BEYOND BLOCKBUSTERS

It's not a new story. Expiring single molecule patents, historically poor replacement pipelines, and rising R&D costs are pushing the pharmaceutical industry to move beyond the blockbuster model. It's an industry-wide challenge and South Africa is no exception.

Issues related to losing exclusivity rights are also affecting the South African operations of multinational corporations (MNCs). Local affiliates demonstrate varying degrees of creativity in remaining relevant and competitive in an evolving industry.

Figure 1: Previous period growth % in volume - IMS Data

Other affiliates favor proximity, trying to identify and find solutions to local needs. "Maybe in an unusual way, the best thing that has happened to Sanofi South Africa was that our pipeline did not deliver," says John Fagan, general manager of Sanofi South Africa. "We came to terms with the fact that we were not going to launch two new chemical entities every year. We, in turn, launched a local business development unit that searches for business opportunities which Sanofi can invest in, in order to grow our businesses," he says.

"From this initiative we have developed both a Generic & Consumer Healthcare Franchise, which has made our generic business model different. We have launched generics of our own products coming off patent, forming strategic alliances with other MNCs whose products will also be coming off patent—and we became the MNC company of choice to launch a second generic, owing to our expertise and trusted product quality," says Fagan.

Some critics are concerned that so-called "pseudo generics," describing the practice of originator pharmaceutical companies producing their own generic versions, are anti-competitive. They argue that such practice unfairly influences the market prices of future "true generics."

According to Paul Miller, managing director of South Africa for Mylan, the trend is ultimately detrimental for patients. "A lot of innovative companies are introducing pseudo generics to circumvent any future competition. Ultimately, the patients are not benefiting from this reduced competition."

Laura Engelbrecht Joubert, general manager for Abbott South Africa and Africa, maintains that a peaceful co-existence between generics and innovative medicine should be possible. "There is definitely an increased understanding that in most countries the generic and researched-based companies can co-exist to the ultimate benefit of the patient," she says.

Omar Ehsan, general manager of IMS Health Africa

What will happen in South Africa remains to be seen, according to Symon Vokes, senior manager, supplier relations, at IMS. "Worldwide, we have noticed that business models are transitioning to hybrid players, but to what extent are we seeing this happening in South Africa? Do local generic players have the capacity to go and patent products and ensure a pipeline? And on the other hand, are local players interesting targets for the innovative industry?"

For now, when it comes to the future business model in South Africa post-blockbuster, like in so many other countries today, many questions remain.