Business Development Operations
The Business development function recognizes potential fresh coalition partners and also handles previous alliances. They are responsible for market research, recognizing potential customers and preparing the promotion and pricing strategy. The scope and role of Business Development in Indian Pharma Industry is set for unprecedented change in the next few years. It is imperative that Indian Pharma companies are bound to seek professionals who can meet this demand.
Business Development is the future lifeblood for all the companies in view of present nature of competition and the developing landscape. In order to stand apart from rest of the pack, companies have to re-discover
the functioning, maneuvering and management of their Business Development departments so that they are “Fit as Fiddle”.
Need to Shape-up Strategies
Understand the future
- Identify the shortcomings
- Customers’ future needs and desires;
- Evolve Fit for Purpose Technology ·
- New product innovation ·
- The key factors molding today’s landscape ·
Schizophrenic approach and not invented here mind-set to Business Development must shift in the strategic outlook. Pharmaceutical Business Models Current Models: I. Blockbuster model involves achieving substantial global sales (usually in excess of $1 billion) through the discovery and distribution of a small number of blockbuster drugs. Large returns from a small number of drugs cover the high cost of the drug discovery and development process II. Diversification model involves marketing of larger number of drugs to smaller niche Markets where distribution costs are low, particularly without a blockbuster to help pay for the high development costs. II. Intermediate model with some of each of (I) and (II).
Potential Future Models:
The futuristic model for a global pharmaceutical company would be to organize, coordinate and finance the various parts of the drug development and distribution pipeline. The role for the global pharmaceutical companies becomes limited as the most of the research activities and a part of the distribution activities are contracted out. Specialization in various aspects of the drug development, distribution processes and technical capability such as genomics could achieve significant economic benefits.
Integrate the processes from drug discovery to distribution to create value for the patients and gain efficiency in order to sustain the growth and profitability .
Preparing for the Change and Alternatives
- Concentrate on individual slices of the integrated value chain, such as cardiology, urology or CNS.
- Focus on individual functions of the value chain such as lead identification, drug development, production or marketing & sales.
- Acquire and integrate the newly acquired companies into current organizational structures to eliminate redundancy.
Conclusions and Recommendations
- Companies can seek to develop and market products that are more innovative, even if the potential sales of the drug are lower than what most pharmaceutical companies currently expect. The “Progressive Drug Development Model” can be considered for certain therapeutic areas to mitigate risk and increase speed to market.
- Pharmaceutical companies can innovate targeted therapeutics for smaller market segments, which are still profitable, while harvesting existing products by maximizing the revenues from products that they currently market.
- The pharmaceutical companies can license or arrange for equity share with the specialist biotech and other research companies by leveraging the value chain.
- Utilize the business process reengineering techniques to lower their costs across all segments of their supply chain. Improve speed to market with minimizing costs and providing great values to the customer with CSV (Cost, Speed and Value) approach by geographic utilization of skills and resources.
- Develop alliances with technology providers and health care companies to improve the distribution of drugs.
- Industry should find more efficient way to segment and target the physician marketplace and minimize costs by optimally deploying resources against such targets.
- Industry needs to maximize the potential of emerging global markets such as Eastern Europe, South East Asia and China to gain the cost and efficiency advantage.
- Lastly, the Pharma companies can respond quickly to the external market forces by transforming the resources and implementing flexible business/operating models.
Comparison of pharmaceutical developmental models
INFOCUSRXPHARMA INTERNATIONAL BUSINESS DEVELOPMENT MODEL
Backward integration strategy employed to expand profits and gain greater control over production of a product whereby a company will purchase or build a business that will increase its own supply capability or lessen its cost of production. For example, a clothing manufacturer may purchase one of its suppliers of fabrics to lessen the cost of raw materials and have more control over the delivery schedules of the finished product.
Forward integration acquisition of or expansion into a distribution channel. For example, a book publisher who acquires or launches a direct-mail book club can increase profit margins and sales volumes on books sold through the club channel.
Horizontal integration expansion via acquisition of a competitor or by adding outlets to a chain. For example, a book publisher might acquire another publishing house to increase its stable of editors and authors or to otherwise enhance its competitiveness. Horizontal integration is highly regulated by federal antitrust acts to prevent unfair dominance of markets.
Vertical integration a company’s domination of a market by controlling all steps in the production process, from the extraction of raw materials through the manufacture and sale of the final product. Contrast with horizontal integration .
Cross-functional integration include increased information flow in the organization, flexibility in workforce and capital resources, and enhanced utilization of organizational resources—all of which facilitate the development of successful new products.
Extegration is the new concept applied to deal with the external agencies to cooperate but not compete to achieve business development objectives. This is a Win-Win situation by which the organization takes the various needs of the external organizations and blends so that organizations business development objectives are met.