"We play by economies of scale, we leverage our ability to stockpile, and we build good volumes based on forecasts, mechanisms that allowed us to win tender after tender. But the industry cannot continue to reduce the price because margins are already at a critical point."
Could you introduce Accord Healthcare’s operations in Italy?
Accord began operations in Europe in 2008, and by 2010 the Italian branch became fully operational; however, it took us two more years to become a truly visible market player. Today, we are a leader for various oncological products in both public and large private hospitals. Adding to our extensive offer of injectable and oral cancer products, over the last five years we expanded our portfolio with numerous chemical entities, but also biosimilars and, most recently, retail products. Having achieved a high market share in the hospital market, we see retail as a new growth space.
How do you think generics companies leverage innovation?
Our tagline, “We make it better,” underlines the simple yet difficult task of constantly offering something different and better. This idea has become a guiding “north star” of our philosophy at Accord. The competitiveness of generics companies has been dominated by the lowest price principle, but a new principle started to brew before the pandemic and is becoming increasingly more relevant today: MEAT (the most economically advantageous tender) is gaining momentum as Italy and other European countries faced significant hurdles procuring materials from Asia. The lowest-price model is a very simple adjudication criterion that led to a dependency on the cheapest imported drugs, but the industry needs to move to a different direction, to acknowledge quality and added features. Equivalent drugs can be innovative, and we are very keen to offer competitive advantages that distinguish our products from the rest.
What are the specific advantages that Accord Healthcare enjoys as a vertically integrated company?
As a vertically integrated pharma player for many of our products, we enjoy control at every step of the manufacturing process, which enables us to be a flexible player and fulfil market demand faster. Our bulk production takes place in India, but the drugs are completed at our manufacturing facilities in Europe. Supply chain flexibility has become a must these days; if 20 years ago, pharma companies used to keep about three months’ worth of stock on their shelves, today the approach has shifted to very low safety stocks and more frequent (and lower quantity) orders. To be able to stay competitive in this context, we need to be very reactive, agile and process more orders.
Could you elaborate on the issue of generics reception in both hospitals and the retail market?
There is a stark difference between the two markets, each entailing its own business model and considerations. In hospital tenders, generics enjoy a very high market share, because any company with the active ingredient in their product can tender, and the lowest price wins, regardless of other criteria. Because of this, the value of hospital generics is low. At the opposite end, generics occupy only about 20% of the retail market, comparably lower to other European countries like Germany or the UK where the market share is somewhere above 70%. Nevertheless, retail generics have a high value of around €2 billion.
As part of your strategy to enter the retail sector, Accord Healthcare has recently launched a new non-medicinal product line called Concquer. Could you elaborate on your strategy in this segment?
Because of our strong presence in oncology, we want to support cancer patients on their journey, and this has translated as offering a full range of support they may request. On top of offering cancer therapies, the new Concquer product line is a range of cosmetic products that may help with some of the side effects of chemotherapy, tackling issues such as damaged skin and other skin issues. We have already launched three products as part of this new line, and more are to come. Concquer is clear evidence that we make it our mission to put patients at the centre.
Do you have a final message?
As a leader in the tender sector, we are advocating for the MEAT principle, working with stakeholders to implement this concept and replace the price battle. We find ourselves in a vicious cycle – we play by economies of scale, we leverage our ability to stockpile, and we build good volumes based on forecasts, mechanisms that allowed us to win tender after tender. But the industry cannot continue to reduce the price because margins are already at a critical point. We are convinced our products can offer additional features and this amongst other elements should be the winning factor.