PUBLISHER Lisa Banket EDITOR Taren Grom CREATIVE DIRECTOR Marah Walsh DIRECTOR OF SALES Darlene Kwiatkowski MANAGING EDITOR Denise Myshko CONTRIBUTING EDITORS Elisabeth Pena Kim Ribbink Lynda Sears Copyright 2003 by PharmaLinx LLC, Titusville, NJ Printed in the U.S.A. Volume Three, Number Nine PharmaVOICE is published 12 times per year by PharmaLinx LLC, P.O.Box 327, Titusville, NJ 08560. Postmaster: Send address changes to PharmaVOICE, P.O. Box 327, Titusville, NJ 08560. PharmaVOICECoverage and Distribution: Domestic subscriptions are available at $160 for one year (12 issues). Foreign subscriptions: 12 issues US$330. Contact PharmaVOICE at P.O. Box 327, Titusville, NJ 08560. Call us at 609.730.0196 or FAX your order to 609.730.0197. Contributions: PharmaVOICE is not responsible for unsolicited contributions of any type. Unless otherwise agreed in writing, PharmaVOICE retains all rights on material published in PharmaVOICE for a period of six months after publication and reprint rights after that period expires. Email: [email protected]. Change of address: Please allowsix weeks for a change of address. Send your new address along with your sub scription label to PharmaVOICE, P.O. Box 327, Titusville, NJ 08560. Call us at 609.730.0196 or FAX your change to 609.730.0197. Email: [email protected]. IMPORTANT NOTICE: The post office will not forward copies of this magazine. PharmaVOICE is not respon sible for replacing undelivered copies due to lack of or late notification of address change. Advertising in PharmaVOICE: To advertise in Pharma VOICE please contact our Advertising Department at P.O.Box 327, Titusville, NJ 08560, or telephone us at 609.730.0196. Email: [email protected]. www.pharmavoice.com THE FORUM FOR THE INDUSTRY EXECUTIVE Volume 3 . Number 9 Send your letters to feedback@pharma voice.com. Please include your name, title, company, and business phone number. Let ters chosen for publication may be edited for length and clarity. All submissions become the property of PharmaLinx LLC. Letters ccording to Da tamonitor , lead ing specialty phar maceutical companies are beginning to outgr ow the tr aditional acquisitiononly model as the size of the pro ducts required to continue their expansion puts them into gr eater competition with larger pharma c om panies and raises the pr ice of lic ensing agreements . Nicole Lamble, pharmaceutical analyst at Datamonitor Plc., says specialty pharma com panies are increasingly looking upstream to fill pipeline gaps with their own R&D rather than acquisitions. But, this is not the only growth strategy available to them. Partner ship networks, for example, will become more pivotal to growth and therapeutic foci will widen or change. There are several other critical success factors that specialty pharma companies must adopt if they are to capitalize on cur rent and future revenue opportunities, Ms. Lamble says. These include sophisticated search strategies and wellstructured col laborative agreements; targeting the “right” disease areas; allying with the biotech industry; extensive geographic reach, with direct U.S. market penetra tion; and a strong and deep latestage pipeline that can be leveraged for contin ued vertical integration. Many of today’s specialty companies are embracing a business model that includes product acquisition and organic growth through the development of the inhouse capabilities required to discover, develop, manufacture, and market drugs. “Specialty pharma has long been seen as a sector that simply buys products and remar kets them,” says Philip S. Tabbiner, presi dent and CEO, of aaiPharma Inc. “As a result, there has been some question as to whether this is a successful strategy.” aaiPharma has transformed itself from a services business that did research only for other companies to a company that not only still provides those services but has its own products in the marketplace. To make this transformation, aaiPharma built commer cial, sales and marketing, and pharmaceuti cal management components. “Because of our science base, we have the ability to acquire products and reintroduce these products, but, more importantly, we can reinvigorate these products by putting them through our R&D process to either improve the molecule or the drugdelivery technology applied to that molecule,” Mr. Tabbiner says. The toplevel executives featured in this month’s Forum recognize that an acquisitiononly model cannot sustain their company’s growth going forward and are balancing shortterm and long term strategies for their companies. “Products have life cycles and these life cycles have to be managed,” says Robert J. Bitterman, president of Dermik, and VP of Aventis Dermatologicals. “We have to anticipate where to place bets for the future given the very long lead times, and that means managing time, cost, and risk to bring new products to market. At the same time, we have to maintain a focus on the daytoday operations to ensure that we get the most out of our current product line to fund the future.” Whereas Datamonitor analysts predict that future prospects of the specialty pharma market will be determined by the growth (both in terms of rate and strategy) of toptier companies, according to Adrian Adams, president and CEO of Kos Pharmaceuticals Inc., much of the dynamic revenue growth and strong performance within the industry will come from companies within the biotechnology and specialty pharma indus try. This is mainly because of the impressive innovation that continues to emerge from within these sectors. Taren Grom Editor ACEO,as well as the entire leadership team, must always concentrate on the big picutre in relation to driving business forward,while focusing on the financial metrics of today. 3 PharmaVOICE S e p t e m b e r 20 03 A

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