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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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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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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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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The relative advantages of being a privately owned or publicly listed pharma company is an enduring debate across the industry. It polarises opinion. The central consideration is simple: how much influence does ownership structure have on the evolution and growth of a pharma business?

With private pharmas typically smaller than their listed counterparts, it’s often suggested that this fuels a nimbleness and agility that gives private an advantage over listed. Conversely, it’s argued that listed companies’ ability to access capital markets gives them opportunities to scale that are rarely possible in privately owned businesses.

Our own analysis reveals a deeper complexity. Although there are distinct advantages to both ownership types, these seldom relate to size and scale. The comparative benefits of private and listed companies – and indeed the characteristics that can stifle their growth – are embedded in cultures and processes that are synonymous with ownership type. The clues for value creation are in the same place. To grow, pharmaceutical companies must craft R&D and commercial strategies that suit their ownership structure. A bespoke approach is best; one size does not fit all.

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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 defines European MidPharmas to be R&D-based integrated pharmaceutical companies with annual revenues of between €50m and €5bn. Our consulting work in this sector has given us a uniquely powerful understanding of how this tremendously diverse group of companies can survive and thrive. In this annual report we share some of our insights into their health. Through this analysis we point to a focused and entrepreneurial future for the entire industry that goes beyond an industry dynamic driven by Big Pharma and small biotechs.

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Successful marketing is based upon a deep understanding of the customer and positioning products to meet their needs. In the mid 1990’s pharmaceutical companies embraced strategic marketing to differentiate their products beyond clinical data and maintain competitive advantage. Though traditionally slower than fast moving consumer goods (FMCG) in adopting new commercial practices, in recent years the pharmaceutical industry has embraced ‘digital marketing’. Done well, this can generate significant benefits – but in the rush to ‘go digital’ many companies have forgotten many of the fundamentals of strategic marketing and are wasting money on initiatives that don’t add value to healthcare professionals (HCPs). To regain their commercial edge, companies must not be overly seduced by digital, and must return to the fundamentals by re-building their strategic marketing muscles.

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The realities of unrelenting price pressure and patent expiries put a special pressure on pharmaceutical companies to consistently create new and differentiated medicines. Pharma companies are compelled to innovate in order to survive, and the rewards for successful innovation are substantial. To understand the magic of innovation in pharma today, we have explored the lessons that can be learned from the FDA’s breakthrough innovation scheme. This relatively recent scheme provides a good indication of compounds that have the potential to become game changers, and through that the habits and behaviours of the companies that are achieving this, for some the “ultimate” level of innovation. So in this paper we review and analyse the granted breakthrough approvals from the scheme’s initiation in 2012 until the end of 2016, and explore the companies that are leading the way in the scheme. We conclude by exploring the lessons learned for would-be breakthrough innovators, defining the criteria and parameters that enable the discovery and development of game changing drugs.

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M&A has become an increasingly expensive method of securing new assets, capabilities and growth for pharmaceutical companies. This has been a natural consequence of the combination of an abundance of cheap capital with the relentless ticking clock of patent expiries. Cheap capital puts pressure on large firms to “do something”, and in most cases acquiring companies (at a price) can appear quicker and easier than building them. Patent expiries create the constant need for pharma companies to find profits from new products to replace those lost to genericisation. In this paper we argue that for most companies the price required to secure a company through M&A is now too high. We then suggest focused entrepreneurship as the response that will create value for the pharma companies’ owners and great medicines for patients and consumers.

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The business uncertainty that was created by the UK’s referendum vote on 23rd June 2016 will be felt for many years to come. The result of the vote was certainly an unwelcome surprise to the pharmaceutical industry. Novasecta privately interviewed 20 top executives from leading European pharmaceutical companies to ask how they are dealing with it. Their perspectives do not make cheerful reading for the industry. With the exception of short-term currency gains for some, the executives did not cite any clear benefits for their companies. And though most companies are watching and waiting, those that are at a point of considering new or increased long-term investment in European R&D or manufacturing footprint are less enamoured by the UK now that its relationship with the EU has become so uncertain.

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The digital revolution has been transforming and disrupting different industries from media and retail to finance and automotive. It is now the time for the pharmaceutical industry to be disrupted. To stay competitive and bring value to patients, pharmaceutical companies need to have an understanding of what digital means for them, define long-term strategies for the digital era, and commit to implementing the strategies by shifting their mindsets towards more patient-centric approaches.

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Effective Research and Development (R&D) is the lifeblood of the pharmaceutical industry. The funding of this highly risky and long-term activity had until the last decade or so been primarily left to well-capitalised and integrated global Big Pharma companies. A more recent era of cheap money has now changed all that. Since the market crash of 2008, a combination of ultra-low global interest rates and quantitative easing have changed how pharma R&D is funded, which has in turn changed how R&D is done. Products that take many years to research and develop are now passing through the hands of a multiple and fragmented set of investors, companies and individuals. Yet the complexity of today’s R&D requires an integration of many skills, perspectives and experiences. In this paper we explore how a new breed of leading pharmaceutical companies have been responding to the new funding environment, by defragmenting R&D to the benefit of the patients they develop medicines for and the investors that fund their businesses.

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Pharmaceutical companies spend considerable sums on marketing to drive growth of their brands. Few, however, take enough time to thoroughly understand the strengths and weaknesses of their approach. As channels to market become more complex, and pricing and access challenges impede product uptake, excellent marketing is more important than ever for commercial success. Companies must therefore critically challenge their marketing plans and apply a level of rigour to brand reviews that is similar to that applied to R&D initiatives. In this Novasecta Note we explore why marketing matters, our perspective on the most important gaps in marketing practices and how companies can enhance brand reviews so that they build more successful brands.

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Putting customers at the centre of businesses is common practice in many industry sectors. Though the pharmaceutical industry has multiple customers, including healthcare professionals and payors, the ultimate customers are always patients. For many in the industry however, embedding the views of patients across the value chain is stuck at strategic intent rather than a practical reality that guides decision-making. Our experience with a number of pharmaceutical companies highlights a range of approaches to this challenge, and in this paper we explore ways in which some are changing their business models to move from worthy words to Practical Patient Centricity.

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Pharmaceutical companies are increasingly entering into R&D collaborations with external parties that create Intellectual Property (IP) and competition law considerations. The pharma companies’ legal teams have a critical and important role for the success of such collaborations. They are the “risk gatekeepers” between the internal and external worlds, ensuring success through a balanced approach to risk mitigation. An excessively risk-averse approach can hinder the potential outcomes of a collaboration or at worst terminate it before an agreement can be reached. On the contrary, limited effective risk assessment and mitigation can endanger the company’s unique advantages. To explore good practice in this area we have explored the “voice of legal” based on a set of targeted interviews with internal and external lawyers and our experience. Our conclusion shows that if innovation teams partner with legal up-front, “legal” can be a force for success in R&D collaborations rather than the stereotypical obstacle to closing partnership deals quickly and effectively.

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European MidPharmas are a class of companies that Novasecta has been working with intensively since its foundation. These R&D-based pharmaceutical companies with annual revenues of €50m to €5bn are tremendously diverse, just like the European countries in which they are based. Working closely with such companies for over a decade has provided us with a unique perspective and a substantial body of practical insight into how pharmaceutical and biotech companies of all sizes can survive and thrive.

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The orthodox thinking for commercialising pharmaceuticals is that the sales trend established in the first six months post-launch determines the product’s performance in the long-term. For those accountable for on-market products, this can be dispiriting – what can I do to ‘beat the trend’ if the evidence says that it is impossible? In this paper we first discuss how this ‘Trend Orthodoxy’ stifles innovation and limits thinking. Then we describe how commercial leaders can create the habits that enable their organisations to consistently beat the trend for their products.

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After years of success from fully integrated, huge and relatively closed R&D centres in the 1970’s and 80’s large pharmaceutical companies have slowly but increasingly embraced the concept of leveraging innovation from external sources to build and balance their internal R&D pipelines. This has coincided with plenty of statements of how “Open Innovation” adds value for pharma and a massive increase in partnering and networking activities and departments within companies. And yet. Open innovation is easier to put into a box and assign to a new group of executives than integrate culturally into proud and established internal R&D organisations. Management systems that are geared to progressing internal assets struggle to cope with the challenge of dealing with outside parties. In this paper we explore this integration challenge and how companies can have the best of both worlds by applying an Integrated and Open Innovation approach to their R&D and Commercial activities.

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In a world of low-cost capital and investor pressure for earnings growth, M&A is still top of the agenda for senior pharmaceutical executives. But it is the more creative world of partnerships – through the likes of licensing, co-development, capability and risk sharing, technology collaborations and joint ventures – that has been a potent force in the industry’s successes in recent years. Partnerships can truly bring out the best in both sides of the deal, if each party is prepared to re-think how they operate and create the right balance of trust and control. In this paper, we explore what companies are spending and getting for their external investments, how they are partnering to create value, and what is required to succeed with partnerships. We conclude by contrasting partnerships with M&A as sources of sustainable business growth.

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In 2010, Morgan Stanley urged pharmaceutical companies to “Exit Research and Create Value”: an attractive proposition for those executives who had been seeing R&D consume enormous resources while generating limited returns. The reality today is more complicated. Integrated pharmaceutical companies remain dependent on R&D to create their future products, but they know that their R&D model can always be better. For all but the very largest pharmaceutical companies the option to acquire de-risked or near-market assets is unattractive given prohibitive capital requirements. So excellent R&D is as essential to pharmaceutical companies’ success as it always has been. It is simply too dangerous to hope that others will constantly produce compounds and drugs in your chosen commercial area at a price that is affordable to in-licence or acquire. Pharma companies need to manage R&D to create value.

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Aligning R&D activities with commercial realities is an issue as old as the pharmaceutical industry itself. The importance of a commercial perspective in R&D is increasing as the downward pressure on drug prices and limitations on market access from private and public payers continue to increase. This is particularly pressing in areas where medicines do not offer differentiated advantages over existing treatments. In parallel, as pharmaceutical organisations have become more complex, regions have become more fragmented, and organisational functions have become larger, it has become increasingly difficult to ensure integrated and holistic commercially-oriented behaviour in R&D. Our experience is that this causes significant frustration in both R&D and Commercial functions, not to mention unrealised value creation. In this Novasecta Note we explore the R&D-Commercial interface and what can be done to improve it.

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European MidPharmas are a class of companies that Novasecta has been specialising in since its foundation. These R&D-based pharmaceutical companies with annual revenues of €50m to €5bn are tremendously diverse, just like the European countries in which they are based. Working closely with these companies for over a decade has provided us with a substantial body of insight into how these companies and their larger and smaller competitors can sustainably grow and improve performance.

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In a context of significant industry restructuring, cost-cutting and patent expiries, 26 of the world’s top pharmaceutical companies have managed to grow their top-line revenues by more than 50% over the last 5 years. Some of the companies have achieved this growth highly profitably, some have sacrificed profits to grow top-line revenue. Some have invested heavily in R&D, some have chosen to avoid heavy R&D investment. So what can we learn from their diverse successes? In this paper we identify the 26 top-growing companies and classify them into three segments to illustrate the contrasting dominant strategic philosophies that have been applied to achieve business growth. We explore the success stories of selected companies within each of the three segments, and then conclude by examining the common theme that we believe has had a key role in driving business growth: that of ‘bespoke strategy’.

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While our industry continues to find diverse ways to ensure cash is applied to early-stage R&D – for example venture funding, option-based partnerships, acquisitions, and more recently IPOs again – funding clinical development is becoming tougher, particularly the later and more expensive stages. We are beginning to face a new funding shortage: pharmaceutical companies and their investors appear to be less willing to finance clinical development through their P&L accounts than they are to find cash for deal-making and M&A. How can pharmaceutical companies secure funding for their most important clinical development projects? Alternative funding models have started to emerge in recent years that can provide access to capital with control over the asset and its development. In this paper we classify the available funding options today, and then discuss the key attributes and risk implications of each. We offer our views on how MidPharmas can explore funding arrangements which are best suited to their stability, scale and long-term strategic goals, ensuring the right balance between accessing capital today and giving up value tomorrow.

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In an effort to address declining R&D productivity in the pharmaceutical industry, many companies have looked to the innovative entrepreneurialism that characterised the original “biotech” companies of the 1970’s and 80’s. This has resulted in numerous restructurings and changes to processes and culture. But what is the real “biotech-like” mentality that the industry is seeking? In this paper we offer our views on what sets the best biotechs apart: focus, flexibility, capital discipline, external oversight, project orientation and culture. We then use a simple, directional set of parameters to assess a group of MidPharmas on these attributes, with some expected and unexpected outcomes and plenty of interesting questions. We offer our views on why MidPharmas provide the ideal environment in which stability and scale can complement the dynamism of the original biotechs, providing a winning combination for long term success.

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