Bristol-Myers Squibb France
53 years down the road
Presented by:
Lena Denstad, Clarence Lim & Kerry Lau
Research Objectives
• Why did Bristol-Myers Squibb come to France?
• What was Bristol-Myers Squibb’s entry strategy?
• What are the key benefits or
constraints in operating in France?
• What are the key lessons
for other companies
coming to France?
Agenda
•
•
•
•
•
•
•
•
BMS – Worldwide
Why France?
Entry Strategy
BMS – France
Key Benefits & Constraints
Case Study
Key Takeaways
Looking Ahead
Bristol-Myers Squibb Company
WORLDWIDE
• Headquarters: New York City
• Key business: Biopharmaceuticals
• Total Sales: US$20.6 billion
– Pharmaceuticals: 86%
– Nutritionals : 14%
•
•
•
•
R&D Investment: US$3.59 billion
Employees: 30,000
Subsidiaries: 50
Ranked one of the top 10 pharmaceutical
companies in the world.
… to become more agile, entrepreneurial and
accountable to achieve our goals.
Source: BMY 2008 Annual Report: Chairman and CEO Message
Product Lines
•
•
•
•
•
•
Cardiovascular and Metabolic
Pain
Oncology
Central Nervous System
Virology and Pathology
Immunology
$6,228
$5,603
$2,153
$2,882
$1,292
$1,149
$1,290
Who are the customers?
Doctors
Key Opinion
Leaders
Patients
Decision
Influencers
Politicians
&
Regulators
Insurance
Companies
Entry Strategy into France
• Why France?
– US, France and Japan key pharmaceutical markets to be present in.
– Medical care = Top notch
• Facilitates the ability to conduct clinical trials
• Entry Strategy:
1935: Dr. Camille Bru
founded l’UPSA
(Union de Pharmacologie
Scientifique Appliquée)
1956: Squibb establishes
its production in France.
1960: Acquired 2 small French
Pharmaceutical companies
– for distribution channels.
1989: Bristol-Myers mergers
with Squibb to form –
Bristol-Myers Squibb.
1993: Creation of l’Institut
UPSA de la Douleur.
1994: UPSA becomes a 100%
subsidiary of Bristol-Myers
Squibb.
Bristol-Myers Squibb Company
FRANCE
• Headquarters: Rueil-Malmaison
• Total Sales: 10% of global sales
– Pharmaceuticals: €1 billion
– Nutritionals : €22 million
Rueil-Malmaison
• Distribution Facilities:
– Fontenay
• Production Facilities:
– Agen
– Epernon
– Meymac
• Employees: 3,100
Epernon
Agen
Meymac
Integration of Corporate Values
to BMS France
• Le Petit Village Gaulois
– Small village resistance to every change (especially from the U.S.)
• BMS corporate values
– Patients are the heart of BMS
– Honor, integrity, respect, excellence, diversity
– Not hard to integrate to French culture
• Responsabilite Social de l’enterprise (BMS Foundation)
– Global initiative, BMS France employees are involved
– TULIP-NGO (France NGO linked with US NGO)
– Involvement brings across corporate values to French employees
Our mission is to extend and enhance human life by providing the highestquality pharmaceuticals and health care products.
France: Key Benefits & Key Constraints
•
•
•
•
Market
Political, Legal & Regulatory
Economic
Infrastructure
The French as a Consumer of
Medical Goods
France: Country of hypochondriacs
Source: Euromonitor
• Comprehensive healthcare systems
• Loyal to brands
– Price is not a primary factor of consideration
– Share of generic drugs in 2007: 9.5%
• Believe that everything can be treated
with pills and cough mixtures.
• French customers are not so different
from others especially
with specialist products.
Market
Political, Legal
& Regulatory
Economic
Infrastructure
France: Key Benefits & Key Constraints
Key Benefits:
•
•
•
•
4th highest per capita consumptions of medicines in the world ($398).
3rd largest market in the world for pharmaceutical products (next to US and Japan).
The biggest market in Europe for pharmaceutical products.
“Critical mass”: 63 million consumers as of 2008.
Key Constraints:
• Threat of generic drugs.
• Increasing complexity of the distribution
channels .
• Increased regulation on the roles of the decision
influencers.
Market
Political, Legal
& Regulatory
Economic
Infrastructure
French Healthcare System
• Biggest public spending on healthcare in Europe: 11% of GNP
• French – all insured under “General Regime”
– Couverture Maladie Universelle (CMU) system
• Poorest (1.1 million; 7.1% of population)
– Private Insurance
• 87% of population
• Result: Debt of €5.5 billion in early 2000s
• Social Security Reform in 2004,
putting procedures and conditions in place
– Limited consultations/year
– 1 doctor/patient
– Prescription guidelines given to physicians
• Do not have freedom to prescribe what they want
– Patients and payers have also become
decision influencers
Market
Political, Legal
& Regulatory
Economic
Infrastructure
Source: © 2009 AFP (Mychèle Daniau)
Une feuille de soins de la Sécurité sociale
France: Key Benefits & Key Constraints
Key Constraints:
•
•
•
•
•
Complex labor laws.
Specific measures favoring generic drugs.
Difficult to predict new “temporary” taxes. Makes it difficult to plan ahead.
High social security costs.
“Taxe Professionnelle” : Tax on the amount of fixed assets.
 Maybe removed next year.
Key Benefits:
• President Sarkozy publicly announced in Nov 2009 that the pharmaceutical industry is the
way to build strong economy.
• Reforms introduced include: 30% credit tax for R&D in France.
• 60% credit tax if partner with public research organisations
 Contract Research Outsourcing (CRO).
Market
Political, Legal
& Regulatory
Economic
Infrastructure
Market
Political, Legal
& Regulatory
Economic
AFSSAPS: l'Agence française
de sécurité sanitaire des produits de santé
Infrastructure
R&D Process
Patent
Application
Pre-Clinical
Development
Registration: New
Drug Application
Clinical Trials
Marketing
Authorization
(EMEA or AFSSAPS)
BMS France’s MAIN role
Key Benefit(s):
• Good caliber of doctors and hospitals to conduct
clinical trials.
• Once approved by Transparency and Pricing
committee  Good for 5 years
• U.S. have to renegotiate every year.
Key Constraint(s):
• Approval process for pricing = 240 days
(vs. 180 days on average for Europe)
• Level of sales controlled by parliament based on
budget. If exceed budget, pharmaceutical industry
need to reimburse government 70% of exceeding
sales. Rebate used as extra income for social
health care budget.
10 years of R&D
SMR & ASMR
assessment
Registration on the
Refundable List
(Ministerial
Decision)
Reimbursement
Rate
(UNCAM Decision)
Price
(Negotiation with
the CEPS)
Publication on the Official Gazette
2 - 3 years of Administrative Procedures
Source: http://www.ispor.org/htaroadmaps/france.asp#1 & LEEM (the pharmaceutical industry association)
France: Key Benefits & Key Constraints
Key Benefits:
• Connections with EU countries - Italy, Spain, UK, Belgium and Germany.
• Helps BMS to be strong in other markets like Africa.
Key Constraints:
• As a result of the financial crisis → Cut in costs.
• Make savings on drugs.
• France’s 2008 budget limits the growth rate for pharmaceutical
costs to just 1.4%.
Market
Political, Legal
& Regulatory
Economic
Infrastructure
France: Key Benefits & Key Constraints
Key Benefits:
• Very good infrastructure.
• High standard of hospitals and doctors → France # 2 in terms of clinical trials (after the US)
• 2,200 per year, 23% in cancer
• Highly recognised competency, high ethical standards → High quality products.
• Special to France -> pain business.
• Educated labour force. (Grandes Écoles)
Key Constraints:
• Quality of Universities: Not comparing well
with the rest of the world.
• Late in biotechnology.
Market
Political, Legal
& Regulatory
Economic
Infrastructure
Case Study
Management of the disengagement
of two production facilities in France.
BMS World’s Future Outlook
Global Pharmaceutical Industry
• Growth slowing down
– 2009-2013: CAGR 3-6% vs. 1999-2007: 9.8%
• Need to develop more innovative products
– Overcapacity
– 17% of pharmaceutical production are to lose patents from 2009-2012
– Drugs for common ailments already developed
BMS Worldwide
• Big move from OTC to BioPharma
– 6 specialized departments
– Launches of promising drugs set in 2010/2011
 offset loss after Plavix and Avapro patent expirations (2011/2012)
•
From big to medium-sized company
– Announced additional 10% workforce cut on December 2008
– 50% of worldwide manufacturing shut down
– Will bring about estimated $2.5 billion cost savings each year
Case: Disengagement of
Production Facilities
Epernon to be closed end of 2009 &
Meymac mid-2010
• Production cut by half
• Production volume moved to Agen; balance to be
outsourced to Italy plant.
• 380 to be laid off, offered many internal transfer
possibilities with Agen plant.
– 100 employees accepted transfer package.
• Search for company to take over sites and
employees
– Did not find for Epernon, continuing discussions for
Meymac
•
Collaboration with local and political authorities
Process Undertaken for Disengagement
• 2 documents required - Economic justification & Social measure that will support employees
• “Work counsel” – communication before decision
• Announced layoff on September 2008
• Build up inventory to buffer against potential strikes
• February 2009: Around 150 out of 250 went on strike for Epernon and 100 out of 180 for Meymac
• Finished consultation mid-March 2009 (around 6 months from layoff announcement)
• Restructuring currently for field force
Strikes everywhere!
Mr. Jean-Luc Fleurial, VP of Human Resources (BMS, France), on Labor in France
•
Perception or Reality?
– US: You can replace striking workers
– France: You cannot  operations
stop.
•
•
•
Big strikes mainly in public companies
Only 10% of French workers are
unionized
Culture of labor relations
– Need for openness and transparency
– Agreement need not be reached
– Announcement can be for
information purpose
•
Plant closing process - same timeline
length all over Europe
Source: http://en.wikipedia.org/wiki/Trade_union
BMS Future Operational Coverage
FRANCE
Rueil-Malmaison
Epernon
Agen
Meymac
Essential Advice
Understand taxation and legalities before dealing with the government and administrative
processes. Get good tax and legal advisers!
Understand the health system and how pricing is defined.
There are different governments to deal with in different regions in France…
All regions compete to attract new companies - Find out each region’s benefits and regulations.
Make sure the criteria you use are in line with those of Transparency Committee.
Enter the country through alliances or make acquisitions to understand
the market well, difficult to do green-field.
Have continuous discussions with the government on unmet needs.
Be transparent with your employees and the government.
In a Nutshell
• The biggest advantage of France is the
size and sophistication of its market.
• Costs maybe relatively higher
– BUT when quality is considered,
France is still cost-competitive.
• Despite complexities in the business
environment, doing business in
France is not as difficult as it seems.
Understanding is key!
Looking ahead…
Dr. Marion Bamberger, Executive Director for Institutional Affairs, on BMS France’s Future
• What kind of new prices is BMS going to have?
• How will it maintain its evaluation with the Transparency
Committee?
• Is scientific evaluation going to be moved to the EU body?
In 10 years time, will this be decided on the EU level?
Acknowledgment & References
We would like to acknowledge and thank:
•
•
•
•
•
•
Dr. Benoit Gallet, VP Corporate and Business Communications
Mr. Jean-Luc Fleurial, VP Human Resources
Mr. Emmanuel Blin, VP Commercial Operations
Mr. Bruno Lauras, VP Finance and Administration
Dr. Marion Bamberger, Executive Director for Institutional Affairs
Mr. Jehan-Yves Drouin, VP Market Access
For their time and help in this research project.
Secondary Research
•
Global Investment Opportunities Special Report: Pharmaceutical Industry, Lombard Street Research, 2009
•
Global Pharmaceuticals Industry Profile, Datamonitor, November 2008
•
Pharmaceuticals in France Industry Profile, Datamonitor, November 2008
•
Consumer Lifestyles – France, Euromonitor International, November 2008
•
The Pharmaceutical Industry in Figures, EFPIA (The European Federation of Pharmaceutical Industries and Associations), 2009
•
Bristol-Myers Squibb Co. in OTC Healthcare, Euromonitor International, May 2009
•
http://www.apmhealtheurope.com/story.php?numero=L14225
•
http://www.internationaltaxreview.com/?Page=10&PUBID=35&ISS=24523&SID=701387&TYPE=20
•
http://www.pharmafocus.com/cda/focusH/1,2109,21-0-0-NOV_2009-focus_news_detail-0-493403,00.html
•
Wikinvest - BMY
Thank you for
your attention.
Questions?