-by Greg Mills, Founder and Managing Director @ Analytic Health
Introduction
Generics play a crucial role in the continued progression of the pharmaceutical industry, making established medicines affordable allows healthcare organisations to free up funds for new, innovative medicines. With the medicines budget now more than £120m extra per month compared to 2019, affordable medicines are more vital than ever.
However, producing and supplying these medicines at an affordable price is no simple task. With the same focus on quality and regulatory compliance as the originator company, the generic is also met with a highly competitive market and subsequent price pressure.
Portfolio Optimisation
In this blog, I’ll outline some of the areas we find to be most important in the portfolio selection process and touch upon some of the tools we developed to support the process.
Strategy
Investing in a portfolio is a costly and time-consuming process, so a thorough understanding of the market is needed before focussing on any single product. Understanding which areas are growing, which are saturated with suppliers requires a multi-faceted analysis including an understanding of prescribing and dispensing trends, competitor profiling, marketing authorisations and pricing.
Low competition is often the goal of a portfolio strategy; here you are able to add true value to your customers, patients and the National Health Service. But there is often a reason for low competition, is the manufacturing process too complex or the selling price too low? We often find there is a sweet spot between competition and feasibility- the spot where value can be added whilst enabling a sustainable business model.
Innovation
Often seen as a term reserved for the originator pharmaceutical companies, innovation is strong and growing in the generics industry as companies seek to offer new solutions to customers and patients. Innovation does not have to refer to new molecules but can refer to innovative pack sizes or strengths. Ask any Pharmacist and they will tell you they would rather dispense a full pack of tablets rather than be forced to decant from a larger pot. Do you know in which quantities your products are being prescribed?
Sourcing
As with services in many areas of modern life, an ever increasing proportion of generics are out-sourced. With the ability to leverage the expertise of a third party company, the greater choice available and the time saving compared with internal development and manufacture, it is unsurprising that more companies are going this route.
Portfolio strategies change over time as new people and ideas come into businesses and markets shift. So what may not fit one company’s portfolio, may be the ideal fit for yours, so keep in-licensing and a thorough understanding of your competitor’s portfolio in mind.
Monitoring
With an average of 40 new product packs registered every week, company acquisitions, pricing changes and supply issues, the generics industry is never dull, to say the least. These changes need to be factored into the launch plan which should offer a live estimate of launch quantity and value. Having worked in Supply Chain and Finance, take it from me, those teams will thank you! But with so much going on it can be challenging to keep a track of this hive of activity. That’s why we developed a dedicated Portfolio Console that allows you to build your portfolio(s), and be notified on every change. Whatever route you take, make it automated and make it simple.
Conclusion
The days of making portfolio investment decisions on a whim are gone, with companies taking an ever more data-driven and automated approach to portfolio selection. Having the data and tools to assess, plan and monitor is the first step. But in this age of AI, you should expect more, does your system give you actionable suggestions for the optimal portfolio? – more to come on this in our next blog. I’ve really only scratched the surface of portfolio optimisation here but hopefully it’s given you some food for thought. Thanks for reading, if you’re keen to optimise your portfolio drop me a message on the contact form below and I’ll be happy to talk about it with you.
Thank you!