Among the hot topics dominating the buzz at the J.P. Morgan Healthcare Conference earlier this year, high on the list were the profound changes impacting generics and specialty pharma. At the conference, I spoke with executives from companies across each of these industry segments and discussed the unique challenges affecting their business. During these conversations, each executive had one common question: “Who are the new leaders who can help my company adapt to the changing market landscape?”
Tough Battlefield in Generics
In the generics arena, rapid change is testing the will of companies focused on this challenging sector. Intense competition from low cost manufacturers and the consolidation of purchasers is driving a freefall in prices for generic drugs that has been weighing on drug companies of all types. The upshot of severe generic drug price erosion has been a wave of downsizing, as companies discontinue or sell off unprofitable assets in order to achieve economies of scale and cost efficiencies.
Big Pharma is compounding the slugfest for generic companies as well – incentivizing drugstores and healthcare providers to prescribe their brand-name drugs over generics, even if it squeezes their own profit margins.
Innovation: Leading Role in Generics Next Act
Facing rising drug shortages and unrelenting price pressure, generic drug makers are desperately seeking a better path forward. At JPM 2019, executives spoke about their desire to find the next great leader who can help navigate a way out of the current market situation. The ideal candidate would bring a much needed infusion of innovation to their organization.
Working with clients in my executive search practice, I have seen signs of this new direction taking shape. I’ve partnered with several companies aiming to recruit and hire a new breed of innovation professional. They want an executive that not only understands product and pipeline selection but can also straddle the worlds of regulatory and commercial – driving bold strategies that will bring forward high value products and create sustainable growth.
Generics companies should understand too that building their innovation engine requires rethinking their approach to talent acquisition. Current pricing dynamics in generics, combined with fierce competition for top talent, have changed the rules in executive recruitment over the last several years. To find the innovation professional that is truly a fit for their unique situation, generics companies must be able to tap into a broader network of candidates and take the strategic steps necessary to ensure they make the right hire.
Strong Growth in Specialty Drug Approvals
At JPM 2019, the outlook for specialty pharma was robust. Companies in this segment continue to experience increasing numbers of FDA approvals of new drugs under the 505(b)(2) pathway. For specialty pharma companies benefiting from these unprecedented opportunities, there is also an equal set of challenges surrounding product launch and commercialization.
The specialty pharma executives I spoke with at the conference managed companies that were typically small, with a strong R&D and clinical focus. At this point in their evolution, commercial operations were not a core competency. For these companies, the challenge was making the transition from an R&D orientation to a commercial focus.
Building the Commercial Arm in Specialty Pharma
Launching a new drug is a watershed moment for any pharmaceutical company. The importance of getting the launch right cannot be overstated. I have seen companies who are set back for several years because they had the wrong commercial strategy in place for their new products, or they did not adequately build their commercial team.
Having the right talent in place to manage the commercialization process is essential. However, finding the right people who possess the unique set of skills required and building out a broader team to support a launch can be daunting. The advice I give my clients is to start early – at least a year before anticipated product approval – and cast a wide net, evaluating a range of candidates before settling on the professionals that are right for their organization.
About the Author:
Dan Sherwood leads the Generics and Specialty Pharma practices at Klein Hersh International. He focuses on the recruitment and hiring of executive leaders for off patent product and 505(b)(2) focused organizations. Dan conducts searches from vice president roles through “C” level executives and has helped many organizations build out their innovation engines and commercial arms.