Posted by: Audrey Erbes | November 2, 2008

Takeaways from 2008 Windhover’s Pharmaceutical Strategic Alliance Meeting

Attending the Windhover Pharmaceutical Strategic Alliance and the UBS Global Health Care Investment Banking meetings in New York every September (with a couple hours at the Metropolitan Museum of Art and stroll through Central Park) are always a highlight of my “personal growth” plan both intellectually as well as culturally each year. The fact that both these East Coast-based meetings are “watering holes” for the industry business development elite provides an additional incentive to keep making this annual pilgrimage.

I just reviewed my notes from the PSA meeting and these were the takeaways:

  • FDA getting much tougher with increasing requirements which will increase company costs to get approvals while FDA lacks resources to deliver reviews on timely basis.
  • The biotech companies are having difficulties in this new environment—up to 50% could shutter doors this year. Payors will only pay branded prices for drugs that deliver improved safety or efficacy in addition to improved convenience but clearly won’t pay  for convenience improvement alone.
  • Debt is becoming more expensive—pharmaceutical cost of capital could rise to 18% or more. New vehicles of financing emerging—i.e., selling participation in royalties
  • Big Pharma experimenting with diversification again but this may be folly. Experience historically showed it’s best to stick with one’s knitting. Diversification is fine for some companies with historic experience and success in other areas but for newcomers, consolidation across business types is risky.
  • Looking for solutions to Big Pharma dilemmas by going overseas where emerging markets now account for 25% of total market growth (IMS) of interest. But just to take advantage of low labor costs not good enough, companies must use investments overseas in emerging markets to take advantage of growth through generics as well as branded products and establishing respected presence in the emerging markets.
  • Glut of Phase II products at Big Pharma with insufficient funds to move them all into Phase III—this could have negative effect on products coming out of some biotech companies that invested in derisked Phase II drugs to partner with Big Pharma and Big Biotech.
  • Big Pharma companies best positioned to gain from biosimilars and “me better” biologics vs. generic companies with exception of Teva (contrary to what Wall Street and biotech thinks); for example, Roche will have biologic brand name of Genentech, biologic manufacturing, regulatory and marketing expertise upon taking over Genentech— positioning them as leader in biosimilars and “bio me betters” (branded generic with a “twist:”

Audrey

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