Business Development & Licensing Journal For the Pharmaceutical Licensing Groups
Issue 16 | September 2011 www.plg-uk.com
The keys to successful entry into the US market
How can crowdsourcing help drug development?
Make the most of your forgotten assets
programs, including Medicare, Medicaid, and
the Veterans Administration. Geographically,
Medicare reimbursement decisions vary
widely across national and local jurisdictions,
the idea being to grant individual regions
flexibility in their reimbursement options.
These payer groups also have at their
disposal a variety of tools that indirectly
influence who receives therapies and
what they pay. One plan may provide easy
access to products with low co-pays and
few hurdles, such as a step edit or prior
authorisation. Another may force patients
through a gauntlet of access restriction
challenges. Meanwhile, the first plan
may extract significant rebates from the
manufacturers of those products that patients
seem to acquire so easily. Geographically,
these competing programs may overlap,
intertwine and abut in a system driven more
by patient age, employment status and
personal choice than by state, county or city
boundaries.
Connecting with consumersUnlike in many other countries, direct contact
with patients by pharmaceutical marketers
is permitted in the US, allowing for the
creation of patient-directed commercialisation
strategies. Programs such as DTC advertising,
couponing and web-based promotion are
all permitted in the US, but the rules are
complicated.
Simply knowing when to get the
necessary approvals and from whom
presents the first hurdle. Pharmaceutical
F our key factors drive a company’s
strategy for entry to the US market. First,
the options may be limited by financial
resources and in addition the company
leadership’s tolerance for risk will influence
its willingness to apply those resources to
the US market. The size of the opportunity
for the product and the market complexities
associated with making the most of that
opportunity make up the third and fourth
factors. Leaders of well-funded companies
emboldened by an enticing product forecast
may quickly overcome traditional risk aversion
but they should do so with a well-informed
understanding of the challenges they face.
In addition to preparing for the general
business environment, leaders in the
pharmaceutical industry must build
knowledge of the industry’s unique operating
requirements. Although ultimately no more
complex than any other market, the US does
present its own set of challenges. It has a
fragmented reimbursement environment,
unique freedoms and limitations around
direct-to-consumer (DTC) advertising and
complex regulations relating to the sales force
and its access to physicians.
ReimbursementBusiness leaders accustomed to single payer
environments will find the US reimbursement
system dauntingly complex. It is fragmented
in many ways, with reimbursement decisions
made by a range of payers, including insurers,
employers and pharmacy benefit managers,
all guided by a panoply of government
Any ex-US company looking to bring a pharmaceutical product into the US for the first time faces a hard choice – to go it alone, sign a licensing deal or embark on an acquisition. Careful consideration is needed to decide on the right strategy.
By Ben Bonifant, Senior Vice President and Practice Area Leader, and Eric Rambeaux, Senior Practice Executive, Corporate Development, Campbell Alliance
About the authorsBen Bonifant is Senior Vice President and
Practice Area Leader, Campbell Alliance.
He is the leader of Campbell Alliance’s
Business Development practice, assisting
pharmaceutical and biotechnology companies
with key licensing and acquisition initiatives.
He also acts as a strategic advisor to venture
capital and private equity decision makers.
T: +1 919 844 7100
Eric Rambeaux is Senior Practice Executive,
Corporate Development, Campbell Alliance.
Keys to successfully entering the US market
4 Business Development & Licensing Journal www.plg-uk.com
advertising is regulated by the US Food
and Drug Administration’s Division of Drug
Marketing, Advertising, and Communications
(DDMAC). Product sponsors of prescription
advertisements must submit their
promotional materials to the FDA around
the time the materials are initially put into
public use, although a majority of product
sponsors voluntarily submit their broadcast
advertisements to DDMAC for prior review
and comment as the materials are being
produced. The most common violations
cited by DDMAC are instances when
pharmaceutical ads overstate a product’s
efficacy, expand the indication or the
patient population approved for treatment,
or minimise the risks of the product either
through inadequate presentation or omission
of information.
The rules around DTC advertising in the US
are not limited to government oversight. The
pharmaceutical industry’s trade and advocacy
organisation, the Pharmaceutical Research
and Manufacturers of America, released
its own Guiding Principles on Direct to
Consumer Advertisements About Prescription
Medicines in 2005. This action was designed
to use industry self-regulation to head off
potential congressional action against DTC
advertising in the wake of mounting criticism.
Selling to physiciansAs in other markets around the world,
efforts to market and sell prescription drugs
to physicians are highly regulated in the US.
In the mission to convince a physician to
prescribe one drug over another or to begin
prescribing a new therapy option, US sales
representatives are under strict constraints
regarding what they can and cannot say
to their physician audience. For marketers
entering the country for the first time, an
understanding of the rules and regulations
particular to the US is vital.
Companies new to the US must
develop an appreciation for each of these
factors and many more. They also must
build strategies that recognise how these
elements are inter-related. For example,
a company facing difficult payer access
may rely more heavily on DTC programs,
including couponing. Alternatively, offering
an overly generous sampling program may
undermine profitability for a product with
open payer access and where physicians
welcome additional information from sales
reps. Tools for effective pricing, creative ways
to gain access to physicians, and alternative
commercial programs are product and
market specific. There is no single approach
to the US market, and what works in one
arena may turn out to fail miserably in a
different product situation.
Weighing up the optionsIn the face of these challenges, companies
in recent years have pursued a range of
strategies (see figure 2). Each of the main
strategic options for bringing a product into
the US market – going it alone, licensing,
co-promotion, or acquisition approach
– carries its own set of advantages and
disadvantages. Weighing up these factors
will help push decision makers toward one
option or another (see box: Questions for
consideration, page 8).
Going it aloneBuilding an independent US commercial
organisation from scratch may appear the
best way to maximise income. Removing
co-promotion or licensing partners from the
equation ensures all product revenue goes
to the brand owner. Also, the product under
consideration may be the first of a string of
assets. Developing capabilities for an initial
product forces the company to build its
own knowledge of the US market, making
launching future products easier.
Unique US requirements mean companies
without existing expertise need enormous
investment of resources to build a fully
Although ultimately no more complex than any other market, the US presents its own set of challenges. >>
Fig 1: Deal distribution by year for various territoriesThe general 2010 trend showed a decline, but the number of deals for Europe and the rest of the world (ROW) has been relatively stable.
Nu
mb
er o
f d
eals
Year
35
30
25
20
15
10
5
02006 2007 2008 2009 2010
Source: Windhover Database. Updated 2 May 2011.
Europe onlyEurope & ROW
North America & ROWNorth America only
www.plg-uk.com Issue 16 | August 2011 5
What appears to be a profit-maximising choice can lead to extended periods of negative returns.
>> functioning independent commercial
organisation. If unsuccessful, companies
may burn significant energy and cash to
little effect. What appears to be a profit-
maximising choice can lead to extended
periods of negative returns.
Out-licensingOut-licensing the product to a US-based
company or one with an established presence
allows the entrant to take full advantage of
existing market knowledge and limits the
investment of money and resources. But
returns will be limited, as product revenue
will be shared. This strategy also keeps the
ex-US company distant from US marketing
activities, preventing the opportunity to build
up market knowledge.
When a company decides to license a
product, about 75% of the time it partners
with a regionally focused firm. The in-
licensors tend to be specialty-focused players
with strong commercial capabilities, limited
research and development capabilities and
little consideration for ex-US expansion
(see figure 3). The vast majority of assets
involved in regional deals are marketable or
very late stage assets. These characteristics
are fundamentally important for products
targeted at highly competitive areas or when
commercialisation requires large numbers of
in-market personnel.
The out-licensing approach was chosen by
Spanish pharmaceutical company Almirall,
which licensed its phase III candidate
LAS34273 for chronic obstructive pulmonary
disease and LAS100977 for broncho-
constriction in patients with asthma to Forest
Laboratories US.
Co-promotionCo-promotion strategies offer a middle way.
Companies can co-promote with a contract
sales organisation, or with a partner around a
single pharmaceutical product or around an
entire therapeutic area.
The co-promotion option allows an ex-US
company to begin building its own market
knowledge by learning from its US partner
and by getting first-hand experience with its
own commercial efforts. The strategy also
requires less investment than an independent
commercial effort while ensuring more
revenue income from the product than a
licensing strategy.
A co-promotion strategy affords the
company the opportunity to build market
knowledge so may be a valuable stepping
stone towards developing an independent
commercial organisation. A company may
choose to find a commercial partner to assist
with sales and marketing of a less strategic
asset with a view to developing the expertise
to go it alone with its primary asset.
This approach requires ample time to build
expertise with the less strategic asset. When
time is short, an ex-US company may be
compelled to turn to acquisition.
AcquisitionThe acquisition strategy lies outside the
spectrum of the options described above. An
ex-US company of sufficient resources and
size may purchase a US company matched
to the product’s commercialisation needs.
By absorbing and bringing the US company
into the fold, this approach provides instant
access to the US company’s existing market
knowledge while ensuring all revenue
from the product is delivered to the parent
company outside the US.
In 2008, speciality pharmaceutical
company Ipsen, based in Paris, took
three significant steps towards building a
commercial presence in North America. In the
field of neuromuscular disorders, Ipsen signed
an agreement with Vernalis to acquire its US
operations, which became Ipsen’s platform
6 Business Development & Licensing Journal www.plg-uk.com
for the launch of Dysport. In the field of
endocrinology, Ipsen acquired Tercica, and
in the field of haematology, Ipsen entered
into an agreement with Octagen to acquire
all of its OBI-1 related assets, a recombinant
porcine factor VIII.
Recently, even companies with an
established US presence have chosen
acquisition to enter new therapeutic areas.
The challenges posed by the oncology
market help explain why so many Japanese
companies have taken this approach.
Takeda’s acquisition of Millennium in 2008,
Astellas’s acquisition of OSI in 2010 and
Daiichi Sankyo’s acquisition of Plexxicon in
2011 all fit this profile.
Decision makers will need to consider
factors such as commercial requirements, the
payer landscape, the degree of consumer
involvement, the level of competition, and
physician access. Within a competitive
category, companies may also be more keen
to retain control over strategic decisions, such
as pricing and resource deployment. This
desire can push decision makers toward the
acquisition strategy.
In contrast, the more a product uniquely
fulfils an unmet medical need to a focused
prescribing group, the more likely the
company is to enter the market independently,
especially where reimbursement is not
anticipated to be as great a challenge.
When Dainippon Sumitomo Pharma Co.
began exploring options for introducing
its schizophrenia drug, Latuda, to the US
market, executives knew they would need a
strong commercial organisation to launch the
product successfully. They had three options:
build the organisation themselves, partner
with a big pharmaceutical company or buy
a smaller US-based company with the right
resources already in place to do the job. A
thorough analysis of its opportunities led
Dainippon Sumitomo to purchase Sepracor, >>
Figure 2: US commercialisation deal strategies
ActionCompany
In their second partnership, European drug company Grunenthal licenses to Forest
Laboratories exclusive US and Canadian rights to its pain compounds GRT6005 and
GRT6006. Deal date: December 2010
Italy’s Chiesi Farmaceutici grants specialty pharmaceutical company Cornerstone Therapeutics
an exclusive US license to sell its porcine-derived lung surfactant Curosurf (poractant alfa)
for the following 10 years (renewable thereafter automatically in one-year increments). In
return, Chiesi receives 11.9 million Cornerstone shares, becoming the majority shareholder of
Cornerstone. Deal date: May 2009
Spanish pharmaceutical company Almirall out-licenses US sales and marketing rights to Forest
Laboratories for LAS34273 for chronic obstructive pulmonary disease in 2006 and LAS100977 for
bronchoconstriction in patients with asthma in 2009. Deal dates: April 2006 and December 2009
Acadia grants Biovail Laboratories International US and Canadian rights to its phase III
selective 5-HT2A inverse agonist pimavanserin for neurological and psychiatric diseases.
Acadia retains rights in all other territories. Deal date: May 2009
Sanofi-Aventis licenses exclusive US development and commercialisation rights to Aeterna
Zentaris’s cetrorelix pamoate for benign prostatic hyperplasia. Deal date: March 2009
Portuguese drug maker Bial-Portela licenses the rights to commercialise the epilepsy candidate
eslicarbazepine in the US to Sepracor. Deal date: February 2009
Dainippon Sumitomo Pharma purchases the outstanding shares of common stock of Sepracor.
In July 2010 the Sepracor name is changed to Sunovion Pharmaceuticals in the US.
Deal date: October 2009
Shionogi completes the acquisition of Sciele Pharma through a cash tender offer followed by
short-form merger. The deal allows the Japanese pharmaceutical company Shionogi to expand
into the US market. Deal date: October 2008
Ipsen completes the acquisition of Tercica in North America to establish its global presence in
endocrinology. This is the third of Ipsen’s three steps to globalise its specialist care business.
Deal date: October 2008
Daiichi Sankyo concludes an agreement to acquire Plexxikon, a privately held pharmaceutical
company based in Berkeley, California, with a late-stage oncology product, PLX4032.
Deal date: March 2011
Astellas Pharma completes the acquisition of OSI Pharmaceuticals for $4 billion through a
short-form merger. Deal date: June 2010
Takeda Pharmaceutical completes the acquisition of Millennium Pharmaceuticals through a
tender offer and subsequent merger of a wholly owned subsidiary of Takeda into Millennium.
Deal date: May 2008
Grunenthal
(Licensing)
Chiesi
Farmaceutici
(Hybrid)
Almirall
(Licensing)
Acadia
Pharmaceuticals
(Licensing)
Aeterna Zentaris
(Licensing)
Bial-Portela
(Licensing)
Dainippon
Sumitomo
(Acquisition)
Shionogi & Co.
(Acquisition)
Ipsen
(Acquisition)
Daiichi Sankyo Co.
(Acquisition focused
on oncology)
Astellas Pharma
(Acquisition focused
on oncology)
Takeda Pharmaceutical
(Acquisition focused
on oncology)
www.plg-uk.com Issue 16 | August 2011 7
integrating the company with Dainippon
Sumitomo Pharma America and rechristening
the combined organisation with the new
name Sunovion Pharmaceuticals.
A year and a half earlier, Bial-Portela
also chose Sepracor as a commercialisation
partner, but the Portuguese drug maker
followed an entirely different approach,
licensing the rights to commercialise its
epilepsy candidate eslicarbazepine in the US
and Canadian markets.
Getting acquiredOne other strategic option may be attractive
to smaller ex-US organisations looking to
establish a foothold in the US – they may
choose to position themselves to be acquired
by a larger US business to take advantage of
the resources of such an organisation.
Picking a partnerDecision makers should consider several key
business questions in regard to potential
partners. For example, what do partners
have to gain in terms of new markets, share
growth, product extension or incremental
use of sales force? What are their risks?
What actions have they taken in this area
already? What other options are they likely
to consider? Do they bring the required
commercial capabilities?
Most important is the consideration of
the potential partners’ core capabilities as
they relate to the product’s potential success.
Some potential partners, for example, are
masters of contracting and payer access,
others may be highly successful at developing
and executing DTC strategies and consumer
access, while some may possess a large and
effective field force of sales representatives.
Assessing the capabilities of one company
versus another is challenging but necessary
when making this type of strategic analysis.
It is also important to map each potential
partner’s need for a deal as well as its history
of completing a deal with a structure as
envisioned by the company looking to enter
the US market. Balancing potential partners’
likelihood of matching the desired deal
structure against their company capabilities
provides a worthwhile insight that the ex-US
company can use in approaching these
potential partnerships.
ConclusionFor companies outside the US looking to
bring a product to the US market for the first
time, the opportunities can be enormous.
But so are the challenges. Few will go it
alone; some will seek the expertise they
require through acquisition and many will
tap into much needed resources via strong
partnerships. Through careful analysis of
their company’s own skills and resources,
the market potential and characteristics of
its product and the scope and capabilities
of potential partners, decision makers can
determine which commercial strategy has
the most potential to make their product a
success in the all-important US market.
Questions for consideration
In addition to creating a profile of the capabilities a potential partner would possess, decision makers should
create a profile of the preferred deal structure in which their company would be willing to participate. There is a
wide range of questions to consider in determining such a deal structure.
• Within the terms of the deal, how important is it for the company to recognise revenue or to have responsibility
for product launch and pricing?
• Is it important that the partner be willing to assist in developing managed markets capabilities?
• Should sales and marketing operations fall under a joint steering committee, with the decision makers’ own
company having final authority?
• Should the company have strategic input on a sales force incentive compensation plan or sales force training?
Whether for Europe or North America, the in-licensers in region-only deals tend to be the specialty-focused players in the regions.
Only a small number of the major EU regional pharmaceutical companies is represented in the
European in-licenser group(e.g., Almirall, Grunenthal).
Forest Lab, Endo, Hospira and the generic companies Watson and King were among the
most active in-licensers in the 2006-2010 period.
Deals for Europe only Deals for North America only
Fig 3: Profile of in-licensers for regional deals
North America
5%
Europe18%
Japan10%
Japan5%
Note: regions refer to the region of origin of the companies involved.Source: Windhover Database. Updated 2 May 2011.
Europe85%
North America
77%
Global co.20%
Global co.11%
Regional co.65%
Regional co.62%
Emerging co.3%
Other 1%
>>
8 Business Development & Licensing Journal www.plg-uk.com
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