1. business and industrial

Small is beautiful..
Winning in the highly competitive generics market
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It’s not the size,
it’s what you do with it that matters!
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Presented by
John Beighton
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An entrepreneur’s dilemma
How to grow without losing the “spirit” of
what creates value
The AMCo case study…
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Company Origins
2010
2012
Oct
5
2012
Aug
2013
2013
May
Dec
Dec
Management
Team
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Unique business model with industry leading margins and cash
generation, replicable across geographies and therapeutic areas
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Optimise existing portfolio and
acquire niche products
Acquire and develop difficult-to-make niche products which are below
the radar of larger pharma companies with attractive margins and
growth opportunities
Leverage market knowledge
Local presence in selective markets will enable successful product
commercialisation (e.g. pricing, portfolio optimisation, market
insight, leveraging distributor network, etc.)
Apply asset light model
Network of CMOs and distribution partners enables high flexibility
and efficient capital utilisation, while driving costs down and
securing stable long-term supply of goods and services
Use low cost support
Low cost Centre of Excellence for support functions in India (e.g. RA,
Supply Chain, Finance, IT, Quality, HR) ensures high-quality support
and cost effectiveness
Unique business model underpinned by three critical enablers
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Financial strength
Cash generating engine based on asset light, highly
profitable business model enables organic and inorganic
growth opportunities
Right size
and scalable
Large enough to commercialise multinational product
portfolios, while staying nimble and agile
Replicable business model across geographies and
therapeutic areas
Entrepreneurial
mindset
AMCo has an embedded entrepreneurial mindset with
fast decision making and the ability to implement
quickly
1 Global generics companies with strong presence
in commodity Gx; strategic focus on specialty Gx
Extent of geographic diversification
Mostly
Global
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Selective
globalisation
beyond
local markets
Mostly local
Mid-sized commodity generics players moving
up the value chain into differentiated products
and mature brands
3 Commerciallyfocused players,
with primary
expertise in
a single market
Commodity Gx
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4 Developmentfocused co’s,
finding new,
local customer
solutions
Differentiated Gx (DGx)
5 Large R&D companies with broad
range of branded innovative
products being sold across the
world
6 Mid-sized Specialty Pharma
companies with therapeuticallyfocused innovative pipelines
7 Focused R&D players with deep
expertise in specific technology
platforms; limited front end
presence; partner/sell products to
large players for marketing/devt
Branded specialty
NCE / NBE
Five strategic Business Action Plans (BAPs) can be derived from the overarching strategy
Leverage AMCo's unique business model to expand in other attractive markets and to broaden niche product portfolio
Strategic BAP
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Description
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Strategic Growth
We will increase revenues through Portfolio Optimisation, acquisition of products and
infrastructure, and through new products launches
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International Excellence
We will increase revenues through establishing direct market presence and
developing internal expertise to support the International markets
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Operational Excellence
We will ensure customer satisfaction by ensuring that product is reliably supplied when
required
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Compliance and Reputation
We will remain compliant and ethical with all our stakeholders, whilst also being
adequately structured to support rapid growth plans
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Integration and Culture
Fast and effective integration is critical to support long-term growth
and our people are key to supporting it
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Strategic Growth
•
Portfolio Optimisation – registering existing AMCo products into new markets where the
product isn’t currently registered or sold, and using the existing manufacturers to make the
product (at least 40 submissions made in 2014)
•
Product Development – creating new products with a contract development partner,
whereby AMCo retains full ownership rights to the product, and freedom to choose who to
manufacture the product
•
In-Licensing – buying the rights to sell a third party’s product in a defined territory, and
agreeing for the licensor to supply the product to AMCo for an agreed period of time
(typically 5 years)
•
Product Acquisitions – buying the permanent rights to own an existing product, in a
defined territory (sometimes global e.g. Fucithalmic). The seller may wish to continue making
the product, but more often would require AMCo to find a new supplier within 2-3 years
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Background: The In-market value chain
The diagram below represents a break down of the in-country value chain and the indicated key strategic drivers / actions related to
each part.
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Market
potential
a) Sizing the
opportunity
b) Product selection
c) Dosage / form
adaption
II
Regulatory
a) Registration of
new products
b) Pricing regime
c) Legal frameworks
III
IV
Coverage
Sales
Geographic coverage
of
- Hospitals
- Doctors
- Wholesalers
Marketing
Medical Promotion
- by Salesforce
- Controlling
Salesforce /
“Managing margin”
- Selling discounts
- Creating promotion
materials
- Telesales
Reporting
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V
a) Specialist
conferences /
KOLs
b) E-marketing (B2C
for OTC)
Data analysis
VI
Pricing
a) Price elasticity
b) Competitive
environment
VII
Distribution
a)
Supply chain
optimisation / no
stock-outs
b) Order taking /
invoicing /
collection
c) Box shifting
Global Coverage
>50% of sales in UK
AMCo offices/direct presence
Distributor network
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International Excellence
AMCo offices/direct presence
Distributor network
Target markets – direct presence
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Five Distinct go-to-market approaches for AMCo
I
II
Market
potential
1
Unmanaged box shifting
2
Strong distributor
3
AMCo
Implant
4
AMCo
Presence ‘light’
5
AMCo
Presence ‘heavy’
IV
V
Sales
Coverage
Marketing
VI
Pricing
VII
Distribution
Distributor
Distributor
Joint AMCo / Distributor
3rd Parties
AMCo
Distributor
Distributor
Distributor
AMCo
Distributor
Drivers to increase sales
Additional costs
2
–
More “managed service”
–
Higher margin to distributor
Personnel costs
Potential 3rd party Sales Resource
3
Broader coverage
More products to market faster
Price increase
Volume initiatives
Focus
–
–
2
–
–
–
–
–
3
4
–
–
Closer to activities
Additional focus
–
–
–
Office
Regulatory costs
Tax implications
4
5
–
–
AMCo salesforce
AMCo marketing
–
Direct labour
1
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Regulatory
III
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Operational Excellence in an asset light context
Critical Success Factors
• Flexibility and having options for supply
• API
• Finished dosage form
• Dual (or triple) sources for key products and APIs
• That are registered and maintained in the MAs
• That remain in a validated status
• Strong Supplier Relationships
• Contractual protection
Results in a low risk supply chain
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