Sharp focus is key to making the cut in niche and regional markets
Big pharma is searching for niche opportunities to tease out further growth, moving into the rare diseases and regional markets that are the hunting ground for midsize companies.
Leading a panel discussion asking “Can Mid-cap Companies Succeed with Targeted Regional Strategies?” moderator Jeff Conroy with Adjuvant Global Advisors set a context for competition highlighting the February announcements by Pfizer and GlaxoSmithKline that they will move into specialized markets.
Sounding out this strategic shift, Conroy suggested it begs the question whether big pharma really can adapt to niches where success often depends on finding specific classes of patients and navigating regulations and reimbursements that tend to be highly local issues.
Putting the issue to a panel of executives who have long labored in these narrow fields, he asked what it takes to build and sustain competitive advantage.
Helmut Kessmann, CBO with Santhera Pharmaceuticals, described his company as a Swiss-based, five year old start-up with a straightforward business strategy to market orphan drugs for neuromuscular disease in North America and leave the rest of the world to its partners.
“We sell in Canada with two people on the ground, yet we have captured 50 percent of patients in less than a year,” he reported. “The reason is that there are perhaps 10 doctors in all of Canada who manage 90 percent of the patients.”
“Clearly this kind of success is achieved by maintaining close links with specialists over long periods of time,” he said, adding, “Focus and specialization is the big seller for Santhera, and is what makes a big difference for a small company.”
“There are thousands of rare diseases and even as big companies move into this space, such as Novartis or Glaxo, we can still hold our own,” he said.
Jukka Muhonen, director for Global Business Development and Alliance Management at Orion Corporation, described his company as midsize with 2009 revenues of EUR 780 million.
“Our strategy is very much a regional one as we have grown out of Finland, which is our home market, to expand into Scandinavia, a large region in itself and our home territory,” he said.
“Eastern Europe has been a growth region for us over the past few years and recently we reached a milestone agreement using a regional strategy that will open southern Europe for us as a major market,” he reported.
“The difference between a midsize company and larger pharmaceuticals is that with limited resources we do not have the luxury of expanding across numerous indications in multiple markets,” he said. “The key, then, becomes understanding a specific competitive space and leveraging a world-class expertise for a therapeutic area. We nurture this expertise, further develop it, and then after perfecting this expertise we will build a presence in a selected region.”
Carlos de Sousa, Vice President for in-licensing and business development with Nycomed called his company a rather large midsize with EUR 3.2 billion in sales.
He agreed that the focus for a true midsize company is to concentrate on its core expertise, and then build a presence in a geography to differentiate the company.
“Yet, on one hand we also share issues with other global big pharma because we cover a good number of therapeutic areas where we both develop and commercialize products,” he said.
“Still, we share similar roots with Orion in Finland, because we remain strongly connected to our home market in Scandinavia having originated in Norway,” he explained saying that it helps to keep a strategic perspective that, “while we look for global growth opportunities in early stage programs, we support that growth with a regional focus.”
He explained, “We have focused on expanding in emerging markets, and the best example is Russia where we are today one of the big pharmaceuticals for the country. Latin America is also a growth region for us.”
“We have an additional advantage in that strategically we remain outside the United States and Japan, yet maintain a great coverage elsewhere so that American companies that want to keep their US rights can come to us to expand their markets,” he said.
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