How to succeed in generics: It’s simple, but...

I wrote recently about why I love working in generics despite – or actually because of – the many challenges of this volatile and highly competitive business.

In September, we celebrated the 35th anniversary of the Hatch Waxman Act, which paved the way for today’s US generics industry, and that prompted me to think about the link between “just” doing what you love and actually doing it well.

Of course, notwithstanding the claims of thousands of “self-help bibles”, the fact that you love doing something is no guarantee of success. It’s a great start, but you also need the basics: a clear understanding of what customers want and what you really do better than your competitors (not to mention a healthy dollop of luck!).

I see three keys to sustainable success in generics: a broad portfolio to meet customer and patient demand, competitive and flexible production, and an organization equipped for constant change. That sounds easy, but there’s a hitch: they can be mutually exclusive!

A broad portfolio

As in any industry, there is room for niche and local players, but a generics company that wants to make a difference globally must embrace two things: choice matters, and nothing lasts.

Choice matters because, all else being equal, customers typically gravitate to the supplier who comes first with the broadest range of products – just as individuals tend to buy their food supplies at a single supermarket.

What’s more, new generic medicines reach the market all the time as reference medicine patents expire. So producers need to be first, or at least keep pace with the competition; otherwise, they’ll be stuck trying to sell “last week’s vegetables”.

Competitive supply

I said that customers tend to go for the broadest offering when all else is equal. The biggest exception to the rule is obvious: the price. As with supermarkets, there is some room for generics companies to differentiate based on quality, brand etc – but only so much.

In the long run, generics companies will succeed if they are set up economically to be “first in, last out”. That means being both consistently first to market and best positioned to compete when (not if) prices drop. So, you need to keep overall production costs in line with the global competition.

Ultimately, customers want the widest possible range of products (with supply guaranteed) – but they also want the low prices (i.e. costs) that typically result from manufacturing large batches of just a few products. Unfortunately, in the standard operating model, this is a contradiction.

As I said, it sounds simple, but...

Organizing for change

You can fix a lot by having the right systems and processes, but I believe the ultimate success factor is something far less tangible: it’s having people with a true “generic mindset”. Probably the single most important component is the ability to organize your company so that it’s not only able to deal with constant change, but is actually set up to do so.

And, as with any cultural change, the starting point is to ensure that you reward people for the behaviors you want to see in practice. In the case of my company, we aspire to put the patient and customer first, drive rapid decision-making, cultivate an appetite for calculated risks, and be willing to admit when it’s time to try something new.

One final thought: success in generics is still very dependent on teams who combine strong commercial skills with the ability to make the most of local market knowledge and opportunities. You really do need to “think global, act local”.

That’s my two cents. I’d be curious to know your thoughts on how to succeed in generics – or in anything else, for that matter...