Tag Archives: leadership

drugs

Big Pharma R & D Failing

Research and development … innovative new drugs … “the life blood of the pharmaceutical industry.”

Tens of billions spent on research and what does Big Pharma have to show for their investment?  What do the multi-million dollar a year CEO’s and executive teams have to show for their brilliance in delivering the much needed new treatments they keep promising?   Not much, according to the FDA calendar for 2013 drug approval decisions chronicled in a recent article by Seeking Alpha (http://tinyurl.com/qjdyc3m).  Moreover, based on their pay and bonuses (http://tinyurl.com/p57yt5o) CEO performance reviews obviously do not put much importance or weight on drug discovery or approvals. 

Here’s my assessment.

From what I could determine, only five drugs (suvorexant, dabrafenib, tivozanib, dolutegravir, trametinib) discovered and developed by the sponsors are what I would consider “new”.  GlaxoSmithKline developed and sponsors three of those five drugs and one was developed and sponsored by Merck.  Two new drugs (efinaconazole and sofosbuvir) were acquired and then developed by the sponsors, Valeant and Gilead.

Six additional drugs scheduled for FDA decisions in 2013, are merely reformulations or new delivery systems for already approved drugs.

And finally, there are five,  already approved drugs,  awaiting new or expanded indications. 

Think about that for a second.  Tens of billions of dollars spent on R & D and technology acquisitions every year for decades and only seven new drugs.   Every year PhRMA touts the thousands of new compounds in development, several hundred by disease state.  How many Big Pharma company executives get up at the never-ending investor conferences to brag about their pipelines of new drugs coming?  With more than a thousand drug or biotech companies, spending tens of billions of dollars year after year and we only get seven new drugs?

I would also point out that, from my perspective, only Merck and Glaxo qualify as Big Pharma.  Ok, Pfizer is in the joint venture on dolutegravir, but still.  Even if you throw in Cubist and Gilead, where are the rest of the Big Pharmas? 

This is a sad commentary on disastrous pharmaceutical R & D productivity (and the lack thereof). More importantly, it’s a very scary picture for investors and worse for those with diseases for which there are few or no therapeutic options.

Perhaps Pharma will figure out that it is not more money that delivers breakthrough new treatments.  Focused, high-level basic science expertise (not just academic degrees) and a deep multi-disciplinary understanding of the target disease are required to crack the drug discovery code.  Unfortunately, for the past couple of decades, Big Pharma hasn’t valued discovery research. They would rather just write a check than do the hard work.  And the results show.

How Bad Behavior Evolves in Pharmaceutical Companies and Probably Other Big Businesses

There appears to be an interesting pattern of corporate behavior that seems to evolve over time and accelerates with the need for executive incentive compensation driven financial performance (sales growth). This behavior is especially noticeable in larger organizations and is government protected if your behavior is within a large corporation (too big to fail).

Whenever there is a need or demand for more robust financial returns, the evolution advances another step.  Here is the progression of behavior that seems to transpire in the context of Pharmaceutical industry executives but it probably applies to other industries as well (think investment banking). So, here’s how it goes…

We have a great product that really can help people.  We have the resources to  make sure physicians and patients know about it, know how to use it  appropriately and safely.   We want to be credible in the market and trusted so let’s  make sure we are ethical about our marketing and sales.

This evolves to…

There is a much bigger market for this product than we are currently capturing …  we’ve probably been to conservative in our promotion so what do we need to do to grow this product even faster?

The plan sounds good,  as long as we have the regulatory language to market it that way.

It looks like it should be ok from a regulatory perspective if we present it like this so we can argue it is our interpretation of the package insert language.

Still need more sales…

OK, it may be questionable from a regulatory perspective but is it legal?  We can  deal with a warning from the FDA if it comes and we’ll probably end up in lengthy but inconsequential litigation to determine if it really is illegal  …  so let’s go with it.

Wanting more sales…

Nobody has called us on our marketing and sales activities yet so what else can we do?

Ok, not sure if this is really illegal but even if it is … what are we facing here?   We might have to pay a fine or something … but nobody’s going to jail.

Notice how fast “ethical” gets dismissed without much thought.

In the end, money and greed protected in the labyrinth of  “Big Corporate” decision making drive this scenario.  For those who want less regulation and less legislation, you can expect even more aggressive business practices.  Without strict enforcement and personal (not corporate) accountability with behavior deterring consequences, regulation and the law are meaningless.   mike@pharmareform.com

Five Irreparable Mistakes made by Pharma

Over the past several decades the Pharmaceutical Industry has made more than its fair share of mistakes but there are five that may be irreparable.   These mistakes that will be near impossible to correct, even in the long term.

  1.  Taking  manufacturing for granted

Pharma executives still don’t get it.   cGMP – compliant pharmaceutical manufacturing is difficult and requires expertise.  It also takes considerable investment to support the quality systems and to maintain operationally.  Pharmaceutical companies often looked to manufacturing for cost cutting opportunities disguised as challenges for operational efficiencies.  Some found outsourcing to be the answer to lower costs and a way to abdicate responsibility.  Others merely delayed repairs and maintenance, reduced labor costs (e.g., hire lower cost, inexperienced technicians and supervisors) or shortcut quality.  And now we wonder why the industry is plagued by seemingly endless episodes of FDA interventions, product recalls, and plant closures.

  1. Valuing “talent” and organizational savvy over expertise

Compensation has been driven by getting promoted, not by the expertise you brought to the table.  People skills, slick presentations, and “managing up” were critical success factors for corporate ladder climbing.  For some it was being lucky enough to be on a blockbuster product team or having a sales territory that embraced private practice over managed care.  Broad general management was valued more than individual contribution as an expert.  For example, wouldn’t you think that individuals who discovered the blockbuster products or figured out how to deliver them safely would be compensated as well as some of the executives who benefited financially from those discoveries?  Without expertise you don’t discover breakthrough products, you can’t consistently manufacture cGMP- compliant products, you can’t run efficient organizations, you can’t be a credible source of information, and you can’t rebuild public trust and confidence.

3.      R & D focus on “development “ rather than discovery research

Just find a patentable compound that has some disease modifying affect that is safe enough to get through the FDA and get it to market as fast as possible.  Fill the pipeline so the CEO can brag to Wall Street about the number of projects in the pipeline, regardless of their real clinical value.  But drug development, while expensive, is the easy part.  Drug discovery is the hard work.  I’m not talking about the simple  “hit and miss” screening for activity.  Finding that new breakthrough product with clinically meaningful benefits for patients requires multidisciplinary expertise, a comprehensive understanding of the underlying pathophysiology of the disease, and takes a long time to produce results.  Most of Big Pharma no longer has the expertise or “know how” to do drug discovery well or efficiently.

  1. Abusive customer practices

If unethical and illegal marketing and sales practices were not enough to erode public trust and confidence in the industry; abusive pricing practices have certainly done so. Desperate patients have been subjected to expensive therapies that, for many, caused more harm than good.  In many cases, the drug companies knew full well they were profiting not from helping patients but rather by putting patient health and safety at risk.  For all the good the industry has done, most patients and the healthcare community don’t care anymore because they no longer trust the industry.

  1. Wasteful spending

Lack of money was never a reason not to do something, including building organizational empires, ramping up sales organizations to tens of thousands of individuals, spending billions on ineffective Direct to Consumer advertising, and billions on promotional “medical education” lunches and dinners.  Tens of billions were spent on R & D that resulted in more “me too” products than true clinical breakthroughs.  And when a Big Pharma got desperate to show growth they spent tens of billions to acquired another struggling Big Pharma at a premium price only to dismantle the acquired company, pay exiting executives lottery size bonuses for getting the deal done, and promising investors long term better results which never came.  We’ll never know what good could have been done with the hundreds of billions of wasted money over the past couple of decades.

The cumulative impact of these mistakes is enormous.  And, as much as these seem like they could be fixed, the damage has been done. What’s most depressing is that the executives managing drug companies contributing to these mistakes were handsomely rewarded for these industry-destructive behaviors.

So, has the pharmaceutical industry done anything good?  We’ll look at that in the next post.   mike@pharmareform.com

Five Predictions for the Pharmaceutical Industry

I don’t pretend to have a crystal ball but trends and evolving patterns can lead one to predict pretty accurately what is going to happen in the future.  As the predictions in Pharmaplasia have pretty much come to pass and continue to play out,  I decided to take another shot at formulating what appears to be in store for the pharmaceutical industry over the next five to ten years.  So here goes…

  • Big Pharma investors will become less tolerant of multi-billion dollar mega-acquisitions of companies and technologies that benefit executives, bankers, and lawyers but do little to improve the acquiring company.  Investors will no longer accept excuses when these overpriced deals don’t deliver on the expectations and promised returns.
  • Biotech investment will continue to decline as investors become increasingly rigorous in their due diligence, identifying true innovation with meaningful clinical potential rather than investing hopefully in purported innovation hyped by articulate CEOs looking to win the “buy-out lottery.”  With the first prediction in play, there will be fewer “buy-out lotteries” to be won.
  • The continued product focus of pharmaceutical R& D is leading to a prolonged period of fewer truly innovative clinically important new treatments.  The acquisition opportunities for development-ready, truly innovative technologies in small biotech companies will slow dramatically.   And,  merely shooting at “disease targets” with chemistry, without a comprehensive understanding of the pathophysiology of disease, leads to a “hit and miss” mentality, lacking in appreciation for the complexities of human biology.
  • The market will continue to experience significant drug shortages until the healthcare market is willing to pay prices that support high quality cGMP-compliant manufacturing and the pharmaceutical industry (including generic drug companies) realizes that high quality cGMP-compliant manufacturing is a critical success factor, important enough to make the necessary investments to consistently sustain it.  This is difficult for Pharma executives because manufacturing has always been the place to look for operational cost cutting and investment in manufacturing expertise and systems is not as “sexy” or newsworthy as placing a big bet on a “hyped up” new drug technology to excite Wall Street analysts.
  • Unfortunately, the pharmaceutical industry will not have the necessary experience base or leadership to navigate this perilous journey.  Downsizings, retirements, and industry changing career choices have diminished the necessary operational (think research and manufacturing) experience and expertise from the industry.   And, those who have survived and aspire to take on leadership roles have mentored during a period characterized by “me too” drug and acquisition driven R & D, questionable (if not illegal) marketing and sales tactics, and a corporate priority for investor interests over patient well-being.   Not exactly the development track you’d prescribe given the organizational challenges  and the complexities of the evolving healthcare market these new leaders will face.

Realistically facing the prospects for the future can help identify opportunities for changing what isn’t working and developing plans to take corrective action, if necessary.  If you don’t believe my predictions are valid, or you believe I have been to negative, then there is nothing to change.  Big Pharma can continue doing what it is doing.   Seems to me  that’s been the consensus position for some time now.

mike@pharmareform.com

How Pharmaceutical Companies can help Increase FDA Productivity

First, I am not going to defend the FDA or ignore its organizational dysfunction and seemingly antiquated review processes.  No doubt, the agency is underfunded and lacking in the necessary expertise to carry out its broad and geographically disperse responsibilities.   At the same time there are steps the pharmaceutical industry could take to help increase FDA productivity.

Historical precedent would suggest that pharmaceutical companies are more interested in getting products to the market than making sure their products are safe, effective, or even needed.  They tend to do the absolute minimum to get through the regulatory approval process (fastest, easiest indication first), hoping to argue there way through questionable safety data and relying on marketing to find expanded revenue opportunities in patients for whom they have little or no proof of efficacy or safety.   Some of the antics reported in the trade and lay press would suggest that pharmaceutical companies are continuously trying to find new ways to “game” the system.  If you need the details, there is a good review of the past forty years of industry missteps and flagrant disregard for regulatory expectations in the book Pharmaplasia™.   It is clear that the FDA has been put on high alert police mode by what historically has appeared to be an out-of-control, intentionally non-compliant, almost defiant pharmaceutical industry that can’t be trusted.

In this context, is it any wonder that the FDA is skeptically cautious, more demanding for proof of claims, and sometimes even slow and seemingly uncommitted when it comes to product approvals and issuance of guidance documents yet deliberate and critical, albeit intermittent and inconsistent in their enforcement?

Here are five steps the pharmaceutical industry could take to help improve the regulatory process and FDA efficiency.

  1. Focus on Innovation
  2. Makes safety issues easy for the FDA to understand
  3. Make manufacturing quality an organizational priority
  4. Commit to ethical and regulatory compliant marketing and sales
  5. Establish a base of credibility

Focus on Innovation

Despite the sunk costs of discovering and developing a product that companies hoped would turn out better than it did, don’t bog down the FDA review process with products that have little or no clinical benefits over what is already available on the market.  If you feel compelled to bring a comparable product to market, don’t try to make it sound better than it really is to substantiate a higher price.  Again, trying to angle for a labeling claim advantage that doesn’t really exist consumes FDA time and resources.

Make safety issues easy for the FDA to understand

It is mind-blowing to me that pharmaceutical companies can get to a final advisory board meeting prior to an expected approval and find out there is a concern and unanswered questions about an animal toxicology study or clinical finding?  Well, maybe the company was hoping it would just slip by and nobody would notice the data or they thought they could argue their way through the questionable or disturbing data.  Why not be proactive, anticipate the concern and just get the data to prove it’s not an issue?  Well, maybe companies still believe in the “don’t look for it unless it is a regulatory requirement” theory because they might find something they don’t like or can’t explain.  I appreciate the need for speed in development but you have at least 3 to 5 years after a product starts clinical studies to sort out any safety issues.  That is, if you really want to take the risk to understand the basic sciences of the concern or potential problem.

Make manufacturing quality an organizational priority

First, the answer to industry manufacturing issues is not lower quality standards, fewer FDA inspections, or less rigorous, less critical inspections.  In fact, I am a proponent of maintaining high quality standards,  more frequent and more rigorous inspections, including of foreign facilities.

As challenging as pharmaceutical manufacturing can be, I don’t see why pharmaceutical companies should expect anything other than a clean slate, no 483′s,  when the FDA inspects their facilities.  With appropriate management manufacturing expertise and robust quality systems in place, avoiding 483’s should not be a matter of chance or wishful thinking but rather a matter of fact.  Clean, high quality, cGMP – compliant manufacturing would make FDA inspections (and follow-up) easier, less laborious, and less time consuming.

Commit to ethical and regulatory compliant marketing and sales

“Pushing the regulatory envelop” and “off-label” promotion can drive revenues and increase your market opportunity but also puts tremendous additional workload on the FDA.   So much so that it is clear that pharmaceutical companies have taken advantage of this burden by trying to be clever in their advertising and promotions knowing full well the FDA can’t police everything and the chances of being caught are remote.  Even if caught, the consequences are minimal (a “slap on the hand” in the form of a letter) unless the Department of Justice pushes for some financial penalty.  And then,  it just becomes a cost of doing business.  Unfortunately, pharmaceutical companies may feel they will be at a significant commercial disadvantage if they don’t “push the regulatory envelop” because “everybody is doing it.”

An industry-wide commitment to ethical and regulatory compliant marketing and selling would make non-compliant outliers more obvious and allow FDA to focus resources  on the more egregious and potentially harmful marketing and sales activities.

Establish a base of credibility

If the pharmaceutical industry were trusted, credible, and committed to regulatory compliance the FDA would not have to spend as much time, effort, and resources trying to sort out the “gamers” from bona fide efforts to bring safe and effective innovative new products to market, to maintain high quality manufacturing standards, and to market products in compliance with the approved label claims.  Yes, I believe there are companies and their CEOs who profess this to be their intent, but the historical record suggests there are few who have been able to deliver or credibly live up to this commitment.

mike@pharmareform.com

Pharmaceutical Companies Need to Know Their Purpose

This may sound simplistic and obvious.  But, have you noticed lately that pharmaceutical companies appear to be struggling with a confusing array of seemingly contradictory strategic choices?  Some of these choices leave even the most knowledgeable industry followers wondering and speculating about the rationale behind the decisions.

Should they get bigger, should they downsize?  Should they acquire, grow organically, or divest? Should they be “pure” pharmaceutical plays or diversified healthcare companies?  Should they continue to exploit the US market or expand into emerging markets?  Should they rebuild and restructure R & D or move to a more flexible outsourcing model?  Should they focus on diseases, products, or technologies?  Are regulatory compliance, manufacturing quality, and integrity important for building trust and credibility or are they “envelops to be pushed” for competitive advantage and financial gain?  Strategic and tactical choices that can affect business today and well into the future.

So what’s the big deal?  Don’t all companies go through this?  Why is this important?

It’s important because, when a company determines who they are, finds its purpose, and develops a passion for what they do; strategic and daily operational decision making become easier and are more likely to deliver the organizational goals and objectives that support the company purpose.  This corporate understanding of “self” includes a deep seated set of behavioral expectations, values, and principles by which the company operates and does business.

Definition, consistency of behavior, and organizational alignment allow employees to embrace and support the corporate purpose in their daily activities.  Decisions become easier as choices and options either fit or don’t fit the behavioral values or purpose.  More importantly, employees, prospective employees, customers, collaborators, and investors all know what to expect from the company.

Despite all the mission and vision statements in their lobbies, I believe many of the Big Pharma companies today have lost their purpose and are confused about their ”self.”  With a fixation on near-term financial performance (their apparent purpose), they seem to be struggling to find the “quick fixes” to business success in the evolving new healthcare market.

Most pharmaceutical companies would never admit they have lost their purpose.  At the same time, if they were to explore this fundamental business principle, many might learn that even their management teams are uncertain, if not finding total organizational disagreement about who they are and what they do.

mike@pharmareform.com

The Reality of Pharmaceutical Industry Predictions is Coming True

The commentary and highlights of pharmaceutical industry challenges noted in Duff Wilson’s article “Patent Woes Threaten Drug Firms” in The New York Times (3/6/2011) and the Morgan Stanley report “An Avalanche of Risk? Downgrading to Cautious” come as no surprise if you have read the book Pharmaplasia.  This disconcerting pharmaceutical industry situation has been decades in the making and unfortunately, will take decades to turn around.

Those looking for or postulating near-term quick fixes from strategic restructurings, mega-mergers, technology acquisitions, or breakthrough serendipitous discoveries to resolve the industry dysfunction will be sadly disappointed.  As described in Pharmaplasia™, the problems in the pharmaceutical industry are deep rooted and involve more than just a lack of  R & D productivity.

Sure there are going to be the occasional successful new product introductions that give us hope that the industry is recovering but even those introductions will have been the result of decades of development work and there will be too few to really make a significant impact on restoring healthy consistent revenue growth for the industry.  For the pharmaceutical industry there are no quick fixes and it could take decades for the impact of the multitude of strategic efforts today to really begin delivering the types of financial results expected from the magnitude of investment being made by the industry.

In addition to fixing R & D, the pharmaceutical industry business model must become more efficient (increase operational productivity and reduce waste), must be more responsive to healthcare market needs, and must replace traditional sales and marketing tactics with healthcare market embraced programs.  Success will depend on competent leadership that is more interested in satisfying evolving new healthcare provider needs and patient well-being than “driving revenues”, satisfying Wall Street, and building personal financial wealth.

In the end, a more prosperous future for the pharmaceutical industry will come from discovering and developing truly innovative new treatments that provide clinically meaningful benefits over currently available therapeutic alternatives.  This will take a major change in R&D philosophy with a much more comprehensive basic sciences approach to finding preventions, treatments, and cures for diseases rather than relying on historical “tweaking of chemistry” and “trial and error” approaches of matching compounds with postulated disease targets.   mike@pharmareform.com

Employee Mindset Is Affecting Your Pharmaceutical Company Performance

Visionary, courageous leadership, R & D retooling, and a new business model are usually the answers given for what is needed to resolve the pharmaceutical industry’s current state of dysfunction.  I believe that unencumbered performance and productivity levels of front line employees is the foundation for resolving many of the issues facing the industry today.  And, I am not suggesting industry people are not working hard today.  So what do I mean?

Industry reports, Wall Street commentary, media exposure, and trade journal articles continue to paint a pretty depressing picture for the pharmaceutical industry. Declining revenues, thinning pipelines, prominent blockbuster products coming off patent, an inordinate number of disappointing clinical trial results, and inexplicable regulatory rejections are just a few of the issues haunting Pharma executives.  Collateral damage from mergers and acquisitions, plant closings, downsizings, and continued regulatory and legal consequences from questionable, if not illegal, activities.  The state of the pharmaceutical industry seems more than just a little challenging as a place to work.

In the midst of this challenging environment, pharmaceutical executives need the support and high level performance from their employees more than ever before.  Unfortunately, executive credibility among the rank and file may be somewhat compromised by uncertainty precipitated by their actions of the past and more recently, the pick slips handed to many of their fellow co-workers.  With the continued threat of even more cost cutting and downsizing,  inspiring and maintaining employee morale will take more than visionary leadership and executive cheerleading.

The single biggest factor company executives have to deal with as they try to manage through to prosperity is the psyche of their employees.  What if I’m worried about my job, the financial viability of the company, the stock price (my retirement), more pipeline failures, litigation losses, and bad press?  Can I really be performing at my highest level?  Do I even care?

So, when are people most productive and performing at their highest level?

When they feel good about themselves, their job function, and their company.  When they are well trained and have the expertise to perform at a high level.  When they have the right mindset about who they are, the role they play in what they are doing, and how well they are doing it.  When they feel they can still grow in their jobs, know they can learn and feel good about finding new ways to do it better.  When they don’t feel like their job is a job but rather what they do makes a significant contribution to the good of the company.  When their efforts and performance level are acknowledge in a meaningful way.

How does your company deal with these issues?  Do company executives and managers have a psyche improvement plan?  Do they have the training to help employees create and develop the right mindset and reach these higher levels of performance?  Or,  are they just hoping things will get better?   mike@pharmareform.com

When is a High Sense of Urgency a Liability for Pharmaceutical Companies?

We are definitely living in a “Just Do It” global economy that rewards action and speed of execution.   This sense of urgency is reinforced by our instant access to new information on the internet and capabilities such as high speed trading on Wall Street.  Service providers and advertisers reinforce this need for speed and create universal expectations with offerings to get it done faster, quicker, and in less time.  In fact, we can’t seem to get things done fast enough, all in the name of taking advantage of a fleeting opportunities and staying competitive.

Almost nothing of importance in the pharmaceutical industry happens fast yet an incessant sense of urgency almost seems to be a badge of honor and is often applauded by Wall Street.  There seem to be a pervasive need to get things done quickly at pharmaceutical companies to create a competitive advantage (first to market) and potentially increase the commercial opportunity (more time left on the patent to market the product).

But, is having this sense of urgency always a good thing? Let’s take a look at four areas where an indiscriminately managed sense of urgency can lead to inferior, if not disastrous, results for a pharmaceutical company.  A reckless sense of urgency in research, manufacturing, commercialization, and employee development all carry significant potential liabilities.

Looking for quick hits in discovery research, rushing products through clinical development and even quickly killing product candidates early in development can all lead to disappointing results, even for products that might have otherwise done really well.  Missed therapeutic applications, overlooked safety issues, and product failures in late stage clinical trials can be symptomatic of making urgency and speed a priority in research.

Manufacturing operation with a heightened sense of urgency may be able to get up and running quickly or increase production output but run the risk of operational errors, increased waste, and fostering damaging quality issues.

Similarly, when commercial plans and tactics are deployed without due processes in an effort to get it done or to make a change quickly, marketers run the risk of medical-legal compliance liabilities, market miscommunication, misdirection of the sales force, and potentially slow adoption or even instigate rejection of the product by the market.

Also, when individuals who have accelerated promotions to higher levels of corporate responsibilities before they are truly ready, they are probably not thinking about the potential liabilities of premature advancement. Unfortunately, the realities of their inexperience can quickly catch up with them,  resulting in mistakes and poor decisions that have increasingly greater and longer lasting impacts on the company and the people who report to them.

I’m not suggesting the pharmaceutical industry and executives abandon this sense of urgency but rather to apply it discriminately and manage it carefully.  Not everything should have the same heightened sense of urgency and those that do require a commensurate high level of attention to detail with a disciplined, realistic assessment of expectations and potential liabilities.  Somebody needs to be asking; “Are these timelines necessary and realistic?  Why? And For what end result? “  With these timelines; “What are we missing here?” and “How do we mitigate the risks?”   mike@pharmareform.com

Pharmaceutical Company Restructuring Considerations for the Future

In the last post we discussed how Big Pharma might have avoided having to lay off so many of their loyal employees had they done a better job of managing their business for the long-term.  Well, easy to look back and criticize but how about looking forward?

Here are some things for Big Pharma executives to consider as they restructure for the future:

  • No single blockbuster product can fix a dysfunctional pharmaceutical company.  It can only buy time to make the inevitable difficult but necessary changes.
  • The pharmaceutical market will become increasingly global with less regional variation in treatment practices, regulation, and pricing.
  • Unsubstantiated value of seemingly unjustifiably high prices will be met with market rejection, outright price controls, government price negotiations, and higher rebate expectations.
  • Relative to Big Pharma pipeline needs, Biotech will have a finite supply of clinically meaningful differentiated innovative products available for acquisition
  • Traditional marketing and sales activities will have little impact on prescribing behavior which will be more influenced by scientific rationale, demonstrated meaningful clinical benefit, and the impact on overall healthcare costs of treating the patient
  • Prescribing will be increasingly managed with “best practice treatment guidelines” prompted and monitored for compliance through e-prescribing technology
  • Electronic medical records with medical information systems driven algorithms will allow for real world assessments for determining relative therapeutic benefits and healthcare cost implications of treatment options
  • Financial incentives, cost management benefits, and more effective products and programs will drive a revitalized interest in making preventive medicine and medically prescribed life style changes a priority
  • Product and treatment assessments will be more rigorous, more sophisticated, and less easily influenced by Pharma companies unless they have  compelling real world clinical data to support their claims
  • Comparative efficacy will become a regulatory and healthcare market expectation
  • Therapeutic options will include stem cell, gene therapy, and synthetic biology- derived treatments.  Some may ultimately eliminate the need for chronic treatment in small molecule mass markets.
  • Drug-device and delivery systems will target treatments to specific disease targets, increasing efficacy at lower doses while reducing the potential for side effects and adverse reactions
  • Companion diagnostics and personalized medicine will be a regulatory, market, and healthcare provider expectation
  • Reliable, high quality manufacturing that ensures consistency and safety will be a differentiating feature for pharmaceuticals, especially for generic drugs
  • Affordability will eventually mean denying insurance coverage (private or government) for high priced drugs with marginal therapeutic benefit, especially those with minimal end of life benefits
  • To maintain profitability under intense pricing pressure Pharma companies will be forced to dramatically reduce their operating expenses (well beyond their current thinking)
  • Big Pharma companies that maintain their large organizational size will have less pricing flexibility and will be hampered in their ability to deliver innovation, ensure customer satisfaction, and avoid regulatory and legal missteps

So what to do now:

  • Pharma recruiting, training, and talent management must improve with a focus on expertise, competence, and integrity.  Hire and develop “the best” (e.g., world class scientific expertise, visionary leadership with integrity, highly skilled operations personnel) rather than just finding somebody who has done or can do the job.
  • Focus research on comprehensive understanding of diseases rather than just exploiting chemistry and disease targets.  Strive for preventions and cures rather than just developing another compound or molecule to get to the market.
  • The number of pipeline projects is only meaningful in the context of new market expectations.  Products that can not deliver clinically meaningful differentiation should be objectively reevaluated for commercial viability in a more demanding healthcare market. Fewer development programs will make it past this assessment if companies are truly objective and critical in their evaluations.
  • Pipeline target product profiles should define the potential “comparative efficacy“ and the meaningful clinical benefits relative to other therapeutic options
  • Identify and develop plans for securing the specific data needed to substantiate the claims of efficacy, safety, and “value”.  This is not just to meet regulatory requirements but to withstand rigorous, more sophisticated managed market expert assessments.
  • Make companion diagnostics a requirement for pipeline projects
  • Develop managed market expertise throughout the organization not just as commercial function.
  • Develop healthcare system collaborations that allow for understanding, designing, and executing comparative product and treatment assessments in different electronic medical records systems
  • Assume none of the traditional marketing and sales tactics will work (including social media) and then prepare plans for promoting your products in this new healthcare market. For example, think about how electronic medical records and best practice treatment guidelines will influence e-prescribing.  How will you educate a physician population without traditional tactics?
  • Assume that even your most aggressive cost cutting programs in operations will not be enough.  Root out legacy, non-essential expenses as if you were facing bankruptcy.
  • All non-core competencies should be critically evaluated as outsourcing opportunities
  • Invest in expertise, competence, integrity, and high performance systems and equipment to ensure consistent high quality manufacturing (if the company plans to continue manufacturing as a core competency). Invest and retool your processes now for the future.

Critical Success Factors

  • Innovative new products with companion diagnostics
  • Robust real world data to support clinically meaningful differentiation
  • Organizational managed market expertise
  • Talent management focused on expertise, competence, and integrity
  • Low cost, efficient yet reliable operations
  • Commercial programs designed to help healthcare providers and patients realize the full value of the company’s products
  • Become a trusted and credible source of disease and treatment information
  • Patient well-being must be a priority (e.g., patient safety more important than negative impact on sales or potential implications for litigation)
  • Leadership and organizational integrity

The intent here was not to draft a business plan but rather to identify some of the predictable changes of the evolving new healthcare market that will impact Pharma companies.  This was merely to demonstrate that it is possible to anticipate the changes we see evolving in the market and prepare for them if we look forward and take action now.

Now, I’m sure some of you are thinking… ” do you think we are idiots? You made me read all this for nothing.  Obviously, the industry and its executives are doing this.  We have strategic planning groups of MBAs working full time on this stuff.”

Well, I’m pretty sure industry executives thought they were taking care of the future back in the mid-1990’s as well.

mike@pharmareform.com