Chapter 4Lean InnovatorsWith roots in the generics companies of old, this business model combines the best practices of efficient generics manufacturing with merger and acquisition (M&A) expertise and an eye for niche treatments.

Lean Innovators are product-centric businesses. Companies evolving toward this model as their primary modus operandi started out as generics companies, but they are no longer focused only on generic products; market pressures and new opportunities have encouraged them to reinvent themselves and enter new worlds of unmet medical need with patented and off-patent products. As of this writing, they have been profoundly successful financially—although increasingly under scrutiny.

Their distinctiveness lies in the fact that they often bring best practices from the world of generics to their work—large-scale efficiencies, a global scope, and a lean organization. Many members of the leadership teams at these companies have deep M&A and post-merger integration skills.

The Lean Innovator model is centered on acquiring companies that specialize in developing treatments for niche illnesses; that's what has made them the focus of many governmental and private payer reviews. Lean innovators capitalize on acquired organizations' growth and margin potential through broad cost-efficiency initiatives and strategic pricing increases.

Increasingly, they are focusing on innovation, with conservative approaches to research and development (R&D) that emphasize indication ...

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