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MedPointe's Private Dilemma

Executive Summary

MedPointe was born via the leveraged buy-out of an old, private pharmaceutical company, Carter-Wallace. Accepting financial strictures was part of the deal; the company must remain profitable. This increases the challenge for the "founders," seasoned pharma execs intent on leveraging the infrastructure they overhauled, to created an in-licensing based marketing powerhouse. Beyond competing with bigger pharma marketers, management's challenge remains bringing in new assets affordably.

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MedPointe and Opportunities in Specialty Pharma: Speed is Expensive

The notion of building up a new drug company with the unwanted, undersized products of ever-bigger Big Pharma is hardly new. But MedPointe, with its acquisition of Carter Wallace's medical products business, is aiming to build up a new firm faster and bigger than can be done simply by in-licensing.

Menarini: East of Eden

When Alberto Aleotti began running Menarini in the mid-1960s, drug companies in Italy did not do research, because the country offered no patent protection. He believed patents would be key to the industry's growth, and campaigned for years on the issue. As soon as Italy began issuing patents in 1978, Menarini began doing research. Aleotti expected the work would take time to bear fruit, and so he concentrated on helping foreign partners sell their innovative products in Italy and beyond. Menarini's highly successful co-marketing of Glaxo's Zantac spurred other large firms to seek its help too. They signed deals with no upfront fees, only royalties, and Menarini's revenues and infrastructure grew steadily through the 80s. The company's research efforts advanced in parallel with revenue growth, which slowed with scandal-induced price cuts in the 90s. As yet, the work has yielded little of commercial value-but Aleotti says he expected it would take this long. Marketing remains Menarini's core strength, but changing industry dynamics are making novel products harder to come by. The company considers several of its drug candidates very promising, and is now striving to move them along faster. Industry observers are watching the progress of this exceedingly private firm, which says it will soon announce agreements of great strategic importance.

Esteve: Aspiring to Innovation

Changing global dynamics, and increasing price pressures in Spain, are compelling private Esteve to change its strategy and its structure. The company feels a need to be bolder and more efficient than before. The firm continues leveraging its traditional strength, helping Big Pharmas market. But lately it has also allied with US biotechs, paying more for exclusive rights to novel products. It's risky, though: two drug candidates it hoped to get failed recently. Now, making research pay off is a top priority for Esteve, which views itself as having a research-oriented culture, although its only successful drug was launched 20 years ago. The company's new strategy heightens risks and difficulties, but the owners feel they have little choice in the increasingly cost-controlled Spanish market. As a private company, Esteve can afford to place the bet and strive for success.

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