S and M

Sales and marketing, of course.  When I joined Wyeth Pharmaceutical’s business development group from directing technology transfer at a “non-profit” academic medical center, a new colleague set me straight:  “We don’t make a dime until a customer buys our product.”  Not entirely accurate since pharmaceuticals are not off-the-shelf products, but the meaning was clear:  the entire enterprise, at the time about 10,000 employees, $10 billion in annual sales, and my salary, depended on someone buying a Wyeth product.  We in BD were responsible for finding leads to new products, but it was the sales and marketing group that made the cash flow.  Fast forward to now, if I were the sales and marketing person for a company with a drug that may be useful in treating a global (neglected) disease, how do I make the sale?

One sales channel that I have mentioned in previous postings is that used by the international agencies, national health systems, or sometimes nongovernmental organizations (NGOs) to purchase large volumes of drugs or vaccines for the big three neglected diseases (malaria, tuberculosis, and HIV/AIDS) or for childhood immunization programs.  These intermediary purchasing agents are typically funded by governments and foundations, identify and certify suppliers, and negotiate prices and sometimes have funds to subsidize the purchase.  Examples are the Advance Market Commitment program of the Global Alliance for Vaccines and Immunizations (GAVI AMC, my post of 1/20/10), the Affordable Medicines Facility for Malaria of the Global Fund (AMFm, my post of 6/10/10) and the Global Drug Facility for tuberculosis drugs (GDF).  These organizations are helpful if you are a major pharmaceutical company with a product that you want to sell and can make to sell make in the hundreds of millions of doses with a small profit margin.  But what channels are there for a company with a product with lesser demand?

My poking around the internet found three not-for-profits companies (distinct from “non-profits” in that each seeks to make a profit to sustain their operations), and I suspect there are others that I didn’t find.  The first is Mission Pharma (Mission Pharma) which is based in Denmark, founded in 1975, and has a mission “to be the preferred provider of generic medicines and medical devices for the benefit of economically disadvantaged populations.”  Their main product groups are generic pharmaceuticals, medical devices and equipment, and medical kits, representing about 2,500 different products that they distribute to customers in 70 countries, primarily governments and NGOs.  Two drawbacks though for the my hypothetical company are that Mission is fixed on generics, I assume because they believe that is the only way to get an affordable price, and their starting point is an order from a customer (MP process), meaning they are not much help in marketing a new product that no one may know about.

The second company is IDA Foundation (IDA) which is headquartered in the Netherlands with regional offices on most continents.  In business since 1972 when it began International Dispensary Association, IDA now has 160 employees, more than 800 customers and distributes 3,000 products in 100 countries to reach annual sales of $150 million.  Although IDA also focuses on generic medicines obtained from the lowest cost provider, it apparently will resell patented products but “only when they are more affordable or if they are compulsory for meeting funding requirements [of the donor] or if there are still valid patents in a particular country for those products.”  Like Mission Pharma, IDA is focused on being a procurement company, responding to requests for existing products, but it also offers a range of services that could be helpful to  a company seeking sales and marketing assistance.  These include warehousing and distribution, repackaging and labeling, in-country knowledge, and country-by-country product registration (IDA services).

The third is WomenCare Global (WCG) and its recently formed subsidiary, Devapharma Trading Ltd.  WCG “provides access to high-quality, innovative and affordable reproductive healthcare technologies for contraception, fertility, and pregnancy management” to both public and private sectors in the underserved markets of Africa, Asia, and Latin America and, notably, it is oriented to “selling” products as opposed to responding to purchaser requests.  WCG apparently formed its Devapharma group to focus this effort, and it is now responsible for “all product-related activities including global sales, regulatory standards, quality assurance, pharmacovigilance, medical affairs, logistics and supply chain management, and product commercialization” (WCG press release).  While all are important, the last, product commercialization, is particularly needed by a small company seeking a global health market.  My quick look at the WCG product offerings found one example of WCG helping in commercialization; WCG is offering Essure®, a non-surgical permanent birth control method, for which it licensed country–specific distribution rights from the originator company, Conceptus, Inc., of Mountain View, CA (another WCG press release and Conceptus).  While not commercialization of a pharmaceutical product, it is a reasonable analogy.

So while there is not a ready-made solution for the S and M person at my hypothetical global health drug company, there are functional, and apparently profitable, intermediaries as potential partners for the sales and marketing of his/her product.  Some of the questions the parties may want to answer while negotiating their distribution agreement:

-can the intermediary be persuaded that the product really is high quality and worth adding to their offerings?

-is the intermediary willing to enter into an exclusive agreement and for how long?

-is the intermediary willing to risk being accused as a “shill” for a money-grubbing corporation?

-can the parties find a supply price that is viable for the company?

-is the intermediary willing to recognize the company’s patents and not offer knock-off products just because the price is lower (hence rewarding innovation)?

-for the company, is it worth the effort of using an intermediary to build global sales (the alternative being licensing to a regional pharma company with a sales force)?

Others?

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