Reuters Events | Pharma

Thought leadership and innovation for the Pharmaceutical Industry

In today’s rapidly changing healthcare landscape, some business leaders believe that pharma needs to be more flexible in order adapt. Lucy Brake talks with AbbVie Australia & New Zealand and A. Menarini Australia Pty Ltd about how leaner, more nimble pharmacos can lead to greater success.

By Lucy Brake on Jul 31, 2013

Some companies seem to get too big to be effective, where mergers can often reduce shareholder values as efficiencies tend to disappear, this raises the question: just how big is too big?

Geoff Blundell, Marketing Director at A. Menarini Australia Pty observes that there are a number of drivers pushing the growing trend of big pharma to divest, including the way in which organic growth and new product growth can be challenging at billion-dollar organization level as well as to reduce costs. “Mergers are often seen as providing benefits for overheads, but when a company is divested there can be a greater focus from the commercial management and R&D point of view which can lead to better competition.” He sees that investment in key products at a mid-sized business level is ultimately good both commercially and for the end user.

“A strategic decision was made to separate the businesses and create two companies with proven legacies” 

 

One recent example of this is AbbVie marking its launch as an independent biopharmaceutical company when it separated from Abbott. Kirsten O’Doherty, General Manager of AbbVie Australia & New Zealand explains that driver behindthe decision to separate and formally launch a new company was that the industries and environments for Abbott’s medical products and proprietary pharmaceuticals businesses were evolving at a different pace with different challenges and opportunities to each other. 

“Based on this, a strategic decision was made to separate the businesses and create two companies with proven legacies, renewed focus and robust plans to improve people’s health”. She says that the separation enables AbbVie to focus its energy, resources and capital to its primary mission, which is to develop and market advanced therapies to address some of the world’s most complex, serious and chronic diseases.

They have created a sleeker and more rationalised business, which O’Doherty believes will ensure this approach is a success. She says that AbbVie launched with a team of experienced senior leaders who understand how to manage AbbVie for long-term, profitable growth and who have the ability to commercialize scientific discoveries for patients. “As a biopharmaceutical company, we’ve adopted a more streamlined and focused business model built on a broad portfolio of market leading medicines that will enable AbbVie to invest in tomorrow’s therapies.”

Making such a major move is not for the fainthearted and AbbVie launched with shouldering the 125-year heritage of an established pharmaceutical leader, which positioned it well for continued success as an independent company. The ‘Thinking big’ part, says O’Doherty, was driven by having an experienced senior team of leaders at the helm, who understood how to manage AbbVie from transformation through to enduring success and long-term, profitable growth, “We launched with an outstanding portfolio, a solid pipeline and committed employees who have a genuine desire to serve patients and deliver growth.” Not to mention approximately $18 billion in annual revenues and a strong commitment to creating shareholder value through long-term growth potential and the continuation of Abbott’s history of healthy shareholder dividends.

“Companies should be quite specific in their area of therapeutic focus. This focussed attention will enable greater efficiency and ensure greater success in achieving R+D outcomes and long-term benefits”

She discerns that the ‘acting small’ part of this balancing act came from their position as an independent biopharmaceutical company, meaning they are focused more than ever on delivering novel solutions and therapies for sufferers of difficult-to-treat diseases with large market opportunity.  “In my view, companies should be quite specific in their area of therapeutic focus. This focussed attention will enable greater efficiency and ensure greater success in achieving R+D outcomes and long-term benefits.”

So how can the pharma industry really start to think big but act small, and take advantage of all this offers? Innovation leads to opportunities says O’Doherty. “Making new discoveries and developing them into effective medicines is the foundation of AbbVie’s mission and business.” To accomplish this, their research is guided by a patient-driven R&D approach that begins with a deep understanding of the serious diseases that are the company’s focus, as well as careful evaluation of the current needs of patients, payors and regulators. “AbbVie’s scientists and physicians work on targets that have the best potential to fundamentally transform the way diseases are treated in the future”.

From O’Doherty’s perspective, the opportunity her team are most excited about is their pipeline. She says that they are committed to applying their scientific expertise to address some of the world’s most pressing health challenges. “With both small molecules and targeted biologic therapies, AbbVie has several Phase 3 programs in development spanning HCV, immunology, neuroscience, women’s health and oncology, and expects to advance seven additional programs into late-stage development over the next 12-18 months.”

Blundell points out that there are many different business models all of which can work, but what he finds interesting is to watch companies making major moves which are reversing the traditional trend for mergers trend into divestment mode. He points out that there really is no best fit model, rather different paradigms to suit different situations. “For example, it is obvious that if you run a generic business out of a big pharma it struggles, but if you separate it does far better”. What is clear is that the pharma industry is evolving fast, and as O’Doherty observes, we need to be more patient-focused and able to operate in this rapidly changing environment: “That means the ability to be nimble, flexible and focused on delivering superior benefits to patients – this is all critical to success.”

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Abbvie will be presenting a case study on the their story and the benefits of a slimmer, streamlined business model at this year's Sales & Marketing Australia Summit in Sydney.

For more information on the presentation or to see which other forward-thinking industry leaders will be there, visit the official website.