Mastering the Generic Pharmaceutical Distribution Sphere

Many companies are applying various methodologies aiming to lead the generic pharmaceutical sphere. Some use economies of scale, where high volume and low-value products are distributed in multiple countries. Others are working on a hybrid generic product portfolio and fixed-dose combination to differentiate them from other players. Another methodology is a therapeutical focus, with applying portfolios clustered in specific therapeutical areas. An additional standard methodology is a geographic supremacy, where a generic company tries to follow the patent cliff and target as many lucrative off-patent molecules as they can cover. More strategies are I.P focus in clustered geographical areas, where early launch opportunities or strong arguments for patent opposition and/or revocation can be utilized successfully. Applying a comprehensive global distribution network and leveraging the economies of scale associate with the product, looking to be launch in numerous countries simultaneously, is another approach. I am a big believer in hybrid methods in clustered geographical areas. Leveraging the accessibility of various dossiers for a product of interest allows today more than ever for a pharmaceutical company to build its strategy more wisely.

Nevertheless, this accessibility from the mounting amount of qualified suppliers is fueling the never-ending armor race of product portfolio, leading in most cases to fatal mistakes done by dossier houses that trade the same dossier in a small territory to too many potential distributors. Pity as it sounds, many dossier houses are building the KPI for their business development team in an inappropriate fatal manner that recognizes short terms down payments over the potential product life sickle rewards from a given country. Unfortunately, many companies are wrongdoing in planning their long-term business expansion and are only drive from short terms relatively small incomes. I strongly suggest to dossier houses and pharmaceutical companies to hire a well-educated business development team that can analyze and investigate the markets they oversee before determining the market penetration strategy. I came across many business development personals that only care about the sales forecast and do not have any clue about the market they intend to sell. I am afraid that’s not right.

Knowing the specific geographic market needs and being familiar with the local culture, payer, and customer behavior is vital. A pharmaceutical company needs to build its value proposition around its strength. Although it sounds obvious, many companies are failing to do that. Shareholders are pushing for fast results, and companies are acting under pressure, leading to fundamental mistakes. Building competitive advantage around its core value proposition is predominantly the preferred way to play it.

Bold moves can be made in cardinal areas that will be harness to the company merits to achieve supremacy in a given segment. Pharmaceutical generic companies will always look for the star segments to extend the cash cow (e.g., product life sickle) and get read of the dog. Porter’s five forces model should always follow the companies' development to achieve business longevity and stability.

The generic world has become very competitive, and merely the companies who will apply innovative hybrid business strategies will have a future. This is the time for each company to revisit their plan and ensure they are calibrated to harvest the market opportunity in the maximal possible manner.


Dr. Shlomo Sadoun:

Chief Executive Officer at SK Pharma | Co-Founder & Chairman at DrugsIntel