Building effective partnerships between big pharma and generics
In many of the biggest therapeutic categories, Starkowicz says, there are no more new, really innovative drugs left to be discovered.
By on Mar 9, 2006In many of the biggest therapeutic categories, Starkowicz says, there are no more new, really innovative drugs left to be discovered. All of the receptors, for example, for hypertension have been screened, he says, and all of the chemical entities examined and tested, leaving nothing more than the development of me too drugs for companies looking to work in that class.
In fact, nearly 65% of all the drugs approved in the past decade are modified mimics of existing medications.
Things are particularly tough in Central and Eastern Europe (CEE), says Starkowicz, where there is no single, dominate company in all the key markets. It is time, he says, to improve and consolidate the industry in this region of the world.
But generic and innovative companies in the region have limited possibilities for growth, with weak pipelines and limited access to reimbursement, Starkowicz says. There also is a strong push for the generics market in the region.
Throughout CEE, the innovative industry has only about 40% of the market, compared to 60% for generics. And that makes it tough for generic makers, who have to compete almost head to head for the same market, he says.
Pricing, Starkowicz says, is particularly challenging. And the problem is not with the government, he adds, but comes from the strong competitive pressure among competing generics makers. One day we will find out there is no place left to make any profit, he says.
But the picture is not entirely bleak, Starkowicz says. There are what he calls three goldmines co-promotion, co-marketing and licensing.
Several factors have combined to transform the will of co-operation's within the industry, he says. Alliances are more than matter of course; they are necessity.
Co-promotion, where two companies promote a product under a single brand name, increases share of voice and splits the sales and marketing spends between the partners, Starkowicz says. By sharing the marketing effort, he says, the originator company can save some marketing effort that it can use on other promising drugs.
But because in Europe the gross margin is lower than in the US, there is less space to spread between the two companies to allow for growth, Starkowicz says. About 60% of these kinds of alliances fail within the first 5 years, limiting the popularity of this type of collaboration, at least for the moment, he says.
But co-marketing, where two companies promote the same molecule under different brand names, is a different story, Starkowicz says. In markets with unregulated prices, co-marketing allows companies to spread out the market and increase both share of voice and awareness of the molecule among doctors.
Licensing, however, Starkowicz says is probably the most important kind of co-operation between companies in the region. Generics companies offer innovative companies strong sales and marketing services to promote their products.
And for generics companies, such an arrangement, gives them a chance to boost their image to a position that is almost as strong as the originator because no one else is selling the drug, Starkowicz says. But licensing agreements are difficult to negotiate, he says, because they require innovative companies to disclose their pipelines, something they are reticent to do.
We can talk about the molecule and the therapeutic classes, but not the details,'s Starkowicz says. So, it's very difficult to make the negotiation if you don'st know what you are talking about.
For generic pharma companies to secure their presence in the market, they must pursue a combination of in-licensing and in-house R&D, Starkowicz says. But in-house R&D is becoming limited in its capacity to boost growth, compared to the potential of partnership activity, he says.
The balance between licensing, co-commercialization or acquisition and R&D activities can deliver the right product offerings at the right times for the right market, Starkowicz says. But he cautions that companies positioning themselves as partners of choice will be forced to realign and reallocate resources to match products identified as key licensing opportunities.
To learn more about generics strategies, be sure to register for eyeforpharma's 2nd annual Generics Marketing and Sales Summit Europe 2006 being held in Berlin, May 16-17. For more information or to register, visit www.eyeforpharma.com/generics2006 .