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How to Build Strategic Alliance Strategies

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Current Approach Will Produce Minimal Shareholder Returns ... Confection. Clinical Trial & Regulation. Product. Development. Screening & Licensing in ... – PowerPoint PPT presentation

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Title: How to Build Strategic Alliance Strategies


1
How to Build Strategic Alliance Strategies?
?
Presenter Mr. Rongjin Lin Date November 6, 2003
TTY Biopharm Co., Ltd Developing the Science from
Humanity
2
Current Approach Will Produce Minimal Shareholder
Returns
3
3 NCEs Per Year With Current Model Will Not
Suffice
4
Sensitivity to Changing Key Variables in Pipeline
Model
5
Total Shareholder Returns For Top 20 Pharma
Companies
6
Is Continued Reliance On Blockbuster Drugs Enough?
7
Exposed to New Challenges and Pressures
RD Productivity
Increasing Therapeutically Competition Decreasing
Exclusivity Patent Expirations Increasing
pressure for reaching sales top
Government Intervention Price Control
8
5 Forces in Global Pharma
Today Future
Threat of New Entrants
Low
Same
Competition in the Pharmaceutical Industry
Power of Suppliers
Power of Customers
Today Future
Today Future
Medium
Increasing
Low
Same
Today Future
High
Increasing
Threat of substitutes
Today Future
Same
Medium
9
5 Forces in Global Pharma
High and increasing rivalry within the industry
High growth, esp. in new markets (i.e.
neutraceuticals, lifestyle drugs) Increased
pressure on margins because of health
reforms High excess capacities Industry
consolidation and concentration (MA) - Increase
in product differentiation
  • Low power of suppliers
  • Some downstream integration of Biotechs
  • High number of suppliers globally
  • Low switching costs / few differentiation of
    supplies
  • Low production costs (25 of sales)
  • Low power of unions

10
5 Forces in Global Pharma
Medium but increasing power of customers Highly
degree of concentration (Few customers
Government, Medical Care Organizations,
Wholesaler) Increase in market transparency
through the internet / better education
Increased demand of patients for participation in
decision making Increase of expectations
Individualization of therapies
Low threat of substitutes Decreased time of
product exclusivity Generics/ improved
products Genomics Parallel imports Trend
towards self medication (OTC) - Substitution only
partly possible
11
5 Forces in Global Pharma
  • Low threat of new entrants
  • Advances in information management, technology
    and science enable small companies to access the
    market
  • After patent expiry low costs of switching to
    generics
  • Biotechs (capital market funded)
  • Economies of scale less important in some New
    Technologies (i.e. Genomics)
  • High barriers to entry because of capital
    intensity and sunk costs
  • High product differentiation
  • Patent protection
  • Difficulty to set up own sales channels (access
    to doctors)
  • Regulatory environment very difficult (i.e.
    safety and environment regulations)

12
Global Trend Shift of the Pharma Paradigm
TTY Approach
Economies of Size Economies of Market
Orientation
Source A. T. Kearney (1997)
13
Various Key Drivers for International Pharma
Companies
  • Rising costs of bringing new products to market
    activities (pre-launch, post-approval)
  • Impact of government intervention on industry
    operations (price control, regulation)
  • Increasing role of consumer influencing health
    decisions.
  • Intellectual property protection / management
  • Declining RD productivity
  • Increasing global competition in pharma industry
    (within therapeutic categories, influencers in
    purchasing decision)

14
Key Issues for International Pharmaceutical
Companies
  • Timely development of new products effective
    management of RD pipeline
  • Effectively launch to peak sales
  • Improving success rates of strategic alliances
    and become a preferred partner for alliances
  • Develop marketing strategy and identify
    opportunities

15
Multi-National Companies
MNCs are getting stronger in product development,
marketing sales in each area
To overcome the bottleneck of new product
productivity
MNCs are eager to grab any business opportunities
everywhere
MNC dominate the potential blockbusters
16
Taiwanese Pharma is in a difficult position for
RD
  • Difficulty of Pharmaceutical Research for Small
    Pharma
  • Costs
  • The average cost to develop a new drug has grown
    from US 138 million in 1975 to US 802 million
    in 2000 (Source Accenture)
  • Risks
  • Only 1 of 5,000 screened compounds is approved as
    a new medicine. (Source Accenture)
  • Only 3 of 10 marketed drugs produce revenues that
    match or exceed average RD costs. (Source
    Accenture)
  • 80 of RD expenses result in only marginal
    improved treatments (Source unverified)
  • 250 drugs constitute 90 of the world need for
    drugs. 75 of them are available as generics.
    (Source unverified)
  • Taiwanese companies lack any competitive
    advantage to deal with such a situation - Small
    size of the home market
  • - Small size of Taiwanese science clusters
  • - Lack of research specialists compared to
    international standards
  • Opportunity
  • Value of patents expired between 1997 and 2002
    US 19 billion (Source unverified)
  • Value of patents expired between 2003 and 2005
    US 26 billion (Source unverified)
  • Meanwhile Taiwanese Pharma should focus on the
    feasible No research, but development of
    improved generics and licensed drugs by applied
    formulation
  • Goals Know-how capital accumulation

17
The Trend of Global Pharmaceutical Market
  • MNCs are getting bigger through industry
    consolidation
  • Market opportunities for multinational niche
    player are growing
  • Localization will be the competitive advantage of
    generic market
  • Industry collaboration and contract services of
    value chain activities will be the trend of
    pharmaceutical RD

18
Position of Company type
19
Develop Regional Niche Core Competencies
20
The Trend of Taiwan Pharmaceutical Market
  • Only top 3 generic companies can survive
  • Few generic companies could build competitive
    advantages or unique capabilities and survive
  • Top 20 multinational companies can survive in
    Taiwan

21
The Trend of China Pharmaceutical Market
  • Multinational companies can fill these needs and
    survive
  • China will become the fifth-largest
    pharmaceutical market with the estimated revenues
    of over USD24 billion by 2010. (3X of current
    size)
  • Top 100 generic companies can survive in China
  • Lots of generic companies with competitive
    advantages or unique capabilities can survive
  • Focusing the head of Chinese operations on
    assessing and shaping local abilities are
    essential
  • Only Taiwanese can do success business in China
    market
  • building the abilities to support Chinese
    operation with world-class regulatory specialists
    and marketers can win

22
What Asia Means for MNC
  • Large rapidly growing markets
  • Across the board software, components,
    services, content, etc.
  • Demographics highly attractive long-term
    opportunity
  • Favorable government policy fostering
    biopharmaceutical industry a top priority
  • Key production base
  • Cost-efficient supplier of labors

23
Key Success Factors of Biopharm Companies
  • Develop and accumulate human capital and
    knowledge capital
  • Leverage the networks of value chain
  • Build self-learning organization
  • The guarantee of success survive longer enough
    till the new innovation launched

24
Key Issues for Big Pharma
  • Timely development of new products effective
    management of RD pipeline
  • Effectively launch to peak sales
  • Improving success rates of strategic alliances
    and become a preferred partner for alliances
  • Develop marketing strategy and identify
    opportunities

25
TTYs Visions
Becoming one of the most innovative
biopharmaceutical companies,
specialising in anti-cancer drugs in Asia, and
specialising in new formulation
technology Becoming the first international
pharmaceutical company focusing
on prevalent Chinese disease. Focusing on
marketing and new drug development (MD)
26
Strategic Plans for 2005 to 2010
Our planning
27
Applicability of Alliances to TTY
  • Alliances can be build along each function of the
    value chain, in case of the existence of
  • A clear win-win situation (mutual benefit)
  • A situation where a prisoners dilemma can be
    avoided (avoidance of mutual harm)
  • The most critically functions are the most
    interesting for international alliances
  • RD Alliances Licensing and product development
  • Marketing and Sales Alliances Market knowledge
    and coverage
  • National alliances can be used for a maximum
    leverage of
  • Clinical trials
  • Production

28
TTYs Specific RD Development Strategy
Discovery
Marketing
Phase III
Phase II b
Phase II a
Phase I
Pre-Clinical
Concept Approval
lead
candidate
Taiwan
China
US EU
?
29
TTYs Position
  • TTY is focusing on marketing and new drug
    development (MD)
  • Position in the industry value chain
  • Be the best Asia partner of international
    biopharmceutical companies
  • Geography focus on Taiwan China
  • Build core competences of channel management
    new drug development
  • Speed, speed speed
  • Co-develop the early phase new drug with
    international biopharmceutical companies to
    create and share the IP right

30
Key Successful Factors
  • Bringing corporate strategies into operation
  • ????????????
  • Training and recruiting right people
  • ??, ?????????
  • Effective management (PDCA) of pipeline and
    portfolio.
  • ????, ??, ??, ???????????
  • Becoming a preferred partner for alliances in
    licensing.
  • ????????????????????
  • Reducing time to reach high sales (fast
    penetration)
  • ???????????????

31
Competitive Advantage
DC Core Competence
32
Competitive Advantage DC
  • DC Team
  • New formulation techniques of slow-released and
    liposomal products and new indications
  • Integrated DC team
  • Project evaluation
  • Formulation
  • Pre-clinical studies
  • Clinical studies (CRA team)
  • Regulation
  • Project management

33
Competitive Advantage DC
Core Technologies
  • Liposome technology
  • Production technology of liposomal drugs
  • New-generation liposomal techniques have been
    developed and patents had been filed.
  • Lipo-Dox, LAIA97, LIIA01
  • Sustained release technology
  • Slow-release product development including high
    dose and low solubility drugs.
  • Regrow SR, Lacoxa, GNTA98, TTTA01
  • New indication development of anti-cancer drugs
  • New indication clinical studies in oncology
  • UFUR, Thado, Oxalip, Asadin, Lipo-Dox

34
Competitive Advantage DC
Brief History of Clinical Trial of TTY
  • 1996 DOH Taiwan issued 1st edition of GCP
    guideline
  • JIRB in Taiwan was established
  • TTY established the SOPs of GCP
  • 2000 The first GCP anti-bacterial drug in
    Taiwan
  • The first GCP anti-cancer drug in
    Taiwan
  • 2000 Phase I trial of thalidomide conducted in
    Taiwan
  • 2000 Eight clinical trials approved by IRB/DOH
  • Clinical trials on new indications started
  • 1. Phase III trial of Thado for HCC
  • 2. Phase II trial of Oxalip for GC
  • 3. Phase II/III trial of Asadin for
    HCC
  • 2003 Phase II trial of Oxalip for NSCLC

35
Competitive Advantage DC
Clinical studies for anti-cancer drugs
40 clinical trial results were published or
presented
36
Competitive Advantage DC
  • NDA Registration Experience
  • According to DOHs Criteria of New Drug, nine new
    drugs were launched.
  • An innovative learning network and professional
    integration ability to speed up the development
    and commercialization of new drugs
  • 43 trials are either accomplished and or are in
    progress

37
Competitive Advantage - Production
  • New plant specialized in production of
    anti-cancer drugs was built in Taiwan in 2000
  • Hai-Pu GMP plant was certified in China
  • Hai-Pu oncology plant was certified in China

38
Competitive Advantage Marketing Sales
  • Brand marketing ability
  • Channels penetrated all medical centers
    teaching hospitals in Taiwan
  • Hai-Pu has already extended its channels to East
    Central China

39
Why Partner?
  • Grow at home, go abroad strategy no longer
    viable
  • Partnering makes emerging growth firms move in
    swift
  • Only large companies can afford time,
    cost-consuming, me-alone penetration
  • Lots of partnering opportunities with Asian firms
  • U.S. market is their No. 1 target
  • U.S./Asian technology highly compatible/mutually
    adaptable
  • Survival strategy during recession
  • License your IP in exchange of capital

40
TTYs Alliance Strategies
  • Know your position
  • Your partners Who are they?
  • Map out how you want alliance to work
  • Play to your core competence
  • FIT your position
  • Localized Marketing Sales
  • Involve the right people
  • Well Planning, Implementation and Controlling
  • Leverage the power of niche products
  • Looking for affordable, safe, and efficacious
    products
  • Grow at home, go abroad with your partners!

41
Who are Potential Strategic Partners?
  • Pharmaceutical companies
  • International, national, niche
  • CROs
  • Vertical integrators
  • Big biotech
  • Consolidators (e.g. Elan)
  • Other companies which dont fit the usual mold
  • Hospitals, philanthropic organizations, etc.

42
Types of Alliances
  • Definition of alliance
  • Explicit agreement to leverage combined
    resources to achieve a competitive advantage
  • Types of partnering
  • Licensing (benefit for money)
  • Co-operative alliance (mutual benefit)
  • Operate typically as virtual organizations
    sometimes minority equity investments
  • Frequent applications
  • Development
  • Co-marketing
  • Co-promotion
  • Joint venture
  • Has typically an entity of its own
  • Frequent application Collaborative research and
    development
  • (Merger)
  • Two directions of partnering
  • Vertical collaboration, i.e. biotech discovers
    drug and pharma develops and markets the drug
  • Horizontal collaboration, i.e. collaborative
    research of two pharmaceutical companies

43
Conclusions for TTYs Business
  • Impossibility of New Drug Discovery
  • TTY focuses on improvement of existing drugs
  • Global pressure on Pharma to assure
    capitalization of investments in the market by
    the means of market orientation throughout the
    value chain
  • Strategic planning of RD investments
  • (...) ?
  • Operational excellence of Marketing
  • TTY strives for mastery in Marketing
  • Fields where alliances can contribute to TTYs
    business
  • Formulation
  • Marketing

44
Problems of Alliance Building
  • Requirement for alliance building Complementary
    competences of the partners
  • Problem What to bring to the deal?
  • TTY RD capabilities (?)
  • 2 D-technologies Lipo and SR
  • - no R-technologies
  • - no patents
  • - competencies build for Taiwan
  • TTY market position ()
  • Sales Strength in important HP channel
  • Marketing capabilities of personnel
  • Strength of brand
  • - Size of Taiwanese market
  • - IP protection in Taiwan
  • TTY financial power (-)
  • TTY production (-)

45
Thank you!
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