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Pharma Management Steps To Get Your Life Sciences Company In Shape In 2013 By Cindy Dubin, contributing editor W hile Moody's Corp. has stated that a credit downgrade for the U.S. is looming, Moody's Investor Services has actually revised its outlook for the global pharma industry. According to Forbes, the ratings agency believes earnings should rebound next year as the deluge of patent expirations on big sellers finally slows down. Since 2007, Moody's has, in fact, maintained a negative credit rating on the industry but now believes the worst is over. "The stable outlook reflects our view that the worst of the industry's blockbuster patent expirations has passed," says Moody's Senior VP Michael Levesque. "Although industry earnings will still be affected by very recent patent expirations, earnings for large, branded (drug makers) will … rebound in 2013." But while the worst may be over, Forbes reports that Levesque believes the industry "remains challenged by a difficult regulatory approval environment for new products and by areas of research that are still seeing limited success." A new report from global consulting firm Booz & Co. points out that successful life science leaders (LSLs) will need to take action in several areas in 2013 and beyond. They will need to identify untapped growth opportunities, focus on core capabilities, analyze operat- 54 LifeScienceLeader.com ing models, collaborate with the payor/ provider community, and trim more fat from the bottom line. FIND THE MISSING "HEADROOM" The study authors define headroom as the market share you don't have less the market share your company will never get; it represents the missing sales already available to you for any particular product. Knowing your headroom helps determine whether a brand is worth further investment. "Finding headroom should be done as part of the strategic planning process for any product," says Greg Rotz, partner with Booz & Co. "To do this, every life science leader should ask the following of its brand teams and commercial teams: Where is the headroom for growth with this product? That is a different question than where is the biggest untapped part of the market because it might be that the biggest untapped part of the market may not actually be accessible to you." The equivalent here is in politics: Some states will always vote Republican, some always Democrat, and there are those swing states that can actually be persuaded to change their behavior. Headroom is all about getting a sharper April 2013 view of the equivalent of the swing states. Find the patients and physicians that have a propensity to value what you are offering and therefore a propensity to change their behavior in your favor. "Headroom brings a level of sophistication and surgical precision to finding those pockets of growth and opportunity where you have a reasonable chance to change behaviors," says Rotz. FOCUS ON DISTINCTIVE CAPABILITIES A capability is the capacity to reliably and consistently deliver a specified outcome through a combination of processes, knowledge, and skills within the organization. Only a few of the capabilities have core strategic value that help differentiate one company from its competitors. As defined in the Booz & Co. report, differentiating capabilities could include personalized medicine, digital patient engagement, or expertise in a particular type of treatment. "Just looking at a few critical capabilities across your product portfolio will make a big difference," says Rick Edmunds, senior partner, Booz & Co. Some of the biggest names in Big Pharma did just that in 2012, with many pharma executives taking pen-