Masterstudiengang "Drug Regulatory Affairs"

Master-Thesis

Global Generic Business: Regulatory oriented Analysis of Development versus Licensing ***

Annika Weyand (Abschlußjahr: 2006)

Language: English
 
Pharmaceutical companies in general and generic companies in particular have to regularly decide whether to develop medicinal products by themselves or whether it is more beneficial to in-license such products.

Several pharmaceutical companies feel impelled through the persistent cost pressure, causing them to concentrate more on their key competences by divesting business units or functions which on a medium term are deemed not to be competitive any longer. Thereby, diverse services are shifted to external providers, such as product development or production. Thus, pharmaceutical companies have to decide whether to further perform own product development and to keep their manufacturing facilities or if it is more profitable to in-license and/or to sell their production unit and to outsource to contract manufacturers. In reaction to the increasing pressure on margins, the industry approaches low cost countries such as India, China or CEE countries on the purpose of regaining shrunken profitability.

Along the analyses within this thesis, certain trends could be identified, which all exert significant impacts on the activities of the pharmaceutical industry. Amongst those are

• Consolidation through mergers and acquisitions
• Alliances and cooperations (in particular in the R&D sector)
• (further) globalization and internationalisation
• Specialization and focus on niche products
• Fierce patent litigations
• Increasingly more own patent claims by generic companies
• Integration of further value added steps into the (generic) value chain
• Outsourcing
• Increasing regulatory requirements

This Masterthesis shall evaluate the factors relevant to decide between In-Licensing as opposed to in-house development, but will also assess potential options for development and production: India or exemplary for CEE countries - Poland. For each of these options, all determining factors identified will be subject to a detailed decision analysis.
The decision in-house development versus in-licensing is exemplarily appraised for a specific business case: a fictive mid-sized company with own R&D and manufacturing facilities. The analysis reveals that despite the general advantages of in-house development, the current business model (about two thirds of the products are developed and manufactured in-house) should be changed in favour of less costly and risky in-licensing activities. Further, it is proposed that the production unit should specialize in modified release products and engage in contract manufacturing. Nevertheless, it evaporates that the recommendation which option to go for will depend on the individual case.

The second decision analysis addresses the current trend to relocate or outsource development and production facilities to low cost countries. Strengths and weaknesses of both Poland (representing the CEE region) and India are analysed in order to identify the best possible option. The outcome of the analysis indicates that both locations offer different pros and cons, but are overall of no significant difference. Hence, individual decisions are to be taken. However, especially with the recent change of the patent legislation, India has lost a significant advantage for generic companies as a preferred place to perform pharmaceutical development programs.

Finally, with a view to the future, proposals are made how to optimize a pharmaceutical value chain, how to arrange for a global marketing authorisation and how to create a more marketing oriented role of DRA-managers, in order to support a sustainable profitability in a changing global business environment.

Pages: 59