January 17, 2011
Atul Sharma explains what it takes for profitable long-term global partnerships. Listen in, and understand why multi-stakeholder buy-in is critical, and how it is achieved. Examine key success factors to win in any market.
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See Summary Below:
Consistently Creating Profitable Global Partnerships (1:00 - 14:00 min)
Understanding specific challenges in tackling new markets. (15:00 – 25:00 min)
Keys to evaluating intricacies of various global markets. (26:00 – 36:00 min)
Analyzing why generic competition drives innovation (36:30 - 57:00 min)
Given your recent ability to initiate one strategic alliance after another with a variety of companies operating all over the world. What is your strategy for consistently creating new partnerships? How do you ensure they are effective relationships?
Atul: Knowledge of basic marketing fundamentals, properly adapted to your organizational strengths and executed effectively will always drive success in any partnership.
All markets are driven by unique success factors & key drivers. One must understand the local needs, and develop an effective and proprietary value proposition to serve them.
It is especially important to convey to potential partners that your value proposition is unique and cannot be replicated by others in efficiencies which you ensure, long term sustenance mutual trust & deliverance of service and constant aid to innovation in business and therapeutic value of product deliverance.
At the same time you must find value in the partnerships you propose for your own company and effectively communicate it to your own management, it has to be beneficial remunerative and productive either ways.
To have sustainable long-term relationship: it must be profitable in the long term; front end partner ensuring market share and equity whereas back end ensuring optimum manufacturing analytical quality and innovation excellence marketing within the country must be done by people who understand the local key success drivers; must be flexible, especially in emerging economies as the market norms are still evolving. Whereas in matured economies basics are set in you have to excel in other aspects of business like IP, distribution, patent challenges, value proposition in your every offering, expertise in tenders, supply exigencies, listing in govt re-imbursement programs.
Recent Latin American regulatory changes create disruption and opportunity.
Attack opportunity… stay flexible, like an amoeba, dynamic shifts to adapt to change in competition landscape and sustaining value offerings to partners to keep your partnership long lasting.
Considering all of this experience, is there a project or deal that you worked on in your career of which you are especially proud, maybe you had to overcome a significant barrier?
Atul: Post equity stake in one of leading companies in one of the emerging markets, a virtual co with strong marketing skills in Gyneac segment given back end support after equity participation of R&D and manufacturing, IP support. M&A in Pharma space should be re-coined as Partnerships – which connotes equal sharing of expertise in respective areas and is mutually rewarding. Partnership with clear objectives of gaining in the gaps does take you forward in being present in the market and gaining from the partners strength
A lot of things can go wrong that are out of your immediate control. But to identify a compelling and realistic value statement to convince my company for it being a good decision was most exciting among many projects I did, also reverse of the above mentioned situation in another market strategically voted against the simultaneous acquisition considering current expertise, speed of new product introduction, ROI in markets, time for turnaround.
Focus on how you can add value as a company, often by comparing relative strengths and weaknesses. Focus on the bigger picture and fundamental benefits.
To overcome difficult negotiations, quantifiably demonstrate how we would add value.
Pursue organic growth, also consider with lot of caution in-organic methods with clear objectives and certainly not for top line growth, but within the realistic constraints of the population and therapeutic profile you are serving, both of which have limited growth rates. Respects partners or acquired entities strengths, never ever consider others to have less expertise even if they are in immatured or rudimentary markets, as to be successful you need not to be advanced in your thoughts or else you will fail because you are too ahead of the market itself. If you grow too fast you are creating barriers for yourself. Large pharmaceutical companies need to take note, therefore, as their growth through geographic expansion is limited.
Understand your growth with respect to the growth of your products segments therapeutic patient profile. Your product must be innovative and add value, especially considering increasingly stringent regulatory environment. As you grow up in the value chain the quality of business of bother participating partners would enhance many fold.
It is also very important to understand all aspects of your organization when you are growing – top line growth does not mean you can ignore R&D pipeline. As R&D is constantly required to fuel & sustain growth, if your R&D doesn’t produce enough, then resort to in-license technology and grow.
You have hands-on experience in Mexico, Central and South America, Australia, Africa, Europe, Middle East, Asia-Pacific and America. Given your exposure to such a wide array of emerging ad mature markets, when it comes to making alliance and partnership decisions, how do you evaluate their respective strengths and weaknesses?
Atul: Each and every market is very different in terms of their success factors and environments… Delhi, Mumbai and Bangalore might have as many pharmacies as all of Europe combined. In the US, the key driver may be first to file or expertise in patents.
Emerging markets have their own success factors. It is critical to understand what drives the market you are entering. All emerging markets have strong local companies who have their own equity in the markets which cannot be discounted for. Best is to start small (by partnering with) select local partners may be to get good specific segments customer equity or strong distribution network or like in Mexico good profile of branded generics.
You must be aware what challenge you are going to have when entering a market; you must design for success.
When entering a new market you may have to plan for losses and be able to sustain these losses. A better strategy is to join hands with another partner who already has established cash flow in the area, and then scale up/integrate backward.
It is important to keep a close watch on distribution and market access to ensure you are taking local success factors in
Nigeria – distribution is a challenge, while getting KOL buy-in is easy. Whereas, in South Africa, distribution is easy and getting buy-in from KOLs is a huge challenge as pharmacies control margin.
You recently posted on Twitter (@Sharma6669) that success in generics requires a complex mix of strategic decision-making; that you must take many aspects into consideration, like manufacturing, efficiency, reverse engineering, volume, patient profile, and a number of other things. Would you please elaborate on, what is required for success in a competitive global generics market?
Atul: Generics are very competitive because incumbents do not have a patent to protect them, therefore they must innovate.
Value addition can come from the perspective of the formulation, combinations of active drugs (pharmacokinetically similar) API or small and ongoing incremental innovations in drug delivery. When you redefine and add-value to your formulation.
It is important to drive series’ of small innovations that ensure sustenance in terms of value and drainage of prices.
You cannot extend your generic product life-cycle without innovation.
Conservatively, 30% of revenue comes from value-added generics for companies in India.
KEY: There are ample amounts of opportunity to innovate already existing molecules. They can all be improved upon, especially in terms of absorption Novel delivery techniques to offer great patient benefit.
Emerging markets are very competitive because of low barriers to entry, therefore you need entirely different strategies for all markets. It is critical to understand specific intrinsic hurdles and conditions in each country before any launch.
Every collaboration is a different business unit in totality, you must have key objectives very clearly defined prior to joining hands, all investments, destinations of business, success drivers, molecules, are entirely different. For example, a European drug pipeline will not be effective in South East Asia. This must be considered when entertaining partnerships, and therapeutic opportunities. Different market may have different aesthetic profiles, South East Asia is typically OTC driven market so is, China has predominantly traditional system.
Again and again: Each and every market has it’s own definition, hence your partners in each market may not be same, their needs and requirements to sustain market share are entirely different and are governed by market dynamics . Hence, proposing partnership may be strategically & thoughtfully pre-casted for striking a deal, complex partnerships may involve more partners each of them adding value to the consortium and ensuring attain objectives as setin. You must have a very clear cut approach based on these unique and intrinsic properties, as sustainability criteria are also different in each market. These are critical considerations when striking a deal and ensuring long-term profit out of it.
In last the most important Human factor, you have to manage people from different mind set, key individuals contributions and cross cultural acceptance of exchange of thoughts and ideas considering practical relevance and assurance of success in market
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