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Over the past decade, the growth strategies of many generic pharmaceutical companies have rightly focused on the emerging markets of the world. Until recently, countries such as Brazil, Mexico, China, India, Russia, Philippines and the Middle East and North Africa have offered a ready market for low cost, quality generic medicines with the added advantage of much higher volume growth than developed countries.

However, economic slowdowns and other issues in many emerging economies in recent times have forced many companies to take a more balanced approach to growth, paying attention to the higher prices and stronger dollar growth of generics in the world’s largest markets of the US and Europe’s so-called “Big 5” of France, Germany, Italy, Spain and the UK.

Each of these markets comes with its own unique challenges in addition to some elements of doing business that are quite similar. Both markets offer reasonable overall growth rates for generic drugs and higher prices compared to the emerging countries. Generic penetration is high in the US but in some European countries, it remains lower due to established prescribing habits and the relatively recent introduction of mandatory INN prescribing and automatic substitution. Highly consolidated wholesale and distribution systems exist in both markets which poses both an advantage and a challenge for generic companies. Being able to cover substantial proportions of a market by doing business with just one or two distributors helps simplify logistics and manage costs but at the same time, there is fierce competition for suppliers wanting to do business with just a few companies offering with the best networks and coverage.

In the US, a particularly painful issue has been the nearly 40 month review and approval times and a backlog of many thousands of ANDAs. While the FDA has made strides in staffing the Office of Generic Drugs to a level that is clearing the massive logjam and setting ambitious targets for future performance, progress remains slow. The Generic Drug User Fee Act (GDUFA) that has funded this activity also places a high burden on new market entrants that may have to invest more than a quarter of a million dollars in filing, facility and inspection fees in order to bring a new generic product to market.

In Europe, implementing new supply chain regulations, often dubbed “track and trace” has placed a high cost on both existing and potential new market entrants. Companies must now place mandatory serial numbers, barcodes and other tracking devices in their finished products and packages which can often only be done with substantial overhauls to production lines and packing and labeling systems.

To succeed in entering these markets, companies can employ a variety of strategies that take advantage of the company’s particular skills and experience:

  • Target older products for development and launch that may be facing availability issues because they are no longer seen as important to larger companies but where there is still sufficient patient demand
  • In the US, companies can follow the well-trodden Hatch-Waxman Act or “Paragraph IV” pathway, be first to file early patent challenges and prosecute them in court, attempting to win the coveted 180 days of market exclusivity competing solely with the original brand
  • Develop less competitive products with complex formulations leveraging particular in-house skills and experience, out-licensing to a partner or partners who will market the products in the target market
  • Acquire companies in markets of interest, paying careful attention to their people, manufacturing capabilities, market reach, IP holdings, product portfolio and other points of synergy with their own businesses
  • Sign expansive joint ventures with marketing partners and become an exclusive contract manufacturer, developing an agreed line of products and bringing them to market over time
  • Work with innovators to license or acquire brand products facing generic competition and market them as Authorized Generics
  • Acquire select portfolios of products from other companies, which could be small brands from an innovator no longer interested in promoting them, products that need to be divested as a result of M&A activity between large generic companies or specialty products from companies needing to access better marketing skills

Whatever the chosen market, its particular challenges and benefits, and the unique capabilities, skills and experience of the company, there are many core competencies that are common to success in implementing any of these strategies, including the ability to:

  • Thoroughly understand local and international regulations
  • Monitor changes to regulations, rapidly assess business their impact and adapt quickly while maintaining regulatory compliance
  • Build and manage a strong development pipeline and portfolio of new products
  • Understand late-stage pipeline activity or new dose form technologies of products that are soon to reach the market and be able to identify indicators of future commercial success
  • Understand market size, patient populations, epidemiology, opportunity, future threats and disruptors
  • Identify products to in- or out-license by spotting gaps in portfolios of potential partners, small portfolio acquisitions, and as business grows, products to divest and their most suitable new owners
  • Understand patent landscape, freedom to operate and infringement risks
  • Understand patent challenges, legal position an associated risks
  • Understand opportunity to generate new IP as a course of doing business and protect it
  • Monitor competitor activities, adapting business strategies and portfolio choices as a result
  • Build and manage a strong pipeline of company acquisitions based on size, reach, portfolio, capabilities and other points of synergy

One company that exemplifies both the various points of market entry and the competencies to successfully implement them is India’s Jubilant Life Sciences. Jubilant has employed a careful mix of organic and M&A-driven growth that has seen it grow from a small producer of intermediates in the 1970s to today’s almost billion dollar global life science enterprise.

Still manufacturing intermediates and APIs, Jubilant produces and sells its own generic drugs, performs contract research, clinical development and manufacturing services for hundreds of customers and even continues to pursue development of its in-house novel compounds.

That process involved many, many partnerships, more than 30 strategic deals and an investment of around $750M to acquire new capabilities in complex product manufacturing, radiopharmaceuticals, clinical trials services and a dossier development firm involving transactions from the US, Canada and Europe.

It’s just one example of the sheer variety of approaches that can be employed by companies to enter new markets and succeed in growing their businesses.

Learn more about your key considerations, competition, and strategies for success in entering the world's largest generics markets by downloading the author's presentation: "Generics & API Manufacturing: Successful Market Entry Strategies for US & Europe."

To request materials in Chinese, including the webinar recording or slides, please click here.

And don't miss author Mike Chace-Ortiz presenting on “The Changing Dynamics Of Global API Manufacturing” at CPhI Worldwide this October. Learn more.