- Service Provider: This is the elementary level of CI function in pharmaceutical companies. At this stage, CI functions are mostly tactical, research oriented and focused on finding facts. The group works on a project basis to produce intelligence upon demand from internal stakeholders. It has a limited budget, headcount, and influence in the organisation, and receives limited senior executive support. The function's communications concentrate on project results that target a narrow audience, primarily the stakeholders who commissioned the project.
- Contributor: At this stage, CI is more than tactical function. The unit concentrates on translating customer insights into implications and business recommendations. It leverages synergy from past projects from the same or different stakeholders, forms bodies of knowledge and has broad perspectives. The unit at this stage has active support from the senior marketer in the company as well as greater access to senior business unit leaders. However, business leaders set priorities. The CI budget exists outside the function's control, and the group's representation on the executive team and its exposure to the board are limited.
- Advisor: This is the next level of maturity of CI in the company. At this stage, senior executives stipulate informed and evidence-based decision making. The CI function acts as in-house Consultants in the organisation. In addition to standard CI projects, CI team members demonstrate critical thinking, a willingness to challenge ideas and status quo, have an understanding of R&D and marketing. Most of the projects are asset/brand centric. The CI team act like a 'sensing, learning and prescribing' unit.
- Partner: At this level, CI function acts as a strategic partner. The unit is focused on innovation, foresight, and predictive capabilities. CI usage goes beyond asset-centric decisions i.e. the unit is involved in corporate level decision making, including product and portfolio strategy, strategic planning, licensing and partnering, M&A, employee engagement, manufacturing, supply chain, etc. The CI team exerts significant control over budget and is truly embedded in the decision-making processes. The team is seen as a thought leader rather than a project executor or insights provider. The team has sound economic, strategic and corporate finance understanding, and has the ability (and credibility) to address critical business issues, provide top-class implementable solutions that are aligned with the organisation and its stakeholders and shareholders.
In the past we discussed the prevalence of competitive intelligence (CI) in various functions of pharmaceutical sector versus other sectors- a cross-industry comparison. CI is a reasonably established function in the pharma and diagnostics industry. However, some companies have been early adopters of the practice; most are 'early/late majority' adopters and some have yet to leverage the benefit. Here we summarise the maturity of CI function in the sector. This should serve as the preliminary basis for benchmarking, empowering and finessing the role of CI in typical pharmaceutical and medical devices companies.
Due diligence is the process by which buyers conduct investigation and evaluation of potential acquisitions and investments. Among various classes of due diligence, commercial due diligence is one of the key ones as it is associated with the future revenue generating potential of the business. For healthcare and life sciences investors, one could argue for a case of rigorous due diligence. The reason being- life sciences based sectors usually have a high risk when compared with other sectors. A rigorous commercial due diligence helps to mitigate risks and in certain cases, conducting objective due diligence might be a fiduciary requirement.
Commercial due diligence usually involves extensive 'external analysis' and often comprises assessment of the market, competitive landscapes and customers. We briefly describe each of these elements here. The objectives of market assessment are to establish the current market size, future market size and the expected growth. As a best practice, BiopharmaVantage emphasises on 'forward looking' metrics and understanding of the fundamental drivers of the market. It is also vital to know which 'market segment' would the target compete in. Subsequent research and analysis should focus on 'deep-diving' into this market segment. We have seen numerous examples of 'inappropriate segments' where the targets reference to the attractiveness of the entire market but in reality only has the potential to compete in a sub-segment of it.
Assessment of competitive landscape is another critical element of the commercial due diligence exercise. A good practice is to assess both- the current landscape as well as future landscape. This is important for assets and businesses that have a longer gestation period (e.g. pharmaceutical, diagnostics, medical devices, etc.) i.e. it takes a long time to get the product to the market. The focus of competitive landscapes should be target market segment, but one should be cognizant of competition from other markets and segments. Our wider definition of competitors is simple- any business asset/entity that has the potential to affect revenue adversely.
Customer assessment is an integral component of commercial due diligence. Appropriate customers need to be identified based on the target market segments, factoring in the B2B and B2C aspects of the business. Interviewing customers allow one to gain insights on their preferences, key asset attributes, current and future buying behaviour, etc. This also enables assessment of the target's offerings to address unmet or under-met needs, ability to deal with evolving needs, value proposition and its sustainability. Sources of information include market reports, databases, government resources, competitors, interviews with KOLs and other key stakeholders.
BiopharmaVantage is a speciality consulting firm that provides due diligence services to healthcare and life sciences investors. If you would like to explore how we can assist, then please contact us.
Market size is one of the critical elements in commercial due diligence, new product planning, commercial assessments for licensing/partnering and investments. Computing from the first principle is a robust approach and help clients understand the fundamental drivers of the opportunity. For a typical pharmaceutical asset, the process is summarized below:
Why Discounted Cash Flow Analysis Reigns Supreme Amongst Valuation Methods in the Life Sciences Sector?
In the pharmaceutical, biotechnology and other life sciences based sectors, valuation is used in numerous decision-making processes such as new product planning, opportunity assessment, business development, licensing, partnering and in-house investment or investment by private equity and venture capital investors. Valuation using discounted cash flow (DCF) method employing NPV (net present value) analysis incorporates most appropriate business metrics and is also aligned with the interest of the owners of assets. In purist terms, decisions based on the valuation usually avoid the ‘principal-agent’ problem.
Valuation often happens to be the most widely discussed topic in several conferences and forms many research theses. Currently, DCF and comparables based methods are mostly employed valuation methods. Like any evolving discipline, new methods of valuation emerge and proponents of new valuation methods invariably highlight the drawbacks of the DCF methodology. In real biopharmaceutical business scenarios, employing most DCF alternatives usually leads to higher value estimations. Is this good or bad? The answer is - it depends. Specifically, it depends on which side of the transaction you are on.
BiopharmaVantage is a boutique healthcare consultancy that specializes in providing valuation services specifically for the pharmaceutical, biotechnology and wider life sciences sector. If you would like to explore how we can assist you, please contact us.
Like that of any other sector, the usage of social media has become an indispensable element of marketing in the pharmaceutical sector. It is one of the 'pull' marketing strategies routinely applied by the savvy marketers. For most companies, a social media campaign is one of the most effective means of implementing marketing initiatives and often provides a high return on investment.
Social media also turns out to be one of the best sources from where organizations can get high quality primary competitive intelligence. Reasonably easy access means social media is a great place to watch rivals' strategies and tactics, devise counter strategies and leverage learnings from them. Tracking the activities of various players over time allows organizations to gain deep insights about competitors' strategy and provides an opportunity to refine ones' own strategy.
Primary intelligence gathering opportunities from social media are bidirectional i.e. one can gain insights into competitors' assets and practices while there is also an opportunity to get feedback about own assets and practices. This also allows pharmaceutical companies to capture and enrich the voice of customers (patients) in decision making. Social media clients, for example, Twitter, Facebook, Goolge+ and so on enable patients to talk freely about their experience with various aspects of the product, its non-obvious benefits and side effects, its packaging and shipping amongst a multitude of other insights that decision makers might seek. Several qualitative insights such as 'quality of life', 'economic utility', 'delight-factor' etc. can be incorporated in the intelligence gathering exercises.
BiopharmaVantage is a boutique healthcare consultancy that takes pride in providing exceptional competitive intelligence services to pharmaceutical and diagnostics companies. If you would like to explore how we can assist you, please contact us.
Generics pharmaceutical businesses generally constitute an attractive business from investment perspective, particularly for private equity investors who are looking to invest in the pharmaceutical and wider healthcare sector. The generics business avoids the high-beta characteristics of novel drugs based business such as high capital requirement, long gestation period to market, the complexity of marketing etc.
Typically, most commercial due diligence exercise on generics business consequently focuses on the competitive landscape, IMS data, general economics, positioning versus other generics companies etc. This is certainly a good approach, however, the biggest risk to investment in generic business comes from novel drugs that are about to lose exclusivity. If the best treatment for an indication is a patent protected novel drug, then upon its patent expiry, it will join the generics market and become the standard of care. So the threat comes from a different segment (novel drugs) rather than from other generics companies. Consequently, in conducting due diligence BiopharmaVantage routinely assesses the novel drug induced threat to key generic products. This equally applies to competitive intelligence, new product planning, search and evaluation for licensing and partnering and landscape monitoring efforts taken by pharmaceutical companies.
BiopharmaVantage is a speciality healthcare consultancy that provides due diligence services to pharmaceutical compnanies and life sciences investors. If you would like to explore how we can assist, then please contact us.