When William Kennally switched from the brand side of the pharmaceuticals business to generics 13 years ago, his colleagues kidded that he was joining the dark side.
Banter aside, Kennally, then an executive with Pharmacia, saw an immediate cultural shift during his transition.
You could say the differences were like day and night.
“You have to be fast, flexible and focused,” said Kennally, now regional president of Pfizer's established products business unit that runs Greenstone, its generics subsidiary.
The generic business requires rapid responses to an evolving landscape marked by competitive pricing. For instance, Kennally said in 2011, Greenstone saw 10,000 price reductions involving products competing with the 76 drugs in its own portfolio.
“In a brand, patent protection is ensured, the market is established,” he said. “Forecasting is easier, and certainly not as volatile.”
The generic portfolio is poised to grow, he said, as more of Pfizer's blockbusters come off patent.
Mike Carrier, a Rutgers-Camden law professor who studies pharmaceuticals, said brand companies invest heavily on research and development to ensure steady and robust sales, whereas “generics focus on imitating the brand and manufacturing quantities.”
The result is two wholly different business models. Yet those models have coexisted in the Pfizer framework for 10 years. Kennally's division — the established products business unit based at Pfizer's spacious Peapack campus off Route 206 — covers generic drugs and brands nearing the end of patent life in the corporation's North American territory.
Greenstone ranks among the top 10 U.S. generics. The subsidiary generated revenue of about $1.7 billion in 2010, according to an IMS Health report. Pfizer doesn't break down revenue for its internal units, but Kennally said the long-term trajectory points upward, with record sales in 2012.
Kennally said the Greenstone subsidiary benefits Pfizer's bottom line by adding revenue that offsets a portion of sales lost by expired patents of blockbusters — what the industry calls the “patent cliff.”
Conversely, Greenstone benefits from Pfizer's manufacturing systems, as well as legal and human resources support, freeing up the subsidiary's roughly 40 employees to focus on selling drugs.
“Greenstone provides Pfizer an opportunity to compete with generics,” Kennally said. “It provides a revenue stream we would otherwise be giving away.”
Rutgers University professor Mahumd Hassan said he's surprised Pfizer has held onto Greenstone for so long, but Greenstone does diversify Pfizer's portfolio, he said.
Specifically, the subsidiary helps Pfizer launch so-called authorized generics that are identical to the brand. Authorized generics also are exempt from the 180-day exclusivity periods that are granted to the first generics company to successfully challenge a brand drug.
In terms of relationship with Pfizer, Greenstone doesn't expect difficulty finding new opportunities as more drugs come off patent in 2013 and thereafter.
“We'll remain robust as future products in (Pfizer's pipeline) lose exclusivity,” Kennally said. “The parent company's portfolio is our bread and butter down the road.”
E-mail to: email@example.com
On Twitter: @biztzanki
Please note: All comments will be reviewed and may take up to 24 hours to appear on the site.View Comment Policy