Differentiation Strategiesfor the Generic Industry

Biosimilar Drug Development WorldBoston, Tues 19th Nov 2013

The PlanSession 1: IntroductionWelcome, Who?!, Why?Current differentiation strategies

Session 2: ChallengesProduct, Organisation, Intimacy, Execution

Session 3: IdeasProduct, Organisation, Intimacy, Idea Factory

Session 4: The FutureTrends, Insights, Expectations

Fujifilm Kyowa Kirin BiologicsGreenstoneLaboratorios EcarPfizerPharmascience

WelcomeWho are you?

AbbottAlfred E.TiefenbacherAvannlab - MedicusBoehringer IngelheimCapsugelEva Pharma

WelcomeWho am I?Founder Generic Pharma 2.016 years in Gx:6 years Packaging, API, C/M8 years Business Development & Licensing2 years market intelligence & global consulting

Imagineering: Insights, ideas, strategy

Have done ‘something’ with:- Pfizer & Greenstone- Boehringer Ingelheim- Pharmascience

WelcomeWho am I?

WelcomeWhy are we here?- Future of the industry is very different from today- Growth markets are “easier said than done”- Biosimilars will be branded, few have sufficient capital- Competition in small molecule never ends- Government funding and policies fluctuate- MNC’s into generics, generics into speciality pharma, speciality into OTC

The challenge:

Where should time be spent and investment be made?

WelcomeWhy are we here?To discuss DIFFERENTIATION:- The process or action of being different (duh!)- To show a difference that distinguishes

To discuss STRATEGIES for it:“The intelligent allocation of limited resources through a unique system of activities to outperform the competition in serving customers”

Why is this workshop needed?Companies in the generic pharma industry (generally)...Underinvest & focus on alternative strategies for competitive advantage

WelcomeWhy are we here?

To be better than the competition!Competitive exclusion principle:

“No two members of the same species can coexist that make their livings in the identical way”

Competitive AdvantageDefined:

“An offering of superior value based on differences in capabilities and activities”

Three components:

- Distinctive Capabilities: Resources + Competencies

- Investment in Activities: Optimisation + Co-ordination (value chain)

- Market Offerings: Consistent positive difference + Credibility/Trust

Competitive AdvantageTransformation Options:1) Better alignment between offering and capabilities

2) Create new capabilities

3) Influence customer preference

4) Change the game - innovate to create a space without competition

Competitive AdvantageBusiness Value Options:

- Product Leadership- Operational Excellence- Customer Intimacy

Alternative to singular focus

MEDIOCRITY & COMMODITISATION

Need to be either; better or different.. we will focus on different

Competitive AdvantageThe problem (status quo)Product Leadership:Generic drugs by definition are commoditiesPatent expiries determine portfolio and drive growthSignificant market share is gained by being the lowest cost

Operational Excellence:Focus on manufacturing & supply chain (to lower costs)Regulatory & legal are the tools to unlock new revenue

Customer Intimacy:A generic company cannot influence (end) consumer preference or intimacyThe trade customer shows loyalty only to price

Competitive AdvantageThe AnswerYou, me and this workshop!

Current StrategiesWhat is happening out there?

Is anyone actually differentiating in generic pharma right now…

PiSA - MexicoDenver Pharma - ArgentinaBiocad - RussiaHelp Remedies - USAAbbott / Piramal - USA / IndiaAlvogen - Iceland / USA

You decide.

Current StrategiesWhat is happening out there?PiSA Farmaceutica - Mexico

Operations: Manufacturing Excellence- Solid Orals - Injections - Infusions

Product: All categories- Nutrition - OTC - Gx Retail - Gx Hospital - Biosimilar

Intimacy: Key services- Low income pharmacies next to hospitals- In-house logistics & distribution centres- Dialysis Centres

Current StrategiesWhat is happening out there?PiSA Farmaceutica - Mexico

Which one is strongest differentiator?

Success:- No1 domestic Pharma in Mexico- $500m revenue (estimated, private company)- Defended against MNC’s & international generics- Operations across region, export 2million med devices to USA

Competitive Strategy:- Full integration, 360 healthcare provision

Current StrategiesWhat is happening out there?Product, Operations, Intimacy

Denver Farma - Argentina

Operations: Nothing special. Solid oral, liquid, semi-solidProduct: Gx Retail, some OTC

Intimacy: Promotion- Large pharmacy sales team- Mass media consumer advertising

Success: 40% annual growth, moving up 20 ranking places in 3 years

Current StrategiesWhat is happening out there?Biocad - Russia

Operations: Biotech Focus- Technical leaders in biotech production

Product: Disease focus- Viral infections; developed novel formulations of Interferon- International partnerships on disease area

Intimacy: KOLs- Strong connections with hospitals and clinicians (and government!)

Success: Founded 2001, 1st product 2005, 2014 sale likely $750m-$1bn

Current StrategiesWhat is happening out there?Help Remedies - USA [HelpINeedHelp.com]

Current StrategiesWhat is happening out there?Help Remedies - USA

Current StrategiesWhat is happening out there?Help Remedies - USA

Operations: No manufacturing, No regulatory. Just marketing.

Product: Design, Branding, Message

Intimacy: As close as possible! [Video]

Success: Launched 2008 300million visitors, international awards Stocked by hotels, major pharmacies, national retailers Recently acquired for undisclosed amount Next stop, international growth

Current StrategiesWhat is happening out there?Abbott (Piramal) - India- Acquired Piramal for sales force- Historic Indian family name (vs Abbott 1910)- Low cost manufacturing capabilities

Corporate Social Responsibility activities- Health information phone lines and telemedicine- Mobile health units for those beyond 3km from centre (400k treated)- e-Swasthya; provide training & cell phone to local women, connected to diagnosis call centre- Government nutrition partnership, enhanced rice (500k people helped)

Current StrategiesWhat is happening out there?Abbott (Piramal) - India

Product: Global brands & locally developed products

Operations: Local manufacturing. Massive distribution. Deep rural access.

Intimacy: Focus on Corporate Social Responsibility; builds deep trust

Success: Biggest & fastest growing pharma in India

Current StrategiesWhat is happening out there?Alvogen - USA

Current StrategiesAlvogen Inc - USA

Current StrategiesAlvogen Inc - USA

Current StrategiesAlvogen Inc - USA

Current StrategiesAlvogen Inc - USA

Current StrategiesWhat is happening out there?Alvogen - USA

Product: ‘hard to make’ and first-to-file Gx, OTC, Biosimilar (coming)

Operations: Lean & quick. Pharmerging focus + USA (50/50 revenue)

Intimacy: Engaging marketing; Corporate brand for OTC

Success: Profitable. Acquiring (big deals in 2012), aiming for Top 10

Current StrategiesWhat is your company value strategy?- Product Leadership- Operational Excellence- Customer Intimacy

AbbottAlfred E.TiefenbacherAvannlab - MedicusBoehringer IngelheimCapsugelEva Pharma

What about industry ‘leaders’?

- Teva- Mylan- Watson- Sandoz- Hospira- Amneal

Fujifilm Kyowa Kirin GreenstoneLaboratorios EcarPfizerPharmascience

Session 2: Challenges

My ambition

My ability

ChallengesBe better, not just different

Internal Challenges - Investment: growth stage, ownership, control - Human resources: talent, expertise, desire- Management: risk tolerance, vision, commitment - Shareholders: time horizon, understanding, vision

External Challenges- Competitive market forces- Government policy- Availability of resources (data, expertise, finance)

ChallengesWhat is required?

- Expertise - Insights - Resources (internal & external )- Time

ProductOperations

Intimacy

ChallengesProduct

Resources - Manufacturing- R&D- Distribution - Market access

Expertise - Regulatory- Legal & IP - Marketing

Insights - Selection criteria / strategy - Market intelligence (competition plans)- Future needs of the buyer - Disease data

Time - Evolution vs radical - Type: small, biotech, otc - Type: formulation, delivery, packaging,

ChallengesOperations

Expertise- Efficiency - Product Development - Resource management - Project management - Partnership and collaboration

Insights - Effective communication - Future of the effective organization - Market intelligence - Future of manufacturing - In house vs out source

Resources - Partner network - Collaboration tools - Communication tools - Management information systems

Time - Organic vs inorganic - Gap analysis - Current culture- Management effectiveness

ChallengesIntimacy

Expertise - Relationship building- Market research - Data analysis/interpretation- Marketing and branding - Product adaptation

Insights - Future needs of buyers- Market nuances- Government and industry policy (payment, availability, cost, category etc )

Resources - Marketing services- Access to customers- Integrated organization

Time - Investment- Credibility- Readiness of organization- Access to customers

ChallengesThe Big Challenge

- Where to get ideas from- How to buy or build them- How to 'on board' them within resistant org.- How to improve likelihood of success

How to dissolve/modify/overhaul status quo of current organisation?!

Give the past and present, does your company have the ‘make up’ to succeed

Session 3: Ideas

IdeasRealistic Differentiation Potential

Within realms of possibility. Short, medium, longBetter, not just different Likely competitive advantage

IdeasKey attributes for a successful Gx company:

- Selection of new products- Delivery of products- Profitable production of - Partnerships- Regulator and payor relations - Access new markets for growth

IdeasDifferentiation for a successful Gx company:

- Product Leadership- Operations Excellence- Customer Intimacy

ProductProduct Leadership

Focus areas for potential competitive advantage through differentiation.

Having better products

ProductDose Management/Compliance- Data collection: Home dispensing recorders- Monitoring: Patient communication systems/service- Intelligent Packaging: Dose regimen notifications- Reminders: Integrated with MHR, insurance, pharmacies- Dispensing systems: Multi-drug machines- Education: Content systems to reduce intentional non-adherence- Labels: Clarity, Weight/dose information

ProductSafety- Child & Geriatric best practice: pack design, readability- Anti-counterfeiting: digital verification, hologram- Dose form: stamps, coating, colour, taste- Dosing: Part doses (also patient cost reduction)- Abuse deterrents: Non-crushable, irritants, antidote combo, bio-activated

ProductFirst to market- Orphan drugs: new indication for old molecule (<clinical + >safety)

- Patent challenges: salts, alternative formulations (505b2), invalidity(Finances - litigation funding, at-risk launch insurance)

- Reformulation: SR/ER, Pegylation/Liposomes, >stability (global req.), bioavailability (reduce volume), fast acting (ODT, thinstrip), solid to liquid, semi-solid to patch/tape, phase release (early morning, mid sleep etc)

"Is it valuable to the patient, valuable to the physician or valuable to the health providers/insurance companies"

ProductPatient Centric- Convenience: Films, liquids, unit dose, direct-to-mouth, patch/tape Regimen/patient packs (blisters vs bottles)

- Preference: Foam or spray vs cream/gel/ointment Size - "bigger is better" vs easy-to-swallow

OperationsOperations Excellence

Focus areas for potential competitive advantage through differentiation.

Having better operations.

OperationsOperations Excellence

OperationsR&D

- Special forces DARPA model for innovation- Optimisation (market vs manufacturing vs resources vs strategy)- Venture capital/Darwinian view of project approval

Manufacturing- Complexity/variant management:- Local 'manufacturing for local markets', regional CMO's- Continuous manufacturing (2 sites worldwide)- Manufacturing techniques e.g Foam (vs wet) granulation

OperationsSourcing/Supply-Chain/Procurement

- Market intelligence via in-market sourcing offices- API R&D price reduction exchange for royalty (subject to timetable, patents etc)- Co-development (cost/profit sharing) for higher risk (competition, time, costs, reg.)- Co-invention projects for global exploitation- Global benchmarking ('local' price = future regulated price)- Sourcing/purchasing plaforms, e.g io-pharma.com

OperationsServices- First to market, support 'early' launch (patent breaking) with legal services- Anti-counterfeiting 'services'- Pharmacy education (product reformulation, value add etc)- Information for pharmacies (availability, new products, patents, promotions)

Outbound Logistics- Dis-intermediation (direct to pharmacy + support contract flexible buyers)- Online pharmacy (direct to patient)

OperationsTechnology- Monitoring and analysis of firm-wide data:

- Decision making- Insights- Quality- Communication

- Connection of data between partners and customers- Help suppliers and buyers to improve their business- Build integrated networks with seemless data

OperationsHuman Resources- Create the Google of Pharma, somewhere people want to work- CA by attracting the brightest and best in the industry (and outside)- An investor in people (vs assets)

Infrastructure- Flat, no-boss organisation like Valve Software

- Compensation based on ranking- Select projects to work on

- Knowledge factories vs labour factories

IntimacyCustomer Intimacy

Focus areas for potential competitive advantage through differentiation.

Having better customer intimacy.

IntimacyWho is the customer?

Next buyer in chain or end consumer?Business-to-business vs business-to-consumer

● Wholesaler / Distributor / Exporter● Payor: Insurance or Government● Pharmacy / Hospital / Website● Patient / Carer

IntimacyWholesaler / Distributor / Exporter

- Market intelligence sharing (data)- Product education materials for next in chain- NPD projects for sub-sector- Rewards program

IntimacyPayor: Insurance or Government

- Demonstrative superiority- Quality (preventative systems)- Reliability (stock committment)- Efficacy (significant enough?)- Compliance (very significant)

- Services- Infusion centres- Payment/reimbursement systems

IntimacyPharmacy / Hospital / Website

- Patient education programs (in-store devices)- Transparency of supply chain for deliveries (data)- Legal and regulatory updates (data)- NPD ideas driven by clinicians and pharmacists- Drug management services/software- Outsourced service provision (?)

IntimacyPatient / Carer

- Mobile apps for disease management (trust)- Compliance and safety programs/systems (caring)- Full disclosure of supply chain information (honesty)- Disease management portfolio discount/co-pay

Corporate Social Responsibility projects

IdeasHow will you pick the best one?

- Theory vs reality- Investment analysis- Timelines

What does an idea factory for generic pharma look like?

Session 4: The Future

The FuturePharmagineering

What might affect the generic drug industry in 10 years?What is beyond emerging markets?What is beyond large molecule generics?

What does it mean for us today?

Asa’s 2030 Futurist Thoughts

Generic drugs will be marginalised in majority of marketsOnly handful of broad portfolio playersHandful of highly specialist technology driven companiesGovernment and insurance fully integrated

Data rulesSupply chains are shortPatients order their own drugs

The Future

The FuturePrevention

The FuturePreventionLifestyle diseases get lifestyle treatmentExercise & diet connected to insurance & healthcarePush responsibility to population, incentives for health (tax)

The FuturePersonal

Genome based healthcare managementLife diagnostics, real-time care and treatmentCradle to grave relationship with Pharma

The FutureTechnology

Mhealth: Smartphones, tablets & apps Data integration: manufacturing to bar codeOpen source platformsOnline drug fulfilment

The Future‘Intelligent’ Patients

Informed choice of drug providerA relationship with drug provider demandedEthics, manufacturing data, quality reports, clinical dataDrug interactions, side affects, diet, exercise

The FutureThoughts & Discussion

What does the future hold?How will it affect the generic pharma industry?What competencies will be required to succeed?What can be done NOW to improve likely success?

The FutureTrends/insights

- Self care- Personalised medicine & diagnostics- Technology facilitation - Connectivity and collaboration - Social responsibility - Environmental conscience- Globalized mobilized workforce - Income disparity & fiscal responsibility

- Gender roles and activities - Protectionist/self reliant government- Role of Dr, Pharmacy and Hospital - Aging population - Generation differences - Southern hemisphere power houses - Funding models (crowd/networked)

What do you see?

The SummarySession 1: IntroductionWelcome, Who?!, Why?Current differentiation strategies

Session 2: ChallengesProduct, Organisation, Intimacy, Execution

Session 3: IdeasProduct, Organisation, Intimacy, Idea Factory

Session 4: The FutureTrends, Insights, Expectations

Differentiation Strategiesfor the Generic Industry

Biosimilar Drug Development WorldBoston, Tues 19th Nov 2013