Emerging Business Models in the Pharmaceutical Industries ...

Many of BMS's key drugs are from other companies,
such as cardiovascular products Avapro and Plavix,
which are co-promoted with Sanofi-Synthélabo, and
Pravachol, which is licensed from Sankyo. The company
earned $395 million in 2003 from the Glucophage
franchise, a 33% increase on the previous year. BMS
has to make considerable royalty payments to partner
companies from whom it sources products.
Realising the importance of treating cancer with drug
combinations, Aventis has in-licensed several drugs
based on a variety of technologies. For instance, the
collaboration with Genta for the antisense drug
Genasense, and the deal with Regeneron for their VEGF
Trap.
The tie up with ImmunoGen allows Aventis worldwide
marketing rights to three of ImmunoGen’s preclinical
products and any products developed under the
collaboration.
While Aventis is responsible for all development,
manufacturing and commercialisation costs, ImmunoGen
receives $12 million upfront, $50 million in research
funding over three years, milestones between $20 to $30
million for each product, royalties, and an option for
some US co-promotion rights.
The Network Model
Product Life Cycle Management
Product life cycle management (PLM) helps to get more
value from the existing products, mitigate risk in R&D, and
reduce the entire life cycle for launch of the products.
Working on the basis of early identification principles, PLM is
targeted at launching products within three to five years, with
pre-launch cost for development less than $200 million.
Pharma companies consider PLM a high priority only in the
second stage, when they have some semi block busters to
replace the revenue gaps.
Current manufacturing life cycles are yet not optimised and
integrated fully to achieve the highest level of efficiency.
Effective PLM can result in savings of close to 15-20% in
production cost.
Strategic Analysis of the Pharma Market, Future Revenue Models and Key Players 32