Setting up a tender organization for life sciences can be a challenge. Not only do you need to deal with the way the tender governance is structured, on top of that, depending on your leadership, you may have to organize your company accordingly. As promised, this blog addresses another even more complex aspect of the organizational design, being “how the lifecycle of your portfolio impacts the tender organization”. Exploring the assumption that Lifecycle may be a key driver of your tender organization and assessing whether this statement can be proven. It is well acknowledged that the products of your portfolio impact the number and the type of tenders your company has to respond to but is there any other factors?
Life Sciences Portfolio
For the organizational design there is no need to go into an extended analysis of the lifecycle. From HighPoint Solutions’ perspective, the following categories of portfolio should be analyzed:
- Patent Protection in non-crowded markets
- Patent Protection in crowded segments
- Loss of Exclusivity
- Loss of Exclusivity without biosimilars
- Loss of Exclusivity with biosimilars
The first easy distinction is the amount of competition within the therapeutic class. In fact, when there is only one alternative, the opportunity for public institution to create a tendering process is limited. Therefore, for companies enjoying the privilege to be alone in a disease’s space, there is no need to create a tendering organization. Nevertheless, this is only the norm in areas of severe unmet needs. Majority of the therapeutic classes have several alternatives nowadays thanks to the progress of life sciences companies’ research and development. In the more common case, there are several players. Even if all players are protected by patent, they are still competing against each other. A good example would be the hemophilia market. Even if the new generation of products is protected by a patent, they will have to go through the tendering process which can include both old and new drug generation. The more crowded the therapeutic class is, the more robust the tendering process should be. At the extreme, the company should have a global strategy with regional leads enforcing it. Regions should be defined based on the archetype of the tender market based on your company’s portfolio to allow for a localization that will respond to the need of each market.
On the other side of the spectrum, in the less crowded therapeutic classes, companies could leverage global tendering policy enforced by tender champions within the affiliates. Such a tender network model has been proven to be really effective by allowing to share best practices on top of aligning on the overall tender strategy.
Specific to Pharmaceuticals, the following category of portfolio is linked to biosimilars. Biosimilars are one of the key area of focus of many companies increasing the alternatives for patient but also increasing the treatment paths for payers. This enables them to setup tendering procedures. Of course, automatic switch from the originator is not the norm but framework agreements could significantly impact the price of such drugs. Biosimilars are increasing the competition and thus the requirement to have a more mature tendering organization. Originators are still in a better position being able to play on safety criteria and legacy demand but the other companies will have to compete in the rough way to gain market share. This will force companies to have a more global tender strategy than if biosimilars weren’t present.
Generics or commoditized medical technology are the most extreme case. It requires tender excellence to compete and remain profitable. All aspects of tender management should be reunited in those organizations to be successful. The global strategy should be achieved, the regional aspects accounted for and of course local operational excellence executed. Generics Companies have to achieve an almost perfect end to end tender management process to be able to compete successfully and sustainably.
As a conclusion, the harder the competition the better companies should be in tender management. Ultimately, it is not the lifecycle that is driving the tender organization but more the amount of alternatives available for tender authorities. Of course, the lifecycle of the product has a lot of impact on the number of competitors.
Learn more about HighPoint Solutions tender management practice by reaching out to Ruven Remo Eul