Pharmaceutical Executive Digest Europe - January 28, 2009 - (Page 10) Strategy 6. Competitive differentiation. In the competitive stage, the intensity and diversity of competitors compels companies to create unique, sustainable product and corporate positioning along several dimensions. Other companies will succeed here by focusing on a specific strategic market segment, geographic region, or disease state. For example, Novo Nordisk achieves differentiation by focusing on all aspects of diabetes pharmacotherapy. Pharma needs to instill a much more competitive mindset in all levels of the organisation. 7. Cost competitiveness. In the competitive stage, it’s particularly important to focus on payers, sophisticated repeat buyers who have the advantage of deciding among multiple competing brands. In today’s market that means that competition shifts toward greater emphasis on cost and service. Pharmaceutical companies must move aggressively to identify substantive ways to reduce costs. Over the past decade, pharma companies have increasingly moved in this direction by outsourcing manufacturing, distribution, clinical development, sales, marketing, IT, and even discovery. 8. Technology competition. In the competitive stage, companies have a much more difficult time discovering new products. Consequently, competition shifts from internal discovery to external licensing and partnering. Pharmas in this stage are now actively marketing to biopharmaceutical companies, academic institutions, and other organisations, sometimes participating in product “bake-offs” or auctions for attractive, early-stage compounds. 9. Stakeholder competition. Healthcare professionals, regulators, consumers, the media, politicians, distributors, and patient advocacy groups are increasingly influencing the adoption, utilization, pricing, and perception of drugs. Forwardthinking companies have developed strategic stakeholder leader plans, similar to those developed for key opinion leaders, to gain competitive advantage with these influencers. 10. Competition training. Key staff members need to know how to analyse competitive products and companies, monitor activities and signals, anticipate moves, develop pre-emptive and defensive strategies, utilize best practices, and take decisive action. Progressive companies have instituted competitive leadership forums, train-the-trainer programmes, competitive case studies seminars, and a variety of other initiatives to provide professionals with the confidence and techniques to gain a competitive edge. Delaying product commoditisation Table 1: Characteristics of the four stages of the pharma life cycle. What’s past and what’s to come, as pharma moves from the competition stage to the commoditisation stage. Characteristics Stakeholder demand Sales Growth rate Costs Competition Commencement Needs to be created Low sales volume Minimal growth Significant startup costs None/little Commercialisation Increasing Dramatic sales increase Double-digit increases Increasing R&D and marketing costs Increasing with established players Competition Very high Peak sales volume Single-digit or stagnant growth Heavy R&D and marketing costs Fierce with numerous competitors Commoditisation Decreasing as buyer seek substitutes Stagnant or declining sales Declining growth rate Reduced costs with decreasing investments Overwhelming with low-cost/generic offerings The US pharmaceutical industry will remain in the competitive stage for the foreseeable future. While there is little chance of the industry reverting to the high-growth cycle of an earlier era, there are opportunities to delay the next stage, commoditisation. In this end stage, pharmaceutical products become nearly indistinguishable, and customers buy primarily on price. Slow-growing, price-constrained European markets are closer to this stage than the US market, while high-growth, emerging markets such as China, India, and Brazil remain in the commercialisation stage. One of the best ways for the pharmaceutical industry to stave off commoditisation is by developing new technologies and technology platforms that ensure the development of new, patent-protected products. For example, biotechnology is the driving force behind a wave of novel, high-priced, high-value products. In fact, biologics are growing at a rate of 13 percent—four times the rate of traditional small molecules. Pharmaceutical executives and their companies are at a critical juncture as the industry confronts its competitive stage. Executives who can recognize these changes, respond strategically, and take pre-emptive action have an opportunity to win in this new competitive landscape. The most successful companies will be those that can transform as the industry itself transforms. For the full version of this article, click here. 11 JACKY LAW Awaiting Pfizer’s next move? 13 CALENDAR Upcoming pharma industry events 2 NEWS Teva and Lonza join forces 3 FROM THE EDITOR Crises of confidence http://pharmexec.findpharma.com/pharmexec/Strategy Articles/Pharma-vs-Ph%20arma/ArticleStandard/Article/detail/574631
Table of Contents Feed for the Digital Edition of Pharmaceutical Executive Digest Europe - January 28, 2009 Pharmaceutical Executive Digest Europe - January 28, 2009 Contents News From the Editor 2009 Forecast Strategy Jacky Law Calendar Pharmaceutical Executive Digest Europe - January 28, 2009 Pharmaceutical Executive Digest Europe - January 28, 2009 - Contents (Page 1) Pharmaceutical Executive Digest Europe - January 28, 2009 - News (Page 2) Pharmaceutical Executive Digest Europe - January 28, 2009 - From the Editor (Page 3) Pharmaceutical Executive Digest Europe - January 28, 2009 - From the Editor (Page 4) Pharmaceutical Executive Digest Europe - January 28, 2009 - 2009 Forecast (Page 5) Pharmaceutical Executive Digest Europe - January 28, 2009 - 2009 Forecast (Page 6) Pharmaceutical Executive Digest Europe - January 28, 2009 - 2009 Forecast (Page 7) Pharmaceutical Executive Digest Europe - January 28, 2009 - Strategy (Page 8) Pharmaceutical Executive Digest Europe - January 28, 2009 - Strategy (Page 9) Pharmaceutical Executive Digest Europe - January 28, 2009 - Strategy (Page 10) Pharmaceutical Executive Digest Europe - January 28, 2009 - Jacky Law (Page 11) Pharmaceutical Executive Digest Europe - January 28, 2009 - Jacky Law (Page 12) Pharmaceutical Executive Digest Europe - January 28, 2009 - Calendar (Page 13)
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