The winning formula for a generics business

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Pharmaceutical Technology Europe

Pharmaceutical Technology Europe, Pharmaceutical Technology Europe-01-01-2010, Volume 22, Issue 1

Pharmaceutical Technology Europe interviews Robert Wessman, Executive Chairman and a major shareholder of the Alvogen Group, and former CEO of generics company Actavis, on strategies for success in generics.

Your achievements led you to become the focus of a Harvard Business School case study titled: Robert Wessman and the Actavis 'Winning Formula'. What strategies/actions comprise the winning formula for a generics business?

Generic business is a high impact sport requiring speed and agility at all levels. The battle of cost control is paramount together with a broad portfolio and an understanding of each market's characteristics and needs. The strategy is relatively simple, but it is the execution of the strategy that makes or breaks a generic business.

Robert Wessman

How do you think business strategies for generics companies should be amended to cope with the current financial crisis?


The industry has been consolidating over the last few years. Size and economy of scale together with a broad portfolio applicable to multiple markets should help companies enhance their efficiencies to deal with the challenges in the external environment. However, generic companies, as do all businesses today, need to take a hard look at their cash flow and leverage ratios to retain the agility necessary to operate in today's economy. For generic companies that do that, the future holds an array of opportunities.

Mergers and acquisitions can be an effective way of growing a company. What should generics companies be on the look out for when seeking to acquire other companies?

When considering an acquisition target, the value added from the acquisition must allow a company to do at least one of the following: extend market reach; add to an existing portfolio; expand development capacity; lower cost; gain critical mass; elevate market position. Last but not least, each acquisition must take into consideration the potential fit between organizational cultures and the probability of a successful integration and realization of projected synergies.

Are there any common traps that budding generics businesses fall into?

Multi-regional generic companies face the major challenge of having to finding ways to maximize the impact of their portfolio across multiple regulatory environments, on time, whilst ensuring high-quality, lowcost manufacturing through a consolidated supply chain and regional packaging platforms.

How do you see the market for generic pharmaceuticals shaping up in the coming years?

We will see some more consolidation in the industry, but also a lot of the streamlining will take place within the companies themselves with changes in supply chain management and leaner, more flexible structures. Also, generics companies will expand their offerings, developing more complex and difficult to manufacture products, in line with changing global consumer demands and rising medical costs.

Many well-established branded pharmaceutical companies have begun to establish a generics unit. What impact do you think this will have on their businesses?

The generic business is a totally different animal to the branded pharmaceutical business, with differences ranging from culture to cost efficiencies. It is very difficult for the leopard to change its spots; the same goes for the big brands. The well-established pharmaceutical companies will be competing with faster, leaner, high-quality generic companies in the future, which are capable of producing a much wider range of complicated formulations than before. This increased competitiveness, however, is a change that will be welcomed by health authorities in their constant battle with rising healthcare costs. This is a change that will benefit consumers and patients all over the world.