Current market conditions offer unique opportunities to leverage external innovation and drive revenue growth, but the inherently complex and cross-functional nature of business development makes it difficult for many pharmaceutical companies to operate effectively. As a result, these companies do not win the transactions necessary for future success. We believe that the six success factors described above can significantly improve business development skills and deserve serious consideration by management teams. Of course, larger M&A activity will continue to take place across the industry. McKinsey, KPMG, EY, BSC and Goldman Sachs all expect an active 2017 for mergers and acquisitions in the life sciences and healthcare sectors. Activity in China/Hong Kong and India will remain high, and emerging markets such as Vietnam, Malaysia and Thailand will grow. Six Success Factors for Business Development in the Pharmaceutical Industry While we focus on mergers and acquisitions here, the six success factors we have identified will enable business development teams to create value through mergers and acquisitions and licensing. (See Figure 1.) For example, the use of additive manufacturing (AM) in the medical technology industry is increasing. AM offers the opportunity for better patient access to life-changing medical devices and reduces supply chain and production costs.
The medical technology industry already accounts for nearly 20% of the AM market. Access to new and functional markets is a crucial business strategy in the highly competitive pharmaceutical industry. Emerging global markets offer a good opportunity for pharmaceutical companies. A 2012 report by MCE estimates that 80% of economic growth over the next decade will come from emerging markets. The strategy requires guidelines for recruiting salespeople who understand how to sell products in emerging markets. To remain competitive in new markets, pharmaceutical companies must also offer high-quality and differentiated products and services. The expert optimally balances the theory with short exercises and many anecdotes that illustrate the theory. The strength of this course lies in providing a comprehensive overview of the business development process, illustrated by numerous examples drawn from the expert`s many years of experience, as well as the many checklists and techniques and decision support tools that can be used at every stage. According to the World Health Organization, the global pharmaceutical market is estimated at $300 billion per year in 2013. This number will increase to $400 by 2016. Six of the 10 largest pharmaceutical companies are located in the United States. To maintain high sales volumes and remain profitable, companies in the industry can apply a number of business development strategies.
At a time of rapidly evolving scientific breakthroughs and, coincidentally, the expiration of many successful drug patents, the key to innovation and revenue growth lies in the development of the pharmaceutical business. While some of the innovation and new revenue may come from pipelines and internal assets, business development teams at most companies are under a lot of pressure to complement internal efforts with external licensing agreements and mergers and acquisitions. Unfortunately, these teams are often unable to execute the trades needed for innovation and growth. Partnerships and outsourcing are the order of the day in the pharmaceutical industry. Seeking and achieving sustainable mergers is a good business development strategy for a pharmaceutical company. Management Center Europe reports that mergers of pharmaceutical companies will contribute more than 50% to the future growth of the industry in global markets. By combining their resources, pharmaceutical companies leverage their strengths to increase their market share and influence. To capture the value of a company, such a business strategy must cover post-merger management topics, such as.B. the effective integration of workplace cultures and systems. Investing in technological innovation is a profitable business strategy for a pharmaceutical company.
Trends such as increasing competition, globalization and the reduction of production cycles are real challenges for the industry (see reference 2). Technological innovations allow a pharmaceutical company to overcome these challenges by reaching more consumers and suppliers and getting immediate feedback at a lower cost. One of these strategies is the use of e-detailing, in which a company communicates the details of a product on the Internet. Consumers can book appointments online and inquire about products or ask a company to answer their questions in real time. A pharmaceutical company can also use a phone app to allow consumers to examine the risks and benefits of a product on their phone. A technology-driven business development strategy encourages innovation in drug improvement or the production of new drugs. Role of Business Development in the Pharmaceutical Industry (Generic Business) For a new series of updated slides: www.slideshare.net/alijehangir/business-development-licensing-overview-150008616 As part of this prioritization process, the management team must regularly review and agree on the revenue growth that the current internal portfolio or pipeline will bring. Only then will it be able to identify the revenue gaps that business development needs to close in which therapeutic areas or specific modalities – and with what urgency. It`s amazing how often management teams are misaligned with this simple goal, often resulting in business development teams wasting time evaluating opportunities that are fundamentally unattractive to the management team and are never approved.
In order to avoid such situations, the team must ask two central questions at an early stage of each transaction: What revenue gap does the transaction close? And who on the Executive Committee will be involved in the transaction from start to finish? By forcing these decisions from the beginning, the team can avoid a lot of wasted time. Early last year, I had a phone call with the Global Head of Business Development and the Regional Human Resources Manager of APAC (Asia Pacific) at a large biotech company. As soon as the first jokes were exchanged, the first words of this executive were: “Rob, we are looking for a scout as soon as possible to lead business development in Asia. » Access resources on new best practices and case studies on business development, strategy, advertising and marketing for the pharmaceutical, biotechnology and healthcare industries. Executives working in generic companies should be aware that the content of this course focuses on business development companies with branded drugs. We are looking for candidates for the position of Director of Business Development who are career-oriented and have a strong scientific background in drug development in the pharmaceutical or biotechnology industry. The Director of Business Development should enjoy working in a dynamic business development environment coupled with a deep understanding of industry breakthroughs in drug or pharmaceutical development. This company offers accelerated career growth potential and excellent benefits. We have many options and only consider the best candidates for our highly talented business development team. 6.
Design an organizational structure that aligns with strategic priorities. Since companies have different revenue gaps and goals and use business development in different ways, there is no single “good” organizational structure. One company could focus on early-stage acquisitions and another on late-stage acquisitions. One company may seek agreements to strengthen its core business, another to build new therapeutic areas. A company`s business development organization must be tailored to its strategic objective, whatever it may be. There are three main approaches (with different permutations) to consider: In recent years, when hiring leaders for business development, the requirements have generally been relevant experience, knowledge of mergers and acquisitions, the ability to carry out large projects, knowledge of the market and an MBA from a good school. These skills are still in demand, but now combined with more technical knowledge. 4. Define integration issues from the beginning.
Management and business development teams often focus so much on due diligence and evaluation that they don`t consider the onboarding process until they`ve signed a term sheet. Integration issues need to be taken into account from the outset, when assessing the attractiveness and viability of the agreement, and alongside due diligence. Teams should ask questions such as: Will the acquired company be a separate entity or will it be integrated into the acquiring company? What governance applies to acquired assets? How do cost synergies fit into the evaluation? In addition, biopharmaceutical companies can finance transactions at a lower cost with today`s very low interest rates. They also have significant financial resources to stimulate business development. BCG`s ValueScience team estimates that the top 20 biopharmaceutical companies have more than $700 billion in cash, short-term investments and additional debt capacity. As a result, however, many companies track the same assets, driving up valuations and the risk of overpayment. 5. Enable an agile business development team and governance. Even if a company has a clear view of the transaction, it still needs an agile process and governance to execute the transaction quickly and efficiently. However, given that the business development process is highly cross-functional (and often includes many junior-level employees), it can be difficult to know who has the decision-making authority and who provides the necessary analytical resources. In addition, existing governance committees (p.B. Executive Committees) are often too few to keep pace with the rapid pace of business development decision-making.
Hiring a new type of “super scout” to lead business development appears to be the way forward in a number of segments, including biotechnology, diagnostics, oncology, and medical devices. .