Brand Management: Sanofi-Aventis Shortens Its Name!

In the play Romeo and Juliet, William Shakespeare famously wrote:

"What’s in a name? that which we call a rose

By any other name would smell as sweet ..."

While I am not so sure about the “sweet part,”  French pharmaceutical giant Sanofi-Aventis believes that no matter what it calls itself it will still be the same old company. To that end, Sanofi-Aventis last Friday announced that it will officially shorten its name to simply “Sanofi.” 

Sanofi is one of the world’s largest pharmaceutical companies based on revenues. It was formed in 2004 in a merger between two French pharmaceutical companies, Sanofi-Synthelabo and Aventis. The reason for the name change; most people (me included) simply called it Sanofi rather than Sanofi-Aventis. And, perhaps more appropriately, the company wanted its name to be “recognizable and easy to pronounce” around the world.

In addition to the name change, the company also declared a dividend of 2.50 euro for its shareholders that will be paid either in cash or stock. The dividend payout will take effect by June 16, 2011

As you may recall, Sanofi purchased Genzyme last month in a $20.1 billion deal. Perhaps the name change was announced because Sanofi-Genzyme is much easier to pronounce and has a better “ring to it” than Sanofi-Aventis-Genzyme?

Until next time...

Good Luck and Good Job Hunting!!!

 

The Pharmaceutical Industry's New Math

Those of us a certain age have all heard of the so-called new math—which by all accounts wasn’t much different than old math—that was suppose to revolutionize the way math was taught at the primary and secondary education levels. While new math may not have not have much different or better than old math from an academic perspective, pharmaceutical companies will have to reckon with the new math associated with the pricing of brand name prescription drugs if they want to remain competitive in the future.

According to statistics offered in a recent New York Times article on Teva Pharmaceuticals, the world’s largest generic drug manufacturer, generics now account for 75 per cent of the prescriptions filled in the United States. This figure is up 47 percent from a decade ago. Further, a recent study from IMS, the research firm that tracks prescription drug use, generic drugs saved the American healthcare system $734 billion between 1999 and 2008. These numbers, coupled with a paltry 25 per cent market share, suggest that brand name pharmaceutical companies must rethink the low volume, large margin pricing strategy that has guided big pharma for the past 50 years. 

As one Teva executive candidly put it, “If you are used to the fat margins of big pharma, it is hard to compete in the rough and tumble of price-cutting generics.” 

The push for wider adoption and use of generic pharmaceuticals and biologics (as compared with brand name drugs) suggests that there will likely be more belt-tightening at big pharma companies in the not-so-distant future.

Until next time..

Good Luck and Good Job Hunting!!!!!!

 

Lilly Shows More Sales Reps the Door

Eli Lilly and Co. announced last Thursday that it plans on cutting 200 sales and marketing support jobs in its U.S. biomedicine group. More than half of those cuts will take place in Indianapolis, the corporate headquarters of the company. The cuts are the latest wave of the drugmaker's previously announced plans to chop 5,500 jobs worldwide by the end of 2011. The layoffs will be the largest since Lilly eliminated 200 jobs from its research laboratories in March.

Big pharmaceutical companies have been laying off marketing and sales reps for the past three years or so in response to lack of newly approved drugs and anticipated revenue losses from blockbuster drugs that are nearing patent expiry. According to a recent survey conducted by SDI Health the number of pharmaceutical sales reps has shrunk to roughly 81,780 in last year’s third quarter from 101,818 in 2005: a nearly 20 per cent. Further a recent post on the Pharmalot blog revealed that “last year, the number of docs willing to see most reps fell nearly 20 percent, the number of prescribers refusing to see most reps increased by half and the number of management-planned sales calls that were nearly impossible to complete topped 8 million” according to ZS Associates, which monitored interactions involving 500,000 physicians nationwide.

Declining revenues from brand name prescription drugs combined with the changing attitudes of physicians to sales reps suggest that marketing and sales jobs in the pharmaceutical industry may become scare in the future. However, as the biotechnology continues to mature, the need for sales reps with backgrounds in molecular biology and protein-based drugs will continue to increase.

While most physicians are very familiar and comfortable with small molecule prescription drugs, their understanding and familiarity with biotechnology drugs is surprisingly deficient. This suggests that PhD-trained life scientists, who are outgoing and don’t have problems “selling”, may want to consider careers in biotechnology sales or marketing.

Until next time…

Good Luck and Good Job Hunting!!!!!!!!!!

 

 

Not All Generics Are Created Equal

The generic drug industry didn’t exist until the passage of the Drug Price Competition and Patent Term Restoration Act of 1984 (Hatch-Waxman Amendments). This piece of legislation, better known in the pharmaceutical industry as the Hatch-Waxman Act, was proposed and adopted by the US Congress because of the escalating costs of brand name drugs manufactured by large pharmaceutical companies (sound familiar?). The act provided the US Food and Drug Administration (FDA) with a regulatory pathway to approve and bring to market “generic” versions of branded drugs that lost patent protection. During the debate over the amendment, and for many years thereafter, branded pharmaceutical manufacturers tried to stifle the growth of the generic drug industry by suggesting that generic versions of their branded medications were unreliable and unsafe. This tactic was partly responsible for the stinted growth of the generic pharmaceutical industry until the mid 1990s when the price of branded pharmaceutical drugs began to skyrocket and insurance companies began to realize that something had to be done to manage rising drug reimbursement costs. To that end, insurers and third party payors began requiring patients to use generics (when available) instead of branded products to cap rising prescription drug costs. Because of this, the generic industry has grown by leaps and bound over the past decade and now threatens the stability of the branded pharmaceutical industry! 

Unfortunately, while increased generic drug use may be good for generic drug manufacturers and insurance companies, it isn’t always in the best interests of patients who use prescription medications. For example, there are a growing number of stories and complaints from patients who were forced to switch from a brand name drug to a generic one and had side effects, or found that their symptoms returned or may have been worse than before. In fact, this happened to my mother who was switched from a brand name pain reliever that worked to a generic version that no longer controlled her symptoms and induced some untoward side effects. Scientifically, there ought to be little difference in the efficacy, safety or tolerability profiles of a branded drug and its generic equivalent. This is because both medications contain the same active pharmaceutical ingredient. However, differences in the formulation of the branded and generic versions of the drugs may be responsible for reduced efficacy or safety and tolerability issues.

While clinical studies conducted by the insurance industry suggest there are no safety or tolerability differences between brand name and generic drugs and the American Medical Association’s assertion that, as a whole, generic drugs do work as well as branded drug, there is some evidence to suggest that some generic drugs may not be interchangeable or substitutable for certain branded medications. This appears to be the case for certain drugs that are used to treat neurological conditions and mental health diseases like seizures, depression and bipolar disease. Lesley Alderman, in an article she wrote in today’s New York Time business sections provides excellent examples of this.   

The problems with some generic drugs may arise as a result of the approval process for this class of drugs. According to provisions outlined in the Hatch Waxman Act which stipulate that a generic version must have the same active ingredient, strength and dosage form as the brand name drug or reference product. The generic version must also be demonstrated to be “bioequivalent” to the brand name drug. This means that the generic product must be shown to reach blood levels (drug concentration) that are very similar to the brand name product. This is usually determined by administering the generic and brand name drugs to a relatively small number (24 to 36) of healthy human volunteers. Generally speaking, once bioequivalence is established it paves the way for regulatory approval of the product. Typically, once approved, many generics receive what is known as an AB rating. Generics that are AB-rated can freely be substituted (by a licensed pharmacist) for a brand name product even though the physician may have written the prescription for the branded product.

In the past, patients were usually given a choice between a generic and a brand name drug —a decision that was largely based on the percentage of the cost of drug that would be covered by insurance. These days, patients no longer have a choice and are generally forced to use generic drugs rather than brand name products based on formulary lists compiled by insurance companies. While I am not practically or philosophically opposed to using generic drugs, there is a growing body of evidence which suggests that not all patients respond the same way to branded and for that matter generic drugs. Therefore, I contend that allowances ought to be made for these differences and patients who don’t respond to (or experience side effects) after taking generics shouldn't’t be denied access to the branded product that, in most cases, was originally prescribed by that patient’s physician. It is one thing to cut costs; it is another to increase a patients suffering or anxiety. If you are concerned about switching from a branded medication to a generic, please read this for some helpful tips and guidance.

Until next time...

Good Luck and Good Job Hunting!!!!!!!!

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Japan's Daiichi Sankyo Co Buy's Generic Manufacturer Ranbaxy

Daiichi Sankyo will buy a controlling interest (50.1%) of Ranbaxy, India’s third largest generic manufacturer.  Daiichi will pay as much as $4.6 billion for the opportunity.

The deal will put Daiichi Sankyo into ninth place in the $120 billion generic-drug market behind leaders Teva Pharmaceutical Industries Ltd. and Novartis AG's Sandoz unit. According to the report “Daiichi Sankyo is mimicking strategies pursued by Novartis and Johnson & Johnson to weather turbulence in the branded-drug industry by diversifying into other markets. The acquisition also gives the Japanese company more reach in emerging regions including India, China and Eastern Europe. “

I think after this deal, that other pharmaceutical companies may consider buying profitable generics businesses. I am not sure why it has taken innovator companies so long to realize that it is much easier to join (buy??) rather than compete with generic manufacturers. It just seems so obvious to me—and I don’t even have an MBA!  Maybe there is some truth to the age-old aphorism “missing the forest for the trees.”

Until next time…

Good Luck and Good Job Hunting!!!!!