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April 17, 2012
Join the Debate! Loss-of-Exclusivity (LoE) Strategies

To LoE or not to LoE, and which strategy to choose? That is the question.
Dany Hallé, Moderator

Our meeting moderator/”referee” Dany provided an overview of how the pharmaceutical environment has changed over the last few years. The recent dramatic shift in global pharma business has caused the Canadian industry to rethink their strategy. Of note, the pharma market has fluctuated over the last 30 years, but in 2011 it was at its lowest rate with a 1.0% negative growth. One of the reasons for this is patent expiries on many blockbuster drugs. Which brings us to our discussion tonight: should branded companies be looking at loss of exclusivity (LoE) strategies differently?

The words “Let’s get ready to rumble!” kicked off the “main event” for the meeting - a debate between two key speakers around the contentious topic of LoE and how best to handle it.

Brand Pharma: LOE DIY
“Don’t sell out, adapt and win.”
Neil Corner

The first contender in the ring was Neil Corner, representing the side of branded pharma. He pointed out that new brand launches just aren’t cutting it like they used to, which means that post-LoE revenue needs to maximized. But how? By thinking of the LoE space as a new product launch, but with new rules and terms of engagement. He presented his 4 x 4 plan, which addresses four internal critical success factors to drive four external needs.

The internal critical success factors are:

  1. Resources: the Quebec public market (BAP15) covers 12% of Canadian population, so branded pharma needs to develop market access skills to address this sector.
  2. Product: generics think about how quickly and cheaply they can make medicines; tablets are the easiest to make, while injections, infusion, sprays and biosimilars are harder.
  3. Skills: pharma needs to build up their own capabilities and beat the generics. They should think about hiring people from generic companies who are experts in their field, because they can provide skills to help business.
  4. Be efficient: you can’t sell to everyone, so focus on the specific audiences that will maximize returns.

 

And the four external factors are:

  1. Public formularies: work with them and show pharma’s commitment to medicine and not just profit margins.
  2. Private coverage: branded pharma is beginning to negotiate with private plans to build post-LoE business; currently it is more profitable for Ontario pharmacies to dispense a branded medication instead of a generic, which should be a strategic consideration for pharma.
  3. Private/own label: Ontario won an appeal restoring a ban on private label generic drugs, but this may be a red herring.
  4. Patient support: web and pharmacy patient retention programs and tactics should provide information and education to convince patients that your product is best and promote brand loyalty; maintaining patient relationships is one of the best possible ways to compete in the market.

 

Neil wrapped up his argument with the following key conclusions:

  • You need a plan!
  • Focus your efficiencies
  • Patient support is a cornerstone
  • Branded pharma companies shouldn’t sacrifice margin to so-called “generic experts”

 

Focus on Core Competencies
Terri Power

Terri was the second contender of the night and argued from the perspective that generics may not represent the “dark side”. In fact, having worked on both sides of the industry during her career, she’s well positioned to provide advice! Her first key point was that branded pharma should stick to their core competencies, such as making life-saving therapies and innovation. The strength of generic companies is being able to pump out solid oral dosage forms at the lowest cost of goods. Does branded pharma want to do this as well or concentrate on saving patients’ lives?

Terri suggested that partnering with generics is something that branded pharma should consider, and that it might not be as painful as it sounds. These alliances can be done in many ways, through mergers or acquisitions, licensing agreements or manufacturing partnerships. In fact, multinational Rx& D-based companies are diversifying into generics using several of these strategies, and these alliances will provide the revenue they need to allow them to focus on innovation, which is what branded pharma does best.

Such partnerships would also allow branded pharma to take advantage of synergies between companies. For example, it would present opportunities to secure dominant generic market share with the well-timed introduction of products. She urged the audience to consider that timing is of the essence when a product is going off patent and that they may want to release patent a little earlier than planned and partner with the generic company receiving it. The reasoning being that the first generic on the market tends to obtain and maintain dominant market share. If branded pharma were to choose their generic partner correctly, and get their product out at the right time, it could translate into significant revenues.

Through partnerships branded pharma could also take advantage of an existing generic sales force, their known negotiating skills and market penetration. Generic companies negotiate with pharmacies for a living and they are highly skilled at this process. Terri disagreed with Neil’s suggestion that branded pharma develop skills and capabilities that mimic those of generic companies. She rebutted by saying that it would be a waste of time and money for branded pharma to develop internal expertise when there are successful generic companies out there who can take your product, manufacture it and make your margins.

Terri’s final words were, “There is no need to walk a mile in generic shoes, because it will be painful and risky.”

Terri’s key conclusions were:

  • Branded companies should stick to core competencies
  • Be more proactive in seeking out opportunities to acquire, partner or license with generics
  • Consider branded partnerships

 

Through this rousing debate, the audience was presented with two points of view around LoE strategies. Although the speakers had differing opinions on how to handle LoE, branded pharma should perhaps consider a blended approach of the strategies presented in order to make their LoE space as profitable as possible.

Lara Holmes
Medical Writer
Email: lholmes@videotron.ca
Cell: 514-425-4977
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Have a great summer and see you in September.