Building Virtual Pharma in new markets

Do you need a risk-minimized business model for building and maintaining an organization for marketing, sales and distribution to commercialize a single drug, or just a few drugs in a new market?

‘Virtual Pharma’ is not a new idea, but it is a valid one that has yet to be properly exploited to full advantage by many pharmaceutical companies. The increasingly competitive environment of the industry, along with the new commercial options made available by the internet, suggests that there is significant potential for Virtual Pharma.

Many pharma companies already apply elements of the virtual model to some extent in their operations and, therefore, this is clearly a feasible and accepted business model. The industry is known as somewhat conservative and resistant to change what for them has traditionally been a profitable and successful formula. And yet, by adopting some models from other industries, pharma could improve efficiency and performance in today’s challenging market. Adopting a model that embraces e-business could be particularly beneficial.

Many companies have already made their discovery activities more virtual. As therapeutic targets have become either too specific (requiring top level scientific expertise) or numerically too broad (where companies cannot employ sufficiently large numbers of experts in each field), pharma has had to explore alternatives to home-grown development programs.

Big pharma companies, such as GSK, J&J and Pfizer, have invested heavily in developing programs with leading academic centers, emerging biotechs, venture funds and highly focused specialty pharma companies in order to increase chances of identifying a promising candidate early in its development.

For companies with compounds further along in development, equally attractive opportunities exist in virtual operations by optimizing, spending and conserving cash that would otherwise go to overhead. This is especially important for companies whose portfolio is not yet sufficiently large or advanced to justify an internal infrastructure to support its commercialization.

So there are clear and immediate advantages to a virtual structure, which might include faster commercialization of assets (drug is brought to market faster), less exposure to responsibilities of employing in-house staff (labor laws in Europe can be rigorous and heavily favor the employee), lower cost of operations in early stages of company’s growth (most costs are variable and negotiable), and greater flexibility. A virtual pharma model, therefore, may offer an extremely flexible and responsive low cost option with very few fixed costs and few long term employer liabilities. On the other hand, many executives of pharmaceutical companies feel more comfortable when they are in complete control and so it is important to consider this aspect when negotiating with suppliers of outsourced services. Control may not sacrificed if suitable IT platforms are utilized to link the different suppliers.

Some of the main questions that would need to be asked include the following:

• What are the organizational requirements: which functions are needed and which are not?
• Would the product(s) performance sustain the organization?
• What might the possible impact be on the financial performance? (The sales and revenues would need to be sufficiently high to offset the increased cost of outsourcing)
• How easily could the functions covered in a virtual structure be converted in future if the company’s business justified a more traditional structure?

Depending upon how ‘virtual’ the model becomes, the company may retain functions such as marketing, legal, procurement, regulatory, finance & administration, and human resources. Other activities, including clinical and process development (such as project planning and management), commercial manufacture and supply, and sales, may also be outsourced.

In a 2003 article published in Pharmaceutical Technology Europe, it was said that “to realise the benefits of the ‘Virtual Pharma’ concept, the necessary infrastructure must be evolved and managed in a way that drives out the inherent fear factor. One way to address this issue is to take a function by function approach and build from there”.

If you need help with this, Eularis can examine your business needs, the functions that are essential to either of the structures under consideration, and then consider and quantify the additional elements that may be added through online approaches, in combination with outsourced supply.

Contact us today to find out how we can help plan, create and implement a Virtual Pharma strategy that brings results.