DRUG DEVELOPMENT TRENDS
care really has two sides: delivery and access; cost. The ACA is
clearly targeted at delivery and access. It has been successful in
reducing the number of people without insurance, however the
jury is still out on whether or not it has, or can, reduce costs.
In the past, a biologic had to have a superior efficacy to justify reimbursement. Now, it has to have a full cost-effectiveness value proposition attached to it. Insurers will pay for products, provided there is
a demonstrated benefit and outcome that’s positive, but, historically,
pharmaceutical products have not been sold strictly on that basis.
To ensure reimbursement today, pharmaceutical manufacturers must have significant information to inform cost-effectiveness
value conversations, with both payers and physicians demonstrating the value proposition. That is how products are going to be sold
de facto moving forward. There’s no other option.
ALZHEIMER’S WILL INCREASE AS A SOCIETAL
AND PUBLIC HEALTH CHALLENGE
Another trend that is directly correlated with the country’s aging
population is the incidence and prevalence of Alzheimer’s disease, which we’re just starting to feel the full effects of. This is a
category that is among the highest relative to R&D expenditure,
however there have unfortunately not been very many successful trials or pharmaceutical outcomes, so most of the spend is
R&D, and most of the expenditure is in treatment that’s nonpharmaceutical.
KB: What are the biggest industry challenges you are seeing?
JC: With big pharma, there is an ongoing pressure to reduce costs
and maintain or increase shareholder value. This is all being done in
an environment where the mix of products is changing. Companies
that are slow to adapt will struggle, while companies that are faster
and more nimble will be able to make these changes more easily.
What we’ll see among both fast and slow companies is an increase
in divestiture of non-core products, that is, products that are outside
the core therapeutic categories they’ve decided to focus on. We’ll increasingly see divestiture of slow-growth and end-of-life products.
Consistent with this focus on core assets, M&A activity will be increasingly targeted. The ability to finance and the capacity to transact
deals is still there, however there are fewer candidates—essentially,
a dwindling supply of companies that meet the criteria of being a
match to therapeutic needs. That will probably put a bit of a crimp in
M&A activity within pharma. There’s not a shortage within M&A and
L&A, the demand for assets is as strong as ever, and the amount of
spending that pharma will have to do within R&D will not diminish.
It will be increasingly difficult for companies to cut costs internally,
yet spend liberally on R&D and translate that into shareholder value.
KB: Do you anticipate these challenges will remain at the forefront for
JC: The specialty pharmaceutical and epidemiological population
demographic trends are most assuredly not changing. We’re in
the early stages of those areas; this will continue to be an opportunity for pharma companies, as these populations will need
higher amounts of pharmaceutical interventions.
It’s also going to put an enormous cost pressure on the U.S.
health care system, the dimensions of which are not fully sorted
out. Pharma can be a big part of that solution. Though it’s not a
majority of health care spend, pharma is a significant part of it, and
it’s increasing. Companies are going to be rewarded in the future
by being able to show the end-to-end value proposition of prod-
ucts—that is, products that are not necessarily superior from an
efficacy standpoint but are net positive to the healthcare system.
This makes pharma part of the solution, not part of the problem.
KB: What specialized capabilities will drive the market in the next
JC: With this new generation of products, it can be difficult to size
the market, forecast and price correctly. Given the increased focus on
pharmaceutical pricing, companies absolutely want to get that right.
Pricing opens the door to the whole outcomes and value
conversation. Companies must have a more integrated view of
commercialization. Pharmaceutical companies must focus more
heavily on launch planning and forecasting. To help ensure success, they should work with partners that can obtain insight from
physicians, payers and patients to create a more holistic view of
the market and its size. Pharmaceutical forecasting is challenging
– there are always things that people miss.
Companies may involve partners on the commercial side as
far out as two years before expected approval, just because there
are so many activities that need to be done that are not strictly
formulaic and don’t adhere to any kind of checklist.
Each situation is a little bit different. An important consideration
is whether a new product is a new class of pharmaceutical, or a follow-on product? For new products coming in to market, oftentimes
the whole infrastructure has to be put in place, from the scientific to
the medical side. As a result, we’re seeing within many pharmaceutical clients that the internal distance between the organization, R&D,
and medical affairs is shrinking. Organizations are less siloed, data
requirements are flowing more end to end, with the caveat that there
are certain pieces of information that can’t flow seamlessly across
the organization due to regulatory and compliance constraints.
From the standpoint of a company that’s about to commercialize their first product, an enormous amount has typically gone
into the process, from both an R&D standpoint and a medical
affairs capacity. Figuring out the type of commercial assets that
need to be deployed is challenging enough.
It is important to know day one post-approval what kinds of
data sets and insights are needed to measure success. These are
not based on prescription volumes—instead, you’re looking at
dosing and the duration of product, the nature of the infusion
and reimbursement. CP
John E. Corcoran is the founder and president of Trinity Partners, LLC ( www.trinitypartners.
com), a Waltham, MA-based holding company focused on life sciences. Organized in 1996, Trinity
provides strategic consulting services to the pharmaceutical and biotech industry. Trinity has expertise in all major therapeutic areas with particular focus on oncology, CNS,
infectious disease, HIV/AIDS, and cardiovascular. The firm has
extensive international experience with assignments throughout North America and Europe for approximately 100 clients.
The firm participates in upwards of 400 projects annually.