The European pharmaceutical market is the second largest globally after the US. In 2017 the markets accounted for 22.2% and 48.1% of world pharmaceutical sales, respectively, and for sales of new medicines launched between 2012-2017 the trend continues – 64.1% for US compared to 18.1% for the top 5 markets in Europe (France, Germany, Italy, Spain and UK), and the size of the market is set to grow by 25% by 2022.

Europe clearly presents an excellent opportunity for many pharmaceutical companies and biotechs, but it can be a confusing market to enter.

The European market has a unique structure with the majority of countries, those in the EU, having a common regulator which provides a single pathway to allow products to be marketed in all 28 EU countries. The market is however fractured at a country level and each country can decide its own market access, pricing and also individually grant marketing authorisation, so it is imperative that companies understand the markets they wish to enter.

Europe poses challenges that other markets don’t so the question for many companies is how to access these markets and this depends on their ambition. Do you want to create a geographic footprint of your own in Europe or do you want to access the Market but keep your main focus on home markets? At Novasecta we help companies with two defined approaches:

Own commercialisation
Strategic Collaborations and partnering

These are both great strategies to enter Europe, but each company needs to evaluate which is best for them.

Contact us to see how we could help you realise your potential in Europe: info@novasecta.com

Download our White Paper to explore European entry in more detail

European MidPharmas are a fascinating, diverse, and resilient group of companies, holding a unique position in the industry. We define the sector as R&D-based pharmaceutical companies, headquartered in Europe with annual revenues between €50m and €5bn.

In our fifth annual MidPharma report we examine these companies across corporate, R&D and commercial functions to delve into what makes them special, how the best are leading the way and why the sector needs to be alert to changing industry dynamics.

This year we highlight and explore the four key needs for companies in this sector:

• Acknowledge vulnerability to changes in capital markets and payers

• Pursue purposeful and selective corporate development

• Reinvent the R&D model to adapt to a changing innovation ecosystem

• Increase commercial profitability and customer orientation

Download the report to explore the key needs of the sector and find out which companies are thriving

We believe these are vital topics for MidPharmas and we have explored some of them before in our White Papers, including reinventing the R&D model, M&A being too expensive, the benefit of strategic collaborations and the vulnerabilities produced by ownership structure

This is not our first report this year on the pharma sector. Read our Global 100 report to explore how the wider pharma industry is accessing capital to drive effective R&D and commercial efficiency and how a non-European mindset influences their approach.

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Commercial models in pharma have evolved over the last few decades moving from brand focussd to access led and now the future is one of personalisation, where all aspects of an organisation’s commercial approach are tailored to individual patients, HCPs and payors based on their unique needs. To achieve this, companies and commercial teams will need to change.

We consider how:

• Pharma’s future commercial model use machine learning (ML) and agile marketing to make the most of multiple data sources to bring personalised messages to physicians and payors

• Companies need to combine products with ‘beyond the pill’ solutions that support product use such as wearable technology, patient support services and digital adherence programmes

• The threat of complete disruption from other sectors is unlikely due to the highly capital intensive and risky nature of the pharma business

• Achieving personalisation requires substantive change to processes, capabilities and culture – such change is hard, and history teaches us that this can be slow in the pharma industry

• Companies that embrace the opportunity of personalisation are those that will see the greatest results

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In light of the most recent decision from a US court, ordering Bayer-owned Monsanto to pay more than $2 billion in damages to a couple that sued on grounds the weed killer, Roundup, caused their cancer, Deutsche Welle asked John Rountree for his views on whether Bayer could survive further lawsuits and what they can do to limit the impact on the company.

Watch the full interview here

Discover John’s previous comments on Bayer here

GSK’s Q1 2019 results were released today (1st May) with their vaccine business driving growth past analyst’s expectations. Reuters asked John Rountree for his thoughts: “They are really refocusing into oncology and that’s going to take some time – to make that transition – so I think its going to be a difficult time for the pharma business,” adding that the vaccine business is growing.

John has been asked for his thought before on GSK, speaking to CNBC about the recent divestiture of the Horlicks brand and the focus on innovative pharma led by Emma Walmsley.

AstraZeneca’s Q1 2019 results were released today (26th April) with their oncology portfolio helping drive profits past analyst’s expectations. Bloomberg asked Ed Corbett for his thoughts: “They’ve got a whole raft of approvals in the pipeline, their transition from big pharma to big biotech is happening.”

The new initiatives of Pascal Soriot are clearly bearing fruit with relatively high investment in R&D, a reorganisation of their R&D structure, high deal volume (2nd highest over the last 5 years in the Global 100) and focus on increasing R&D programme success, from 4% to 20%.

As Bayer’s troubles continue, Die Zeit interviewed John Rountree to understand what is going on at Bayer and how they should proceed.

Download the article in German above or read the English translation below:

“All that just distracts”

    Bayer is fighting the lawsuits over the plant protection product Round-Up. But that hides the real problems of the group, says John Rountree.

    ZEIT: Mr. Rountree since acquiring the Agrochem Group Monsanto has lost Bayer 150 billion euros in value, threatening billions in billions due to claims for damages because customers claim they have gotten cancer from the use of the crop protection product Round-Up. Was that worth it?

    Rountree: Great scientists work at Bayer. But like many other pharmaceutical companies, Bayer is less good at maintaining a strong and trusted public image. The legal proceedings concerning the active substance glyophosate, which was included in the weed killer round-up, are a burden for the everyday business. Within the group, only a small group of employees take care of it, especially from the legal department and the executive board. But every Bayer employee knows about it and follows the proceedings. In this respect, a shadow hangs over the company. It is easy to imagine what the board meetings are talking about: legal risks, the current status of procedures and possible outcomes. It’s not so much about issues like growth, innovation, research, about things that drive a business forward, but about how the process goes. No matter how the proceedings go, Bayer will not break. But the procedures damage the reputation. It does not make it easier to find new talents. These are all side effects that will show in the performance in a few years. They do not settle down immediately. In that sense, the Monsanto acquisition is a burden for Bayer.

    ZEIT: So, was it wrong to want to become one of the largest agrochemical companies in the world?

    Rountree: At the moment of the takeover it seemed like no alternative. There was a consolidation process in the agricultural sector. Dupont and Dow Chemicals merged into Dow Dupont and Chem China acquired Swiss manufacturer Syngenta. As you thought at Bayer, you will soon have nothing to report, if you stay small. As such, the Monsanto acquisition seemed the right move. It was about economies of scale and cost reduction. It was about defending the status quo. But: the problem with the matter was already at that time, that one did that within the group structure: one did not separate out the own agricultural division from Bayer and a new enterprise. Now you have the problems: Because Bayer is actually a pharmaceutical company and the agricultural sector is a completely different business. It will not be easy for the board and management to bring that together.

    ZEIT: Before that, Bayer was also a company that was active in all these sectors. Why should this not work?

    Rountree: First of all, there are the customers. In the pharmaceutical sector, they have three types of customers: patients, doctors and those who pay, insurance companies or governments. You have to be prepared for that and you have to work with this not very simple constellation. In the agricultural sector, the customers are completely different: it is the farmers worldwide. This market is a completely different one. And as a corporation, you always have to think about the customer. So it would be better if the board focused on one thing than trying to bring pharmaceuticals, consumer brands, agrochemicals and veterinary medicine under one roof. It becomes very difficult to concentrate on the necessary things.

    ZEIT: The broader a company is set up, the more stable it is. In that sense, is not that wrong?

    Rountree: Man can see that as a sign of stability. But one has to wonder if it would not be better to have a board that only cares about pharmaceuticals and a board that deals only with agrochemicals. You could work much more concentrated. In addition, Bayer already has problems today. Bayer’s profit margin was 10 percent in 2018, which is the worst of all major pharmaceutical companies. Then sales general and administrative overheads at Bayer are exceptionally high at 39 percent of sales. In addition, debt has risen dramatically due to the Monsanto acquisition.

    ZEIT: But there are savings in the millions by the acquisition …

    Rountree: … the latter is a matter of expectation. Let’s put it this way: Bayer was not overly ambitious about these goals. And the high debts are a heavy burden on the management. If you have to save and the costs have to be reduced to pay the debts, then it makes investment in growth difficult. Even strategic investments are no longer so easy. High debts dampen one’s own ambitions. Of course, it can be good for a company to cut its own costs, to clean up, to become more profitable. But if you want to invest in growth, if you want to put money into research and development, impede such austerity programs. Not only on the subject of debt, but also on the subject of profitability are competitors such as Pfizer, Johnson & Johnson or Merck are significantly better.

    ZEIT: What are they doing differently?

    Rountree: They have no agribusiness and focus on what they do well. Above all, the US companies are much less widely positioned. And that’s good with pharma: you want a board that is extremely focused and can focus on the business. An exception might be Johnson & Johnson, which are broader but have a federal structure, meaning that the individual units are more independent. In addition, few pharmaceutical companies still make large acquisitions or form mergers.

    ZEIT: How is this an advantage?

    Rountree: Instead of taking over competitors, one works rather together on projects. This has proven to be a successful strategy in the pharmaceutical industry and is a trend. Take the example of Regeneron and Alnylam. These are two independently strong science-based US biotech companies. Bringing Alnylam’s RNAi expertise together with Regeneron’s genetics expertise is a win-win for the companies and for patients. For this they cooperate as independent companies. That means both keep their culture, their ethics, their organizational structure. And they can do research without being distracted by lengthy integration process. There is no need to look for synergies, there is no need to merge departments, employees are not secretly looking for a job because they are afraid of losing their jobs – all this is missing. You can just work in peace. Both sides can learn from each other and focus on their strengths. One plus one is more than two in this case.

    ZEIT: But you have to share the profits in the end as well.

    Rountree: But you also share the research costs and without further obstacles. This is better for the future of companies. And it works not only between big and small companies but also between big and big ones. For example, Merck cooperates with AstraZeneca in the field of cancer research. Both companies want to learn from each other. And they refrain from buying one another. Imagine if both had come together: A gigantic company would have emerged, the merger would have employed and distracted employees for years. The Monsanto takeover by Bayer has been running for two years. A lot of energy is used on it, the employees and the board are distracted, meanwhile others cooperate and can do research and development without being distracted.

    ZEIT: What should Bayer do to your opinion now?

    Rountree: It’s difficult at the moment. One should outsource the agricultural sector and lead independently. Let me say it again: agrochemicals and pharma are not compatible. But at the moment this is hardly possible .. In the US, the processes are running because of Monsanto and nobody knows how they go out, there are no investors.

    ZEIT: You advise pharmaceutical companies worldwide. How much easier is it to be able to express one’s opinion without being responsible for the consequences of the business, like a board?

    Rountree: We have a different role as consultants. I feel that our job is to provoke and challenge the board and management. We need to help them to find a different perspective and to think differently so they can make the best decision they can with confidence. And in one, I have to correct you: we have a lot of responsibility, it’s a tough business and our clients won’t ask for our help if they don’t see value from it.

    ZEIT: Can you buy a pack of aspirin tablets at the pharmacy without thinking about which company made it, how it is and how profitable the pack is?

    Rountree: When I see a pharmaceutical product like Aspirin I always think about the company that made it and the amazing effort and resources that it took to get it to the point where patients can get the benefit of it.

    Bayer is a company that we have been asked to comment on several times before, to read our previous views click here

As the timeline for Brexit shifts and no clear statement on the future of trade, Bloomberg, revisits the perennial question for pharma of supply. They highlight Novo Nordisk keeping an inventory of insulin at more than twice normal levels and asked for John Rountree’s opinion on this crucial topic: “Keeping extra supplies on hand is only one of the challenges. Brexit raises questions about new investment in manufacturing in the U.K. and bringing talented people into the country.”

Read the full article here

With the publication of the Novasecta Global 100, John Rountree, was invited on CNBC today to expand on some of the trends in our report, and in particular how attitudes towards M&A are changing in the sector and for investors.

John highlights the low revenue growth for 6 of the top 10 companies and how mega-mergers are no longer the solution to growth, highlighting the recent deal between BMS and Celgene. Instead he underlines the importance of smaller collaborative partnerships, such as the alliance between Regeneron and Alnylam, which allows both companies to focus on their strengths whilst utilising the support of their partners. Since our inception we have held a firm belief in the value of strategic collaborations.

CNBC also delve into the topic of whether tech giants will eat away at various segments in healthcare; to which John emphasises the difference in the approaches of tech and pharma and why tech companies’ consumer focused platforms might gain good traction in the healthcare sector.

Follow the links to read the Novasecta Global 100 or to learn more about achieving growth through strategic collaborations.

The Novasecta Global 100 is a comprehensive look at how the world’s top pharma companies are shaping the future of healthcare.

 

Our report analyses the companies as whole entities rather than pharma business alone in order to fully explore the impact of their diverse business models and choices. We cover their performance across multiple dimensions, their capital allocation choices, their innovation models, and their commercial models. We explain how the Global 100 is:

• Highly diverse: headquartered in many different countries, with very different business models

• Innovative: with many alternative approaches to investing in new solutions for patients

• Commercially successful: achieving impressive profitability and revenue growth through value or volume, yet finding it harder to sustain top-line revenue growth at the top

• Collaborative: with partnerships across country boundaries becoming more favoured than M&A to develop and provide access to medicines

 

In our report we touch upon how companies are dealing with many of the issues currently facing them, including patent expiry, new commercial models, the changing role of Medical Affairs, approaches to innovation and whether to pursue M&A or strategic collaborations.

 

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Medical Affairs is in the midst of an exciting metamorphosis. The global shift towards evidence-based care is creating new opportunities for the function to play a more strategic role within pharmaceutical companies.

As medicines become more targeted and the evidence base more nuanced, Medical Affairs has the potential to become one of the key influencers of the future….

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Margins have, until recently, not been a great cause for concern to many pharma companies but as the healthcare landscape changes we believe margins will be an area that many companies cannot ignore.

In this month’s white paper, we look at why pharma needs to rethink its approach to day-to-day spending and start to foster a culture that connects spending with return on investment…

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One of the pharmaceutical industry’s longest-held mantras is that the first six months of a product launch defines future success. This can lead to too much focus on performance compared to a forecast, rather than building for future success by seeking a deep understanding of why a product is performing. To read our latest insight please complete the form below.

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AI is one of the hottest topics in pharma at the moment and is already starting to yield results. One area it is making significant impact is in R&D. In the last two years alone there have been several multi million pound deals with leading pharma companies and AI providers, one of the most recent being the GSK collaboration with Cloud Pharmacuticals, who we interviewed earlier this month. R&D has always been a strong area for Novasecta and given our expertise MedNous asked us to think about how pharma companies could approach AI in R&D.

For insight on what the wider pharma industry should do about AI click here

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Novasecta’s Managing Partner, John Rountree, was asked by CNBC to comment on the rumours of the sale of GSK’s Horlicks brand to Unilever, in which he reflects on GSK’s continued exploration of ways to refocus its business towards innovative pharmaceuticals.

To read our insight into R&D innovation click here or to understand the importance of R&D renewal click here.

Artificial intelligence is one of the hottest topics in the pharmaceutical industry and there seems to be an almost daily stream of stories about its benefits. This is leading to questions about whether the hype is justified, and if it be shortly replaced by something else. To get an insider’s perspective, Ed Corbett a Principal at Novasecta, interviewed Don Van Dyke, Chief Operating Officer of Cloud Pharmaceuticals to hear his thoughts on what the potential of AI is and whether the hype is justified.

To read our whitepaper on “What Pharma Should Do About AI” click here

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On average in 2018 over 58% of sales for big pharma have come from products over 10 years old. ‘Mature’, ‘Established’ or ‘Diversified’ brands are products that have lost or are approaching loss of patent exclusivity and represent a significant source of revenue for pharmaceutical companies.

In 2000, few in the pharmaceutical industry had heard of mature brands. Yet now the vast majority of pharma companies have either entire portfolios or significant business units dedicated to their commercialisation. This shift in emphasis has been driven by reduced R&D productivity and the realisation that managed well, mature brands can provide strong profits following patent expiry. In this white paper, we explore the importance of mature brands to pharma companies, how best to approach loss of patent exclusivity and how best-in-class teams are commercialising mature brands effectively and redefining traditional life cycle management.

To find out how we can help with your commercial strategy click here

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AI has the potential to provide huge benefits to the pharmaceutical industry, from improving R&D productivity through to more effective sales representative deployment and better supply chain management. Adoption of AI is lagging other sectors, with initial forays mainly being led by big pharma who have deep pockets and are willing to try new innovations. For many however, it remains misunderstood, or even feared. Given the transformative potential of AI, companies must at the very least understand its benefits and develop a strategy that meets each organisation’s unique situation. Those that do will be well informed to make decisions; those that don’t, may be left out of the next industrial revolution.

For an insider’s view on what the potential of AI is and whether the hype is justified read our interview with Don Van Dyke, COO of Cloud Pharmaceuticals

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AI – the acronym on everyone’s lips, and rightly so, as it has a huge variety of potential applications in pharma. In light of this, Pharmaceutical Market Europe (PME) asked Ed Corbett for a special report piece, to consider AI and how pharma should navigate this burgeoning technology.

To read the full article click here or download this article using the button above.

If you want to learn more about AI in pharma our white paper on the topic gives great insight into what pharma should do about AI or for an insider’s perspective our interview with Don Van Dyke, COO of Cloud Pharmaceuticals, looks at what the potential of AI is and whether the hype is justified

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John Rountree discusses, on CNBC, Novartis financial results, pharma innovation and how acquisitions in Big Pharma are still a hot topic

To read our insight on breakthrough innovation click here and for our point of view on the cost of pharma M&A click here

 

Novasecta’s Principal, Ed Corbett, was asked by The Pharma Letter, in a special report piece, to consider an issue of paramount importance to the future of the industry: AI

Artificial intelligence (AI) has the potential to provide huge benefits to the pharmaceutical industry, from improving R&D productivity through to more effective sales representative deployment and better supply chain management.

Adoption of AI is lagging other sectors, with initial forays mainly being led by big pharma, with its deep pockets and willingness to try new innovations. For many, however, it remains misunderstood, or even feared.

Given the transformative potential of AI, companies must at the very least understand its benefits and develop a strategy that meets each organization’s unique situation

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Novasecta defines European MidPharmas to be R&D-based pharmaceutical companies with sustaining annual revenues of between €50m and €5bn. In our fourth annual report into this fascinating sector, we examine the current health of these companies, drawing on both our extensive consulting experience with such companies and our proprietary research based on public domain data sources. We highlight important lessons for pharma and biotech companies of all sizes

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As the escalating cost of both M&A and R&D continues to challenge the global pharmaceutical industry, CEOs know that it’s incumbent on them to explore innovative ways to grow their businesses. The most entrepreneurial have recognised the significant opportunity to create business value through strategic collaborations. Initiating collaborations is complex and difficult. However, the most successful examples show that it helps organisations to fuel transformative growth by establishing a deeper strategic focus and a more effective deployment of high-value assets and capabilities. In this paper we examine the need for strategic collaborations, examples from pioneers, and the lessons learned from our experiences with making them happen.

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Novasecta’s Managing Partner, John Rountree, was asked by Reuters to reflect on Christophe Weber’s, CEO of Takeda, comments on the cuts to R&D after their deal with Shire:

“They are cutting quite deep in R&D and it is not clear if the amount of money they are saving is going to be beneficial or harmful. Merging R&D is never easy. There are going to be lay-offs and that creates uncertainty and disruption and sometimes the best talent just leaves.” To view the full Reuters article, click here.

This is not the first time John’s opinion has been sort on the deal having previously been asked for his thoughts by CNBC.

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