Terrence Reilly Joins as VP & Director of Healthcare Practice; Jodi Scarbrough joins as Research Director, Manufacturing Practice
CAMBRIDGE, Mass., Feb. 14, 2012 /PRNewswire/ -- Fuld & Company today announced two new hires. Terrence Reilly joins as the new VP and Director of the Healthcare Practice, and Jodi Scarbrough joins as Research Director for the Manufacturing Practice.
In making the announcement, Leonard Fuld, Chairman, Fuld & Company, said, "This is a major step forward in providing our clients with superior competitive intelligence and strategic insights. Terry Reilly brings experience in the full range of healthcare issues having worked with leading organizations from producers to providers. Jodi Scarbrough is expert in competitive analysis, offering Fuld & Company Fortune 1000 clients strategic assessments to support their business objectives."
Prior to joining Fuld, Reilly held a number of global positions. These included: Vice President at Asterand, Ltd, a leading company in providing human tissues and human tissue research, and positions with Genzyme, Bard Access Systems and Tufts Health Plan. He graduated from Michigan State University with Bachelor of Arts in History and Economics.
Jodi Scarbrough joins Fuld from Grail Research where she was Director of Research. In this role she assisted clients in identifying new markets and product opportunities. She previously held positions at Communispace and Colliers International. She received her Bachelor of Science from University of Witwatersrand and her MBA from the University of Cape Town, South Africa.
Fuld & Company is Cambridge, Massachusetts-headquartered pioneering firm in the field of competitive intelligence, providing research and analysis and strategy gaming for over 33 years with offices in London and Manila.
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FOOD FOR THOUGHT AND HEALTH | Pharma Magazine | January / February 2012
How can pharma get a share of the market … and avoid being blindsided by consumer packaged goods (CPG)?
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The pharmaceutical industry is in danger of ceding the large and growing nutraceutical market to the CPG companies. Thus predicts The Battle for Designer Foods, a public war game in which four teams from top business schools were tasked with stress‑testing
the nutraceutical strategies of Abbott Labs, Danone, GlaxoSmithKline (GSK) and Nestlé.
The global market for nutraceuticals — foods that, owing to addition or enhancement, provide health benefits beyond nutrition — is projected to be close to $250 billion by 2015, according to a report from Global Industry Analysts1.
The change in landscape that appears to signal the end of the era of the blockbuster drug and bring pharmaceutical companies face to face with expiring patents and slim pipelines means that the nutraceutical market could provide an alternative revenue stream — and a welcome one at that. Rather than posing the question of “can pharma compete here?” companies should instead ask what changes should be implemented by pharma to compete, and refuse to allow the obvious advantages of CPGs — such as strong track records in marketing foods directly to consumers — and the inherent obstacles of pharma companies — particularly a risk‑averse culture borne of strict FDA regulations — to prevent them from carving out a piece of this market.
This is not to overlook the challenge that pharmaceutical companies must overcome to succeed; strict FDA regulations prevent them from simply putting their drugs into consumer products (although nutraceuticals are regulated by FDA, they are subject to different restrictions). Their traditional route to success, which encompasses a high reliance on science, clinical trials, the protection of intellectual property (IP) and reaping the benefits of years of patent protection, may have to be upended if pharma is to succeed in the adjacent nutraceutical market. This hesitancy could well be a classic case of what Clay Christensen describes as The Innovator’s Dilemma, in which the high revenue‑and‑returns bar set by large companies, and their reluctance to accept anything less, hinders innovation — pharma companies are accustomed to much higher product margins than packaged food companies. Having invested billions in researching drugs that treat or prevent diseases, will pharma companies be satisfied with something as apparently simple and relatively low‑margin as probiotic yoghurts, scientifically engineered nutritional drinks or even heart‑healthy breakfast spreads?
Such solutions, promising profits that exceed typical packaged food products, are part of what makes the opportunity so appealing for the CPGs, who boast great expertise in creating and marketing mainstream products in addition to some experience in doing the same with less sophisticated enhanced food products, such as vitamin water. Food giants are beginning to make significant investment in this space; October 2010 saw Nestlé announce its planned investment of more than half a billion dollars in creating a standalone health science business to “pioneer a new industry between food and pharma.”2
Similarly, Danone has refocused its portfolio on nutrition during the last decade, a key example of which is its $17 billion purchase of Royal Numico, a leader in infant and clinical nutrition products. This deal, along with its blockbuster Activia probiotic yoghurt, provides Danone with a stronghold in the area of health and nutrition. The bottom line is that to compete successfully, it will be necessary for pharmaceutical companies to start thinking and acting as CPGs do. The recent war game exercise gave rise to some specific strategies that the pharmas can usefully employ.
Lose the Blockbuster Mentality
The extensive — and expensive — research, clinical trials and formulation required to obtain FDA approval for drugs have paid off for the pharmaceutical companies in the form of patent protection, IP and a ready made distribution network of hospitals, doctors, formularies and insurance systems. This has contributed greatly to the mentality of relying on blockbuster drugs. Instead of looking for blockbuster‑equivalent nutraceutical products, the pharmaceutical companies should consider taking smaller, measured steps and building a portfolio of products that incorporate ingredients already approved by FDA for use in foods such as fish oils, sterols and stanols.
Make the Public Health Case
High cholesterol, diabetes, obesity and heart disease are among the most serious and prevalent health risks in the developed world — and are all conditions that can be affected by nutraceuticals. Making the public health case is about solving a problem that already exists with already proven ingredients that don’t need drug‑level approval.
Experiment Outside the Lab
Pharmaceutical companies are accustomed to basing their experimentation in the lab; indeed, it is at the very heart of what they do. There is, however, an overarching need for this zeal to be redirected toward the marketplace; companies must be willing to trial different enhanced‑food products and establish what customers will buy and realize that testing a food that may bomb with consumers in one version and moderately succeed in another is not the same as putting out a drug that is found to have severe side‑effects. The consumer marketplace for nutraceuticals may offer a different risk–reward equation when testing for a winning product. Food companies recognize this distinction and are constantly tinkering with packaging, ingredients and brand extensions — although this is not always successful (new Coke, anyone?). It is this flexibility and willingness to fail occasionally that constitutes a part of their success.
Despite marketing directly to consumers, pharmaceutical companies lack expertise in creating and exploiting a broad, populist market need. The key will be in raising consumer awareness about the efficacy of nonmedicinal products to manage certain health conditions, conditions for which they are already deeply involved in treating or preventing in many cases. The nutraceutical product simply provides another approach to addressing the same problem.
Be Willing to Collaborate
Although mergers will increase (Pfizer has recently announced its willingness to sell a portion of its nutrition business), collaborations with CPGs will likely be a key basis for success. This is also an area in which pharmaceutical companies tend to be wary, afraid that the marketing, packaging expertise and distribution channels of CPGs will put them at a disadvantage in any deal. In the short‑term, however, collaboration may be the easiest and quickest route to enter the market.
All this should not suggest that the barriers to entry and potential success are too high for pharmaceutical companies — they may be better equipped than CPGs to endure the costly and time consuming R&D required for more sophisticated products that the market may eventually call for. There have been some limited Big Pharma success stories; Abbott Labs is a leader in both child and adult nutraceuticals with its high science Pedialyte and Ensure products. GSK Consumer Healthcare has successfully launched several of its nutritional beverage products in China and India, the revenue growth from which could motivate the company to take a more aggressive approach with these products in other markets, such as the US.
The size of the opportunity presented by this sector and their need for fresh revenue streams are pressing reasons for pharmaceutical companies to assert themselves in the market. It is in collaboration that their best hope for success lies — borrowing strategy, and perhaps even talent, from the CPGs. A shift in attitude will also be needed; the risks may be greater, but so may be the rewards. To ignore the potential of this market would be a mistake for an industry that can no longer rely on its former business model as its only means of success.
Five Predictions from ‘The Battle for Designer Foods’
On 8 April 2011 in Cambridge (Massachusetts, USA), four leading business schools (MIT, Kellogg, Tuck and Yale) represented four companies with a stake in the growing nutraceuticals market: Abbott, GSK, Danone and Nestlé. As the teams attempted to present and defend their strategies, whilst addressing opposing teams’ questions and a barrage of issues by the judges, a series of predictions surfaced.
Consumers will steal the march on pharma
• Food companies, represented by Nestlé and Danone, are more likely to see mainstream success than the pharma-oriented companies in the short‑term.
• The food/CPG companies appear to have much more expertise in making mainstream functional foods, rather than just products for infants, geriatric patients and exercise enthusiasts.
• Consumer companies are willing to cut more deals and experiment with joint ventures or small acquisitions than pharmaceutical companies.
• Although clinical trials and the science that is intrinsic to pharma are important in designer foods, these are only two of many elements needed for market success.
Measured steps, not high science will win in the short-term
• Food companies could begin to incorporate a variety of specialized ingredients that are already available, including fish oils, plant sterols and stanols, herbal extracts, vegetable and dairy proteins, probiotics and other beneficial bacteria.
• CPG companies, particularly the major ones, have been notably adept at microsegmentation — producing niche products that are accompanied by effective branding — whereas pharma companies have relied heavily on blockbuster products.
• Food/CPG companies are likely to experiment slightly more than pharmaceutical firms until something big catches on.
Consumer education is critical in building a consumer market
• Companies will have to reach out directly to consumers rather than employ the traditional doctor‑referral approach.
• CPG companies seem to have more experience at direct consumer education.
Simple products that can build a ‘public health case’ will forestall regulatory
interference and win in the market
• ‘Simple’ functional foods, such as dairy products, have long established their case with regulators by selling a food (dairy) that has already gained wide acceptance — despite Danone’s Activia misstep.
• Products that solve a public health problem will win in the long‑term.
• Embedding a drug into a food to create a functional food will trip regulatory alarm bells.
• Overextending health claims will damage brands; this may hamper the selling proposition for more complex functional food products.
Mergers will become more common, but collaboration is the hidden trump card
• Competitors will be forced to collaborate to succeed — in certain cases by building on each other’s brands rather than acquiring brands (Unilever and Starbucks, for instance).
• Companies must tap into ‘adjacencies.’ The days of only‑invented‑here are over. Breakthroughs will come through university and government laboratory collaboration (for example, National Institutes of Health).
• CPG companies will realize that they must acquire their way to growth — and proceed to do so at a rapid pace.
• Pharmaceutical companies are averse to the risk of merging with a consumer brand, concerned that CPG corporations might damage their science‑based brands.
On 30 April 2012, this war game will be acted out in the UK between top business students from Oxford and Cambridge. It will take place at Said Business School, University of Oxford, where students from Cambridge Judge Business School, University of Cambridge, will compete for the prize. It will be interesting to compare the predictions made in the US in April 2011 with those resulting from this game.
1. P. Malik, “Value-added Nutrition,” Can. J. Cardio. 23(12), 956 (2007).
2. Industryweek.com (27 September 2010).
For more information
Leonard M. Fuld
Fuld & Company
To see excerpts of the Fuld & Company The Battle for Designer Foods war game, please visit www.fuld.com/Services/WarGames.html.
World's Leading Pharmaceutical Executives All Converging in Zurich, Switzerland on February 21-22, 2012 for Breakthrough Event
ZURICH, Feb. 1, 2012 /PRNewswire/ -- The buzz is growing stronger and stronger for one of the most talked-about events in 2012- the Pharma CI Europe Conference on February 21-22, 2012 at the Renaissance Zurich Hotel in Switzerland(http://pharmaciconference.com/ ). "With more than 150 top pharmaceutical executives already attending, people are already saying that this event is sure to make waves among the industry's influential decision makers," says conference organizer Amy Yueh. "After all, this event is the counterpart to our annual Pharma CI USA Conference, scheduled for September 11-12 inParsippany, New Jersey, which is the largest gathering of biopharma competitive intelligence execs in the world with over 300 CI professionals attending annually."
Conference participants will benefit from the impressive speaking faculty of more than 40 expert speakers from prestigious companies like Actelion, Amgen, Bausch + Lomb, Chiesi Farmaceutici, DSM, F. Hoffmann-La Roche, GlaxoSmithKline, Helsinn Healthcare, Johnson & Johnson, MedImmune, Merck, Norbrook, Novartis, Nycomed, Onyx, Pfizer, Sanofi-Aventis, Shire, Takeda, Virbac, and many more!
These senior level speakers are prepared to delve deep into meaningful discussions about the latest and most pressing issues. To see the detailed program agenda, go to: http://www.pharmaciconference.com/EUR_program.html
The Pharmaceutical Competitive Intelligence Europe Conference provides the ideal atmosphere for learning and debating the industry's most pressing topics. This is the only event that brings together all the industry's decision makers and experts in an atmosphere that promotes gaining insight, developing and solidifying meaningful working relationships, and providing clear directives about the future of this important industry.
The 2012 Pharma CI Europe Conference sponsors/exhibitors include the following: Deallus Group; Lifescience Dynamics; Citeline; Pennside; Adis; BioMedTracker; Digimind; Evaluate Pharma; Evalueservce; Financial Times; Fletcher/CSI; Fuld & Company; ISIS; Larvol; PharmaVoxx; Prescient; SAI MedPartners; Sedulo Group; Value Edge.
The Pharma CI Conference is THE INDUSTRY'S GOLD STANDARD for senior level pharmaceutical, biotechnology, medical device, and diagnostics professionals seeking the latest news and the industry's best networking opportunities. More than 300 people attended the 2011 event in the U.S., and now it's Europe's turn!
For more information, go to http://pharmaciconference.com/ , call +1-212-228.7974, or email email@example.com
Pharma CI Conference
+ 1 212 228 7974
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