Posted by: Audrey Erbes | September 24, 2012

Big Pharma Getting Serious and More Thoughtful about Innovation Sources

I just attended the 22nd Elsevier (formerly Windhover) Pharmaceutical Strategic Alliance conference in New York City where I heard reports on new experiments to replace the traditional VC model of funding start ups, reform the failed Big Pharma model of drug development, find solutions to lowering cost of clinical trials and develop a culture of innovation with enhanced productivity at lower cost. I was impressed that some of these more well thought out experiments with academia might actually work despite the differences in incentive cultures at universities vs. for profits.

It is certainly apparent that Big Pharma is desperate to find alternative, faster and more affordable methods to develop new high value drugs. I got the sense that the management realizes that they won’t have the large stores of cash available in the future unless they develop and market products more rapidly. Externalization of innovation is real and cause of much of the shrinkage in their R&D departments as well as need to participate in volume of rapidly growing patient bases in emerging markets. Note some of these new ideas in the notes I took which appear as takeaways.

Key Takeaways

  • South Korea is growing its CRO capability—IND submissions take about a month to approval and while China and India don’t allow first in human trials, Korea does; Korean companies looking to sell products outside as there are pricing controls in Korea and market consists largely of low priced generics
  • Potential companion diagnostic deals on the rise—many not disclosed but trend clear; there will be coding changes in January 2013 as CMS wants to differentiate prices of older tests vs. new improved tests
  • Philip Ma, Senior Partner, McKinsey & Co. shared his thoughts on need for pharmaceutical ecosystem that embraces:
    • New relationships with suppliers and CROs
    • Studying decision-making—need to study how to get best advice for go-no go decisions at end of Phase II to avoid high failure rate in Ph III
    • Diversity in innovation sourcing—48% of drugs from biotech by 2016 vs. 11% in 2011
    • Integration of technology can have positive impact on high costs of clinical trial monitoring which consumes about 40% of drug development costs
    • Coinvention suggests many types of partnerships and collaborations need to emerge
  • Pharma getting council from Payors—Payors are becoming more like CROS in helping pharma companies
  • 50-60% of MDs are now employees in the U.S. and up to 75% work in hospitals—physicians are becoming more team based, more comfortable with technology and recognize that value is not enough but must also be affordable
  • Partnering in emerging markets more popular than “green fielding” because foreign companies don’t have contacts or knowledge regarding local markets
  • Change in pharma business model to selling health care vs. drugs when forced into “pay for performance” environment
  • Andrew Baum, MD, Managing Director and Gloval Head of Healthcare, Citi Research was more optimistic about fixing R&D but noted that demonstrating “affordable value was harder;” significant increase in R&D productivity is required to offset worsening reimbursement status
  • Reduction in fixed capability of Big Pharma frees up capacity for partnerships with smaller companies
  • There needs to be balance of commercial and science with incentives for academic researchers to be innovative; academics are more open to working with companies due to drying up of NHI funding of university research
  • Combination drugs will be more important beyond HIV and in oncology and diabetes; cost of combinations of multiple high priced biologic products can’t be simple additive pricing—must be priced as one product combination
  • There is growing number of pharma/pharma collaborations now, especially, in precompetitive space
  • Some companies doing collaborations with VC firms—Merck has done 5 such investments in venture funds
  • There is need to foster culture to recommend high risk deals
  • Paul Stoffels, MD, Worldwide Chairman, Pharmaceuticals, Johnson and Johnson shared plans for 4 innovation centers in Shanghai, Boston, London and California (latter with offices in both San Diego and San Francisco) to open soon. These centers allow easy access to J&J by academic scientists, entrepreneurs and start up companies.
  • FDA is working in positive manner with industry to enable new pathways in drug development

One of these new experiments mentioned at conference included TransCelerate BioPharma, a coalition of 10 Big Pharma companies, with mission to work together across the R&D community internationally to share research and solutions that might simplify and accelerate the number of innovative new medicines at reduced cost.  The head is CEO Garry Neil, M.D., a partner at Apple Tree Partners and formerly corporate VP for science and technology at Johnson & Johnson.  Janet Woodcock, M.D., director of FDA’s Center for Drug Evaluation and Research says “This collaborative approach in the precompetitive arena, utilizing the collective experience and resources of 10 leading drug companies and others to follow, has the promise to lead to new paradigms and cost savings in drug development, all of which would strengthen the industry and its ability to develop innovative and much-needed therapies for patients.” The ten founding companies include:  Abbott, AstraZeneca, Boehringer Ingelheim, Bristol-Myers Squibb, Eli Lilly, GlaxoSmithKline, Johnson & Johnson, Pfizer, Roche’s Genentech, and Sanofi. I find this a major step forward in eliminating duplication and waste—what a change from the past where working together was considered impossible.

Highlights for this week’s upcoming meetings include:

  • BioCentury TV Today, See new program Webcast Starting Sunday, Sept. 23, 2012 http://www.biocenturytv.com, Available anytime starting at 9:00 a.m. EDT; Topic: “Science and Austerity: Francis Collins Speaks Out;” Guest Speaker: NIH Director Francis Collins
  • Pharm Asia Summit-Shanghai, Sept. 24-26, 2012; Focus: “Renewing Growth through Innovation in Emerging Markets: Strategic Data and Case Studies for Prioritizing your Business Model
  • Bio2Device Group, Tuesday Morning, Sept. 25, 2012; Topic: “Global Regulatory Environment for Medical Devices;” Speaker: Patrick Lee, Regulatory Affairs Consultant, Anson Group
  • Eyeforpharma, Free Webinar, Thursday Morning, September 27, 2012; Topic: “Sell Outcomes, Not Medicines”
  • Simon Kucher & Partners Forum, Thursday, Sept. 27, 2012; Event: 5th Bay Area Life Sciences Marketing Strategy Forum; Speaker: Anand Mehra, M.D., Partner, Sofinnova Ventures; Christian Schuler, Partner, Simon-Kucher & Partners; many others
  • BOLD Workshop, Thursday Afternoon, September 27th, 2012; Topic: “Using Technology to Promote Global Organizational Growth” Panelists: Michael McCreary is the Director of HR Services Operations at Intuit, Rob Lake, Global leader for Talent Acquisition, Retention and Workforce Planning at Motorola, Scott Shelton, Creative Director, Allegis Group Services
  • San Jose BioCenter, Thursday Afternoon, September 27, 2012; Topic: “New rules on Crowdfunding: A real opportunity for your emerging company?” Panelists: Jai Ranganathan, Co-founder, Scifund Challenge;  Patricia Salber, MD, MBA, Founder and CEO, Health Tech Hatch and Vice-Chair, National Crowdfunding Association; Paul Spinrad, Executive Board Member, Crowdfunding Professional Association; Paul Fox, General Partner, CalCEF Clean Energy Angel Fund; Lead Facilitator: Larry Kane, Corporate Partner, Emerging Companies Group Member, Orrick, Herrington & Sutcliffe LLP
  • HBA, Thursday Evening, Sept. 27, 2012; Topic: “Perfect Your Elevator Pitch”
  • East Bay Awis, Thursday Evening, Sept. 27, 2012; Two Topics: “Therapeutic Flow For Lab Rats” And “Best Practices For Networking;” Speakers, Respectively: Speaker: Poh Teng, Ph.D., Yoga Alliance Registered Yoga Instructor, Postdoctoral Researcher, University Of California, Berkeley And  Connie Hampton, Hampton & Associates, Scientific & Executive Search Consulting
  • BayBio, Friday, Sept. 28, 2012; Topic: “Life Science Series: mHealth Regulation and How to Avoid Practicing Medicine on the Web;” Speakers: Scott A. Edelstein, Partner, Squire Sanders; Paul Nerger, CTO, Happtique, Inc. and Karl M. Nobert, Of Counsel, Squire Sanders
  • IEEE, Friday and Saturday, Sept. 28-29, 2012; Workshop: IEEE Smart Tech Metro Area Workshop; Three tracks run concurrently all day Friday, choose one:Track 1: Embedded Software; Track 2: Life Science (Morning Session: BiotechnologyandAfternoon Session: Medical Devices); Track 3: Career Assistance; Saturday tracks include:Track 1: Consulting and Patents, Track 2: 21st Century Infrastructure, Track 3: Career Assistance
Check out the details for my upcoming Oct. 11-12 Life Science Business and Marketing: Their Integral Role for Success class at Berkeley Extension in Belmont. You’ll have access to the extremely helpful Elsevier periodicals including In Vivo and Startup and deal database for two months of term while working on your investment assessment during course ending Dec. 10th.

Download Audrey’s Picks through December and flyer for the Oct. course by right clicking on highlighted titles.

You’ll find me at the Simon Kucher forum and speaking at the IEEE conference on Friday, Sept. 28th. Have a great week!

Audrey

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