? Can you offer what they need? 7) NEW DISTRIBUTION MODELS Many different distribution models are emerging that will certainly affect how companies will progress. Online pharmacies can now enable “supply anywhere” and mobile insurance payments, while Big Pharma is setting up direct-to-consumer distribution with same-day delivery. Government- sponsored drug vending machines in low-income neighbourhoods are also appearing, as well as virtual doctors who can prescribe and deliver drugs to rural towns. Challenge: How will you ensure your company is part of the revolution? 8) PATIENT POWER Consumers are now growing in knowledge about drug quality, supply chain and pricing. Mobile monitoring technologies are giving patients physician-level health data. There is more of a demand for the selection of drug manufacturers based on ethics, reports and stats. There is also a growing connection between diagnostic data, diet and lifestyle and the request for drug programmes. The immediate opportunity is to identify patient drug requirements; deliver better generics, differentiated delivery systems and improved compliance. Challenge: Is your company ready to differentiate its offerings to consumers? 9) NEW MARKETING TECHNOLOGIES Social media is becoming a prime channel for patient influence. Mobile apps now allow patients to select a pharmacy based on the manufacturer listed and use price- comparison websites linked directly to drug fulfillment services. Drug monitoring and selection have also developed game- like reward programmes, and virtual drug education (sponsored by Big Pharma) is being used to appeal to consumers. Challenge: How long will your traditional marketing to wholesalers be effective? 10) GOVERNMENT PROTECTIONISM Growing economies recognise that healthcare costs can become a massive burden. They do not want to be reliant on expensive imported drugs, especially essential drugs. The need is growing to develop their own manufacturing programmes to contain costs and be self- reliant. The use of programmes to direct investment in R&D, education and IP development and setting policies to favor local manufacturing sources for all product types are essential steps to success. Challenge: How quickly can you partner with governments? COMPETITIVE ADVANTAGE The best companies look into the future, see its challenges and opportunities, and work to turn their strategy into a competitive advantage. Innovation takes place least when times are good; crisis and adversity are good environments for radical ideas to flourish and for the unimaginable to become necessity. It is easy to turn one’s head and look the other way. Market analysts predict trends that do not upset the old order, and running strategies counter to established data can be risky. So what is the motivation to change? The generic industry has reaped incredible profits for the past 20 years. It is now faced with a future that will not allow for the same simple price-driven model to do the same. Every company, large and small, faces a challenge to determine its strategy for overcoming these challenges and creating a plan for competitive advantage or they could risk extinction. Which do we rank higher? • A company that successfully comes out of a tough situation, or • A company that successfully avoids the tough situation If you can devise a strategy better than your competitors: you win. Simple. What Will the Generic Industry Look Like in Ten Years? WHAT WILL THE GENERIC INDUSTRY LOOK LIKE IN TEN YEARS? - GENERIC “You need to find experts who can help you plot a path through the minefield.” “Game changers will force companies to consider their growth strategy, product selection and fundamental business models in a different way ....” Peer Reviewed By: Karan Arora, Andrej Gasperlin, Aziz Hiouni, Markku Huhta- Koivisto, Allen Lefkowitz, Sherri Leonard August 2012 Want to talk about the latest industry issues? Join the discussion forum. NPT | The Community of Big Thinkers
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10 Game Changers in Pharma
Transcript of What Will the Generic Industry Look Like in 10 Years?
The generic industry is going to look very different in 10 years’ time. In this fierce marketplace, it is easy to make the mistake of planning based on the
status quo; building strategies and forecasts that assume the industry of today will be the industry of tomorrow. Often there is little ready opportunity to consider a different future that requires evolving industry dynamics and the inclusion of emerging trends. If you are open to seeing them, great, but unfortunately many executives are struggling to manage the stresses of an aggressive, fast-evolving market. Whether it is a resistance to change, lack of insight, fear of the unknown, complacency, pressures of near term returns, or lack of expertise, it is time to take the time to take an imaginative view of a wide-ranging future. Be on the lookout for indicators. There is information, advice and partners available to help plot a path through this minefield. And it is a minefield.
These 10 potential game changers will force companies to consider their growth strategy, product selection and fundamental business models in a different way.
1) Big Pharma’s growing interest in generics
Over the past five years, more than 20 significant deals and acquisitions have been made in the generics industry; and this is just the beginning. There is a growing use of globally-recognised
brands in emerging markets which can help to gain market share and a utilization of large-field force infrastructure to drive demand for branded generics. By building know-how of the generic industry, companies can provide a platform for biosimilars and further increase interest.
Challenge: Do you partner? How do you compete?
2) Biologic Patent exPiryAs of now, 75% of blockbuster drugs are biologics; however, an estimated $62 billion in brand sales are expected to be exposed to generic competition by 2020. Development costs for biologics are 25 times that of small molecules, but often require a fundamental learning curve for marketing.
Challenge: How do you get into biosimilars?
3) new comPetitorsEmerging market players are beginning to seek export revenues. In a growing market like China, with 7000 pharma facilities, government directed consolidation will create manufacturing powerhouses. Thailand, Indonesia, Pakistan, and Ukraine should also be on companies’ radar as new competitors. Other emerging trends include API companies starting the process of forward integration and contract manufacturing organizations developing their own products, as well as wholesalers evolving into having their own manufacturing capabilities.
Asa Cox is the founder and CEO of Generic Pharma 2.0. He has been involved in the generic pharmaceutical industry for 15 years; his work experience covers both technical and commercial aspects of the industry. Please contact Asa via email at [email protected]
Ten Potential Industry Game Changers
GENERIC
by Asa Cox
Challenge: Do you know who might take away your future business?
4) Preventative healthcareEmerging markets are eager to improve their healthcare systens, but want to avoid many of the problems of that the Western populations have faced in the past.
There is a significant move towards building healthcare systems around exercise, diet and neutraceuticals, as well as connecting health insurance premiums with preventative activities or lifestyle habits. Expect changes in this field as Big Pharma moves into health management services as a move to protect itself from generic drug competition.
Challenge: Should you be planning a move into prevention?
5) Disease-management services
The kind of personalised medicine that is emerging involves a patient’s total care: prevention, diagnostics, treatment, maintenance and palliative care. Payers will work with partners who can offer this complete service and a full portfolio. For generics, this will mean serious consideration needs to be given about portfolio selection and non-drug offerings. Or face being cut out.
Challenge: How do you select your pipeline? Can IMS data predict the future?
6) Power of PayersThe power of payers lies in the fact that insurance companies control drug-supply chains and pricing, while pharmacy chains own drug approvals and have exclusive supply contracts. Tighter government controls, along with fixed margins for commodity medicines, will change the face of the industry, as well as the fact that patient groups can bargain down drug portfolios with competing suppliers.
Challenge: Are you developing the right relationships? Can you offer what they need?
7) new DistriBution moDelsMany different distribution models are emerging that will certainly affect how companies will progress. Online pharmacies can now enable “supply anywhere” and mobile insurance
payments, while Big Pharma is setting up direct-to-consumer distribution with same-day delivery. Government-sponsored drug vending machines in low-income neighbourhoods are also appearing, as well as virtual doctors who can prescribe and deliver drugs to rural towns.
Challenge: How will you ensure your company is part of the revolution?
8) Patient PowerConsumers are now growing in knowledge about drug quality, supply chain and pricing. Mobile monitoring technologies are giving patients physician-level health data. There is more of a demand for the selection of drug manufacturers based on ethics, reports and stats. There is also a growing connection between diagnostic data, diet and lifestyle and the request for drug programmes.
The immediate opportunity is to identify patient drug requirements; deliver better generics, differentiated delivery systems and improved compliance.
Challenge: Is your company ready to differentiate its offerings to consumers?
9) new marketing technologies
Social media is becoming a prime channel for patient influence. Mobile apps now allow patients to select a pharmacy based on the manufacturer listed and use price-comparison websites linked directly to drug fulfillment services. Drug monitoring and selection have also developed game-like reward programmes, and virtual drug education (sponsored by Big Pharma) is being used to appeal to consumers.
Challenge: How long will your traditional marketing to wholesalers be effective?
10) government Protectionism
Growing economies recognise that healthcare costs can become a massive burden. They do not want to be reliant on expensive imported drugs, especially essential drugs. The need is growing to develop their own manufacturing programmes to contain costs and be self-reliant. The use of programmes to direct
investment in R&D, education and IP development and setting policies to favor local manufacturing sources for all product types are essential steps to success.
Challenge: How quickly can you partner with governments?
comPetitive aDvantageThe best companies look into the future, see its challenges and opportunities, and work to turn their strategy into a competitive advantage. Innovation takes place least when times are good; crisis and adversity are good environments for radical ideas to flourish and for the unimaginable to become necessity.
It is easy to turn one’s head and look the other way. Market analysts predict trends that do not upset the old order, and running strategies counter to established data can be risky. So what is the motivation to change? The generic industry has reaped incredible profits for the past 20 years. It is now faced with a future that will not allow for the same simple price-driven model to do the same. Every company, large and small, faces a challenge to determine its strategy for overcoming these challenges and creating a plan for competitive advantage or they could risk extinction.
Which do we rank higher?
• A company that successfully comes out of a tough situation, or• A company that successfully avoids the tough situation
If you can devise a strategy better than your competitors: you win. Simple.
What Will the Generic Industry Look Like in Ten Years?
WhaT WILL The GenerIc IndusTrY Look LIke In Ten Years? - GenerIc
“You need to find experts
who can help you
plot a path through the minefield.”
“Game changers will force companies to consider their
growth strategy, product selection and fundamental
business models in a different way....”
Peer Reviewed By: Karan Arora, Andrej Gasperlin, Aziz Hiouni, Markku Huhta-
Koivisto, Allen Lefkowitz, Sherri Leonard
August 2012want to talk about the latest industry issues? Join the discussion forum. NPT | The Community of Big Thinkers
