What if divesting a pharmaceutical asset were as easy as selling your car?
Pharma products and cars have more in common than you might think… until it comes to selling them.
Sports cars and blockbuster drugs — two things you wouldn’t necessarily put together, but they have a number of common threads:
- Both require disproportionately high upfront investment
- This investment is expected to return significant rewards
- They ultimately go out of fashion, and their appeal falls off
For the proud owners of the automobile (“Car Fan”) and the blockbuster drug (“PharmaCo”), the good times are rolling. People can’t stop staring in the street when Car Fan drives past, and PharmaCo has just topped a billion dollars of sales. Maybe they think about getting a second one! And a third, and a fourth...
After a few years, Car Fan begins to run out of space in the garage. Some of the older cars are becoming costly to maintain and hardly get driven much any more, since he prefers to drive his newer wheels around town. He realises that some of the older vehicles would get more miles from a different owner and, as their value is declining, he elects to sell them on the second hand market. Car Fan is sad to see them go but is happy that he cashed out when he did, for he has made room in the garage and can now invest the money back into what he loves most: new sports cars.
As for PharmaCo, the number of products in the portfolio has similarly become untenable. Over time, it may not make sense for the company to hold onto these off patent, ‘mature’ products. This could be the case for three reasons:
- The product is non-core. The company may want to focus on a certain therapeutic area or specialty that the product does not belong to
- The product is not as profitable as it once was. A decline in sales after the product came off patent, but a high cost base inherited from its blockbuster days
- The product is too complex to manage. Global supply chains, unfamiliar markets, complicated regulatory environments and new quality controls have led to unmanageable complexity and spiraling costs
Like Car Fan, PharmaCo rationally decides that it would be best to sell some of these assets that no longer make sense to own, and invest the cash back into what it does best: developing and launching new blockbuster drugs.
But wait — there is a problem.
There is no easy way to sell (divest) the products.
The complexity is mind-boggling. Negotiating the transaction can take up to a year. Closing it takes a few more months. Then, three to five years of hard work are needed to complete the transfer operationally. The divestment needs to involve everybody: Legal, Regulatory, Supply Chain, Finance, Pharmacovigilance… the list goes on. It can cost over €1M just to run the process — it simply doesn’t make sense.
So, this leaves PharmaCo with two options:
- Continue to manage the products inefficiently, wasting valuable time and resource that could be deployed on value adding activities
- Discontinue the products, freeing up the resources and ‘garage space’, but depriving patients of a perfectly good medicine
Clearly, neither is ideal. But we think there is a third way.
Divesting pharmaceutical products should be as easy as selling your car.
Simple Pharma is on a mission to make this a reality. After handling acquisitions, divestments, and integrations of over 800 SKUs in 40+ markets around the world, we’ve distilled our experience into a proven methodology to deliver the smoothest possible transition of products and services.
“This is the smoothest divestment I’ve ever done.” — Senior Project Manager, Janssen Pharmaceutica (describing working with the Simple Pharma team).
We handle transactions of any size, acting as an outsourced operations partner, as a distributor, or as an acquirer of assets. Please head to our website to find out more.
We believe that divesting pharmaceutical products should be as easy as selling your car. With Simple Pharma, it can be.