The company was stagnating, suffering from a lack of leadership, and its larger competitors were threatening to trounce it when Bedrosian took over as president in 2001, Since then, he’s shaken up the once-moribund company by pushing hard to get new drug applications to the Food and Drug Administration for approval and by looking for niche products and dosage forms to create new revenue streams.
Bedrosian hired experienced staff to put together clean applications that would more easily pass muster with regulators and timed production so that products would be available to ship when approvals arrived.
Bedrosian’s boldness has worked most of the time. For example, the company turned down an offer to package a private-label drug for another company, choosing instead to offer it under its own label. That risky move paid off by giving it a foot in the door to virtually every chain, distributor and wholesaler in the country.
But another project hurt the 180-employee company’s 2005 top-line performance when approval for a major drug came in late, long after two of its competitors had secured their own go-aheads. That dragged net sales for fiscal 2005 to $42 million, down from 2004’s $64 million, but with a number of new approvals secured and anticipated, Bedrosian expects a strong rebound in fiscal 2006.
Bedrosian talked with Smart Business about how he’s bringing Lannett Co. out of the doldrums.
What is your long-term strategy for Lannett?
To grow the company as quickly as I can, because being the oldest generic drug company in the United States and being as small as we are says it all.
It says it’s been poorly run and poorly managed in the past and shouldn’t remain that way. My goal is to turn that around, to certainly make sure that the management team I put together is capable of growing this company.
That growth will come about organically, as well as through acquisitions. There are a lot of small companies that Lannett could acquire. If I look at some of the larger competitors, I could certainly be as successful as they have been on a smaller scale because the industry and the demand for generic drugs are going to grow dramatically.
How will you expand your business in an industry where there is so much capacity?
We’re looking at different opportunities. For example, in the tablet and capsule field, there are probably 400 suppliers, clearly an overcapacity. But if you look at other dosage areas, if you look at the injectables field or the ophthalmic field or ointments and creams or suppositories or aerosols, you don’t see an overcapacity.
Granted, you’re not going to see multimillion-dollar blockbuster drugs there, either, but nevertheless, for a company the size of Lannett, I don’t need a blockbuster drug to grow. I need steady, small products that bring growth opportunities and eliminate the need for me to compete with 17 other competitors.
They can be more profitable, even though the volumes might be small at the beginning. So we’re looking to diversify into other dosage forms.
What kinds of products have you introduced along those lines to date?
We’ve already introduced oral liquids, and there are some other things in the works in joint ventures that are being developed for us that will bring other dosage forms to the table. When you look at drugs like oncology drugs, there are some that are tablets, there are some that are injectable, there are some that get sold through our normal course, there are some that are sold only to physicians for dispensing by physicians.
We’re looking at all of these opportunities and picking the products or the product lines that we should go after.
How did you implement the strategy of getting more applications into the pipeline?
I brought in the kind of people that could put together an application properly so we wouldn’t be going through any learning curve. When I took over the company, we had a lot of 30-somethings.
I brought in a number of 50-somethings, people with considerable experience who could help a young company with young staffers grow. As a result, a lot of applications went to the (FDA) that we’re benefiting from now.
How do you formulate the overall strategy for Lannett?
I really rely a lot on my experience and the fact that I seem to be able to help pick the right products. When I look at the forest, everybody has the same opportunity to pick another brand to turn out another generic form of. There are no secrets. The data is available to everybody.
The strategy has to be very fluid. One of the things I learned as an entrepreneur and as an employee is you have to pick a strategy, you have to focus on it, not get derailed and not get discouraged. On the other hand, you also have to be able to step back and look at your strategy and say, ‘This is not the right strategy, I made a mistake, I’m headed down the wrong path.’
How do you make course corrections in your strategy?
I tend to question my strategy, and I have my staffers try to punch holes in it because sometimes what sounds good in January, when you take a look at it in June, suddenly it’s not such a good strategy. Having other people take a look at it and say, ‘It was great idea in January, but it sucks today’ brings you a little more to the present.
The hardest thing for people to do is walk away from one of their ideas or their pet projects, but we’ve done that here. I’ve worked carefully with my board to help me do that. We have a strategic planning committee with the board, and it helps them oversee these opportunities because they’re not emotionally tied to them like I might be. They bring a different perspective.
How to reach: Lannett Co. Inc., www.lannett.com