Ideas for competing in the generic industry of tomorrow

1. Differentiation Strategies
for the Generic Industry
Biosimilar Drug Development World
Boston, Tues 19th Nov 2013

2. The Plan
Session 1: Introduction
Welcome, Who?!, Why?
Current differentiation strategies
Session 2: Challenges
Product, Organisation, Intimacy, Execution
Session 3: Ideas
Product, Organisation, Intimacy, Idea Factory
Session 4: The Future
Trends, Insights, Expectations

3. Fujifilm Kyowa Kirin Biologics
Greenstone
Laboratorios Ecar
Pfizer
Pharmascience
Welcome
Who are you?
Abbott
Alfred E.Tiefenbacher
Avannlab - Medicus
Boehringer Ingelheim
Capsugel
Eva Pharma

4. Welcome
Who am I?
Founder Generic Pharma 2.0
16 years in Gx:
6 years Packaging, API, C/M
8 years Business Development & Licensing
2 years market intelligence & global consulting
Imagineering: Insights, ideas, strategy
Have done ‘something’ with:
- Pfizer & Greenstone
- Boehringer Ingelheim
- Pharmascience

5. Welcome
Who am I?

7. Welcome
Why are we here?
- Future of the industry is very different from today
- Growth markets are “easier said than done”
- Biosimilars will be branded, few have sufficient capital
- Competition in small molecule never ends
- Government funding and policies fluctuate
- MNC’s into generics, generics into speciality pharma, speciality into OTC
The challenge:
Where should time be spent and investment be made?

8. Welcome
Why are we here?
To discuss DIFFERENTIATION:
- The process or action of being different (duh!)
- To show a difference that distinguishes
To discuss STRATEGIES for it:
“The intelligent allocation of limited resources through a unique system of
activities to outperform the competition in serving customers”
Why is this workshop needed?
Companies in the generic pharma industry (generally)...
Underinvest & focus on alternative strategies for competitive advantage

9. Welcome
Why are we here?
To be better than the
competition!
Competitive exclusion principle:
“No two members of the same species can coexist that make their livings in the
identical way”

10. Competitive Advantage
Defined:
“An offering of superior value based on differences in
capabilities and activities”
Three components:
- Distinctive Capabilities: Resources + Competencies
- Investment in Activities: Optimisation + Co-ordination (value chain)
- Market Offerings: Consistent positive difference + Credibility/Trust

11. Competitive Advantage
Transformation Options:
1) Better alignment between offering and capabilities
2) Create new capabilities
3) Influence customer preference
4) Change the game - innovate to create a space without competition

12. Competitive Advantage
Business Value Options:
- Product Leadership
- Operational Excellence
- Customer Intimacy
Alternative to singular focus
MEDIOCRITY & COMMODITISATION
Need to be either; better or different.. we will focus on different

13. Competitive Advantage
The problem (status quo)
Product Leadership:
Generic drugs by definition are commodities
Patent expiries determine portfolio and drive growth
Significant market share is gained by being the lowest cost
Operational Excellence:
Focus on manufacturing & supply chain (to lower costs)
Regulatory & legal are the tools to unlock new revenue
Customer Intimacy:
A generic company cannot influence (end) consumer preference or intimacy
The trade customer shows loyalty only to price

14. Competitive Advantage
The Answer
You, me and this workshop!

15. Current Strategies
What is happening out there?
Is anyone actually differentiating in generic pharma right now…
PiSA - Mexico
Denver Pharma - Argentina
Biocad - Russia
Help Remedies - USA
Abbott / Piramal - USA / India
Alvogen - Iceland / USA
You decide.

16. Current Strategies
What is happening out there?
PiSA Farmaceutica - Mexico
Operations: Manufacturing Excellence
- Solid Orals - Injections - Infusions
Product: All categories
- Nutrition - OTC - Gx Retail - Gx Hospital - Biosimilar
Intimacy: Key services
- Low income pharmacies next to hospitals
- In-house logistics & distribution centres
- Dialysis Centres

17. Current Strategies
What is happening out there?
PiSA Farmaceutica - Mexico
Which one is strongest differentiator?
Success:
- No1 domestic Pharma in Mexico
- $500m revenue (estimated, private company)
- Defended against MNC’s & international generics
- Operations across region, export 2million med devices to USA
Competitive Strategy:
- Full integration, 360 healthcare provision

18. Current Strategies
What is happening out there?
Product, Operations, Intimacy
Denver Farma - Argentina
Operations: Nothing special. Solid oral, liquid, semi-solid
Product: Gx Retail, some OTC
Intimacy: Promotion
- Large pharmacy sales team
- Mass media consumer advertising
Success: 40% annual growth, moving up 20 ranking places in 3 years

19. Current Strategies
What is happening out there?
Biocad - Russia
Operations: Biotech Focus
- Technical leaders in biotech production
Product: Disease focus
- Viral infections; developed novel formulations of Interferon
- International partnerships on disease area
Intimacy: KOLs
- Strong connections with hospitals and clinicians (and government!)
Success: Founded 2001, 1st product 2005, 2014 sale likely $750m-$1bn

20. Current Strategies
What is happening out there?
Help Remedies - USA [HelpINeedHelp.com]

21. Current Strategies
What is happening out there?
Help Remedies - USA

22. Current Strategies
What is happening out there?
Help Remedies - USA
Operations: No manufacturing, No regulatory. Just marketing.
Product: Design, Branding, Message
Intimacy: As close as possible! [Video]
Success: Launched 2008
300million visitors, international awards
Stocked by hotels, major pharmacies, national retailers
Recently acquired for undisclosed amount
Next stop, international growth

23. Current Strategies
What is happening out there?
Abbott (Piramal) - India
- Acquired Piramal for sales force
- Historic Indian family name (vs Abbott 1910)
- Low cost manufacturing capabilities
Corporate Social Responsibility activities
- Health information phone lines and telemedicine
- Mobile health units for those beyond 3km from centre (400k treated)
- e-Swasthya; provide training & cell phone to local women, connected to
diagnosis call centre
- Government nutrition partnership, enhanced rice (500k people helped)

24. Current Strategies
What is happening out there?
Abbott (Piramal) - India
Product: Global brands & locally developed products
Operations: Local manufacturing. Massive distribution. Deep rural access.
Intimacy: Focus on Corporate Social Responsibility; builds deep trust
Success: Biggest & fastest growing pharma in India

25. Current Strategies
What is happening out there?
Alvogen - USA

26. Current Strategies
Alvogen Inc - USA

27. Current Strategies
Alvogen Inc - USA

28. Current Strategies
Alvogen Inc - USA

29. Current Strategies
Alvogen Inc - USA

30. Current Strategies
What is happening out there?
Alvogen - USA
Product: ‘hard to make’ and first-to-file Gx, OTC, Biosimilar (coming)
Operations: Lean & quick. Pharmerging focus + USA (50/50 revenue)
Intimacy: Engaging marketing; Corporate brand for OTC
Success: Profitable. Acquiring (big deals in 2012), aiming for Top 10

31. Current Strategies
What is your company value strategy?
- Product Leadership
- Operational Excellence
- Customer Intimacy
Abbott
Alfred E.Tiefenbacher
Avannlab - Medicus
Boehringer Ingelheim
Capsugel
Eva Pharma
What about industry ‘leaders’?
- Teva
- Mylan
- Watson
- Sandoz
- Hospira
- Amneal
Fujifilm Kyowa Kirin
Greenstone
Laboratorios Ecar
Pfizer
Pharmascience

32. Session 2: Challenges

33. My ambition

34. My ability

35. Challenges
Be better, not just different
Internal Challenges
- Investment: growth stage, ownership, control
- Human resources: talent, expertise, desire
- Management: risk tolerance, vision, commitment
- Shareholders: time horizon, understanding, vision
External Challenges
- Competitive market forces
- Government policy
- Availability of resources (data, expertise, finance)

36. Challenges
What is required?
- Expertise
- Insights
- Resources (internal & external )
- Time
Product
Operations
Intimacy

37. Challenges
Product
Resources
- Manufacturing
- R&D
- Distribution
- Market access
Expertise
- Regulatory
- Legal & IP
- Marketing
Insights
- Selection criteria / strategy
- Market intelligence (competition plans)
- Future needs of the buyer
- Disease data
Time
- Evolution vs radical
- Type: small, biotech, otc
- Type: formulation, delivery, packaging,

38. Challenges
Operations
Expertise
- Efficiency
- Product Development
- Resource management
- Project management
- Partnership and collaboration
Insights
- Effective communication
- Future of the effective organization
- Market intelligence
- Future of manufacturing
- In house vs out source
Resources
- Partner network
- Collaboration tools
- Communication tools
- Management information systems
Time
- Organic vs inorganic
- Gap analysis
- Current culture
- Management effectiveness

39. Challenges
Intimacy
Expertise
- Relationship building
- Market research
- Data analysis/interpretation
- Marketing and branding
- Product adaptation
Insights
- Future needs of buyers
- Market nuances
- Government and industry policy
(payment, availability, cost, category etc )
Resources
- Marketing services
- Access to customers
- Integrated organization
Time
- Investment
- Credibility
- Readiness of organization
- Access to customers

40. Challenges
The Big Challenge
- Where to get ideas from
- How to buy or build them
- How to 'on board' them within resistant org.
- How to improve likelihood of success
How to dissolve/modify/overhaul status quo of current
organisation?!
Give the past and present, does your company have the ‘make up’ to succeed

41. Session 3: Ideas

42. Ideas
Realistic Differentiation Potential
Within realms of possibility.
Short, medium, long
Better, not just different
Likely competitive advantage

43. Ideas
Key attributes for a successful Gx company:
- Selection of new products
- Delivery of products
- Profitable production of
- Partnerships
- Regulator and payor relations
- Access new markets for growth

44. Ideas
Differentiation for a successful Gx company:
- Product Leadership
- Operations Excellence
- Customer Intimacy

45. Product
Product Leadership
Focus areas for potential competitive advantage through
differentiation.
Having better products

46. Product
Dose Management/Compliance
- Data collection: Home dispensing recorders
- Monitoring: Patient communication systems/service
- Intelligent Packaging: Dose regimen notifications
- Reminders: Integrated with MHR, insurance, pharmacies
- Dispensing systems: Multi-drug machines
- Education: Content systems to reduce intentional non-adherence
- Labels: Clarity, Weight/dose information

47. Product
Safety
- Child & Geriatric best practice: pack design, readability
- Anti-counterfeiting: digital verification, hologram
- Dose form: stamps, coating, colour, taste
- Dosing: Part doses (also patient cost reduction)
- Abuse deterrents: Non-crushable, irritants, antidote combo, bio-activated

48. Product
First to market
- Orphan drugs: new indication for old molecule (<clinical + >safety)
- Patent challenges: salts, alternative formulations (505b2), invalidity
(Finances - litigation funding, at-risk launch insurance)
- Reformulation: SR/ER, Pegylation/Liposomes, >stability (global req.),
bioavailability (reduce volume), fast acting (ODT, thinstrip), solid to liquid, semi-solid
to patch/tape, phase release (early morning, mid sleep etc)
"Is it valuable to the patient, valuable to the physician or valuable to the health
providers/insurance companies"

49. Product
Patient Centric
- Convenience:
Films, liquids, unit dose, direct-to-mouth, patch/tape
Regimen/patient packs (blisters vs bottles)
- Preference:
Foam or spray vs cream/gel/ointment
Size - "bigger is better" vs easy-to-swallow

50. Operations
Operations Excellence
Focus areas for potential competitive advantage through
differentiation.
Having better operations.

51. Operations
Operations Excellence

52. Operations
R&D
- Special forces DARPA model for innovation
- Optimisation (market vs manufacturing vs resources vs strategy)
- Venture capital/Darwinian view of project approval
Manufacturing
- Complexity/variant management:
- Local 'manufacturing for local markets', regional CMO's
- Continuous manufacturing (2 sites worldwide)
- Manufacturing techniques
e.g Foam (vs wet) granulation

53. Operations
Sourcing/Supply-Chain/Procurement
- Market intelligence via in-market sourcing offices
- API R&D price reduction exchange for royalty
(subject to timetable, patents etc)
- Co-development (cost/profit sharing) for higher risk
(competition, time, costs, reg.)
- Co-invention projects for global exploitation
- Global benchmarking ('local' price = future regulated price)
- Sourcing/purchasing plaforms, e.g io-pharma.com

54. Operations
Services
- First to market, support 'early' launch (patent breaking) with legal services
- Anti-counterfeiting 'services'
- Pharmacy education (product reformulation, value add etc)
- Information for pharmacies (availability, new products, patents, promotions)
Outbound Logistics
- Dis-intermediation (direct to pharmacy + support contract flexible buyers)
- Online pharmacy (direct to patient)

55. Operations
Technology
- Monitoring and analysis of firm-wide data:
- Decision making
- Insights
- Quality
- Communication
- Connection of data between partners and customers
- Help suppliers and buyers to improve their business
- Build integrated networks with seemless data

56. Operations
Human Resources
- Create the Google of Pharma, somewhere people want to work
- CA by attracting the brightest and best in the industry (and outside)
- An investor in people (vs assets)
Infrastructure
- Flat, no-boss organisation like Valve Software
- Compensation based on ranking
- Select projects to work on
- Knowledge factories vs labour factories

57. Intimacy
Customer Intimacy
Focus areas for potential competitive advantage through
differentiation.
Having better customer intimacy.

58. Intimacy
Who is the customer?
Next buyer in chain or end consumer?
Business-to-business vs business-to-consumer
● Wholesaler / Distributor / Exporter
● Payor: Insurance or Government
● Pharmacy / Hospital / Website
● Patient / Carer

59. Intimacy
Wholesaler / Distributor / Exporter
- Market intelligence sharing (data)
- Product education materials for next in chain
- NPD projects for sub-sector
- Rewards program

60. Intimacy
Payor: Insurance or Government
- Demonstrative superiority
- Quality (preventative systems)
- Reliability (stock committment)
- Efficacy (significant enough?)
- Compliance (very significant)
- Services
- Infusion centres
- Payment/reimbursement systems

61. Intimacy
Pharmacy / Hospital / Website
- Patient education programs (in-store devices)
- Transparency of supply chain for deliveries (data)
- Legal and regulatory updates (data)
- NPD ideas driven by clinicians and pharmacists
- Drug management services/software
- Outsourced service provision (?)

62. Intimacy
Patient / Carer
- Mobile apps for disease management (trust)
- Compliance and safety programs/systems (caring)
- Full disclosure of supply chain information (honesty)
- Disease management portfolio discount/co-pay
Corporate Social Responsibility projects

63. Ideas
How will you pick the best one?
- Theory vs reality
- Investment analysis
- Timelines
What does an idea factory for generic pharma look like?

64. Session 4: The Future

65. The Future
Pharmagineering
What might affect the generic drug industry in 10 years?
What is beyond emerging markets?
What is beyond large molecule generics?
What does it mean for us today?

66. The Future
Asa’s 2030 Futurist Thoughts
Generic drugs will be marginalised in majority of markets
Only handful of broad portfolio players
Handful of highly specialist technology driven companies
Government and insurance fully integrated
Data rules
Supply chains are short
Patients order their own drugs

67. The Future
Prevention

68. The Future
Prevention
Lifestyle diseases get lifestyle treatment
Exercise & diet connected to insurance & healthcare
Push responsibility to population, incentives for health (tax)

69. The Future
Personal
Genome based healthcare management
Life diagnostics, real-time care and treatment
Cradle to grave relationship with Pharma

71. The Future
Technology
Mhealth: Smartphones, tablets & apps
Data integration: manufacturing to bar code
Open source platforms
Online drug fulfilment

74. The Future
‘Intelligent’ Patients
Informed choice of drug provider
A relationship with drug provider demanded
Ethics, manufacturing data, quality reports, clinical data
Drug interactions, side affects, diet, exercise

76. The Future
Thoughts & Discussion
What does the future hold?
How will it affect the generic pharma industry?
What competencies will be required to succeed?
What can be done NOW to improve likely success?

77. The Future
Trends/insights
- Self care
- Personalised medicine & diagnostics
- Technology facilitation
- Connectivity and collaboration
- Social responsibility
- Environmental conscience
- Globalized mobilized workforce
- Income disparity & fiscal responsibility
- Gender roles and activities
- Protectionist/self reliant government
- Role of Dr, Pharmacy and Hospital
- Aging population
- Generation differences
- Southern hemisphere power houses
- Funding models (crowd/networked)
What do you see?

78. The Summary
Session 1: Introduction
Welcome, Who?!, Why?
Current differentiation strategies
Session 2: Challenges
Product, Organisation, Intimacy, Execution
Session 3: Ideas
Product, Organisation, Intimacy, Idea Factory
Session 4: The Future
Trends, Insights, Expectations

79. Differentiation Strategies
for the Generic Industry
Biosimilar Drug Development World
Boston, Tues 19th Nov 2013