MNCs bid for ‘themed’ victory with innovation and legacy

Reinterpretation of new and off-patent drugs …reorganized to specialty drugs

Originals sell strong in the Korean market … reimbursement approval determines success and failure of drugs

Whichever the cause, the decision of the Big Pharmas to ‘focus on their strengths’ is more than just a pretext for reorganizing their businesses.

 

Setting a clear ‘theme’ can have a positive effect on the image of a company.

 

Also, dividing its business does not mean a loss of drive.

 

However, such divisions will bring one company to lose its cash cow, and the other to lose its new product line.

 

In this sense, the divisions will intensify companies’ competition for survival and movement to specialize their domain.

 

◆Reorganizing by theme for a reason=The theme of a company's pipeline leads to consistency of its message.

 

For example, Pfizer’s Upjohn was a spin-off of its off-patent drug business, but its merger with Mylan added biosimilars, generics, and over-the-counter drugs to its pipeline.

 

Organon, which pursues leadership in women’s health, has established its pipeline in the field of cardiovascular, urinary, respiratory, dermatology, and biosimilars.

 

In other words, the spin-offs can let one company can purse innovation, while the other succeeds legacy brands.

 

The brand power held by legacy product lines is also a competitive edge that cannot be ignored.

 

In this sense, the restructuring, which enabled Pfizer and MSD to focus on developing and launching innovative new anticancer and rare disease drugs while their spinoffs - Viatris and Organon - became specialty pharmaceutical companies that focus on chronic disease or women’s health, was a convincing move from the stockholder’s viewpoint.

 

However, there is a loophole in the reasoning of these spin-offs and sales.

 

Ironically that Pfizer’s biosimilar, as well as MSD’s blockbuster drugs such as the diabetic drug ‘Januvia,’ Takeda’s OTC drug ‘Actinum’ remains in the original company.

 

◆Specificity of the Korean market= Also, the Korean subsidiaries of the multinational pharmaceutical companies may face a different situation due to the inherent characteristic of the Korean market.

 

In Korea, original drugs tend to sell strong regardless of their patent status.

 

This may partially be due to the generic drug pricing policies in Korea, but many Korean subsidiaries of multinational pharmaceutical companies have been enjoying strong sales even after patent expiry.

 

In fact, Viatris Korea accounts for more than half of Pfizer Korea's sales.

 

Just last year, Viatris's lead statin product ‘Lipitor,’ recorded 185.5 billion won in prescription sales.

 

Also, even without the ‘Januvia’ family, Organon Korea’s originals ‘Atozet,’ ‘Cozaar,’ ‘Singular’ had in total recorded around 150 billion won’s worth in sales last year.

 

Launching combination drugs that succeed the originality of originators is therefore a strategy that companies can choose to take in the Korean market.

 

Viatris had recently released ‘Lipitor Plus,’ an atorvastatin and ezetimibe combination drug.

 

Viatris aims to target the Korean market with Lipitor’s brand power and the fact that they use the original API.

 

Under the stepped pricing system that was newly applied, Lipitor Plus’s price was set lower than Atozet.

 

The results remain to be seen, however, Korea is an adequate market for testing new strategies based on manufacturing pharmacy such as by improving the convenience of chronic disease drugs, etc.

 

On the other hand, the Korean subsidiaries that have let go of their cash cows may need to brace for sluggish sales growth depending on their reimbursement situation, as due to the nature of Korea’s national health insurance system, new drugs are not easily prescribed without reimbursement in Korea.

 

Pfizer is currently working to list its ‘Vyndamax,’ and two other follow-on drugs that have been listed are facing RSA re-evaluations soon.

 

MSD recently failed to expand its 'Keytruda' reimbursement to first-line lung cancer, which was key to expanding the scope of prescription for the drug.

 

These are risks that cannot be ignored from the Korean subsidiary’s perspective.

 

An official from a multinational pharmaceutical company said, “The separation of roles seems to be happening between multinational pharmaceutical companies as well.

 

In the future, the companies will be divided into those that reduce their sales division while focusing on reimbursing high-price drugs, and those that increase collaboration with domestic companies and implement various sales strategies.”