Effective strategies are built upon four pillars: first, achieve an objective understanding and a fact-based analysis of the business context. Second, tailor the strategy to the unique competitive situation and resources of a company. Third, ensure the strategy fits the culture of the company. And fourth, develop a pragmatic implementation plan that may include, if appropriate, a strong change management component.
By combining all four components, CMS Pharma is able to design and systematically implement effective strategies.
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Business Landscape for Western CMOs:
The pharmaceutical CMO business is in its late stage of commoditization with increased pressure from pharmaceutical companies and competition coming from India. The first half of the 2000-2010 decade has seen India establish itself as the de-facto worldwide API (active pharmaceutical ingredient) powerhouse for generics. The second half of the decade has seen India make forays as an alternative supplier for advanced API services. As this trend continues over the next five years, the impact on the business models for Western CMOs will become acute. Businesses will need to respond by establishing tailored de-commoditization strategies leveraging their competitive strengths.
CMS Pharma can assist in developing actionable and customized M&A and business strategies enabling Western CMOs to address effectively market commoditization challenges.
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Business Landscape for India-based CRAMS and pharmaceutical companies:
The rise of India-based CRAMS and pharmaceutical companies as leading suppliers of generics APIs has projected them on an acquisition spree of Western assets held by Big Pharma. The approach to acquire such assets has proven to be ineffective. Big Pharma assets systematically fail to deliver low-cost API manufacturing environments despite massive write-off and low to no book value attached. On the other hand, India-based CRAMS and pharma companies became the target of acquisitions from Europe, US and Japan, among them Matrix, Ranbaxy and Piramal Healthcare. In the wake of their growing presence in advanced API services, we believe India-based CRAMS will shift their M&A strategy to acquire small and mid-size Western CMOs rather than large pharma assets, while Western CMOs will also increase their M&A activities seeking to add an Indian asset base to their production network.
CMS Pharma can assist India-based CRAMS and pharma companies in designing effective buy and sell-side M&A strategies.
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Business Landscape for pharmaceutical companies:
A trend in chemical API asset rationalization started in the mid-2000s as global pharmaceutical companies suffered a decline in new chemical entities (NCEs) approvals. This trend is accelerating, driven mainly by a wave of blockbuster products going generic in the 2009-2014 timeframe, as well as a de-facto tightening of FDA regulations for NCE approvals. Companies such as Astra Zeneca went as far as to announce their intention to divest all its chemical API production assets. Pfizer, Eli Lilly, BMS and many others are driving similar asset strategies.
CMS Pharma has developed a proven methodology and industry benchmarks to manage such projects and assist pharmaceutical companies engage effectively with CMOs to review a potential site take-over or shut-down, structure the process of production transfer to a CMO site, define risk mitigation standards to ensure product continuity at both originator and CMO production sites and assist in overall pricing negotiations. Such projects, dubbed pipeline deals can deliver high returns if properly designed. CMS Pharma's methodology can speed up project timelines, ensure financial targets are set realistically and achieved with an acceptable level of risk for parties involved.