www.ngpharma.eu.com | Q3 20 2010 010
THE
MAGNIFICENT
SEVEN
Why China and the rest of the E7 could hold the key to the pharmaceutical industry’s future
EUROPE CALLING How Astellas is putting down roots far from its Japanese home
FAIR PLAY Developing countries deserve the same standards of treatment as the West
STAYING POWER Persistence is the key to maintaining operational excellence at Amgen
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FROM THE EDITOR 7
Undiscovered countries Why pharma companies are moving into emerging markets in a big way.
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ooming patent cliffs and shrivelling pipelines have pharma’s big players looking for new business models that will allow them to increase their bottom lines. One way to do this is to seek out niche markets for specialised products to treat rare diseases. Another is to focus your efforts on the so-called ‘pharmerging’ markets. According to PricewaterhouseCoopers’ ‘Pharma 2020’ report, the real GDP of the top seven emerging countries – China, India, Brazil, Russia, Mexico, Turkey, Indonesia – will triple from US$5.1 trillion in 2004 to US$15.7 trillion in 2020, whereas that of the G7 countries will grow by just 40 percent, from US$25.8 trillion to US$36.1 trillion. Our cover story looks at how these seven countries, along with other under-exploited areas of the globe, represent a huge opportunity for the pharmaceutical industry. They offer the chance to further develop new products and establish manufacturing, R&D or other facilities, as well as to take advantage of local skill sets and accelerate time to market. There are some potential issues to watch out for, however. Political upheaval, civil war, abrupt changes in government policy – the likelihood of these unforeseen events ocurring is arguably higher in certain of these countries than in the West. Lack of infrastructure and inferior intellectual property and regulatory standards are also concerns.
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It’s important to remember that all emerging markets are not created equal. Some observers think China, for example, has almost emerged, thanks to the sheer size of its population, and the fact that the government has accepted international companies at many different levels as well as maintaining its own generics sector and a high-level healthcare programme. By contrast, parts of Africa that face serious political crises and widespread poverty are unlikely to emerge in the foreseeable future. Any perceived downsides seem unlikely to prevent the pharmaceutical industry’s continued expansion in to these areas. PwC’s report also predicts that in 10 years’ time, the E7 emerging economies will account for 20 percent of sales in the US$1.3 trillion pharmaceutical market. Combine the profit potential with the huge numbers of desperately ill people in need of medicine, and it’s clear that staying out of emerging markets is not an option. The real question will be how can companies expand into these markets in a way that makes sense both for them, and for the people they are trying to treat.
“I strongly feel that the companies that already have a strong strategy in the emerging markets will be more successful than others in future years” Sumit Sharma, Senior Vice President for Emerging Markets and New Business, Frost & Sullivan Page 30
Marie Shields Editor
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CONTENTS 9
30 Taking the world by storm Why emerging markets are the pharmaceutical industry’s next big thing. By Marie Shields and Nick Pryke
58 A level playing field Jesper Høiland looks at how emerging pharmaceutical markets could beat the Western world at its own game
40 Staying power Amgen’s Madhavan Balachandran on why persistence is key to implementing an operational excellence campaign
84 Singled out Why Paul Stoffels believes greater differentiation and a move toward open innovation are the answers to the industry’s woes www.ngpharma.eu.com 9
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48 Manufacturing efďŹ ciency What Nycomed is doing to progress its manufacturing and supply chain operations
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66 Decision time PwC’s Mike Mentesana tells us how to make the right choices when it comes to chasing new innovation
74 On the edge of eradication Rino Rappuoli on the breakthrough vaccine that could consign four deadly types of meningococcal disease to history
94 Attention to detail What a recently uncovered molecule arrangement could mean for R&D and drug design in the world of pharmaceuticals
98 Moving into Europe How Astellas has established a strong presence far from its Japanese headquarters
102 Getting the numbers right Rosalind Cheetham explains why companies should prioritise the accurate forecasting of clinical trial recruitment levels
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50
Details 135 Travel: China 138 Airport lounges 140 Gadgets 142 Executive health 144 Photo finish
144 110 Leading the way Fred Hassan opens up on what it takes to be an exceptional leader in the pharmaceutical industry
116 Green medicine Why pharmaceuticals need to clean up their act when it comes to waste management
122 Beware the Bribery Act Strategies pharmaceutical companies worldwide will need to take to avoid criminal liability
126 Pharma and social media – an EU perspective Tim Worden takes a look at the dynamic between social media and pharma companies
130 Reframing pharmaceutical industry strategy for emerging markets John Singer’s tips for making the most of new opportunities.
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Ask the expert 50 Chris Ellins, Total Flow 54 Marcel Velterop, Dr Reddy’s Laboratories 68 Silvia Esteban, GE Healthcare 92 Marc Botteman, Pharmerit
Executive interview 44 Ariel Lasry, Rockwell Automation 56 Richard Lucas, Bioquell 63 R Arun Kumar, Infosys 90 Mike Ackermann, Quintiles 106 Paula McHale, Perceptive Informatics
Industry insight 38 Mikael Nilsson, Minimpex 52 Martin Svantesson, Geodis Wilson Pharmaceuticals 78 Warren Potts, Waters Corporation 80 Scott Boley, MPI Research
120 Johann Bonnet, Veolia Water Solutions and Technologies
Next big thing 46 Mark Selker and Barb Paldus, Finesse Solutions, LLC 82 Michael Butler, Xceleron 108 Chris Moriarty, Randox
Roundtable 71 Drug development, with Guy Charles de la Hoire of Neovacs and Mark Richards of QIAGEN
SILVER S P O N S O R
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NG Pharmaceutical Summit Europe 2010 Find Out More 12 - 14 October 2010 Contact NGP Grand Hotel Huis ter Duin, The Netherlands
+44 2920 729 345
The Next Generation Pharmaceutical Summit is a threeday critical information gathering of the most influential and important executives from the pharmaceutical industry. The NGP Summit is an opportunity to debate, benchmark and learn from other industry leaders. A Proven Format This inspired and professional format has been used by over 100 executives as a rewarding platform for discussion and learning.
A Controlled, Professional and Focused Environment
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THE INSIGHT
The emerging few At present, the US attracts roughly 53 percent of the total amount that the entire pharmaceutical industry spends on R&D. However, industry experts forecast that 20 percent of this expenditure is likely to move to the Asia pacific region by the end of 2011 – and with western pharmaceutical companies setting up low-cost research sites in emerging markets, this comes as no surprise. Companies are beginning to interpret the real potential of emerging markets, with their low operating costs and boost in middleclass populations, with over 1800 R&D deals worldwide taking place outside the US and Europe in the past five years. With this in mind, NGP offers some predictions on what is now being termed the ‘E7’.
China Population: 1,324,655,000 BAR THE CONFLICTING FORECASTS, China is undoubtedly the frontrunner in the emerging markets race. With it’s healthcare infrastructure improving at a staggering speed and western companies flocking to set up low-cost R&D sites, IMS Health predicts that China’s drug revenue will grow by US$40 billion by 2013. Another string to its bow is the sheer size of its market and how, due purely to its size, it can accommodate everyone – from major ethical players to the big multinationals. it also has it own generic pharmaceuticals that integrate within their improving healthcare system, cementing the countrie on the boundary between emerging and emerged.
Emerging success:
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Turkey Population: 73,914,260 With turkey’s disease profile shifting from infectious disease control to management of more chronic conditions such as cancer, diabetes and respiratory disease, the market for products that address these largely unmet medical needs is growing rapidly. From this, therapeutic benefits such as dosing regimens and targeted dosage forms such as via drug delivery technologies will further increase the potential for commercial success for companies wanting to get into the emerging market mix.
Emerging success:
Brazil Population: 191,971,506 BRAZIL HAS BEEN UNDER THE MAGNIFYING GLASS for some time now, as companies continue to monitor its infrastructure and healthcare. The main problem facing Brazil is the fact that, currently, it doesn’t have a sufficient enough healthcare infrastructure to support big pharmaceutical companies that would otherwise leap at the opportunity to enter its market; its population and disease profile, yet again, would serve the industry well. Unlike Russia, Brazil doesn’t have to contend with so many political issues, but rather the government tends to spend far more money on security – leaving less for healthcare. Sort this out, and Brazil could rocket up the E7 charts.
Emerging success:
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Mexico
Russia
Population: 106,350,434 Population: 141,950,000 RUSSIA HAS A FEW HURDLES in its way that need to be tackled before it can really start making ground. Its population levels are almost perfect, and disease profiles are worryingly high – both of which would obviously work in its favour. But with external control factors and political issues top of the concern list, western companies are finding that distribution is an extraordinary hassle in Russia; trying to get drugs approved for distribution and building distribution networks is also a major problem. Again, if it can reel-in these external issues and try and afford pharmaceutical companies an assurance that they will be able to work without unnecessary struggles then the industry is knocking at their door.
Emerging success:
The current exchange rate of the Mexican peso against the US dollar is causing a certain level of uncertainty considering the increase in pharmaceutical import costs. In turn, this will affect previously registered import levels. However, despite the suggested pharmaceutical negative growth in 2009, the downturn and evolving regulatory environment are fuelling generics consumption in Mexico, with the market expected to double by the end of 2010. It is off the back of this that the country should be projecting itself to multinational companies. Indeed, Sanofi-Aventis and Valeant have already entered the market by acquiring local producers.
Emerging success:
Indonesia Population: 227,345,082 DUE TO THE SHEER SIZE OF THE POPULATION, Indonesia cannot be dismissed. It has a massive generics market, which is likely to witness consolidation sometime in the next year as larger companies seek to maximise profits through acquisitions of smaller domestic companies. However, despite the country possessing huge manufacturing capabilities, its complete lack of R&D in domestic companies could cause the market to stagnate. Indonesia is undoubtedly a poor country, but with foreign aid and government investment improving the lives of many, it should see a steady increase in the access to affordable drugs.
Emerging success:
India Population: 1,139,964,932 INDIA HAS HAD A MAJOR HAND in the production and R&D sectors of the pharmaceutical industry ever since the Patent Act of 1970 allowed India to seriously approach and contribute in the worldwide pharmaceutical market. With its extremely low R&D and production costs, pharmaceutical industries have made full use of the favourable environment offered by the country to make it big. On top of this, its elderly population, alteration in disease profile and socio-economic situation all point to its likelihood to emerge in the next few years. Confirming this, industry experts predict that India’s pharmaceutical market will reach an overall worth of US$15.5 billion by 2014, with PwC projecting that the number of diabetes sufferers could reach 73.5 million by 2025.
Emerging success:
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Head of the pack
Executive salaries OVER THE PAST THREE DECADES, executive compensation has risen dramatically, far surpassing the wage of the average worker. With this in mind, NGP takes a sneak peak at some top earning executives to fi nd out how the pharmaceutical industry measures up. In a modern corporation, the CEO and other top executives are paid a salary plus short-term incentives or bonuses. Th is combination is referred to as ‘total cash compensation’ (TCC). Short-term incentives are usually formula-driven and have some performance criteria attached depending on the role of the executive. For example, a CEO’s criteria could be based on incremental profitability and revenue growth.
Comparison HEADING UP the pharmaceutical industry’s CEO counter attack is Ronald Williams, CEO of Aetna – a diversified healthcare benefits company. Having been with the company for a total of eight years, Williams has undoubtedly left a lasting impression as head of the company for the last three years as his total take-home compensation was an astonishing US$38 million. Astonishing in the sense that, when compared to Ellison, it seems as though Williams takes home mere pennies. Next in line is Thomas Ryan, CEO of CVS Caremark, one of America’s largest chains of pharmaceutical providers. Having been CEO for the past 11 years, he currently owns US$84 million in company shares, with a total compensation package of US$36 million. In at number three is Miles White, CEO of Abbot Laboratories, who nets a total compensation of US$27 million for being in charge of heading up the development of many popular drugs over the past 10 years for the company.
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LEADING THE WAY on the executive salaries list is Oracle Corporation, a multinational computer technology corporation, which by 2007 had the third-largest software revenue after Microsoft and IBM. It gave its CEO Lawrence J. Ellison a total compensation package of US$56.8 million. Ellison founded Oracle in 1977, putting up a mere US$1400 of his own money under the name Software Development Laboratories (SDL). Indeed, it pushed through its tough times – 1990 saw it laying off 10 percent of its staff and having a near miss with bankruptcy – but within the year, Ellison had turned his company round. This year has seen the European Union approve the acquisition by Oracle of Sun Microsystems by agreeing that “Oracle’s acquisition of Sun has the potential to revitalise important assets and create new and innovative products.” Next, you have the likes of Proctor & Gamble, a multinational company that manufactures a wide range of consumer goods, which in early 2010 became the fourth-largest corporation in the US by market capitalisation, surpassed only by Exxon Mobil, Microsoft and Walmart. It paid its former CEO, A. G. Lafley, a total of US$23.6 million in 2009 – his last year before retirement. Lafley is largely credited with turning around P&G during his tenure under the mantra ‘Consumer is Boss’. During his leadership, sales doubled, profits quadrupled, and P&G’s market value increased by more than US $100 billion dollars.
“In a modern corporation, the CEO and other top executives are paid a salary plus short-term incentives or bonuses”
Only woman THE ONLY WOMAN to feature on the top salaries list is Brenda C. Barnes, CEO of Sara Lee, and previously the first CEO of PepsiCo North America. Barnes has been making a name for herself for a number of years now, having been ranked in Forbes list of ‘The World’s 100 Most Powerful Women’ since 2004. In 2009 she appeared at number 29 on the Forbes list. Barnes has shown that after taking time out to raise a family, you can also achieve a career – and a very successful career at that. In 2009, Barnes raked in US $15,231,519 in total compensation. By comparison, the average worker made US $40,690 – so Barnes made 374 times the average worker’s pay.
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Best of the web Here are the top recent stories from the NGP website, www.ngpharma.eu.com NICE rejects breast cancer drug Tyverb The British Watchdog’s fi nal draft guidance follows earlier rebuffals of Tyverb, which is used in combination with Roche’s Xeloda (capecitabine), as a treatment for an aggressive for of advanced breast cancer (ErbB2/HER 2 – positive). It is a last resort for those whose treatment with standard chemotherapies and Herceptin has failed. GSK offered to provide patients with Tyverb for free for the fi rst three months and drew attention to evidence that it can extend the life of breast cancer patients for longer than just taking Xeloda on its own. However, despite these factors, NICE Chief Executive Andrew Dillon said that Tyverb “only extends life by a small amount of time – around 10 weeks – and costs thousands of pounds more” than Xeloda on its own, and that the breast cancer drug does “not represent good value for money when compared with the alternative, currently available treatment”.
Genetically tailored cancer care on NHS A groundbreaking approach to cancer treatments is to be offered to the UK’s National Health Service (NHS) patients later this year, with UK patients being offered genetically tailored cancer care for the very fi rst time. Cancer Research UK is going to launch the pilot scheme during the autumn, and will study the most effective ways in which genetic diagnostic techniques can be utilised across the NHS as a whole, so that eventually all patients may be able to benefit from personalised genetically tailored cancer care. Scientists at Cancer Research UK have said that by 2015, this approach could become part of routine procedure and believe that doing so could also save the NHS a considerable amount of money by cutting down on ineffective treatments for cancer patients.
Being short increases risk of heart disease A Finnish team at the University of Tampere have analysed data on over three million people and discovered that shorter adults were 1.5 time more likely to develop heart disease, die from heart disease or have a heart attack, than their taller counterparts were. For the study, people under 160cm were considered short, while those over 172cm were classed as tall. The researchers claimed that being under 160cm posed a greater risk of heart related illnesses. According to the
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Finnish team, shorter people could have smaller blood vessels to the heart that clog easier. The fi ndings, which were published in the European Heart Journal, also suggested that other factors that can stunt growth – such as poor nutrition during childhood – can also lead to an increased risk of heart disease.
GSK and Merck’s rotavirus vaccine safe The European Medicines Agency (EMA) has ruled that the presence of porcine circovirus (PCV) in GlaxoSmithKline’s Rotarix and Merck’s Rotateq poses no threat to the public and said that there is no need to confi ne use of the vaccines within the European Union. The EMA’s conclusion echoes the evaluation made by the US Food and Drug Administration (FDA) earlier this month, during which the FDA claimed that the benefits of Rotarix and Rotateq are substantial and include prevention of hospitalisation and death. The EMA’s latest statement revealed that the agency is now awaiting further information from manufacturers of these drugs on the measures being taken to eliminate PCV from their vaccines and will consider the need for further recommendations in its meeting in July as additional data emerges.
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Italy limits price cuts to generic drugs Italy is the latest in a long line of European countries to issue health cuts in attempts to decrease the budget deficit. However, unlike many other EU states, Italy’s reductions to healthcare spending will focus on price cuts to generic drugs and restrictions on reimbursements for more expensive medicines. Under a package of measures, outlined in a 176-page report published last week, the Italian government pledged to slash prices of generic drugs by 12.5 percent from June until the end of the year, reported Reuters. Reimbursement of generic drugs will also be limited to the cheapest version of a medicine within four therapeutic categories, with the lowest price established by a tender system. It is hoped that by issuing price cuts to drugs based on those applied by their neighbouring states, a cut by one government could have a domino-effect and lead to further reductions elsewhere.
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James Cornelius, Chairman and CEO, Bristol-Myers Squibb JAMES CORNELIUS WAS NAMED CEO in September 2006 and was elected chairman of the Board by the company’s Board of Directors on February 11, 2008. Prior to joining Bristol-Myers Squibb, he served as Chairman Emeritus of the Guidant Board of Directors upon closing of its merger into Boston Scientific in April 2006. He previously served as Chairman and CEO during the merger process and was responsible for the company’s initial public offering and subsequent split-off from Eli Lilly in 1995. “Our vision for Bristol-Myers Squibb is to become a healthcare leader for the future,” says Cornelius. “By uniquely combining the best elements of a leading-edge biotech company with the reach and resources of a major pharmaceutical company, we are transforming into a new kind of enterprise – a next-generation biopharma leader.” Since 2002 the company has brought nine key products to market for the treatment of serious disease, including two new biologic medicines. “Our focus is helping patients prevail,” says Cornelius. “Moving forward, our strategy will be unwavering.” Cornelius was a member of the Board of Directors of Eli Lilly, a member of its Executive Committee and Chief Financial Officer from 1983 to 1995. From 1980 to 1982, he served as President and CEO of IVAC Corporation, previously an Eli Lilly subsidiary. He attended Michigan State University, where he earned a BA magna cum laude in accounting in 1965 and an MBA in 1967. Cornelius has received several honorary doctorate degrees in recognition of his civic and philanthropic activities in Indiana.
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INTERNATIONAL NEWS ➊
Innovation denied According to a group of European drugmakers, Chinese patients are being denied innovative new medicines because of continued problems with the country’s clinical trial process. Compared to a 60-day approval timeline for clinical trials in Europe, China has an excessive nine to 12 month waiting period before approval is even sniffed at, with a lag of at least two years between drug registration when comparing the two regions, as reported by the European Chamber of Commerce in China (EUCCC) in Beijing this year. For drugmakers operating in China, the most important development of 2009 was the update of the National Reimbursement Drug List (NRDL), which increased the number of western drugs that Chinese patients can access through the healthcare system. However, according to the EUCCC, the list – that should be updated every two years – further restricts Chinese patients’ access to innovative medicines if it doesn’t get updated. Combined with this is the fact that hospital financing levels have remained low, with bidding policies based mostly on pricing rather than quality. The EUCCC concluded that China’s goal of becoming an innovative society by 2020 is being jeopardised by the long and unnecessary approval processes for clinical trials that continue to be endured by its population.
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Water mess US geological scientists claim to have identified pharmaceutical manufacturing facilities as significant sources of surface water pollution. Conducted in collaboration with New York state officials, the study focused on outflow sites from two wastewater treatment plants that receive more than 20 percent of their wastewater from pharmaceutical facilities. Researchers found concentrations of pharmaceuticals up to 1000 times higher than from outflows at 24 other wastewater plants nationwide that do not receive wastewater from pharmaceutical manufacturers. Officials commented that the study is part of a long-term effort to determine the fate and effects of chemicals of emerging environmental concern and to provide water-resource managers with objective information that assists in the development of effec-
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tive water management practices. It is hoped that the study will expose the need for better waste management and environmental standards from the manufacturing facilities while highlighting the importance of monitoring water pollution levels.
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Scientists have discovered a chemical that could potentially eradicate ‘painful’ memories from the human brain. Hailed as an anti-fear drug, it could lead to the possibility of an entire new class of drugs that could be used to alleviate post-traumatic stress disorder or cases of extreme anxiety. The study, published in Science, was carried out on laboratory rats and examined how the animals froze up upon hearing a sound they associated with a small electric shock. However, by injecting the rats with brain-derived neurotrophic factor (BDNF), a protein that stimulates the growth of nerve cells, scientists found that it was possible to eradicate their fear by creating a chemical imitation of the retraining process. According to Science: “In rats subjected to auditory fear conditioning, BDNF infused into the IL mPFC reduced conditioned fear for up to 48 hours, even in the absence of extinction training, which suggests that BDNF substituted for extinction.” Although it will undoubtedly takes years of clinical trials before the drug is approved for human consumption, scientists are confident that new treatments for fear-related illnesses and anxiety disorders will emerge from the research.
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Not to fear
The cutting room Following its acquisition of Wyeth, which it bought for US$67 billion last October, Pfizer plans to close eight manufacturing sites – leading to 6000 job losses, with about 20,000 jobs expecting to go from the combined total of 116,000 employees at the two companies. In acquiring Wyeth, Pfizer’s manufacturing sites swelled to 78 sites, having aimed pretakeover to have around 41 facilities in 2010. As well as reducing overall capacity and overheads, the cuts reflect an increased interest in biologics at Pfizer. Among the sites to be closed are the three that manufacture solid doses in Puerto Rico, Ireland and New York. Pfizer’s Golbal Manufacturing President, Nat Ricciardi, said: “The restructuring of our global
plant network is critical to our efforts to remain competitive so that we can continue to meet patient needs and expand the access and affordability of our medicines. We have a complex network of manufacturing plants with excess capacity. This is not good for costs.”
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Astellas doubles Astellas Pharma Inc. has recently announced the completed acquisition of OSI pharmaceuticals for US$4 billion. The acquisition was completed through a short-term merger without a meeting of OSI’s stockholders. Prior to the acquisition, OSI primarily focused on the discovery, development and commercialisation of molecular targeted therapies addressing medical needs in oncology, diabetes and obesity. I.T manufactured a leading cancer medicine and had several prospective new oncology medications in its R&D pipeline. It is expected that OSI will augment Astellas’ strong, existing franchises in urology and transplantation, expanding the product portfolio and pipeline of the combined company. Astellas’ CEO, Masafumi Nogimori, hopes that the acquisition will help develop a “world-class oncology platform and help us realise our goal of improving the health of people around the world.”
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The cancer ‘app’ GlaxoSmithKline (GSK) has teamed up with MedTrust Online, a US-based provider of specialist data and technology to oncologists, to launch CancerTrialsApp, described as “the first free geolocating cancer clinical trials application” for the Apple iPhone and iPad. The ‘app’ enables cancer doctors to find and share information with their patients about experimental therapies in clinical trials. It includes a quick search menu based on 12 common cancers as well as more advanced features that refine searches based on criteria such as gender, age or trial status. Once the relevant trials have been found, the results can be mapped relative to the location of the iPhone or iPad running the application. With e-care slowly but surely introducing itself to the US, it seems as though the CancerTrialApp could spearhead the initial push of integrating technology with healthcare.
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Beyond monoclonals Over the last 12 years, the advent of targeted biologic therapies, especially inhibitors of TNFα, a pro-inflammatory cytokine, has transformed the treatment of severe autoimmune diseases. Their clinical success has been matched by commercial success: today this is the most successful category of biologic drugs, with sales in 2009 of over US$18 billion, a double-digit percentage increase on 2008. For all the success of these drugs, they also have significant drawbacks. Most importantly, in many patients the current drugs lose efficacy over time, often because the patient’s immune system generates anti-drug antibodies. Further, they are expensive, typically US$15,000 to US$20,000 per patient per year. For these and other reasons, the current generation of TNF inhibitors is typically held in reserve for the most severely ill patients, notwithstanding a growing body of evidence that shows, in both RA and CD, that early use can alter the course of disease long term. Consequently, there remains a significant unmet medical need in these diseases. New drug development is proceeding in three areas: small molecule immune modulating drugs, passive immunotherapy biologics to other targets and active immunotherapies. The third category – active immunotherapy – holds out the promise of addressing the shortcomings of the TNF inhibitors without requiring a new therapeutic pathway. Critically, since the antibodies produced by the therapy are from the patient’s own immune system they will not stimulate the generation of resistance. Indeed, since they are polyclonal, recognising multiple epitopes on the target cytokine (unlike monoclonal approaches), they might be expected to have both broader and longer efficacy. In addition, passive immunotherapies require the administration of gram quantities of drug per patient per year. By contrast, with active immunotherapy it is the patient generating the antibody and hence only milligram quantities per patient per year are required, with obvious implications for cost of goods. Biotechnology has transformed the treatment of severe autoimmune diseases, and continued innovation holds great promise for patients afflicted with these serious and debilitating conditions. The evidence is growing that an approach using active immunotherapy will have a key role to play in the future, with clinical trials in hand in CD, RA, Type 1 diabetes and lupus.
“Active immunotherapy – holds out the promise of addressing the shortcomings of the TNF inhibitors”
For more information, please visit www.neovacs.fr
Do you speak health? ‘HEALTH SPOKEN HERE’. Three simple words that encapsulate the world of change that health-focused brands now compete in globally. They also embody the guiding philosophy and expertise practiced by the Grey Healthcare Group (GHG). Together, these three words are compelling and vital to brand success in the modern marketplace. Individually, they express the fundamental and constantly evolving changes every brand owner in the healthcare and pharmaceutical industry is coming to terms with. Today, ‘health’ embodies everything from scientific innovation to wellbeing. It encapsulates treatment, care, compliance, prevention, wellness and – increasingly – outcomes. Everyone has both a point of view and an increasingly informed voice that they are prepared to use, especially as expectations rise. In this complex and changing environment, what is ‘spoken’ has evolved beyond transactional communication into powerful sales tools. What is said and expressed by brands is done so in the spirit of a conversation. It is now an ongoing and orchestrated process of engagement. Today’s brands listen as much as they speak and share ideas just as much as they impart information. ‘Health Spoken Here’ has an equally transformational meaning. As the inclusive credo of the Grey Healthcare Group, it both understands as well as acknowledges the changed landscape health brands now occupy. From the high science dialogue with thought leaders to the plain spoken dialects of bloggers, GHG offers today’s marketers the expertise to get their brands engaged in the conversations that matter. For more information please visit: www.healthspokenhere.com
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Astellas Pharma: Fiveyear anniversary A MERE FIVE YEARS after its formation through the merger of Fujisawa and Yamanouchi, Astellas Pharma has become one of the top 20 pharmaceutical companies in the world. With its 15,000 employees and annual sales reaching €€1,287 million in Europe, Astellas has exceeded all growth expectations for the last five years – and the company’s management team has devised a clear vision for the future to ensure they continue in the same vein with their ethos of ‘Changing Tomorrow’.
New SAP templates for manufacturing execution WITH ‘BATCH MANUFACTURING with SAP MII’, SAP AG is now delivering preconfigured, cost-free best practice templates to support the SAP Manufacturing Integration + Intelligence (SAP MII) solution. Within the scope of the co-innovation project of SAP and SAP MII partners, Trebing & Himstedt played a major role in the development of the templates. Now the special expertise partners for life science industries are offering customers their expertise for the implementation process as well as in the form of complementary add-on solutions. The templates are designed specifically for batch manufacturing requirements and support lightweight production execution. They provide pre-built processes, user interfaces and contents for manufacturing preparation, execution, documentation and reporting. In detail, they cover the following application areas: role-specific manufacturing operations cockpits, manufacturing order lists, material identification, work instructions, quality control, production confirmation, shift book, monitoring and logging and manufacturing performance. With the templates, SAP MII ensures
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seamless integration of business and shop floor levels and enables implementation of manufacturing execution functions independent of SAP ERP availability.
Work instructions – completing the manufacturing process step by step The work instructions template integrates manufacturing enterprise, operations and shop floor data to support comprehensive task and process control, as well as process documentation. It provides an intuitive, easy-to-use application to take operators step-by-step through production execution for the selected process order. Thanks to the pre-built integration with SAP ERP, work instruction data is sent to SAP MII via the control recipes. Furthermore, actual process values entered in the work instructions are sent to SAP ERP to ensure accurate update of batch and order records, the process order, as well as goods issue/receipt and order settlement. Likewise, SAP ERP quality management inspection lots are updated with the confirmed inspection data.
At the point of inception, Astellas had just two major products: Prograf and Omnic. Today, following a strategic expansion plan focused on the company’s core values of innovation and fulfilling unmet needs, Astellas holds six franchises spanning pivotal medical needs in both primary and secondary care. Its future holds forward drivers in franchise and prudent market expansion, marketing excellence and aims to become an ‘employer of choice’ – attracting, growing and retaining the leaders and innovators of tomorrow. From Japan to Europe, Astellas Pharma is certainly one to watch.
For more information visit: www.t-h.de, www.sap.com
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Rumbled According to the latest CBI/Pfizer ‘Absence and Workplace Health Survey’, sick days cost the UK economy over €20.5 million each year. With UK employees racking up an astonishing 180 million sick days in 2009, surprisingly the rate of absence is the lowest since the survey began in 1987 – and down from 6.7 to 6.4 sick days per employee since 2007. Unfortunately the fall back of many a bad day, the ‘sickie’, remains a problem. Senior HR staff surveyed across 241 public and private-sector organisations estimated that around 15 percent, that’s roughly 27 million sick days, were far from genuine and cost the country over €2 billion a year. The survey also showed that larger organisations had higher rates of absence than smaller ones, and that firms have increased their use of structured rehabilitation plans to help people with longer-term illnesses back to work. When asked what the government could do to help, responses focused on GPs, with 63 percent of employers wanting to see better occupational health training, 56 percent wanting to see better working relationships between GPs and occupational health professionals and 41 percent wanting more flexible GP working hours.
Company index Q3 2010 Companies in this issue are indexed to the first page of the article in which each is mentioned. ACR Image Metrix 125 Agensys Inc. 98 Amgen 40 Astellas Pharma Europe 98 Bioquell 56, 57 Bio-Rad Laboratories 13, 37 Blue Spoon Consulting 130 CASIO 104 Christian Burkert 27 Corbett Accel 129 Dr Reddys 54, 55 Febit 28, 29 Field Fisher Waterhouse 122 Finesse solutions 46, 47 Frost & Sullivan 30 Fujisawa Pharmaceutical Co., Ltd 98 GE Healthcare 68 Geodis Wilson 52, 53 GlaxoSmithKline 102, 105 Grace IFC, 1
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Grey Healthcare Group 22, 23 Health Care Without Harm 116 Hikma Pharmaceuticals 30 Infosys 62, 63, 64 ISIS 94 iStrat 69 Johnson & Johnson 84 JMP 77 Kinomescan 4,5 Klinge Pharmaceuticals 98 Medis Ltd Minimpex 38, 39 MPI Research 80, 81 Neovacs 22, 71 NNIT 132 Novo Nordisk 58 Nycomed 30, 48, 49 OSI Pharmaceuticals Perceptive Information 106, 107 Pharmerit International 92, 93
PricewaterhouseCoopers 30, 67 QIAGEN 70, 71 Quintiles 8, 90 Randox 108, 109 Rockwell Automation 44, 45, OBC Schering-Plough 110 Shire 30 Singluex IBC Taylor Wessing LLP 126 Thermo Fisher Trebing & Himstedt 24, 25 Total Flow 50 Ubichem 2,3 University College London 94 Veolia Environment 6, 120, 121 Waters 78, 79 Xceleron 82 Yamanouchi Pharmaceutical Co., Ltd 98
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COVER STORY
Taking the world
by storm
As big pharma’s traditional business model becomes increasingly unworkable, many companies are looking to emerging markets to boost demand for their products. What does this mean for the future of the industry?
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By Marie Shields & Nick Pryke
W
ithout the steady stream of blockbusters to prop up their balance sheets, pharma companies are being forced to fi nd new ways stay solvent. As Simon Friend, Global Pharmaceuticals Leader for PricewaterhouseCoopers, points out, “The industry has been in a watershed mode for the past few years, and to some extent is starting to work its way out of it. But there are huge pressures on it from a number of different angles, and the most critical or fundamental is, where are the new products coming from? “Compounding the pipeline issue, you’ve got patent expiries. We predicted two years ago that US$157 billion of sales would come off patent by 2015. We’re now some way into that. It’s very real and companies are struggling to work their way through it in the absence of significant new products coming through.” Indeed, there is no escaping that 20, even 30, years ago there was an abundance of drugs in the pipeline that upped the valuation of pharmaceutical companies and their share prices: everything was upbeat and there was plenty of innovation and constant demand. In the last five years, however, all of this has significantly reduced due to the rising cost of R&D and bringing out new drugs, as well as the increasing difficulty of getting approval from the FDA and registering in different markets. It’s now far more challenging for pharmaceutical companies to continue to produce blockbuster drugs, which is unquestionably having an impact on their business.
Moving abroad One strategy that many of the bigger companies are employing is to seek new markets outside North America and Western Europe. PwC’s ‘Pharma 2020’ report, which analysed industry trends for the next 10 years, says that seven countries – China, India, Brazil, Mexico, Russia, Turkey, Indonesia, the so-called ‘pharmerging’ markets – will play a crucial role in the future of the pharmaceutical industry. According to the report, “The real GDP of the E7 countries will triple from US$5.1 trillion in 2004 to US$15.7 trillion in 2020, whereas that of the G7 countries will grow by just 40 percent, from US$25.8 trillion to US$36.1 trillion. Their wealth relative to that of the G7 will rise from 19.7 percent to 43.4 percent over the same period. “In 2004, the E7 countries spent 0.94 percent of their GDP on prescription medicines (although the precise percentage varied from one state to another). They collectively accounted for eight percent of the US$518 billion global market. The G7 countries, by contrast, spent
“There are huge pressures from a number of different angles, and the most critical or fundamental is, where are the new products coming from?” Simon Friend
1.31 percent of their GDP on medicines and accounted for 79 percent of all sales. “If all 14 countries continue to spend the same proportion of their GDP on medicines as they do now (and if their GDP grows as we have projected), the global pharmaceuticals market will be worth about US$800 billion in 2020, and the E7 countries will account for about 14 percent of sales.” Sumit Sharma, Senior Vice President for Emerging Markets and New Business at Frost & Sullivan, also believes the future of pharma lies outside traditional markets. “In the 1970s and 1980s,” he says, “pharmaceuticals as an industry were primarily driven by North America and Western Europe. Most of the drugs were designed to meet the needs of the more developed part of the world, dealing with diseases that were more common in North America or Western Europe because that’s where the money was. “As we moved into the 1990s, there was an emergence of new economies where the likes of China, India and West Asia Pacific started to take off. The pharmaceutical industry saw the population of these economies and they started taking a lot of their existing products there. When it started to work, many of the new products were designed around these economies and diseases. Excluding the drying of pipelines that we see now, that was a huge paradigm shift . “These kind of changes are having a massive impact on consumers and within the pharmaceutical space,” continues Sharma. “The generics, which have dropped in price, can compete far more openly now – and far more smartly. They’re hiring people from the ethical side to brand their drugs and make it big in the lower set of the so-called ‘weaker economies’.” Th is significant change has come from one simple fact: the pipelines are running dry and new markets are naturally attractive. Going one further, Sharma outlines that there are three major issues: the emergence of generics, the growth of new economies and the indisputable fact that pipelines are indeed drying up.
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All of this is driven by the economy and the way that consumers in pharmaceutical spaces are increasing significantly. Diseases such as diabetes, cancer, cardiovascular disorders and even asthma get far more investment today in China, Russia and India than in any of the emerged markets. In addition, the relevant governments aren’t always concerned whether a patient consumes a drug made by a multinational or a local company, as the relative allocated budgets allows the generics to easily meet the needs of patients. Ann Brady, Vice President of New Market Development for Shire, confirms that her company is seeking new markets in less developed areas of the world. “The traditional model within pharma has been dominated by Western developed markets, treating Western diseases. In recent years we’ve seen a trend for big pharma, as they have come under pressure with regard to patent expiries and a lack of pipeline, to move commercialisation activities beyond the developed markets.” Shire is a specialty biopharmaceutical company focused on helping people with serious diseases, wherever they are in the world. Brady continues: “The world is becoming more connected and as an industry, we do need to look at global development, and specifically for Shire, that’s where we are directing our business. We’re looking beyond just what will service the developed Western market.”
an early stage and we automatically built on that. “When it comes to countries like Turkey or Mexico, if you were not there in the early days, maybe you’re reluctant to go in later. It will cost much more, of course, and in some of these markets you may well have to go in and acquire local companies, only by that time there is not much left to acquire, so it is much more difficult.” As General Director for Nycomed Russia-CIS and Senior Vice President, Nycomed, Davidsen has been involved with the company’s operations in the country since the Soviet days, and has seen the region rise to play a key role in Nycomed’s growth strategy; so much so that the current aim is to have Russia-CIS represent 38 percent of the company’s growth in 2013. That doesn’t mean there won’t be challenges along the way, as Davidsen explains: “Entry costs are high, although there is relatively less expense on the registration of products and on clinical trials. But office premises are much more expensive here than in other parts of Europe, and the cost of media campaigns and TV campaigns for over-thecounter products has risen dramatically. And then there are unforeseen events that can have a negative impact. Unforeseen events are indeed a potential downside of moving into any new market, but particularly so in markets where the political situation or other factors
“You cannot go into a market in the good times and leave when there’s a crisis. You have to stay in a long-term partnership” Mazen Darwazah
Practical concerns It’s one thing to say you’re moving into emerging markets, and quite another to deal with the practicalities involved. The seven countries that make up the top of the emerging market list are obviously vastly different from each other in terms of geography, population, culture and political situation. The presumptive grouping of all emerging markets together can be a dangerous one. The term ‘pharmerging’ suggests that there is one blanket strategy to cover all emerging nations. This is simply not true. Some of the bigger pharmaceutical companies might have an input in the majority of emerging markets, but judging which ones will work within their respective portfolios comes down to a combination of history and fit. There is no such thing as a generic ‘emerging markets policy’ – each country requires its own specific plan, which brings with it its own challenges. How then, does a company choose which new market to invest in? As Nycomed’s Jostein Davidsen points out, the top 10 companies will most likely invest in all of them, while for mid-sized and smaller companies, it’s often a matter of history. “It has to do with the history of the different companies, the history of Nycomed being, for example, active in the Soviet Union for 20 years. We had a footprint there from
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may be unfamiliar to the investing company. As Mazen Darwazah, Vice Chairman of Hikma Pharmaceuticals, puts it: “You need to understand the local culture. Often, when you’re a multinational company, you think globally and you act globally. Working in this part of the world you have to think globally and act locally. “You have to understand the barriers of entry. You have to understand the perception that the healthcare community has in a particular country, so you have to work with them on the basis that these are local requirements in terms of dosage forms, pricing and delivery of goods. “You also cannot work in a country, and then when there’s a crisis or a civil war, leave that market. Th is is what happened for example in Algeria, when there was a civil war and all of the multinationals left . You cannot go into a market in the good times and leave when there’s a crisis. You have to stay in a long-term partnership.” Hikma started out as a Jordanian company 32 years ago, so its perspective is a little different from that of European or US-based companies. Having concentrated on the immediate surrounding markets of Lebanon, Syria, Iraq and Saudi Arabia for its fi rst 10 years, the company then expanded into other parts of the Middle East and further afield, and has a presence today in 42 countries in 18 markets. Th is history of moving from an emerging market outward rather than the other way around has given Hikma an interesting insight into the complexities of doing business in different parts of the world, as Darwazah explains: “Egypt, for example, is a US$2.2 billion market, while Bahrain is a US$40 or US$50 million market. To make a fi le for registration for a product takes the same time in terms of preparation for both countries. You cannot say, ‘I want one fi le for all the Arab countries.’ It’s an accumulation of the registrations and an accumulation of the time that you spend in countries where you get your market share and you gain your footprint in those markets.” PwC’s Simon Friend points out that this tremendous variation is not something that is unique to emerging markets: “The reality is that this is also the case in developed parts of the world: the US market is very, very different from the markets in Europe, for example. It may be changing in the US at the moment, where you will end up with a much greater percentage of the industry being funded by government, but right now US healthcare is still largely private, whereas in the UK and other economies, it is very heavily a government-funded market.”
Declining influence The other thing to bear in mind is, who is actually buying? That is transforming the way in which the sales and marketing functions are being designed for the future, away from the traditional model of going out to physicians and leaving samples. “The influence of physicians has declined, because the buying process is becoming increasingly binary,” says Friend. You need to get to the payer and get behind the payer’s mindset and understand what the payer’s economics are. And that applies equally in the emerging and the developed world; you need to know who are the real influences and what sort of sales forces you need in the future. “One of the interesting things for domestic companies in countries like India, China, Brazil and Central Eastern Europe is that the best thing they can do is not to follow the Western model. If the view is that the western model is broken, why would you try to replicate it?” Given the number and nature of the challenges involved, you may wonder why companies would bother moving into emerging markets at all. The benefits do, however, outweigh the challenges. “Those markets are becoming increasingly attractive in
a number of different ways,” continues Friend. “Emerging markets are playing a pivotal role in how established companies will move forward and in their growth potential for the future. “Part of that is in terms of where the money sits, and if there is a growing purchasing power in some of these emerging markets there in itself lies a market potential. That’s why companies are looking to build their footprints in those marketplaces, where the demand for branded drugs will start to increase in the same way that it has done in the developed world. “Equally, there are other significant opportunities in emerging markets from an industry perspective – whether it is around the further development of new products, or establishing manufacturing, R&D or other facilities. These environments are increasingly attractive because of the skill sets that exist there, and the speed at which they can accelerate and get to market. “There are still concerns about the infrastructures in place, about the IP considerations and about the ability to properly establish compliance and regulatory standards in these areas, which will require proper monitoring and resources to ensure that companies are not exposing themselves to undue risk.”
Opportunities It becomes clear that companies look at where the biggest opportunities are in terms of size, ease of doing business and how regulated the market is. Today, although China and India still present challenges, if companies decide to ignore them, they may as well “shut
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up shop” as Sumit Sharma puts it. However, with a multitude of other challenges and potential issues relating to culture and political health, companies will have to be astute in their considerations. “One of the biggest issues in China and India is fi nding the right people to work for you asserts Sharma” American, UK or German field representatives are slightly different people to those you will fi nd or hire in China or India. In Western Countries, you want people who are much stronger on the drug side in terms of the science behind it. In China and India, you want to hire people who have rooted relationships – so it’s difficult to fi nd people. You have to be very ‘local’ in these places and many companies are missing this opportunity simply by being extremely multinational or globalised in their approach and not being flexible. Being local is an opportunity but also the biggest challenge facing companies. “Even getting your human resources right – marketing managers to salespeople – is pivotal, as these are the most important people who will go out, sell and detail the drugs. If these people are not well trained, or they’re not the ideal ones for a local market, then it’s certainly going to be a struggle. HR challenges are large and many. “Secondly, I would say that these places are becoming more expensive to operate out of. Every multinational is trying to get into India and China, so there is a huge demand for real estate; if you want to set up factories and distribution networks and you’re not doing it right now, it’s going to be a massive challenge to do so in the future purely because of the expense. “Besides the pharmaceutical standpoint, getting the local sales infrastructure in place with local skills and relationships is key. In addition, fighting the government at times and being a lobbying agent for price and reimbursement is a massive challenge because you’re an outsider and have no say. The trick is to partner with a local company or agency and hire some powerful local people who could be part of your organisation.” Simon Friend cites the rise of homegrown companies in developing markets as the force behind regulatory and infrastructure improvements that may help to draw the big
international companies in: “The domestic companies are building and growing and establishing themselves in the larger world. They’re no longer small offshoots. They’re starting to become well-established companies with well-established products that are competing against others in the more developed environment. “The infrastructure that is starting to be put in place to support domestic companies provides great support for Western companies to come in behind and have more security around what is happening. For example, in India where they put in new IP legislation in 2007 or 2008, the issue there around policing still exists. Does that mean you wouldn’t go there? I don’t think it does. “What we’re seeing with many companies building a presence there, is that you just have to go in with your eyes open. In China, we know that from a counterfeit perspective, the authorities are working hard and have identified the pharmaceutical industry as one where they need to ensure that the IP is protected. They are taking steps in the right direction.”
Instability There seems to be a vicious cycle of wants versus challenges; for some of the least emerging nations, political instability has shut down any hint of an opportunity for multinational companies. As Sumit Sharma says, “If you look at some of the emerging markets – let’s leave out Western Europe, North America and Japan – and con-
How do the pharmerging countries rank? Sumit Sharma, Senior Vice President for Emerging Markets and New Business at Frost & Sullivan China is up there. It pretty much functions as some of the companies function in North America in terms of their depth and breadth of operating and reach of distribution. China is a far more developed emerging market in the respect that you have a greater focus in terms of human resources, products being launched and marketing activities. I would still put China outside the others – basically the bricks and mortar – of Turkey, Indonesia and Mexico; then you put the bricks up and complete it with a ‘K’ and call it Korea. “China is by far the biggest emerging market. You have the major ethical players who make it big in the urban part of China with their regular blockbuster drugs and maintain a very good uptake rate. Then you have the generics, which are benefiting the tier 3 cities whilst the tier 1 and tier 2 cities are with the big multinationals. It’s the sheer size of the market that
is helping China accommodate pretty much everyone. Personally, I see China as emerged. It’s not at the same level yet as you’ve seen in North America where everything is much more regularised and far more legalised. Regardless, it’s far beyond the likes of India, Russia, Brazil and Turkey simply because the market is big; they’ve accepted every type of company plus they have their own generics and a great healthcare programme in place, which is ensuring that everyone has a piece of the pie. In the next 10 years, India will be where China is now – simply because of its sheer size and the fact that it has the unique advantage of being a completely self-
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sider the rest of the world as still emerging and plot it on a curve, you will see that the ones that are not even on the curve yet are the areas that face huge political crisises: Africa, Latin America and certain parts of the Middle East. “These are big markets with huge opportunities because people are extremely sick, as a generalisation, because they live in unhygienic environments. The problem arises from the fact that governments don’t focus on healthcare because they tend to spend the majority of their budgets on defense. Remember every government that spends a dollar on defense spends 50 cents less on education and 50 cents less on healthcare. Every government spending a dollar more on defense is leading to lesser healthcare spends, which is not helping Africa or places like Brazil. “Brazil’s biggest problem is that they don’t have the infrastructure on the healthcare side; they don’t have the skills, so it’s a massive challenge to build a health infrastructure. It’s not like a service industry where you just set up shop and you’re done. Hospitals need to be built and skills need to be acquired. I don’t think there are political problems in Brazil as such, but Brazil is not a safe place and the government spends a lot more money on security and law and order, which doesn’t help because it means they’ll spend less on healthcare. Making this problem worse is the huge ageing population in Brazil. “If you want to work with such nations successfully, you should always have the government on your side and keep the Department of Health happy, because if they don’t approve any of your drugs, millions of dollars could be lost. To give an example, GSK has been in Asia in all those tough markets like the Philippines, Indonesia and Vietnam – and they’re doing quite well. One of their greatest strengths has been working very closely with the government and helping during the political challenges they faced in the 1980s. “How did they help? By saying that they would be in a position to drop prices, conduct forms of social marketing and run some disease programmes. Those kinds of things help, and today, any drug that GSK tries to launch in these markets gets registered, approved and to market faster.”
producing market. In addition, India has benefited from its history of maintaining a quasi-colonial healthcare system; these kinds of characteristics help companies penetrate a bit faster. In two to three years, time, according to Sharma, India could potentially become the second or third biggest global market. After these two, I would put Korea. Again, it’s a massive market and very developed. It’s smaller than Japan, but it competes in terms of its similar demographic characteristics and a highly sophisticated healthcare system that has witnessed a lot of expensive investment on patients. Many expensive drugs, such as ones focused on obesity, have become big in Korea. While it may not be sustainable as it’s not as big as Brazil or Russia, it has a sophistication about it that has seen companies focus more on it than Japan. In fact, Japan is dying out because of the downturn in the economy. Turning the focus on Turkey and Russia – Russia is an extremely tough market, as it has to deal with exterior control factors and politics to get
Any potential pitfalls will not be enough to stop the industry’s major and niche-market players from making the move overseas. Shire, for one, has set itself a goal that will be driven by expansion into non-traditional markets: it aims to be the most valuable specialty bio-pharmaceutical company in the world by 2015. “An important part of achieving that goal is the diversification of our revenues across a bigger geography globally,” underlines Mark Rothera, Vice President for Europe, the Middle East and Africa for Shire’s Human Genetics Therapy business. “This means not just the revenues that we’re generating, but the quality of those revenues and the sustainability of them that will build value.” “We have a broad ‘rest of world’ defi nition,” adds Shire’s Ann Brady. “Today our revenue base is very heavily weighted to the US, and we need to diversify that. We need to look in geographies beyond the US, Canada and the major European markets. Our definition is extremely broad in that it encompasses Central and Eastern Europe, Latin America and Asia Pacific. So we have a huge opportunity to increase our presence in many of the developed markets within this ROW definition. “In addition, the traditional emerging markets are a significant component of our ROW activity. As a business, we will be targeted in our expansion here. We’re not saying we’re going to every one of these markets, and nor are we saying that we are going to invest directly in these markets. We need to target our rollout into new geographies
drugs approved and to build distribution networks. Distribution is a massive hassle in Russia, which makes it difficult for multinationals. I’ve had conversations with GSK, Sanofi, Novartis and others trying to do business in Russia and they feel that they will face roadblocks simply because they’re of European or North American origin. What’s more, Russia’s infrastructure is not improving. There’s a huge health deficit there and their disease programmes are not in order. A lot of people are not treated, and as a result they die. The mortality rate in Russia has risen significantly, with life expectancy rates in the 50s and early 60s. Worryingly, a big chunk of the problems relate to mental disorders, hepatitis and liver issues because of alcoholism and cardiovascular disorders that aren’t addressed because no disease programmes are in place to control them.
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on the basis of our portfolio and how we may best optimise value for our global business.”
Current climate One would have thought that the recent worldwide economic downturn would have stopped movement into emerging markets, but Sharma is keen to assert that the exact opposite is true: companies are entering emerging markets because of the economic downturn, and if anything, emerging markets have saved pharmaceutical companies, as they have their own domestic economies to consume the majority of products. Underpinning this is the view that the global economic crisis has had very little impact on the healthcare industry because it has been battling its own recession for the last 10 years, with fewer products coming out, more expensive price tags and governments cutting back on spending. “Companies have gone to emerging markets a bit more aggressively,” continues Sharma, “because they realise that in the US and government Europe are not going to spend much more on healthcare, while emerging markets such as India and China have not changed their economic Sumit strategies, so healthcare has continued to grow. In addition, if you take certain disease areas such as obesity or asthma that are traditionally common in North America and Europe you soon realise that they are just as common, if not more, in China because of the smoking and food habits. “What pharmaceutical companies are trying to do is get there at an early stage where they can go in with the right products and get in to preventative healthcare – where drugs are produced or launched with the intention of controlling such factors at an early life stage. Because of the affluent Chinese and Indian societies we see today, there are plenty of drugs coming out that control obesity and glucose levels – drugs like Abbott’s Reductil in China. We’re currently doing some work where we’re trying to understand the psychology of the people who take these drugs and what it comes down to is wanting to be thinner than the next person. “It’s this consumer psychology that these pharmaceutical companies are picking up. They’re launching these products because younger, 20-something women go to doctors asking for a prescription for Reductil and then begin a three month dose just to maintain their waistline – and they’re willing to pay for it. In years to come, targeted,
personalised drugs for these types of demographics, and I would even include Africa a few more years down the line, will prevail.” The next question to be answered is, who is better geared up to deal with working outside of their own home markets? For European-based companies, who have more of a history of thinking about markets outside of their own, there really is no competition. Sharma even goes as far to say that in 10 years time he doubts that many of the current North American companies will still exist. “It’s a bold statement,” admits Sharma, “but with drugs not getting approved, the US government might have to bail the industry out; it’s one of the flagship industries in the US. The pharmaceutical business originated from there and France. My view is that there will be far more consolidation and this will make the European companies stronger. What I normally see is that the companies who are doing well in China are the non-American companies; they have worked out that it is largely about cultural adaptation and an ability to think on the local scale. It’s also the fact that a lot of the French and British companies have been there for a very long time due to colonial history. Sharma “I strongly feel that the companies that already have a strong strategy in the emerging markets will be more successful than others in future years. The population isn’t growing much in Western Europe and North America but a lot of untapped population still exists in China, India and even Brazil and Russia. Then, of course, you have Turkey, Indonesia, Malaysia and Korea, to name a few. However, the companies that will do the best will not only be involved with emerging markets, but will also be the ones who don’t ignore their home markets. That would be suicidal as those are the more mature, bread-andbutter markets.” To return to specifics, Sharma analogises where China will be in 10 years time by putting it like this: “China did the best modern-day Olympics in 2008. No other country will come close to that in the next 10 to 15 years, so China could surprise everyone and emerge in the next one to two years”. With the right companies being attracted to a sustainable infrastructure that can also provide a massive population base, Sharma predicts that in roughly 20 years time India will be as big as the US, and China will be the biggest emerged market to date. With such a prediction, perhaps it’s time to place your bets on the biggest race in pharmaceutical history.
“I strongly feel that the companies that already have a strong strategy in the emerging markets will be more successful than others in future years”
Every government that spends a dollar on defense spends 50 cents less on education and 50 cents less on healthcare
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INDUSTRY INSIGHT
Visibility. Efficiency. Profit Mikael Nilsson offers some advice on how to make your supply chain more profitable by taking it online.
A
supply chain is a row of activities set up between a supplier and a customer with the purpose to provide value to a customer. If the supply chain is smooth then it’s also profitable. In this article I will show how you can make your supply chain smoother. While the parts of the supply chain can be different from case to case, the general design usually takes the form of: Marketing, ordering, manufacturing, delivery, payment and fi nally, interaction. While all the activities contribute to the profitability, I would say that the most important is step number one. Marketing is the same thing for a business as blood is for the body. If the marketing doesn’t work, no business is generated, and if no business is generated then you make no money. You must
have the marketing to work properly, and one way to do that is through the internet. At the end of this article you will fi nd an opportunity to take advantage from the internet in your business. When customers know that you exist and have a product or service to offer, they must be able to send you the correct orders in a smooth way. There are many opportunities here, but the customers have to know how to order and what information you need. With a correct order, the manufacturing process can start. This part is the most specific one – and for that reason it’s difficult to describe what things can go wrong. But one way is to look for bottlenecks and see what you can do to eliminate them.The same bottleneck approach can be used in the delivery part as well. How about the fl ight capacity to the destination? Is it
“Marketing is the same thing for a business as blood is for the body” tricky to pass goods through customs? Would it be profitable to hire someone to deliver to the customers? These are questions you can ask when trying to get this part in order. While the manufacturing and delivery parts are similar, the ordering and the payment parts also have some things in common. The customer has to know how to pay and you must inform them of how to go about it. As it’s much cheaper to keep an existing customer than to get a new one, the interaction part is important to generate future business. It enables you to inform the customers about future offers and the customers to give you feedback if they are satisfied with you and if there is anything you can improve on. From this, we fi nd ourselves here with a couple of questions to be answered regarding your business. I wish you good luck with your efforts and look forward to hearing from you to see what we can do together in order to improve your profitability.
Minimpex was started by Mikael Nilsson, who has a Master degree in Applied Logistics from the Royal Institute of Technology, the number one technological institution in Sweden. He has a background in the telecoms business, where he gained knowledge in the entire supply chain, from manufacturing via transportation to the customer end. He has worked in a dozen countries and has experience from a wide range of cultures and language skills in English, Swedish, Thai, German, Chinese (Mandarin) and Japanese. Nilsson resides in Stockholm, Sweden and Bangkok, Thailand. He like cars, golfing, travelling and flying.
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Mikael Nilsson Trading Consult Utg책rdsv채gen 18 19144 Sollentuna Tel: +46-73-6493268 Email: mikael@minimpex.com WEB: www.minimpex.com www.BuildItBeforeYouNeedIt.com
SPECIAL FEATURE
STAYING
POWER Amgen’s Madhavan Balachandran tells Marie Shields why persistence is key to implementing an operational excellence campaign.
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adhavan Balachandran had a great time in Puerto Rico, but he wasn’t there on vacation. Before taking up his current position as Amgen’s SVP of Manufacturing, Balachandran was based for five years at the company’s manufacturing site in Juncos. Juncos is the company’s largest and most complex manufacturing site, representing every element of the manufacturing process: from receiving components from the far corners of the world, to warehousing them under the appropriate conditions, to making recombinant proteins. Balachandran went to Juncos to set up the bulk manufacturing operation, and he found the experience invaluable. “The entire manufacturing supply chain is represented in Puerto Rico. What we call the formulation, fi lling and packaging operation – where we formulate for use as a human therapeutic and then fill it into containers for injection – has been there since 1994,” he says. “In 2002, we decided to expand that operation to include the upstream bulk manufacturing. The bulk is formulated for use as a human therapeutic and fi lled into primary containers – vials or syringes – before being labeled and packaged. “I was dispatched to Puerto Rico to oversee the engineering, design, construction and commissioning that would lead to the documentation and demonstration to ourselves and to regulators that what we’d engineered and constructed met operational and regulatory requirements. “All that was done, and we set up the operation to produce commercial product. In the meantime, we, as a company, were growing and introducing new products. We decided to expand our existing formulation, fi lling and packaging operation at the same time that we were building and licensing the bulk protein manufacturing operations.” During this process, Balachandran was exposed intimately to all these aspects of operations – not only the different kinds of manufacturing, but also its different stages, from engineering to licensure to commercial operation. He says he feels privileged and lucky to have had that exposure and believes that it prepared him well for his current position.
“That one single characteristic, along with producing strong results – more than genius, more than creativity, more than anything else – the sheer need to be persistent, dogmatic and unrelenting in what you decide to do is the ultimate predictor of success. “It’s also a challenge. That probably applies in most endeavours, and certainly no less so in the case of operational excellence or a Lean approach. In general, there could be times along the journey that will be challenging: people could get disenchanted. But those are not reasons to discontinue the journey; those are reasons to redouble your efforts.” Three years ago, Amgen developed a customised Lean deployment strategy that took into consideration the relative youth of biotechnology, Amgen’s unique culture, and the recommendations of Lean experts. The team achieved monetary savings in the first six months and created enough positive momentum to widen the net in its next phase. This move toward greater operational efficiency did “In general, not come about completely spontaneously, but arose from the circumstances the company was facing at the time. “In there could be some ways, it was thrust on us,” Balachandran explains. times along the “Until late 2007 we were growing quite rapidly, as a comjourney that will pany, and also within operations. Some of that changed in be challenging: 2007, for a number of reasons.” people could get Those reasons included the related sales impact of the disenchanted. introduction of black box warnings for Amgen’s anemia drugs, the erythropoiesis stimulating agents Epogen and But those are Aranesp. A black box warning – the strongest the FDA renot reasons to quires – is implemented when medical studies indicate that discontinue the a drug carries a significant risk of serious adverse effects. journey; those are “Our manufacturing plans had to be adjusted,” reasons to redouble Balachandran says, “We had to change our way of thinkyour efforts” ing. It was important for us to keep quality high, but we had to gain additional efficiencies, and we had to get faster in the way we made and supplied products to our patients.
Going Lean When asked about the challenges that might arise during a Lean implementation, Balachandran stresses the essential aspect of frequent communication, as well as the need to be persistent. “Out of my own experience of over 30 years, I would say that if there is one single factor that predicts success in anything a company might undertake to do that has far-reaching consequences, it would be persistence.
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Human touch
“Supply chain optimisation is a contradiction in terms. When you say you have optimised the supply chain, it suggests that you’ve reached perfection, and of course we will never reach perfection”
“Some of the growth plans, behind which we were preparing our own operations plans, had to be adjusted, which, in turn, resulted in us having to modify our plans for manufacturing. We had to do it cost effectively, by introducing additional, important business dimensions into our thinking. When I say ‘our thinking’, I don’t mean the thinking of only the management team, but, in fact, through the breadth and depth of the organisation.” Balachandran explains that his team was keen to engage everyone in the enterprise in the whole endeavour, rather than have it be something that came only out of the minds of people sitting in corporate headquarters in Thousand Oaks. They wanted it to have its origins with the people making the product or fulfi lling various roles across the company, particularly in operations. “We did this to unleash the energy and creativity of all our staff,” he says. “That was, looking back on it, a fairly significant moment, when we realised that was the way to achieve operational excellence.” Many companies use the terms ‘Lean manufacturing’ and ‘Lean operations’ to describe the changes they introduce into their organisations, in search of efficiency and effectiveness. By contrast, Amgen uses Lean as merely one way of achieving operational excellence. According to Balachandran, Lean is a set of tools and techniques, methods, analyses and approaches that they decided they would train themselves and their staff in. The aim was to enable the people who had ideas to improve their operations, as fully engaged staff members representing their company, to better enable them to achieve their goals and ends.
Grand plans to ratchet up operational efficiency are all very well, but the human element has the potential to make or break any improvement effort. How can companies manage the effect that people-related issues have on the implementation of operational excellence programmes? “With all such discussions on operational excellence and Lean and transformational approaches companies undertake, people are always beset with doubts about the probability of success,” Balachandran points out. “The reason that people hesitate, in many cases, is due to their concern that with attempts to be Lean or operationally excellent, there could be a fallout regarding employment, reductions in head count, reductions on growth plans, and so on. Those are natural concerns that many organisations struggle with at the outset of such efforts.” Balachandran admits that Amgen was not immune to these kinds of doubts, but there are a couple of principles that the company recognises as important for the longterm success of its operational excellence journey. One is the engagement of people who believe and act as if they are accountable for the success of the company and that the future of the company is in their hands, not just in the hands of the CEO or the senior managers. Balachandran’s point is that all 17,000 Amgen employees collectively and actively contribute to that future success. “That is something that needs to be repeated and repeated and repeated,” he says. “Most people get it, though there are some who don’t, who continue to be cynical and skeptical. Those are inherent challenges. But by and large, the majority of the people understand, when you communicate that the fate of the organisation is in their hands. “Having said that, we have to follow that up very quickly and in a determined fashion by giving them the tools and the training and the coaching and the patience and the communication, all of this repeated time and time and time again, in almost a never-ending way, to stress its importance. “It’s a constant stream of life in the organisation. There literally is no end. When people think of it as a journey with an end, that journey is fated to failure. We like to think of it as a journey without end. Then people understand it.” Balachandran is quick to underline that this is not some kind of ‘Shangri-La journey’. “Always we are confronted with people asking the question: ‘If we do this, what’s in it for me?’ Our growth opportunities will diminish if we don’t grow, if we get more efficient, if we use resources more efficiently, which means we’ll have fewer people, which, in turn, means less employment, which, in turn, means fewer promotions.’ “These are facts of organisational life in any endeavour of the kind that we’re talking about. However, on the positive side – and that’s the communication challenge that we
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all face – is the intellectual and professional satisfaction that staff at all levels gain from this. They’re better prepared to deal with professional life. They’re better prepared to deal with challenges, not only at Amgen, but throughout their professional career.” Balachandran stresses that this is a good thing for staff, as they are better prepared to cope with wherever their careers might take them. He finds it gratifying that the programme has gone well during the three years since the beginning of its implementation.
New growth Balachandran believes the need for increased operational efficiency will continue to grow. He recalls the avalanche of new products that came through in the 1980s, when the priority for the industry was to get them approved, made and launched. As we enter the second decade of the 21st century, a different set of external business circumstances prevails: there are fewer new products; it can be harder to get them approved; there is more pressure on the industry from the regulators and from government regarding safety; and the hurdles for approval, are being raised. “There’s a whole different set of dynamics today compared to 10, 20 or 30 years ago,” Balachandran says. “And then there’s pressure from society to reduce the cost of medicines, which is driving new legislation, not only in the US, but everywhere across the world. “Out of that will come competition for us from biosimilars and small molecule generics, With that context, it is inevitable that we, as an industry, in addition to not taking the foot off the pedal in innovation and the search for new products, will certainly have to step up our effort on getting operationally efficient. “That’s part of the increasing sophistication that will be thrust on the industry, which has already been thrust on other industries that have predated us. We’re going to be following in the footsteps of these other industries that have gone ahead of us, and have dealt with these kinds of circumstances before.” Amgen itself faces some very specific challenges when it comes to ensuring operational excellence, with operations in nearly 50 countries, and plans to continue expansion into underserved and fast-growing markets. All of this has implications for the supply chain – how it is managed, who makes the product, where the product is made, how much is produced, and for which countries. There are also issues of storage, and the amount of differentiation allowed from country to country. As Balachandran says, “It raises a host of questions that we have to be prepared to deal with and answer in a way that’s good for patients and that’s good for the countries we do business in, as well as in a way that is cost-effective
and affordable, and that allows us to continue to survive as a thriving business.” In Balachandran’s view, supply chain optimisation is a contradiction in terms, because the supply chain can never be fully optimised – it is always suboptimal. “People say, ‘We are going to optimise the supply chain.’ But you cannot, because when you say you have optimised the supply chain, it suggests that you’ve reached perfection, and of course we will never reach perfection. “For people who are professionals in the supply chain, it’s an extremely stimulating exercise. The challenges that stimulate the best minds in the company are quite significant, and are inspiring to a lot of people who work here, because of our ambitions globally.”
“The future of the company is not in the hands of the CEO or senior managers. All 17,000 of us collectively own that future”
Personalisation There are other innovations happening that directly affect manufacturing, such as those in the world of medicine, as physicians and life science researchers come to understand human biology better through biochemistry, cell biology, molecular biology and other life science disciplines. More directly, there are tremendous advances in making manufacturing more efficient, which Balachandran says will inevitably mean – perhaps in the next 10 or 20 years – that the size of manufacturing plants will shrink. “It’s going to shrink because of the technological innovation that’s happening,” he explains. “It will also shrink out of necessity, because innovation in medical discovery will drive customised, personalised medicine. “The more personalised the medicines are, the more likely it is that we’ll have to make smaller and smaller amounts of medicine to treat people in the future. And, at the same time, what’s fueling innovation in manufacturing – where we can make these smaller and smaller amounts in more and more efficient ways – will drive our plants and sites to be much smaller than they are today. “It’s not difficult to imagine a world in which we could make approved, licensed medicine out of a plant the size of my office. It’s not possible today, of course, but it’s not inconceivable that something like that could happen in the future. As a manufacturing person, I fi nd that incredibly thrilling and exciting.”
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EXECUTIVE INTERVIEW
Serialisation and counterfeiting The United States Food and Drug Administration estimates that counterfeits make up more than 10 percent of the global medicines market: Serialisation can help in anti-counterfeiting without comprimising throughput. Ariel Lasry of Rockwell Automation takes a walk through what automation is doing to help prevent counterfeiting. Africa, parts of Asia and parts of Latin America have areas where more than 30 percent of the medicines on sale are counterfeit. To what extent has serialisation evolved the pharmaceutical manufacturing process? AL. Life Sciences manufacturers have mainly
Ariel has led the Life Sciences business for Rockwell Automation EMEA since 2007. With more than 10 years of experience in consultancy and sales in Pharma and the Food and Beverage markets, before joining Rockwell Automation he co-founded a company specialising in IT and MES (Manufacturing Information Solution) solutions and worked as a consultant for leading manufacturing companies.
Please tell us about the current counterfeiting trends in the US life sciences sector. Ariel Lasry. No country is free from drug counterfeiting. Even in countries generally considered ‘safe’, such as the United States, Canada and many of the European Union, counterfeit medicines have entered the legitimate supply chains. A number of factors have contributed to this rise in criminal counterfeiting activity; among them the growing involvement in the medicine supply chain of under-regulated wholesalers and repackagers, the proliferation of internet pharmacies, advances in technology that make it easier for criminals to make counterfeit medicines, the increase in the importing of medicines and the relatively small risk and penalty faced by counterfeiters. Today, the most counterfeit branded pharmaceuticals include innovative treatments for severe diseases: anticancers, heart diseases, anticholesterol and antihypertensive drugs, psychologic disorders and infections. The United States Food and Drug Administration (FDA) estimates that counterfeits make up more than 10 percent of the global medicines market. Many developing countries such as
focused their initial serialisation solutions on small scale deployments, either in pilot studies or in specific countries, following legislation requirements for Turkey, Italy, California, Greece, Belgium and Brazil. These solutions allow to uniquely identify individual items, cases and pallets and have been focused on packaging lines, trying to minimise the impact on efficiency and OEE (Overall Equiment Effectiveness). It is clear, from these early experiences, that these solutions should be extended to the warehouse and the value chain, and involve contract manufacturers from the beginning. One of the main effects on the manufacturing process deriving from the adoption of these solutions is the pressure to eliminate barriers among different functions, creating a seamless network of processes and information. A second one is the introduction of new technologies including soft ware, hardware and automation. These actions can help to increase detection and reduce counterfeiting, enlarge inventory visibility, speed up and lower the cost of recall processes while enhancing reputation. How much of an effect has that had on battling the current issues of counterfeit drugs? AL. The implementation of serialisation solutions is just beginning. All involved parties like EU, FDA and leading pharmaceutical companies see serialisation as an important element to reach product identification at individual pack level. The FDA identifed in its March 2010 guidance: “Standards for Securing the Drug Supply Chain - Standardised Numerical Identification (SNI) for Prescription Drug Packages”, the package-level SNIs as an initial
step in FDA’s development and implementation of additional measures to secure the drug supply chain. Anti-counterfeiting is not only serialisation. There are three core elements for an efficient technological anti-counterfeiting strategy based on the integrity of the pack – a specific item of a product batch. The use of tamper-evident packaging or tamper-resistant closures for all medicines; use of overt, covert and forensic authentication features and strengthening product identification at individual pack level through a harmonised coding standard. What direction do you see anti-counterfeiting procedures and technology taking in the next few years? AL. To get an anti-counterfeiting strategy in place, global and harmonised industry and regulatory standards need to be developed for all three core elements – tampering, authentication and product identification at an individual pack level. This means applying safety features on the outer packaging which allow wholesale distributors or pharmacists to verify the authenticity by assessing 'overt covert or forensic’ devices, identification and ‘tampering’ in a pragmatic manner. Track and Trace over the complete supply chain requires coding harmonisation in both human-readable and machine-readable forms, based on common industry standards like Datamatrix and/or RFID and GS1 compliant serial numbers. In addition, common standards likes EPICS (Electronic Product Code Information Services) for product verification data exchange are essential to fit different countries’ governance models and to deal with heterogenous IT systems. Once Track and Trace over the whole supply chain is in place, the next stage is to uniquely identify not only the pack but each blister, tablet or vial. This can mean more safety in the hospitals and more efficient re-traceability during production.
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NEXT BIG THING
Deciphering the Burgess Shale of single-use bioreactors By Mark Selker and Barb Paldus
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ne of the most famous of the Beatitudes, “The meek shall inherit the earth” (Matthew 5:5), has been likened by Darwinists to the ascendance of little furry mammals after a meteorite hit the Earth, initiated the Ice Age, and damned the almighty dinosaurs. In the bioprocessing industry, single-use enthusiasts would claim that the dinosaurs are really large-scale stainless steel infrastructure, the furry mammals are disposables, the housing market/stock exchange collapse in 2009 is the meteorite, and the current recession is the Ice Age. Market drivers – the natural selection criteria in this case – such as lower capital, skilled operator labour and validation costs, biosimilars price erosion and time to market, are accelerating the adoption of the single-use paradigm. An interesting question, drawn from evolutionary biology, therefore emerges: How will the ‘survival of the fittest’ principle apply to designs and vendors of single-use equipment? The recent proliferation of mid- to largescale (25L to 2000L) single-use bioreactor designs has focused primarily on aeration and agitation methods. Agitator types include single to multi-impeller configurations with different blade geometries (Thermo Scientific and Sartorius-Stedim), magnetic motors (XCellerex), paddles (ATMI), rotating wheels (PBS Biosystems) and even two- (GE Healthcare/Wave) and three-dimensional (Cellution BioSystems) rockers. Aeration methods range from traditional frit and open pipe spargers (Thermo, Sartorius, and XCellerex) to air-lift designs for more efficient oxygen transfer with lower shear stress (XCellegene and PBS). Bioreactor geometries either mimic typical cylindrical stainless steel vessels, or present a radical departure, with
shapes such as rectangular prisms (ATMI), pillow bags (Wave), cones (XCellgene) or U’s (PBS). In the lab-scale arena (0.5 L to 50L) new disposable vessel designs are also becoming more and more numerous (e.g. Millipore’s Mobius, New Brunswick’s CelliGen, and Artellis’ iCELLis). In essence, single-use upstream bioprocessing equipment is experiencing the equivalent of the Cambrian explosion, with many diverse species trying to survive and thrive. As Stephen J. Gould so aptly described in his book A Wonderful Life: The Burgess Shale and Nature of History (1989), the “history of life is a story of massive
“How will the ‘survival of the fittest’ principle apply to designs and vendors of single-use equipment?”
removal followed by differentiation within a few surviving stocks”. A common need, however, has clearly emerged for single-use sensors and easy-to-use process automation, and efficient validation of both. There are many operations, even in singleuse bioprocesses, that can be improved to reduce burden and time load to ensure end-user success. As many of the vendors have focused exclusively on disposable bags and bioreactors, if one vendor can indeed provide an intelligent, self-calibrated measurement and automated solution, it will carve out a unique and lucrative niche. This provider could symbiotically exist with all bioreactor manufacturers, providing a
unique service to the entire bioprocessing industry. To extend the evolutionary biology analogy, this vendor would resemble homo sapiens, both from the ability to problem-solve, and also to use, and eventually even create, tools. If we follow Gould’s train of thought, such a creature with intelligence and self-awareness would surely have evolved. However, Gould himself concluded that evolution was “not the conventional tale of steadily increasing excellence, complexity and diversity”. He based this argument on the fossil fauna records from 530 million years ago that are found in the Burgess Shale. He argued that chance played a central role in the selection of the survivors, and that given the chance to “rewind the universe”, the outcome could have been altogether different, even for the homo sapiens species. In other words, our planet could just as well be ruled today by intelligent gecko lizards, using genetically modified canaries in their drug development trials. If we return to the original question: which companies will win the ‘survival of the fittest’ game to become the dominant players in singleuse bioprocessing? What will happen to XCellerex, Artellis, PBS Biosytems, Sartorius and Finesse? Only the future fossil record will tell, and for now, the universe is mum, but continues to roll the dice. Mark Selker has worked and published in various areas within the optics industry. He has worked for NASA, Coherent Laser Group and Harmonic, and most recently has been a visiting scholar at Stanford University. Selker received his ScB and PhD in electrical engineering from Brown University in 1986 and 1990 respectively. Barb Paldus was most recently the CTO of Picarro, a company she founded in 1998. Her efforts there culminated in solid-state Cyan laser products in 2003 and cavity ring-down spectroscopy products in 2004. Barb received both her PhD (1998) and MSEE (1994) degrees in electrical engineering from Stanford University.
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MANUFACTURING
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harmaceutical companies invest extraordinary amounts of time, money and ideas into their R&D stages, so it is no surprise that their supply chains and manufacturing stages should do exactly the same. If a drug is lucky enough – which nowadays means it’s successful enough – to get through to the production stages, that ‘golden ticket’ falls into the hands of a few to efficiently see it through to its fi nal stages. Without these champions of the manufacturing leagues, many would be left literally fending for their lives, without the drugs they so desperately need. With the acceleration of technology and communications over the past two decades, pharmaceutical companies have had the luxury of utilising an extensive knowledge base to implement supply chain and manufacturing systems that surpass anything the industry has previously witnessed. Barthold Piening, EVP of Operations at Nycomed, has a privileged perspective of what the world of pharmaceuticals is doing to deliver and progress its manufacturing expertise. “I pretty much grew up in manufacturing,” explains Piening. “I was focused on technology, construction, factory design, supply chain management and some project work launching products globally.” With so much experience already under his belt, Piening has a firm grasp on the challenges facing the pharmaceutical supply chain. “I’m a little bit biased from the current company perspective,” admits Piening. “In the old pharmaceutical industry we saw a move from the typical high-margin, high-volume, so-called blockbuster products that we had quite frequently seen in the industry in recent years. Today, many companies have the challenge of going into much smaller, niche-related, specialised products that are, from a manufacturing background, characterised by lower volumes and more complexity, and from a business perspective, often lower margins.
Motivation
Manufacturing efficiency NGP finds out what Nycomed is doing to progress its manufacturing and supply chain operations.
“It’s not only in manufacturing. It affects all organisations. We see a price pressure more or less everywhere – even in emerging markets where we have seen the effects of the financial crisis in the last year – and we see plenty of margin pressure. It was much easier in the past to handle a high-volume, multi-billion tablet product with efficiency than it is to manage the complexity of smaller products today. With this in mind, we started our operational excellence programme in the conceptual stage roughly two years ago. Now in its implementation stage, we have been gathering some first experiences of the project, which are fascinating to see.” The main advantage with projects such as operational excellence or Six Sigma is that you have the ability to in-
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volve, motivate and activate almost all of your employees. Whereas in the past, initiatives for special projects would be set up for higher-level management, these new projects affect the whole organisation and provide the huge potential of improvement ideas and concepts for the organisation as a whole. The key to all of these projects is how to open employees up to contributing to the process. “We have invested a lot in the training, education and personal development of our shop floor employees,” continues Piening, “which was regarded as a major benefit for the individual employee. To give you a number, we have now touched roughly 10 percent of our workforce with education and training programmes to get into operational excellence, and are finally starting to see the fruits and to harvest from this campaign.” However, while the human element is obviously the most important aspect in making a system as efficient as it can be, it carries the duality of also being the biggest potential obstacle during the implementation stage; resistance from employees and misunderstanding can make or break a programme. “Certainly there are some barriers to overcome. I would say the major barrier is not motivating and activating the shop floor employees, it’s more to get the management support and buy-in. “People are so occupied with what they do and how they did it in the past that readiness to change is sometimes tougher to achieve in the higher management tiers rather than on the shop floor level. We have seen fantastic enthusiasm on the shop floor, where people were extremely happy to get additional training, and then to apply what they have learnt in real-life projects immediately. This is perceived very positively. You have to make sure that someone sees additional opportunities from a new perspective and to take up new methodologies in contrast to what they have done in the past. Many of them are convinced that what they did in the past is the only right way of doing things, so changing their minds and going into new areas is pivotal. “If we can achieve this change on the management level, it goes beyond the typical budget thinking. Normally, everyone on the top management level is thinking about our budgeting process. What we need is a change in the mental philosophy to think beyond budgets and to think that wherever we can improve, we want to improve.” With this in mind, Piening has adopted a multi-faceted approach to Nycomed’s operational excellence programme.
Flexibility “In our company, we have decided to not use only one Lean methodology and to make ourselves intentionally flexible. We apply Six Sigma we apply Lean Six Sigma and push the continuous improvement and 5-S quality management wherever it is feasible. We have the complexity
of different types. For example, Latin America, India and Russia have different levels of technology than the centre of Europe and the US, so we said very early on that we don’t want to apply just one tool. There must be a common understanding – which we call operational excellence – that can give a variety of different tools to the teams, and whatever is appropriate, they can apply.” And while this certainly gives Nycomed, and Piening, the luxury of being slightly more flexible than other companies, they still have to share the same air when it comes to tackling increasing regulatory hurdles. “We don’t have a problem when it comes to higher regulatory requirements coming from the FDA and we certainly comply well with the FDA guidelines. Our major challenge comes from having to operate all over the globe and comply with each and every regulatory requirement. Th is gets increasingly complex and could do with a harmonisation between the FDA and EMA – and in the future all emerging markets that will also be conjuring up their own specific requirements. “It’s a very real challenge because it gets more difficult to have just one standardised system; instead companies have to lean towards tailor-made solutions, for example to fulfi l specific requirements for certain emerging markets, which makes things more complicated. In addition to this it is important for us to now focus much more on the typical, state-of-the-art forms of supply chain management and to catch up with other industries in order to reduce our lead time, increase our flexibility and to reduce our inventories. In former times, far more emphasis was placed on the marketing and R&D side, but since the margins are going down in general, our contribution will be much more important in terms of cost-effectiveness and working capital management.” It is here that the true contribution from supply chain management prevails. In order for a progression to be made that will affect the discipline’s future, the management of information from the market – from point of sale to the manufacturing side – needs to become more focused and efficient to allow the backbone of pharmaceuticals to develop. As Piening puts it, “this is our key vision”.
“In our company, we have decided to not use only one Lean methodology and to make ourselves intentionally flexible”
Barthold Piening is EVP of Operations at Nycomed.
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ASK THE EXPERT
Next generation Lean How looking simultaneously inward and outward can help pharma executives to build a road map for the future direction of their organisations.
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irtually every pharma organisation across the world has embraced Lean thinking as a means to engage their organisation, drive structural change, pursue and eliminate capital redundancy, and liberate cash, usually in the form of excess inventories. Most organisations have embraced Six Sigma too, leveraging DMAIC (defi ne, measure, analyse, improve, control) as a means to drive robust problem solving and using advanced statistical tools to create and then assure process capability, especially within their industrial and process engineering communities. When asked, the vast majority of pharma VPs are more or less content with their progress, have a clear vision of their ideal state, have embraced rhythm scheduling as a means to enable flow and are beginning to turn their attention to the improvement needs of back office, research and development and logistics functions. All in the garden of Lean pharma would seem rosy. However, off the record, most VPs are more candid about their progress and after a glass of wine or two, highlight openly areas of concern and insufficiency. Marketing functions are disconnected from global supply teams, reducing the voice of the customer often to a measure of on-shelf availability within a wholesaler or agent. No single individual owns the customer or the enabling supply chain end to end or through life, and where moves are underway to address this, then VPs are only at the beginning of figuring out how to make this work in a matrix organisation. Managers encouraged to make improvements focus their efforts within their span of control, optimising their own business function, often at the expense of the system as a whole. The responsiveness of fi nal packing is sluggish despite rhyme scheduling, with the responsiveness of many packing lines still languishing toward an ‘every product every in-
terval’ of four weeks or more. Inventory levels remain high despite significant investment in ERP and demand management systems with enterprise stock turns rarely above two per annum. The availability, performance and effective utilisation of capital assets are poor, with OEE levels rooted stubbornly between 35 and 55 percent. Local interpretations of GMP and FDA guidelines place severe restrictions on manufacturing flexibility and responsiveness; however, there is a distinct reluctance within the organisation as a whole, and within the quality function in particular, to embrace ideas from other industries and adopt solutions that uphold the spirit of the FDA and eliminate risk, and yet enable fast, flexible flow. Perhaps the garden is not quite as rosy as it would first appear. If this is true and more representative of the challenges faced – then where does big pharma go next with Lean? How might industry leaders more successfully identify and eliminate the root causes of under-performance and obstacles to flow? If we are bold then how might we leverage fully Lean thinking and Six Sigma tools to drive innovations in products and services, delivered waste-and defect-free, and in so doing provide greater value to patients, payers and shareholders in established and emerging markets?
Lean thinking: the value creation matrix Figure 1 presents the key strategies, processes and behavioural enablers of almost all Lean enterprises. Th is framework enables organisations from any sector to contextualise their challenges, understand the different enablers to different types of improvements and reveal the gaps in their thinking, and helps executive teams build a road map for the next stages of their organisations’ development. The value creation framework enables executives to redefi ne their problems, differen-
“Managers encouraged to make improvements focus their efforts within their span of control, often at the expense of the system as a whole” tiating between cause and effect, and encouraging them to focus their attentions on strategy, systemic alignment and talent management. If followed, the framework encourages pharma executives to ask themselves the following questions: What compelling products and value-adding services might we offer payers and patients enabled by innovations in process capability? What combination of leadership skills, market insight and operational awareness will enable us to imagine and construct them?
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How might value stream thinking guide the design of end-to-end, through-life value streams that transcend functional structures yet leverage fully the functional capability and expertise available? What knowledge, skills and behaviour are needed to conceive their design, gain support for their introduction and sustain their implementation? How might systemic transformation be achieved without losing management control or talent? How might we leverage Lean thinking to enable fast, flexible flow throughout our organisation, defect- and waste-free, without exposing patients to unacceptable risk? What knowledge, skills and behaviours must we nurture throughout the organisation to enable performance to be improved at a rate
Left to right thinking tunes the senses to waste and enables individuals and operating teams to learn, practice and master their craft. It is accessible, galvanising, immediately rewarding and falls within the span of control of most managers. Right to left thinking, in contrast, forces teams to defi ne value through the eyes of their current and future customers, ensures we are improving the right things, drives innovation and ensures the voice of the customer penetrates deep into their organisation. It is strategic, imperfect, carries more risk, transcends organisational boundaries and scares the holy bejesus out of all but the most strategic.
that exceeds the annual reduction in drug costs demanded by institutional payers?
By answering the first of these questions, one very rapidly fi nds oneself asking the second. How do we design an end-to-end flow? How do we forge a relationship with our customers through life? Who is going to design and implement the future state and oversee its successful implementation? How do we deal with legacy assets and behaviour? How should we navigate a route through the choppy waters of transformation? Many VPs at this point decide to put their pens down and content themselves with the path of least resistance. History suggests they should have more courage. Clayton Christenson has written extensively on the merits of “Skating to where the money will be” and his work suggests disrupting markets with process-enabled innovations
Left to right and right to left thinking To answer the first of these questions, pharma executives must look simultaneously inward and outward – a process known as ‘left to right and right to left thinking’. Left to right thinking encourages an organisation to focus internally, to map its current state, to identify waste and the causes of variation, to standardise process and to set about the elimination of root cause. Right to left thinking, in contrast, looks to the burdens endured and the benefits enjoyed by patients, payers, GPs, pharmacists and supply chain partners and seeks to provide compelling propositions enabled by Lean processes. Figure 1.
Seeing the whole
offers a significant and sustained advantage to the supplying organisation. Dan Jones has consistently encouraged practitioners to “see the whole”. His research suggests end-to-end alignment typically liberates about 20 percent of the total system cost and 75 percent of the throughput time. Combined companies can enjoy the equivalent of corporate alchemy – a lot more out for a lot less in. However, combining left to right and right to left thinking has its challenges. Implementing organisations need to identify the current and future values of different patient groups. They must learn to design value propositions that are compelling to payers and patients alike and that are enabled by process, making them difficult to simulate. They must learn to translate propositions into value stream designs and deploy these while remaining in control of today. They must equip each value stream organisation with the skills, knowledge and behaviour to prosper without diluting functional best practice and they must recognise and mitigate risk. In the next NGP publication, I will explore the process of transformation and the practicalities of driving daily improvement within value streams. In what remains of this article, I would prefer you to reflect. The pharma industry has made enormous strides to embrace Lean thinking in recent years and for the first time it has grabbed the imagination of more than the operations community. With a bit of courage and skill, pharma companies can combine compliance, standardisation and the reduction of operating expense with process and proposition innovation. Left to right, right to left or an informed combination of the two? As an industry we have a once in a lifetime opportunity to reduce operating expense and provide service innovation. Let’s not let it pass us by. Chris Ellins and Total Flow, the organisation he founded in 2005, are regarded as innovators in the world of Lean enterprise. Chris is an expert in customer value creation, endto-end value streams, the elimination of systemic waste and the realisation of waste-free production systems.
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INDUSTRY INSIGHT
Facing challenges in the pharmaceutical supply chain How to sustain intact good distribution practice within emerging markets. By Martin Svantesson
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he distribution demands of pharmaceutical products with a need for an intact, unbroken cold chain or ambient end-to-end solution pose a challenge to distribution service providers who wish to be involved in the distribution of pharmaceuticals. Developments in distribution of temperature-controlled air containers with the ability to secure the correct temperature at all times constitute an ongoing process between pharmaceutical companies, distribution providers and manufacturers of materials when operating a successful supply chain. Pharmaceuticals, being high value goods, demand a safe process at all hubs in the chain. Security measurements must be harmonised and rigorously checked across the operating lanes, with their sub warehouses and on/off loading places. The importance of utilising few on/off loading places and changes of transport mode is one of the challenges for a time effective and secure solution; this at a minimised cost level. The market demands global solutions and customers are requesting the ability to order correct quantities and lower inventory levels. Th is brings a change to the order profi le; orders are becoming smaller and production changes accordingly. Th is is a challenge for the distribution of pharmaceuticals, and consolidation possibilities that can meet with the lead time demand to end customer are highly valuable. A change of routine in the supply chain can have dramatic effects if not properly implemented at all levels. With clear communication, the cost of change reduces dramatically. Global harmonisation enhances the possibility of maximising effects in a supply chain. The issue of ‘ownership’ of the supply chain is becoming increasingly important as
pharmaceutical markets are growing towards emerging markets. It is the harmonisation and interaction between the pharmaceutical company, the freight forwarder and the carrier that gives the supply chain success. There has to be an understanding that the freight forwarder is in need of robust, openly agreed operational solutions for products distributed into specific markets. Risk assessments for any new flows managed should be rigorously checked, ideally with on-site visits to follow the supply chain in person. I am quite sure that several product/ cargo damages could have been prevented had decision-making parties visited and audited the sites and full supply chain before launching new products. For example, some end destination countries in emerging markets have an issue with distributing some of the larger scale air freight containers on their temperature-controlled vehicles. Imagine landing pharmaceutical products at an end destination airport in +40ºC and not being able to fit your container into the distribution truck going to the fi nal destination. You would then have to unload the container at a temperature-controlled warehouse facility, pay for the extra charge of breaking the container, then unloading and reloading on to accepted format pallets, perhaps not even in a container anymore. There would be an additional risk of not having correct container types available at the end destination. Not to mention the warehouse facilities in use for handling the pharmaceutical products. The characteristics of the goods somewhat steer the handling process and what equipment has to be used throughout the supply chain. I would argue that distributing ambient pharmaceuticals or tablets, for example, puts
the supply chain in a very challenging situation. A cool chain distribution chain demands a rigorous packing of the product that would/ could link to the lead-time demand. You make sure that you pack the products properly to secure an intact temperature for 48-72 hours, or even place the products in temperature controlled containers, air or ocean. Distributing ambient products that cannot exceed +25ºC would demand a rigorous process when distributing into warm and moist
“A change of routine in the supply chain can have dramatic effects” countries, especially when the equipment alone cannot secure the temperature. Geodis Wilson fully understands and supports the interaction between carriers, suppliers and local environment that will secure an intact good distribution practice throughout the supply chain. Yet there must be an ongoing development process in order to always be and act one step ahead of any potential problems. Martin Svantesson is Vertical Market Director of Geodis Wilson Pharmaceuticals. He has 15 years experience in global distribution and holds a Master’s degree in Supply Chain Management. Svantesson’s role is to develop Geodis Wilson’s pharmaceutical distribution solution/proposal for existing and potential pharmaceutical customers, as well as to harmonise a global approach within Geodis Wilson in regards to pharmaceutical handling according to good distribution practice standards.
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ASK THE EXPERT
Where next innovation? Now that innovators increasingly dominate generics, asks Dr Reddy’s Laboratories’ Marcel Velterop, what about innovation?
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fter the latest generic acquisition by a big pharma company, even the most conservative thinkers in the pharma industry will have to face the reality of 2010: affordability and global access of medicines have become key strategies for innovators too. The former nemesis and frequently quoted reason for the top-line decline of innovators now commands large premiums as a way to capture emerging market growth and improve revenues quickly. Today, with one exception, most big pharma companies have become larger generic suppliers than the majority of the global generics industry itself. But what about innovation? By increasingly sourcing innovation from the biotech sector and academia, pharma innovators seem to be acknowledging that the way they innovate needs drastic innovation too. More nimble and therapeutic area-focused R&D units are set up to mimic the sense of urgency displayed by biotech companies. Defending the US$1 billion or more development costs for new molecules is no longer acceptable, and needs to be reformed into a question of how to develop and launch a truly new drug for less than US$250 million? Just imagine the impact for society’s unmet needs if for the same ‘standard cost’ not one but four new drugs are launched? Furthermore, imagine instead of taking on average 10 years to reach the market, this is done in 6-7 years. “Wishful thinking and not possible” is a frequent response. What then can make the difference? Simply put: people in our industry deciding to change things and aspire to truly groundbreaking innovation.
Clearly the model of doing everything in-house is gone at big pharma, and outsourcing and in-licensing are in progress. However, this is but a fi rst step in the process to begin to truly integrate external collaboration. The pharma 2020 report by PwC provides many compelling new ways of looking at innovation. In addition, the increased use of genetics to defi ne the right target set of clinical trial patients will reduce unexpected side-effects and improve attrition rates. Regulators are likely to support a smaller, more precisely targeted launch, with quicker approvals linked with post-launch monitoring. Therapeutic expansion can be staged from here to ensure sufficient earnings. The question this raises is what then should change in the way of innovation programme management? Intelligence in biological systems is achieved when the number of connections increases exponentially, ultimately leading to human thinking. State-ofthe-art technology and communication can enable spiderweb-like partnerships between the NCE development team and a variety of external partners required to bring innovation to patients. Integration of drug substance and product, toxicology, clinical development and medical specialists validating the real patient need will allow reduction of waste in development and time lost in the process. A more transparent sharing of goals, timelines and developmental requirements will not only minimise time-lags between an otherwise serial set of events but will also energise all partners to achieve the same goal of lower costs and faster development. Clinical service providers sharing their timelines with CMC partners will directly reduce the risk of late supplies. In-
creased visibility of target dates, as seen in other industries, has reduced lead times, working capital and costs of development. Lack of trust and fear about losing IP currently prevents such new ways of working in the pharma industry, as well as the more complex set of service agreements such an approach would require. As with any innovation, developing a prototype in order to test the problem areas seems a pragmatic and prudent way forward. Once proof-of-concept has been identified and IP fi led, partner selection and signing a joint letter of intent are among the next steps. A master service agreement and business principles can be defi ned; either a risk-reward sharing or a more typical cost-margin based approach funded by the innovator. Dr Reddy’s Custom Pharmaceutical Services is open for novel ways to service innovation and able to interact in more complex consortiums. We invite the more daring innovator to discuss options and the set-up of a pilot to innovate the way our industry innovates. Marcel Velterop is Vice President and Global Head Sales & Business Development, Dr Reddy’s Laboratories SA, Custom Pharmaceutical Services. Velterop joined Dr Reddy’s Laboratories in January 2004 as European Director ,Sales & Marketing. He currently heads the global business development team for Dr Reddy’s CPS business, which caters to innovator pharma companies.
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EXECUTIVE INTERVIEW
Tackling contamination risks successfully As focus switches to accurate and validated bio-decontamination methods, hydrogen peroxide vapour treatment is becoming increasingly recognised as an essential part of any contingency plan, explains Richard Lucas.
What are the main areas of contamination in the pharmaceutical manufacturing phase? Richard Lucas. The shift towards biopharmaceuticals as the mainstay of modern drug development has increased the risk of contamination to a process. This is due to a more biologically accommodating environment inherent to these processes, the need for additional aseptic processing – for example virus removal, diafi ltration or centrifugation- and frequent sampling. Unfortunately, every additional process step presents an additional contamination risk. This is commonly through introduction via operators, materials movement or other process interventions, which create risk of contamination from the background environment. The recent example of a Vesivirus 2117 viral contamination in a large manufacturing facility's bioreactors, and the subsequent impact on drug production and regulatory concerns, highlights the potential impact of a contamination event. To what extent has technology helped eradicate problematic bacteria and viruses throughout the development and manufacturing process? RL. The use of facility and process-compatible hydrogen peroxide vapour (HPV) for example, allows regular bio-decontamination cycles to be performed in order to manage the risk of contamination while preventing lengthy and costly facility downtime. The non-residual nature of HPV and the regulatory acceptance of the process as a means of bio-decontamination has allowed the rapid and effective bio-decontamination of complex process equipment. This includes, for example, freeze driers and incubators, as well as other large components that have been previously challenged due to the limitations of manual cleaning or requirements for disassembly, autoclave and reassembly. HPV is an effective bio-decontamination process for iso-
lated manufacturing lines without the need for disassembly through to complete facilities with minimal preparation. Advances in materials transfer technology, such as the HPV transfer solutions developed by Bioquell, represent an important innovation in eradicating the risk of transferring contaminants into and out of clean and aseptic zones through rapid, validated and reliable bio-decontamination. HPV-enabled materials transfer allows rapid movement of tools components, consumables and even sensitive biological products themselves, whilst maintaining efficient process flow and offering secure management of contamination risk. Additionally, cross contamination of a facility or manufacturing line (for example with viral material) is an area of interest to manufacturers with a need to ensure batch-to-batch and campaign integrity. Are current decontamination techniques sufficient to battle future issues of contamination? RL. Techniques such as spray and wipe or mop and bucket methods appear to be under increasing regulatory scrutiny as the ability to validate and accurately monitor these inherently manual processes comes under challenge. Validated solutions are required that are amenable to process requirements, and that offer the complete process control and operator safety that manual methods cannot. Bioquell’s HPV solutions represent an increasing share of the bio-decontamination market, replacing outmoded manual methods. The high operating costs of a modern biopharmaceutical facility mean that it is crucial to maximise manufacturing capacity. HPV offers key efficiency gains, minimising downtime during routine shutdowns and campaign changes as well as allowing better management of the risk of contamination during these periods.
In his role with Bioquell as a Biopharmaceutical Process Specialist,Dr Richard Lucas investigates the application and integration of Bioquell’s novel decontamination technology in biopharmaceutical production environments. As part of his role, he liaises with thought leaders from both academia and industry to ensure Bioquell innovates to support future areas of development and manufacturing.
What path do you see the future innovation of decontamination techniques and technology taking? RL. The industry must maintain pace with the demands of the fast developing biopharmaceutical sector. Efficacy, safety and efficiency remain of paramount importance. It is critical that bio-decontamination technology meets the needs of an increasingly diverse range of biotechnology processes, ensuring controlled, validated bio-decontamination methods that help minimise the risk of process compromise due to contamination. Bioquell is an international business committed to high-level R&D investment in order to support the biopharmaceutical industry. We offer bio-decontamination solutions that manage contamination risk, improve process efficiency and easily integrate into current and future workflows. The acceptance that personalised medicine is of growing importance may require considerably different manufacturing and patient delivery methodologies. Consultation with industry thought leaders will be vital to ensure this key enabling technology is available in a manner appropriate to new challenges.
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EMERGING MARKETS
Novo Nordisk’s Jesper Høiland tells NGP how emerging pharmaceutical markets could beat the Western world at its own game.
“More than 65 percent of the world’s GDP growth is coming from the emerging, non-Westernised markets,” begins Jesper Høiland, enthusiastically. As SVP of International Operations for Novo Nordisk – a global leader in healthcare provisions – Høiland is acutely aware that he stands on the precipice of a seismic global shift for the pharmaceuticals industry, and he’s justifiably excited by the prospects of this new world order. “You don’t have to go that many decades back to see life expectancy in the 40s, 50s or 60s in some countries, whereas today you are seeing emerging markets catching up – life expectancies in China, India and Brazil now average the mid-70s. Whether you are born in central China, Latin America or North America, you have the same wish: to live long and be healthy.” Bringing about a level playing field in global healthcare will be no mean feat. Humankind has been conditioned for centuries to look West for fi nancial prosperity,
artistic inspiration and high life expectancy, yet the emergence on the world stage of the BRIC economies (Brazil, Russia, India and China) will have long-lasting repercussions for all, particularly in the healthcare sector. “In the past few decades, 85 percent of the world’s healthcare expenditure has been allocated to just 15 percent of the world’s population,” reveals Hoiland. “In very simple terms this means that North America, Europe and Japan have been consuming 85 percent of the world’s healthcare, while 85 percent of the world’s population has hardly had any spending per head in terms of healthcare.” Høiland warns that the West’s ingrained sense of entitlement to better healthcare and higher standards of living is about to be challenged by the emerging nations, who will no longer be content to settle for second best. “Many people have a very strong misconception that if you are not receiving exactly the same quality of healthcare as you are in Europe or in the US you might still be
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willing to settle for less. The opposite is now the case. Those with money [in the emerging markets] are more likely to spend more on quality healthcare because they want to make sure that they do not get cheated.”
New world order As countries such as Russia, India and China become more and more energised by their tangible realisation of unprecedented economic growth and fi nancial stability, Høiland calls out the general malaise and stagnation of Europe’s healthcare market. “I call Europe a pancake. You do not see any growth there, and you are not going to see any growth for many years. I wouldn’t be surprised to see a decline in healthcare spending. “Therefore, the outlook for the pharma industry in Europe is not that encouraging. Healthcare in North America remains, of course, a big part of the industry – between 40 and 50 percent of the world market for healthcare has been spent in the US. Everything for the past 20 years has been US-focused; the US has been the backyard for over half of the industry’s multinational companies, most of which are American. They thought, ‘If we’re so successful in North America, why look outside of this market?’” As the economies of China and India continue to outpace all others, increased spending in healthcare is driven not just by a top-down desire to improve the overall health of the population, but also from the bottom up. Affl ictions and diseases that have long been seen as Western woes are now starting to have an impact on the emerging economies. “We’re seeing a strong rise in diabetes in the emerging economies,” says HØiland. “The reason for this is that many economies – China, India, Brazil – have been stifled for the past 200 years. With the growth of these economies many millions of people have rapidly changed their lifestyle. They have moved from rural areas to cities. They have grown older and their eating habits have changed dramatically. “Those three parameters have been a part of the pandemic growth we are seeing in diabetes, but also hypertension and a number of other things.” The growing pains of emerging markets are obvious and well documented, and it is only natural, explains HØiland, for pharmaceutical companies to earmark them for expansion. “There has been a paradigm shift. Previously you sent your most rookie people to these markets because no one else really wanted to go there. They would gain experience and you would move them on to more exciting and profitable markets. The trend today, however, is for the pharma industry to send all of its most experienced executives to China and India.” Another facet of this progression is the emergence of a sizeable and fi nancially active middle class in countries such as China and India. “Every month in India and China 30 million new people get their fi rst mobile phone. Mobile phones are an important part of these societies because of connectivity. Th ings are changing with the mobile phone because you can call the doctor and get some advice and so on and so forth. But to me the indications are that the penetrations of mobile phones are significant - today the world’s largest mobile phone market is China, closely followed by India. It is not the US and it is not European countries that are dominating the market.
“Th is indicates to me that there are huge middle classes that want and have exactly the same call for drugs that we are having in the Western world. In Shanghai, for example, life expectancy is now higher than in the US, and purchasing power is on par with Washington DC. So the average person living in Shanghai has exactly the same wealth as the average person living in Washington, DC, with a higher life expectancy.”
Tackling the new markets As China in particular attracts greater foreign investment, Høiland is cautious in declaring a free-for-all on the country’s pharmaceutical market. “In the very short term it’s business as usual,” he stresses. “Th ings are not going to change that dramatically, but what you are seeing is a much more focused government. They are focused on spending money on healthcare, and we are seeing healthcare plans coming out as part of the central government policy. But you have to understand that China is not one market; you just have to look at the huge differences between the 29 provinces, they are all different.” As the world’s most populous country, overseeing a national healthcare policy in China is a daunting prospect, but Høiland is adamant that the Chinese government is in this for the long haul. “Healthcare is extremely high on the agenda for China. Smoking is something that
“I call the European economy a pancake economy going forward.You do not see any growth there, and you are not going to see any growth for many years”
people are talking about. Obesity is a huge problem. The country is growing very, very rapidly. I would say that in 15 years there is no doubt in my mind that China will become the number one single market in healthcare. If you take Goldman-Sachs’ outlook for the world economy, then China is already at number three. By 2035 China will be largest, with India in second.” India’s market is an interesting one for HØiland. It currently ranks fourth in terms of global healthcare spend, yet the market is rather unregulated – pushing it down to 14th in value terms. “Hardly a week goes by without hearing of some scandal or other where products
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in India do not live up to quality and expectations. There is not much regulation there at the moment, but this is going to increase in line with demand.” Høiland is equally positive on the Russian market, which has seen a great upswell in healthcare demand in the last decade. “Russia is undergoing a dramatic shift . There, pharmaceuticals have become available to everyone, which was the political intent of Putin – the easiest way to make yourself popular as a leader is to build an infrastructure that looks after people’s health. Putin’s DLO (Federal Drug Supply) programme has made him a very popular man, and Russia’s increasingly wealthy inhabitants are demanding the very best healthcare, which has led to Russia introducing a new plan called Pharma 2020, with the country keen on building its own pharmaceutical industry.” Turning his attentions to Brazil, Høiland is equally eff usive about the potential of this rapidly expanding market. “In Brazil there is a huge sponsored public market that is created by tendering. They go out and have the biggest tenders in the world in many different drug categories. Companies are then applying. That is both by similars and multinationals, and then the lowest price is the law. That, in a nutshell, is the public market in Brazil.” “There is also a huge private market in Brazil,” continues HØiland. “Out of the 200 million or so people in the country, there is a sizeable middle class who are typically willing to pay for pharmaceuticals either out of their own pocket or via insurance. So there is a two-tier market to tackle there.” Other markets that are of particular interest to Høiland at this time include Mexico (“Mexico is a huge market with a sizeable GDP”), Korea and Africa, where a number of Chinese pharmaceutical companies are beginning to invest. “China is also a big investor in Indonesia and Vietnam. There will be a spillover effect into these markets and as that effect comes into place in 20 years’ time, I believe that these economies will be very interesting too, thanks again to the two-fold driving factors of large population and high GDP.”
that in order to get approval in China you need to have conducted trials in Chinese populations. It is not enough to now only do so in Westernised populations. In the future, if not already, clinical trials will be conducted in emerging markets because of greater demand from governments. Th is is also a cost-effective approach, which is great news for the shareholders.” Another market that is beginning to demand greater provision to affordable and high-quality healthcare is Turkey. Th is ancient land has traditionally been a place where East meets West and so is in a strong position to take advantage of improved healthcare standards in both Asia and Europe. “If you take the Turkish market,” says HØiland, “there are 78 million people living there, yet its market strength is on a par with Spain’s [a nation of 42 million]. The latest initiative of the Turkish government is enforcing significant price decreases in the country. Coupled with just how dynamic the country is, I think it is a strong indicator of how the world is developing.”
Pharma’s future Høiland believes that, as with any industry, the pharma industry will see a number of winners and losers over the next few decades. The market, he argues, is cash rich, but is sometimes lacking in innovation and insight. Companies that can bring new compounds to the market and adopt their strategies to take advantage of both the established Western markets and the expanding emerging markets will be the ones to succeed. “The Chinese are going to want things done their way; be it in drug doses, or the way drugs are applied. The Chinese healthcare regulatory body is demanding
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As the world becomes more and more egalitarian, extra challenges present themselves in many forms, and Høiland manages to encapsulate the two camps of thought perfectly. Both sage-like and cautious when speaking as a man of his experience, Høiland is also intensely passionate and optimistic when discussing the future. He is both the Western world and the emerging markets, rolled into one. “There are two things I have learnt that are important in the pharma business. One thing is growth and the other is market share. Those are the only two parameters when I’m out judging opportunities – I look at potential growth and I look at market share.” With growth always a more attractive proposition than stagnation, Høiland admits that he often gets frustrated at Europe’s apparent inability to rouse itself from its self-induced slumber of contentment and comfort. “The European markets will say: ‘We generate all this cash because we’re still selling,’ but my argument is: ‘You’re not growing, and investors are not interested in necessarily just delivering the same results as last year. They’re interested in growth and prosperity.’” Big pharma companies that are not agile enough to move with the times will suffer in the future, warns HØiland. Doing business the same way they did in the past is a recipe for failure, particularly when faced with the dynamic demands of the increasingly vocal and pernickety – but extremely wealthy – new markets. “The Chinese market is currently growing at around 24 percent. The Russian market and all of the other BRIC economies are experiencing double-digit growth, and then behind them is Saudi Arabia, Algeria, Turkey and Mexico. I see these markets and I can hardly believe the numbers that I am looking at. “Negotiating prices in these markets is different. You have to be out and about, you have to groom the market on an ongoing basis. You have to take part of diagnostics. You have to adapt.”
The next challenge With the Western world sewn up and understood, and the emerging markets working collaboratively towards a system that is suitable for all parties concerned, Høiland believes that the pharma industry’s next challenge lies in providing affordable healthcare to the world’s poorest. “There are four billion people – two thirds of the world’s population – who survive on just US$2.00 a day. These people are what I call the bottom of the pyramid, and I believe there is a pharma market there. I do not think it is necessarily the same product market for the types of propositions you are seeing in the Western world, but it is beyond doubt to me that initiatives at the bottom of the pyramid present huge opportunities.”
As the market seeks to diversify to take advantage of the economic upheavals that have come to the fore in the past few years, Høiland believes that it is not simply a case of survival of the fittest. Companies and investors are going to have to work harder, yes, but smarter too. It is no use focusing on a market that you are traditionally comfortable with while overlooking strategies that can
“Everything for the past 20 years has been US-focused; the US has been the backyard for over half of the industry’s multinational companies, most of which are American”
gain you a foothold in more diverse and energetic markets. “The US companies have been very insular on this matter in the past,” admits HØiland. “They have focused on their own home market, because it accounted for 50 percent of their market share. “Other countries, while smaller, have acquired a broader market share. Let’s take Germany. The German pharmaceutical industry is extremely strong in Latin America, so there is an opportunity there for pharmaceutical companies to move forward and take advantage of the region’s growing economic power. If you come too late to the market, all the business opportunities are likely to have disappeared.“ This ‘early adaptor’ mentality is a truism in business as a whole, yet for a pharma industry that is racing along at break-neck speed, there is an even greater emphasis on flexibility and forward thinking. Of course, the pharmaceutical industry can only prosper if governments in these emerging markets are prepared to place greater emphasis on the welfare and health of their citizens, putting healthcare above things like military spending in order to nurture not just a stronger, happier and healthier society, but also a more supportive one. “Governments need to be engaged,” concludes HØiland. “I think that politicians are smart enough to see that, by tackling issues such as ‘What sort of healthcare will I get for my money?’ They will make themselves more popular. As people get wealthier they have more money to spend on healthcare. They want to live longer. They want to feel better and they want to look better.” And nobody could begrudge someone for wanting that, be they from Sweden or Swaziland. Jesper Høiland is Novo Nordisk’s SVP of International Operations.
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EXECUTIVE INTERVIEW
Enabling drug development by efficient data management R Arun Kumar, Associate Vice President and Head of the Global Life Sciences practice at Infosys, discusses the influence of data management systems on drug development.
and the interaction of candidate compounds is now possible. Data management thus enables taking a more holistic approach to decisionmaking in drug development, leading to better research outcomes, improved research productivity and reduced cost of innovation.
R Arun Kumar is an Associate Vice President, who heads the Global Life Sciences practice at Infosys and is responsible for the growth and expansion in the life sciences domain. Kumar has more than 16 years of professional experience in the areas of business-technology alignment, IT and BPO services, global sourcing, strategy and marketing, software product development, wireless, and consumer goods. His career spans multiple continents and he has worked in leadership roles in established trans-nationals as well as in startups. Kumar lives in the San Francisco Bay Area and can be reached at R_ArunKumar@infosys.com
How has the introduction of data management systems affected the drug development process in recent years? R Arun Kumar. Data management has primarily improved information flow across the drug discovery and development processes and has provided managements with improved visibility into the status of a project, as well as helped researchers with efficient decision-making. The drivers to manage research information from biology, chemistry and pre-clinical development are to ensure clear understanding of project development objectives, facilitate a project-team based approach towards drug discovery by providing access to annotated knowledge sources and to help in monitoring progress towards R&D milestones. Facilitation of targeted analysis of data to improve understanding of the disease model
What challenges has the Infosys Scientific Innovation solution overcome and to what extent, if any, will it create additional challenges? RAK. The Infosys Scientific Innovation solution addresses the basic problems of information disconnect and a siloed approach towards discovery research. It provides for harmonisation of multiple research workflows; semantic interconnect and transformation across diverse knowledge sources; novel ways to identify, associate and search for scientific entities; the availability of intuitive visualisation and analytics capabilities. Infosys proposes to manage additional challenges of user adoption with a businessvalue driven change management model, and also bring together best practices in usability engineering and user experience design. Infosys research ensures that scalability of semantic interconnect solutions will exceed most business requirements. To what degree can the solution framework help predict scientific innovation? RAK. Linking of academic research, public data libraries and pharmaceutical research to improve success in the drug discovery process is the key to improving the research productivity in drug discovery and development. The Infosys solution reduces the burden of data dredging or fi nding a needle in a haystack situation. On the other hand, it anticipates stakeholder needs and makes information available
in real time. It is this key objective that the solution framework addresses. In addition, the solution allows for and supports knowledge pooling, peer collaboration and workflow harmonisation to reduce research redundancies. Given the efficient semantic interconnect and networking capability, the solution framework can help in generation of new scientific possibilities. Research organisations can manage scientific information from ideating to developing a proof-of-concept, measure research performance at each step with the objective of addressing inefficiencies and leveraging relevant best practices. How do you see IT and data management developing within the arena of drug development? RAK. There is an explosion of biological and chemical data along with manufacturing and clinical data. The effective cross-linking of these data volumes is necessary for the generation of novel therapeutics. Existing data management systems link to specified databases and thereby are limited in their ability to cater to new drug discovery and development. For the entire drug development process to be productive beyond present limits, technology-supported data management needs to be an integral component of the drug development process. Scientific data management activities and responsibilities must be well defi ned and integrated with the pharma process defi nitions for a given drug development project. Achieving real-time communication, 24x7 information access and virtualisation of operational tasks like data retrieval across databases, will become the primary focus of the drug discovery industry in its endeavour to replenish the pipeline with new and innovative therapeutics.
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INNOVATION
Decision time With the need for new innovation nipping at the heels of pharmaceutical R&D leaders, PwC’s Mike Mentesana offers some advice on how to make the right decisions.
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e’ve heard it time and time again, shouted from the rooftops of pharmaceutical companies worldwide: the pipelines are drying up. It’s nothing new to those in the know, but for both the general public and the industry alike, it’s a potentially scary future to think about. Gone are the days of blockbuster drugs popping out into unsaturated markets with relative ease; what remains is a struggle to push the industry through the vacuum it currently fi nds itself in. However, in order for this to become achievable, a new dimension of innovation needs to prevail. Indeed, defi ning innovation is a deeply subjective topic – as is defi ning what specifically needs to be done to save the pipeline – with many people now referring to a potential solution as ‘open innovation’. Mike Mentesana, Global Pharmaceutical and Life Sciences R&D Leader for PricewaterhouseCoopers (PwC), understands better than most the implications of this term and what it could mean for the future of pharmaceuticals. “Th is is a very exciting time for our industry – we are in the throes of a major paradigm shift” begins Mentesana. “You could defi ne innovation in many ways, but ultimately it comes down to creation and management of information flows and increased collaboration. Open innovation deals with the access and transparency of knowledge, and how knowledge flows are used to increase targets and compounds. When combined with collaboration among industry players, this information exchange
Mike Mentesana
creates new opportunities for innovation. “The industry struggles with a lack of R&D productivity, and the root causes are the link between managing complex science with complex operations, in addition to the simple fact that the science is becoming a lot more difficult. Th is is not to suggest that we as an industry do not collaborate. But companies produce an enormous amount of data that we have not yet figured out how to digest and leverage to foster more innovation. “Let’s be clear: when I’m talking about increased information flows and collaboration, I mean increased
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sharing of information, more inflows and outflows of data, increased joint ventures, increased partnerships, increased discussions and open innovation forums. For instance, we support open innovations at PwC through a client conference that we host called The 180° Health Forum. It’s activities like these that will enable the open innovation flow across the health system. It’s already being done, but we need to increase the speed and rate at which it happens. “If you look back over the last 15 to 20 years, the industry has done an amazing job of bringing new medicines to market. The drugs that are on the market now have turned a tremendous amount of illnesses that were previously death sentences to treatable illnesses. We’ve done a very good job as an industry, but ironically that’s the source of the present dearth of innovation. It’s widely acknowledged that the low-hanging fruit of drug development has been plucked. There will still be blockbusters, but they’re going to be fewer and further between – that’s why there is so much focus on driving innovation.” As is the seeming norm in these situations, the problem is easily identifiable – it’s the solution that poses the challenge, both in the context of time and money. “It’s a two-pronged challenge: both scientific and operational,” continues Mentesana. “The scientific challenge has two key facets: one is the balance of where we spend our money, and the other is the collaborative piece we just discussed. The operational challenge comes into play in terms of how quickly we’re fi xing how we make the spending and collaboration decisions, and my sense is that there are things that biopharmaceutical companies can do to improve operational efficiency. It’s pretty well known that some companies have revisited their internal cost structures with the aim of carving out unnecessary costs. Organisations that crack the code in the cost/efficiency area are going to win in a marketplace where price controls are becoming increasingly dominant.” However, as Mentesana points out, at the end of the day the operational issues don’t mean anything if the science isn’t there. “On the whole, the industry needs to understand more around the pathophysiology of drugs; how they f low through the body and interconnect in the wider context of a whole system is pivotal to a better appreciation of a drug. I believe it’s an evolution of the industry and it’s an evolution of how we will start to develop drugs in the future. Another way to handle the deficit in addition to the spreading of money and understanding the pathophysiology better is changing the drug development paradigm. Our recent R&D paper, Pharma R&D 2020: The Virtual Man, details this proposal to the industry. I’m not suggesting that this is the only way forward, but it’s a proposal to think about different ways to work with the regulators and to
get to smaller patient populations because that’s where the innovation is going to come from. Companies will need to choose which areas they’re going to focus on, rather than trying to have a metaphorical fi nger in every pie.” Of course, Mentesana isn’t suggesting that these are the only hard and fast routes, but it forces companies to answer the question –‘which path will you take?’ Some of the larger pharmaceutical fi rms have already taken their first steps down their chosen paths and changed their business models accordingly. The paths they’re choosing are to become more nimble and collaborative while ensuring that their catalysts are not only fi nances and flexibility but also the state of the regulator, as you can evolve a business model as much as possible, but without the FDA on your side the regulation can’t do the same. However, this only pertains to the big pharmaceutical players – what about the smaller companies? Mentesana thinks they’ll be asking the same question. “I don’t think the roles will change too much,” he asserts, “but the way people operate will change slightly. There will be some winners and losers in this – and I don’t mean small versus large here. The guys that are out in front – the early adopters – are moving the ball forward and I think they will be the eventual winners. There will be some fast followers trying to learn from others’ mistakes, but the companies that sit back, regardless of size of organisation, and say that this is going to be done ‘to’ them without taking an active role in their future will either not be here in five years, or will be irrelevant. “Companies, large or small, that test new business models are going to play a significant role in shaping the industry’s future. Unfortunately, there will be winners and losers; that’s just the way things work. Our thought leadership papers discuss and push out a vision around what the world will be like for pharmaceutical companies in 2020. We know that we are living longer. We know that the healthcare systems will be making step-change evolution to both keep pace with and drive the changes in the world around them; these changes will be enabled in large measure by increased information flows and collaboration among all players in the healthcare system. My hope is that in five to 10 years we experience the benefits of these changes in a positive way for the patient.” Looking forward to the future is one thing, but if the pharmaceutical industry is to get to that point, Mentesana believes a significant change to accommodate non-traditional collaborations and methods needs to take place – and it needs to take place now. For those companies who decide to watch and emulate what others do it may be too late; for those willing to take the risks and capture innovation in its truest form, this may just be the start. ■
“If you look back over the last 15 to 20 years, the industry has done an amazing job of bringing new medicines to market. The drugs that are on the market now have turned a tremendous amount of illnesses that were previously death sentences to treatable illnesses”
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ASK THE EXPERT
Driving cost optimisation and productivity With costs and expenditure taking the current pharmaceutical limelight, Silvia Esteban offers up her expertise on how to optimise company costs and productivity.
I
n the current economic climate, pharma and biotech business leaders are looking closely at their value chain; the strategically relevant activities and assets that impact the quality and cost of R&D. Of the utmost importance to the profitability of a company are CAPEX and OPEX optimisation. We should not, however, be focusing only on reductions or cuts, but on working better, smarter and more efficiently. The idea is to ultimately make the business more viable in the long term by reducing costs through operational and organisational change. Cost structure must be examined throughout the business and cost discipline embedded within the company culture to see sustainable gains. Data visibility is a fundamental aspect of CAPEX and OPEX optimisation. Having the necessary data and business analytics facilitates the making of informed decisions, which, when combined with Lean processes and productivity, will generate an optimal level of both CAPEX and OPEX. If this is the case, then why is it that while detailed, accurate data are routinely used to assess therapeutic targets and manage smaller, more targeted pipelines, few companies use the same level of data to drive asset management and utilisation programmes? The fact is that, although some biotech and pharma companies have adopted measures such as asset tracking, spend and utilisation analysis, they have not maximised the benefit these tools can bring. We believe that the industry must shift towards data-driven asset management, offering analysis of workflow and waste, data analytics designed to measure service quality, and benchmarking data to ensure spend, service levels and other variants are best in practice.
A key factor in gaining control over spend is inventory. Purchasing decisions are typically made by assessing the state of the current inventory compared to the assets requested by the departments. However, the assessment of the current inventory is generally based on data that are, in our experience, at best only 45 percent accurate. To remain viable, an accurate inventory is an essential component of any effective asset management programme. As a first step in asset management optimisation, GE Healthcare’s Laboratory Asset Management Assessment (LAMA) programme can increase inventory accuracy to at least 95 percent. Improving inventory paves the way
“Improving inventory paves the way for powerful new capital planning tools and processes” for powerful new capital planning tools and processes, enabling the allocation of budget based on thorough analysis and powerful data. In addition, the programme can offer visibility of contract spend and opportunity for redeployment of unused assets. Throughout the LAMA programme, a dedicated onsite team from GE Healthcare engages with different functional areas within the organisation to appraise the current business practices and processes connected to laboratory asset management. Following analysis of all collected data, a final report is provided – delivering a comprehensive gap analysis comparing current versus optimised state, highlighting recommendations for improvements and the
benefits an optimised service solution would bring to the organisation. A large US biotech company had experienced rapid expansion, growing beyond its infrastructure. Over a three-year period, the number of employees and assets in R&D alone had doubled. Although the company had over 2000 assets located at one site, there were no centralised systems in place to track assets and service spend, and severely limited reporting capability. To fully assess the current state and provide recommendations for improvements, the company chose LAMA from GE Healthcare. In the three months following the LAMA report and recommendations, US$400,000 in hard savings were identified, as well as US$800,000 in soft savings (e.g. scientist productivity, reduced POs, equipment uptime). In addition, the exercise yielded the longer term benefits of a more accurate inventory, visibility of service spend, and industry benchmark data. With CAPEX and OPEX at top of mind, LAMA can deliver the data necessary to kickstart optimisation, and plays a pivotal role in transforming processes that will cut costs and drive productivity. Alignment to the right partner that has deep domain expertise in the industry and is flexible and creative in identifying solutions will deliver value and ensure that you stay ahead of the game.
Silvia Esteban is the Global Marketing Manager for GE Healthcare’s Scientific Asset Services business. Her expertise is in developing go-to-market offerings and solutions that can deliver customer value for R & D and laboratory equipment within life sciences. Esteban has also excelled in implementing global integrated strategic marketing plans to better communicate to customers the benefits these solutions bring to their organisations. Esteban has over 12 years’ experience delivering strategic marketing and communication programmes to the life sciences and pharmaceutical industries, and has worked for the top three life science instrumentation companies.
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ROUNDTABLE
Pushing drug development With pharmaceutical research increasingly under the industry microscope, NGP talks to two leading experts to find out what techniques are being employed to push the efficiency of drug development methodologies. In your view, what are the main challenges currently facing drug development in the pharmaceutical industry? Mark Richards. A look at the pipelines of big pharma reveals a significant number of small molecules and biologics in development for ‘solid tumours’. Currently, there is a paucity of methods to rationally link new targets to clinical settings where modulation can provide benefit. Without automated processes and standardisation, available methods can lack the reliability and reproducibility to make them suitable for drug development work. Additional challenges include identifying successful therapeutic candidates early and then subsequently selecting the patients most likely to benefit. Each of these could conceivably benefit from a well-designed and effectively implemented biomarker strategy from an early stage in clinical development. Guy-Charles Fanneau de le Hoire. For the industry as a whole, productivity is too low and the enterprise faces multiple challenges: the cocktail of low productivity, rising regulatory demands and growing pricing pressure challenges the industry’s economic model and threatens innovation and the supply of new drugs. One can already see the result, with some companies choosing to invest outside the research-based pharmaceutical business to manage risk and sustainability. For small companies, these pressures translate into a difficult fi nancing environment, independent of the impact of the broader context, so we need to be very disciplined in how we allocate the capital we have.
What tools and techniques can pharmaceutical and biotech companies use to maximise the efficiency of the drug development process? GH. Th is depends very much on one’s starting point. At Neovacs, our lead product is to a very well validated target, TNFα, with an established huge market. But the benefits of this novel technology mean that success with our approach will be a game-changer in TNF-mediated autoimmune disease. One approach to efficiency might translate into radical improvements in the approach to existing targets. Our second product is in lupus, an indication where clinical development has proven to be very difficult because of the heterogeneous and relapsing/remitting presentation of the disease. Here, we are planning to use a potential biomarker that might both be predictive of who might benefit from our drug and allow us to measure the activity of our drug early in the clinical trials process. Given the huge and growing costs of pivotal studies, as well as competition for patient recruitment, we need to find ways to make earlier studies as informative as possible.
“Currently, there is a paucity of methods to rationally link new targets to clinical settings where modulation can provide benefit” Mark Richards
MR. It seems clear that successful drug development programmes of the future will incorporate major efforts to identify and validate predictive biomarkers for response, toxicity and other signals. As such, prospective collection, stabilisation and storage of patient samples – for example blood or tissue – could greatly assist this biomarker discovery process. Furthermore, as clinical research becomes increasingly global in its scope, the requirement for standardisation of techniques across trial centres through the
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use of automation becomes more important, to reduce variation and increase the quality of data generated. In response to the current challenges within the industry, many companies are choosing to focus their drug development efforts on areas of high unmet medical need. What are the potential benefits and drawbacks to such an approach? MR. The advantages of targeting high, unmet medical need are clear: efficacious medicines that extend or improve quality of life are valued by patients and payers, and ultimately are able to command high prices. Many conditions are well-served by existing therapies and as such companies are faced with the law of diminishing returns – demonstrating improvements on standards of care becomes increasingly challenging. Focusing on areas of high unmet need is a way forward for many companies. Historically, successful drugs have addressed large homogeneous disease populations, and since the technology to efficiently select patients has been lacking, it has been either unfeasible or unprofitable to develop therapies for more ‘niche’ indications. The decrease in pharma R&D productivity over time has been well documented and the drug development industry has yet to fully reap the benefits of the so-called ‘genomics age’. However, there are signs that this may be changing, and as we gain a greater understanding of the molecular basis of disease etiology and progression, a growing number of therapies have been launched that require companion diagnostic tests. Th is trend is set to accelerate; cost-effective, widely available molecular testing will facilitate the development and approval of further targeted therapies.
“Demographics make it inevitable that cost pressures in the rich countries can only grow” Guy-Charles Fanneau de le Hoire GH. Areas of high unmet medical need are the natural target for the research-based biopharmaceutical industry. When we stray too far from it, it has undesirable regulatory and public perception consequences. Another benefit is that sufficiently high and unmet medical need may qualify a compound for regulatory preference mechanisms, leading to a faster route to market. At Neovacs, we are seeking to take advantage of these mechanisms by targeting our TNF product on patients poorly served by current TNF inhibitors; the level of unmet medical need in lupus also suggests that our interferon alpha product may be eligible for such consideration.
In terms of drawbacks, high unmet medical need typically translates into a major market opportunity and these areas are not secret, which means that there is always a very good reason why the medical need is unmet: Specifically, meeting it requires a novel approach, which carries with it risk. However, taking and managing such risks is what the research-based biopharmaceutical industry does and we should be suspicious of short-cut business models. How do you see pharmaceutical drug development changing over the next decade? GH. Given the pressures on the enterprise, it is inevitable that there will be major changes in drug development, and we already see the large companies making very different bets based on their analysis of likely changes. I’d like to highlight one very important change we predict: There is going to be much more focus on the affordability and cost effectiveness of therapies going forward and this will increasingly influence what gets developed. Even in the richest countries, politics aside, healthcare is rationed today, although the mechanisms vary from country to country. Demographics make it inevitable that cost pressures in the rich countries can only grow. By contrast, many of the large pharmaceutical companies are increasingly interested in emerging markets as a source of growth: today this is mainly about expanding markets for existing medicines, but tomorrow the pipeline will be increasingly driven by the needs of these patients and affordability will be high up that list. The development of the traditional vaccine industry may provide a useful template as to some of the changes we may see in the therapeutics industry. MR. I anticipate that progress in molecular testing will continue to permeate all stages of drug development, including the trend towards the development of companion diagnostics. Th is drives the necessity for coordinated biobanking efforts whereby patient samples are extensively and routinely collected at multiple time-points in order to monitor disease and tailor therapy accordingly. A number of techniques are already available to track this monitoring of disease: Real-time PCR and sequencing being two examples. We can expect the proliferation of analytical platform installed bases to continue in drug development organisations and within community-based pathology networks. In the short term, this would include systems for Pyrosequencing and real-time PCR, with more widespread and routine use of whole genome sequencing towards the end of the decade. As an innovation leader, QIAGEN is committed to advancing new technologies supporting personalised healthcare development. We will continue investing and working with pharmaceutical partners to make improvement in life possible.
Prior to Neovacs, Guy-Charles Fanneau de le Hoire worked for IDM. Previously, he spent eight years with Biogen, ultimately as a Vice President, leading International Regulatory, Medical and Marketing Operations. Before that, de la Hoire worked at ScheringPlough and Baxter. He started his career in the industry at Boehringer Ingelheim and holds a DVM from Lyon and an MBA from INSEAD.
After gaining a degree in Biochemistry from the University of Manchester, Mark Richards started his career in oncology at AstraZeneca, Alderley Park. Subsequently he has worked in sales and marketing within the biotechnology industry, and currently oversees marketing activities for the QIAGEN pharma business in Europe and North America.
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LEADERSHIP
On the edge of eradication NGP talks to Rino Rappuoli about the breakthrough vaccine that could consign four deadly types of meningococcal disease to history.
W
hile meningococcal disease appears relatively rare in Western countries, with a frequency of around one person per 100,000 population, the disease does disproportionately affect certain populations, such as infants under nine months of age. The disease is more deadly in developing areas: In the 2009 epidemic season, for example, 14 African countries implementing enhanced surveillance reported a total of 78,416 suspected cases, including 4053 deaths. Even in those countries where incidence of the disease is lower, it is still devastating, because it preys on the young and healthy and its effects are so swift. A typical case could involve a young healthy teenager playing football in the afternoon, who comes home at 6 p.m. with a bit of a headache. By 10 p.m., the headache gets worse; he goes to the hospital and is put in intensive care. His condition continues to deteriorate, and within 48 hours, he could be dead. Combine that with the fact that before the antibiotic era, the mortality of meningococcal disease was 80 percent, and the amount of fear inspired by the disease is understandable. Although treatment has improved enormously in the last 100 years, as Rino Rappuoli, Global Head of Research for Novartis Vaccines and Diagnostics, points out, five to 10 percent of people who get meningococcal disease in Western countries still die. “And between 20 and 25 percent of those who get the disease will have permanent sequelae,” he continues. “This means they will have to live for their entire lives with the consequences of the disease. It’s not uncommon for people to have arms or legs amputated; there are many cases where that has happened. The more modest cases of permanent sequelae will be hearing loss and learning difficulties. If you put the two things together, the number of people who either die or have permanent sequelae is pretty high.”
Global effects According to the World Health Organization, meningococcal meningitis is a bacterial form of meningitis,
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a serious infection of the meninges, the system of membranes that surrounds the central nervous system. It can cause severe brain damage and is fatal in 50 percent of cases if untreated. Several different bacteria can cause meningitis; of these, Neisseria meningitidis has the potential to cause large epidemics. Twelve serogroups of N. meningitidis have been identified, five of which (A, B, C, W135, and X) can cause epidemics. Geographic distribution and epidemic capabilities differ according to the serogroup. As Rappuoli explains, from a disease standpoint, there’s no difference between the groups. “From an epidemiological point of view, the reason they’re different is because these bacteria all have a capsule of polysaccharides. That means they are surrounded by a kind of gelatin made by sugar. The chemical composition of this sugar changes, and, therefore, depending on the chemical composition, they are recognised by different antibodies. “In different geographical areas, you can have several groups. Although, regardless of that geography, whatever picture you have is a snapshot of today. In the same geographical area, things change over time, so these bacteria have changed in different areas over different times. “Today, globally, meningococcal B is a major cause of disease in the developed world. But in Africa, the most potent is A, and A is not present in Europe and the US, it is only present in Africa, Asia and Russia. In Europe, it is mostly B, although there are others coming up, including Y and W.” “In the US, it’s more or less equal 30/30/30 for B C, and Y. But, for instance, 15 years ago in the US it was almost exclusively B and C. Y came out over the last 10 years. So you cannot say the US has only Y and B, because it changes.”
Prevention One of the obstacles to successful treatment of meningococcal meningitis is the speed at which it strikes. As Rappuoli says, “By the time you recognise it, it’s too late.” This being the case, the only way to win against the disease is to prevent it, which is why Rappuoli is so excited about Menveo, which was approved earlier this year by the FDA for administration in the US for people aged between 11 and 55, and was granted a marketing authorisation by the European Commission for all 27 member states in March for use in people 11 years of age and older. It is the first conjugate vaccine commercially available in Europe that helps protect against four major groups of meningococcal disease: A, C, W135 and Y. The vaccine has also been tested extensively on lower age groups, including infants starting from two months of age. Rappuoli calls the data “beautiful” and says the company plans to submit license applications for all ages
Epidemic in the southern hemisphere Rino Rappuoli was able to use his expertise to advise the New Zealand government, which had been suffering from a decade-long epidemic of serotype B meningitis during the 1990s. Unlike its counterparts in the UK and the US, the New Zealand epidemic was caused by a single bacterial strain. Despite the fact that this single strain could be overcome using currently available technology, the country was struggling to come up with a vaccine. In 2000, Rappuoli gave a talk in Sydney about the first result using the genome sequencing technology, which had just been published in Science. “In my presentation I said we would probably solve the problem of meningococcal B,” Rappuoli says. “Someone came to me and said, ‘I’m from New Zealand and I hope you’re right, because we have a big problem there.’ “And I said, ‘I hope you don’t have to wait for my new approach because you have an epidemic and children are dying every day, and my new vaccine is going to take 10 years. You have an epidemic caused only by one strain: you don’t need this sophisticated approach, you can use conventional technology.’” “He asked me if I thought the epidemic could be ended right then, and I said yes. I told him the reason they did not have a vaccine was not because it was not technically possible, but because it was a problem that existed only in New Zealand. “I told him that his government had to convince vaccine manufacturers to develop a vaccine only for New Zealand. We had some conversations and they came to spend a few days with me, and we made a plan. Six months later, the New Zealand government decided to develop the vaccine. By 2004, the vaccine had been developed and phase I and phase II had started. Then we could start vaccinating using the same approach that we had used in the UK. We vaccinated every single person from two months upwards, and by 2005, the epidemic had disappeared.”
down to two months. The launch of Menveo is even more of an achievement when you consider that researchers have been working on the development of vaccines for meningococcus for more than 20 years. The fi rst conjugate vaccine developed was in the 1990s for meningococcus C, which had a high incidence in the UK at the time. Rappuoli tells the story: “Between 1999 and 2000,
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public health in the UK licensed vaccines for meningococcus C from several companies, and together we vaccinated the entire country. From one month of age to 18 years of age, one year, an entire country. And the result was that in one year, the disease practically disappeared. Previously, every year in the UK they used to have 1500 cases per year, resulting in more or less 150 dead and 300 permanent sequelaes. Now that’s largely gone.” “In 10 years we prevented 15,000 cases and 1500 deaths. That’s why I’m so confident that Menveo will work, because one component has already done its job. Because of these very good results with meningococcus C, we decided to use the same technology to do Menveo, which works against four of the five types.” After the success of the meningococcus C vaccine, Rappuoli was determined to fi nd a vaccine that would cover the five main serogroups: A, B, C, W135 and Y. Menveo represents the culmination of 10 years of successful work on a conjugate vaccine for A, C, W135 and Y, using the same technology that was used to develop the C-only vaccine in the 1990s. But as Rappuoli explains, this technology could not be used for B. “The reason is pretty simple: B also has a gelatin that surrounds the bacteria, like the others. But unfortunately the chemical composition of this sugar is identical to a sugar that we have in our bodies. “Our immune system does not recognise this is a foreign piece of bacteria, but as our internal material, so it’s not able to provoke a response. Because of this, the Menveo technology could not be applied to B. And since this very successful technology could not be applied, many people tried in the 1990s to solve the problem of B, and it was one failure after another.” “I also tried in the mid-1990s, and I reached the conclusion that with the technologies we had at that time, making a vaccine for B was impossible. So I shut down the project in my lab because I felt it was useless to work on something where there was no hope because the technology was not there.” Rappuoli did not forget the idea, however, and was always looking for new technologies that might help solve the problem. In 1995, when Craig Venter of Celera Genomics published the sequence of the first bacterial genome, its potential for the development of a meningococcus B vaccine came to Rappuoli’s mind immediately. “That was a new power for technology, with information that nobody had seen before,” he recalls. “I jumped on the idea that maybe this could help us to solve the problem. I went to talk to Craig Venter, and asked him whether he would sequence the genome of meningococcus B, so we could use that information on the genome to try to come up with new solutions. “He agreed to sequence the genome, and in the first few months of collaboration I immediately felt that we
had a new revolutionary technology and we were going to fi nd a solution. Just to give you an idea of the situation we found ourselves in when we started, with the old technology, the people who had been working on meningococcus for a century had found maybe 10, certainly no more than 15 possible antigens for a vaccine. Now we could predict at least 600. It was very exciting because it was like we had discovered a new world that we never new existed. “And among the 600, eventually, we found antigens that could solve the meningococcus B problem. After a lot of work, we are at the end of phase III in infants in the European trial. Ten years later, we are positioned where we believe we have a vaccine.” Novartis plans to submit a fi le for its meningococcus B vaccine with EU regulatory authorities by the end of 2010.
“Treatment is always too late, so the only way to win with this disease is to prevent it”
Adjuvant needed In addition to his work on meningococcus, Rappuoli has also been carrying out extensive research in the influenza space. He explains that while the existing influenza vaccine is very good if given to healthy adults, in the elderly and those with weaker immune systems, it works less well. Rappuoli and his team began working on a new vaccine that would respond better in those whose immune systems were less robust. “We did a number of trials and fi nally in 1997, we licensed our fi rst adjuvant, and then in 2000, it was licensed all across Europe and then in 50 different countries worldwide,” Rappuoli says. “To give you an idea of the importance of this, in the previous century from 1900 to 2000, only one other adjuvant was licensed, in 1924. So our licensing a new adjuvant for human use was something that happened once in a century. We licensed it to improve the efficacy of the vaccine, which we did, and it worked. “Then in 1997, when the first H5N1 avian influenza strain came along, we were the first ones who were able to make a vaccine out of that strain. It was difficult to make, but we made it and tested it in people, in phase I. And we decided to test it with or without an adjuvant. “To our great surprise, we found that the H5N1 vaccine without the adjuvant did not work at all in humans. At that time, H5N1 had disappeared, and no one noticed. But then in 2004-2005, when H5N1 came back and started to travel worldwide, the vaccine was needed immediately. They made the conventional vaccine, and found it didn’t work. “Eventually, everybody agreed that for H5N1 you need an adjuvant. There’s no way you can get a good vaccine without it. Now everybody has developed emulsions that are very similar to ours.” ■ Rino Rappuoli is Global Head of Research for Novartis Vaccines and Diagnostics.
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INDUSTRY INSIGHT
Facilitating continuous improvement How quality by design eases method transfer to more efficient analytical instrumentation in the pharmaceutical laboratory. By Warren Potts
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mid increasing interest by pharmaceutical manufacturers and regulatory bodies in applying quality by design (QbD) principles to processes and product, organisations are beginning to recognise that QbD can be a catalyst to facilitate continuous improvement, not only of manufacturing processes and product quality, but also productivity. One area where this multi-faceted opportunity presents itself is in the area of laboratory analyses by liquid chromatography (LC), the gold standard in pharmaceutical analysis. Th is technique has recently undergone vast technological improvements that positively impact many areas, from development to manufacturing. The International Conference on Harmonization (ICH) recognises analytical procedures as key to demonstrating a deep scientific understanding of these products and processes. Adopting a QbD approach may create an impetus to transfer higher quality LC methods to reduce compliance risks, and increase regulatory flexibility for greater productivity and fi nancial benefits. Method transfer can be difficult due to the analysts’ experience levels in the transferring as well as the receiving laboratories, the LC instrumentation that the method is being transferred to, and the depth of knowledge about the method and the variables that can impact performance. The risk of failure on transfer is real and the result, having to re-work and revalidate the method, can be very expensive – especially if it delays a drug getting to market. How can companies attenuate the difficulties of method transfer? A lack of robustness
(ensuring that a method remains reliable under normal conditions of use) is often the cause of transfer failures. By adopting a QbD approach during method development, companies can reduce the risk of method transfer issues later in the development process by building robustness into the development approach. Th is approach is in alignment with ICH 2Q8 Validation of Analytical Procedures: Methodology, which states: “…the evaluation of robustness should be considered during the development phase…” By evaluating robustness up front, quality is built into the method rather than tested for at the end during validation.
Potential impact There are two key areas of potential impact for the company that adopts a QbD-based approach to method development. The fi rst relates to flexibility: The ICH Q8 guideline on Pharmaceutical Development states: “…the demonstration of greater understanding of pharmaceutical and manufacturing sciences can create the basis for flexible regulatory approaches”. The second is the direct impact of reducing method transfer failures. By following a QbD approach, method robustness is considered during development and an in-depth knowledge of the method is gained − allowing the key risk factors to be known and subsequently controlled. As the industry focuses on shortening time to market and reducing operating costs, technologies that facilitate LC method transfer and QbD must do so seamlessly and efficiently. Waters has addressed this need by developing the ACQUITY UPLC® H-Class System for method development. Adopting a
“A lack of robustness is often the cause of transfer failures” QbD workflow and building robustness into methods during development is facilitated by Fusion Method Development™ Soft ware, which automates experimentation according to QbD principles. These products combine for an integrated and efficient QbD LC method development solution that dramatically reduces the amount of time required to develop a robust method the first time, while also reducing the likelihood of issues upon method transfer. This convergence of technologies allows companies to easily put QbD principles and benefits into practice for greater efficiency, quality, and flexibility. For more information, visit www.waters.com/methods.
Warren Potts received his MS at the University of Medicine and Dentistry of New Jersey in 1998. Today, he is the Director of Pharmaceutical Business Operations at Waters Corporation, where he and his team focus on identifying and commercialising new approaches and technologies to help pharmaceutical companies increase the productivity of their business with respect to laboratory practices.
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INDUSTRY INSIGHT
The impact of the growth of biopharmaceuticals on preclinical CROs By Scott Boley
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he only thing certain is change. Th is axiom holds true for many aspects of today’s world but it is a central tenet for drug development. Fifteen years ago, small molecules (chemically synthesised molecules designed to interact with a specific cellular receptor) represented the majority of pharmaceuticals under development. During the past 10 years, however, the number of therapies being developed that fall into the category of biopharmaceuticals has exploded, with predictions that the majority of therapies developed in the next 10 years will fall into this class. For the purposes of this article, the term biopharmaceutical is used interchangeably with the terms biotechnology-derived pharmaceutical, large molecule, biologic or biotherapeutic. In the most general sense, the term biopharmaceutical can be used to refer to anything that was produced by a living cell (bacterial, yeast, mammalian, insect or plant) and may include antibodies, peptides, intact proteins, oligonucleotides, vaccines and stem cells. The nonclinical safety programme used to support the development of a biopharmaceutical can differ significantly from that used to support the development of traditional small molecules. Some of the key considerations include the following: Study design With small molecules, general toxicology studies and reproductive toxicology studies would typically be conducted in rodent and non-rodent species based on in vitro metabolism profi les. For biopharmaceuticals, regulatory bodies allow the animal studies to be conducted in a single species if the biophar-
maceutical is pharmacologically active in only a single species. Safety pharmacology studies In the case of small molecules, a standard battery of separate safety pharmacology studies is conducted, where the potential for the test article to affect the major physiological systems is examined. For biopharmaceuticals these studies may not be conducted as stand-alone studies; rather safety pharmacology endpoints may be included in the design of the general toxicology studies. If the biopharmaceutical has known effects on a physiological system, stand-alone safety pharmacology studies will likely still be needed. Reproductive toxicology studies For small molecules, reproductive toxicity testing is conducted in two species. If the pharmacological activity of the biopharmaceutical is limited to one species, typically non-human primates (NHP), reproductive toxicology studies can be conducted solely in NHP with the rationale being that if there is no pharmacological activity of the test article in a particular species, conducting reproductive toxicology studies in that species would not provide meaningful data. Dosing solutions The preparation of dosing solutions used for non-clinical safety studies with biopharmaceuticals also differs from those used for small molecules. For example, biopharmaceuticals are more prone to ‘adhesion’ than are small molecules and may, therefore, require specific materials during their formulation (for example glass instead of plastic). In addition, vigorous homogenisation procedures
used during the preparation of small molecules are not used in the preparation of biopharmaceuticals because of the propensity to create bubbles that can denature a protein. Delivery methods The delivery of biopharmaceuticals presents its own challenges. Biopharmaceuticals cannot be administered orally, because they would be broken down in the acidic environment of the stomach before they had an opportunity to become systemically available. Therefore, the common routes of administration are parenteral (subcutaneous, intravenous, intraperitoneal, intramuscular). These are just a few of the important considerations impacting the non-clinical research industry, which, instead of being driven by small molecules as it has been over the past decade, will now have its growth largely fueled by biopharmaceuticals. It is critical that the CRO selected by pharma and biotech companies has the experience, expertise and equipment necessary to meet their nonclinical safety evaluation needs with this emerging class of compounds.
Scott E. Boley, PhD, DABT, is Senior Director of General Toxicology and Infusion Toxicology at MPI Research. He received his PhD in biochemistry and environmental toxicology from Michigan State University and did postdoctoral work at CIIT Centers for Health Research. Contact Dr. Boley at Scott.Boley@ mpiresearch.com or +1-269-668-3336, extension 1887.
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NEXT BIG THING
Overcoming early clinical development hurdles Clinical trials are part of a staple diet for pharmaceutical companies. They provide priceless information that pushes the right drugs and inhibits the haemorrhaging of money to drugs that would fail at market. Michael Butler tells NGP how to overcome clinical trial problems and get the right drugs to market.
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nprecedented thinking is emerging in early clinical drug development – driven by the need to understand compound-specific challenges in humans before committing to large sums for full clinical development. Critical early human data that cannot be obtained solely by traditionally methods can now be generated using 14C tracers coupled with exquisitely sensitive accelerator mass spectrometry (AMS) analysis. Large pharmaceutical companies and smaller innovators are employing this unique application in different ways. “We hope to obtain an early read of human drug metabolites instead of relying on animal models. Th is will allow us to make knowledgebased, strategic decisions that foster our cost-effective and prudent drug-development decisions,” says Jerry Brisson, Associate Director of Clinical Pharmacology at Otsuka Pharmaceutical Development & Commercialisation, Inc.
The need to reduce late stage failure Reducing the rate and high cost of drug compound failure in phase II clinical trials is a high priority for Xceleron’s clients. Paradoxically, high phase II attrition has developed because of advances in scientific innovation. For example, automated combinatorial techniques can produce more promising and closely related analogs than can be accurately discriminated by existing preclinical methods used to predict human pharmacokinetics (PK). Additionally, new post-genomic targets have required novel chemistries that interact with the new target space. Drug candidates with unprecedented chemistry are now estimated to
comprise 60 to 70 percent of candidates entering first human trials. These compounds have a high rate of failure because they lack predictive models and human PK data. As a result, there is great interest in rapidly promoting high-value candidates and identifying failures before entering phase II.
Early clinical discrimination Recently, the area of greatest client interest in Xceleron’s approaches has been an enrichment of phase I clinical studies. Adopting the 14C/AMS approach provides invaluable human metabolism and PK insight to a candidate drug with minimal additional expense and effort. Understanding human PK early helps to identify selection criteria and allows informed decisions about candidate choice,
reduces the uncertainty associated with PK prediction and can guide the development of follow-up candidates where improved PK compared to the primary candidate is important. On the regulatory front, gaining early quantitative metabolite information allows the team to address potential metabolite safety issues, as emphasised by MIST and ICH M3 guidance, before embarking on long-term safety studies. Finally, rather than following a wholly predefi ned development strategy, our customers are increasingly opting for fit-for-purpose programmes that address the particular needs and problems of each molecule in question.
Innovative phase I clinical development The increase in interest we have recently
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witnessed in phase I is driven by multinational pharmaceutical innovators who want to gain an early insight into human bioavailability, clearance, distribution and systemic metabolism, especially to identify potential BCS class II liabilities. In one approach, development teams administer a very small dose of 14C-labelled experimental compound intravenously concomitantly with an oral, pharmacological dose. The specificity and exquisite sensitivity afforded by the 14C tracer/AMS combination results in the acquisition of critical data very early in human development and at pharmacologically relevant doses. Th is data is used by clinical pharmacology and CMC groups to inform subsequent development decisions that can influence the overall cost/candidate, time-to-market and even PIII probability of success. AstraZeneca has used this approach as a ‘bolt on’ to existing phase I programmes (e.g. as part of a food interaction study) to make go/no go decisions – as recently described in a presentation made at the 2010 Exploratory Clinical Development conference in London. We’re also seeing increased interest in addressing human metabolite safety much earlier in the development process and specifically in phase I. Initially driven by the Metabolites In Safety Testing (MIST) FDA guidelines, such investigations yield advantageous intelligence when conducted cost-effectively. By obtaining human metabolite profi ling at this early stage, development groups can make sense of their preclinical species results and make sound decisions about potential toxicity liabilities. The data also help to focus metabolite identification work, saving time and cost. Large pharmaceutical companies have traditionally addressed these issues in phase III, due in part to the cost and time associated with manufacturing the 14C-drug and the associated dosimetry testing to gain radiation approvals. Now, however, the lower radiation levels in the 14C-micro-tracer/AMS study approach overcome these constraints and enable valuable investigations in phase I. With only incremental cost to a SAD/MAD study, a 14Cmicro-tracer can be added to the pharmacological dose and the pooled plasma and excretory samples analysed by AMS. In the majority of cases, major metabolites in most sample types
can be quantified up to several days post dose, although the limits of detection depend on the molecule under study. The phase I study designs and the technical reasons for their adoption are becoming increasingly well understood. Such progress is possible because micro-tracer enriched studies provide important early asset-specific information in humans whilst adding only 10-20 percent to the cost of the committed programme. Application of 14C Microtracer Approaches in Early Clinical Drug Development: Presentation at ECD 2010 London, Dr Andy Gray, AstraZeneca FDA MIST Guidance : February 2008
“The point is that phase 0 studies provide very valuable and costeffective insight when used appropriately”
Putting the best candidate forward: phase zero development Phase 0 clinical studies have become synonymous with so-called microdose studies, which in turn have been the subject of sometimes heated debates about the correlation between microdose PK and pharmacological dose PK. Th is is a shame because preconceived ideas can close minds to the potential of very early access to human data in pharmaceutical development. “Our innovative approach with the use of human microdosing has allowed us to fasttrack these compounds to a stage where we expect to select the best candidate to continue classical phase I studies,” says Alice Huxley, CEO of Speedel. Let’s review a few examples in the public domain. Idenix conducted a microdose investigation of two non-nucleoside reverse transcriptase inhibitor (NNRTI) leads being developed for the treatment of HIV-1. The data showed for the fi rst time that both exhibited favourable human PK, including high mean absolute
bioavailability and long half-life. IDX899 was considered the stronger candidate and subsequently in-licensed by GSK. Corcept investigated its GR-II antagonist in a phase 0 study and determined that it was well absorbed, demonstrated good bioavailability and possessed a half-life consistent with once-daily oral administration. The phase 0 study also guided phase I dosing and it has been estimated that savings of US$400,000 and six to eight weeks were realised as a result. Speedel used phase 0 investigations to ‘screen in’ the most promising renin inhibitors for the treatment of hypertension. Speedel used this early human data to select the best of three candidates and eventually sold their enhanced portfolio back to Novartis. These are just three examples in the public domain; we have many more that are proprietary. The point is that phase 0 studies provide very valuable and costeffective insight when used appropriately.
Drivers of change in early clinical development Xceleron’s experience suggests that larger, multinational innovators are driving interest in enhanced phase I investigations enabled by 14C/AMS technology. Smaller innovators continue to drive most of the interest that we see in phase 0 and much of that information enables out-licensing attention. We are actively engaged in discussions of novel clinical designs that could be characterised as screening or one-off investigations. However, two themes prevail throughout all discussions. Irrespective of client or study type, the 14C/AMS approach is best applied early in asset development and must be done so cost-effectively. Michael Butler is CEO of Xceleron. He has 20 years of experience in science-driven businesses in Europe, the US and Asia. Butler has been President, Scientific Operations and Chief Scientific Officer with Aptuit, Group Vice President at MDS-PS and Group Director, Business Development for Huntingdon Life Sciences.
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THE BIG INTERVIEW
SINGLED
out
NGP caught up with Johnson & Johnson’s Paul Stoffels at the recent Pharma Summit in London, UK, to get his insight into the move towards more open innovation, the need for greater differentiation between new clinical entities, and his personal experience fighting HIV in Africa. 84 www.ngpharma.eu.com
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ne of the most striking things that comes through when you meet Dr Paul Stoffels is passion – for his work, for the future of healthcare, even for the wellbeing of his close friends. In his speech to a packed conference room at the recent Pharma Summit in London, he held the audience rapt with his description of the effects of advances in HIV treatment on his friend Jens. His focus on the need for new strategies to cope with the pharmaceutical marketplace of the future is also worthy of note. When asked to expand on this point, he specifies two strategies that J&J is committed to: working on real medical needs, and differentiation. “It’s a combination of transformational research and making the fields we are in better. For example, we have a lot of know–how today on HIV, but I know that we can make a better drug still. So there we have an evolution. “On the other hand, we did a discovery on a completely new target for TB, and that was the start of a new area that we now are looking at, to determine if we can use that target for antibiotic research. It’s an ATP synthase and we should be able to also fi nd an ATP-synthase inhibitor, so it’s transformational, it’s not incremental. It’s like using similar targets to fi nd better drugs. “We went from HIV to hepatitis C, because we knew that we had mastered that chemistry very well. A lot of our strategy is building on what you know, taking significant risks in new areas, but always on medical needs.”
“That is where we are far behind, on figuring out how we can do better collaboration amongst ourselves and not inventing the same thing twice”
On access to treatment
Lagging behind As pipelines dry up and the so-called innovation deficit increases, the need for greater collaboration with both traditional and new partners has become ever more obvious – yet the pharmaceutical industry seems to lag behind other sectors in this regard. Stoffels points out that while the industry has always collaborated well with academia, big pharma companies have traditionally shied away from collaborating with each other. “That is where we are far behind, on figuring out how we can do better collaboration amongst ourselves and not inventing the same thing twice,” he underlines. It’s not in our genes in the pharma industry. We have grown up as very individual companies, and with big houses you think you know everything yourself.” Stoffels’ early experiences on HIV in Africa, which have proved fairly seminal in terms of his later work, began by chance. As a student training in Africa, he found his ability to perform surgery restricted by the rise of HIV. He became fascinated by this new disease, and began looking into it as a research area.
Could you give an example of healthcare technology that might be deliverable at a cheaper price point in developing countries? PS. If you look at HIV drugs in the West, for general therapy, you easily reach US$8000-US$10,000 per year, while a lot of patients in Africa get access at around US$100-US$200 a year. But, in that field, there is a general acceptance that, because of the healthcare problem, we are not going to look at the prices as for other drugs, where governments from the West would come back and say, “You give this for US$100 in Africa, and therefore we also want it in France for US$100.” There’s the respect for the fact that industry put it into that use at a low price. The European Commission has special rules around that where you cannot re-import drugs that are delivered at a lower cost for HIV in Africa. It’s a crime. www.ngpharma.eu.com 85
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During that time, he met the influential Dr Paul Janssen, one of the most productive pharmaceutical researchers of the 20th century – he and his team were responsible for the discovery of more than 80 drugs, including 25 antipsychotic medicines. “I met Dr Janssen,” Stoffels says, “and he wanted to make it a vision in life, a passion in life to make a difference there, and that’s how things evolved. I had never planned to be in the pharmaceutical industry.”
True dedication Th is lack of a planned career trajectory applies to many of those who start off in medicine and end up in pharma. They don’t go into it for the money; they follow their passion, and a true desire to do something worthwhile for humanity. Where then, does the often negative public perception of the industry come from? Stoffels puts it down to a combination of factors. “We have had an exaggerated commercial model for a long time, and that with the profits that are published and some of the challenges we’ve had, like Merck and Vioxx – things like that are spread widely in the press, and put us in a very negative light. I regret that, because if you come into our organisation with our scientists, with the physicians we have, they are all committed to making a difference. If you’re in this industry it is such a challenge to work and to commit yourself for so long to a project that you have to do it because you love it, to make a difference in the world. “Why does the industry have such a bad name? Often, you have a bad name for a football team, because you have a few bad players, and you don’t control them all. At J&J, we have a very good name. We are a company that is very highly respected; we have a very high ethical standard everywhere. I’m very, very proud of what we do, whatever people think. I brought several new drugs to patients which, today, are keeping thousands of people alive, which is not a small thing. “Of course, we have to make an income because we have to pay for it. We use money from the capital market, so we have to give a return on the investment. But the economics of our business are very challenging. If you look at most of the big pharmaceutical companies, their stock value is not growing much. And we pay a dividend of two percent a year. “If you put your money in the bank, it’s safer today than putting it out in industry. That’s where people say, ‘Th ink of the shareholders.’ The shareholders are all of us; our pension funds are the investors in J&J, and they want a return on investment. They push us to be profitable in that model. We invest a lot in R&D, and we get a very decent return on that, but that decent return is two percent or three percent a year for the shareholder, which is not huge. I think there are a lot of wrong perceptions about what is happening in this industry.”
On global pricing What challenges has today’s instant access to information posed for the worldwide availability of drugs? PS. The global pricing of products has held back a lot of availability, and there is no simple solution to that. If a drug is priced more cheaply in Asia than it is in the US or Europe, it’s known worldwide very quickly through the internet, and people will start fighting to get the low price. And the whole model crashes. I don’t have a solution, but there should be much more thought put into how innovations can become available to patients worldwide, while still being able to pay back the huge development cost.
Paul Stoffels is Global Head of Research and Development for Johnson & Johnson Pharmaceuticals Group.
First person Paul Stoffels’ views on the state of the industry.
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worked for several years in Africa as a physician researcher in the area of HIV, where I met Dr Paul Janssen, who was one of the greatest innovators in our industry, and learned that a long-term vision is the most critical in getting to innovation. It’s not about the next crisis in the economic or financial environment. It’s all about your long-term view, because innovations in our field do not come about in the next two years, they happen over the next 20 years. If you want to make a difference in healthcare with innovation, it’s long term. I’m convinced, as a physician, that running a large pharmaceutical R&D organisation is not that different than being a doctor in a clinic. I consider myself as a partner in healthcare. It’s all about the patient; if we do good work the economics will follow. The focus is relentless on how to make patients better. You can’t get through times like these and the ones to come if you don’t have a vision on how to make healthcare better. The other thing I’ve learned relates to technology. When I was in Africa 20 years ago, in the 1980s, in the whole of Kinshasa there were probably 20 phone lines. Today every second person has a telephone. How is that possible? It’s possible because significant advances in technology have made it so simple that it can be applied to everybody. I’m a believer that we should continue in healthcare research to be so advanced that, ultimately, we get to solutions that are simple and applicable to everybody. Being on the leading edge of technology, combined with a passion for patients and making sure we see our-
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On cost How can we make it cheaper to make drugs? PS. That’s a technology story. If you can inject an antibody once every second day, or once every three months, if you make it more potent, with better PK and better tolerability, and it works over a long time period, it becomes much cheaper. I’m a believer that very good technology and very good delivery will give us much cheaper healthcare.
selves as a partner in healthcare, and not just as a business: those are the fundamentals to being successful in this industry in the future. As an industry, we have made a significant contribution to healthcare over the last 100 years. Look at the gain in life expectancy, a very significant part comes from the industry offering better tools for physicians to cure and to care for patients. If you look at penicillin and what happened with small pox, and even with HIV over the last 20 years, where it went from being a disease with a two-year life expectancy to today having a 20- to 30-year life expectancy. There’s only one group of organisations responsible for it: it’s the pharmaceutical industry that discovered the new drugs that made the virus disappear from the body, and allowed patients to survive. Now that all the simple diseases have been solved, the challenge of the diseases we have to solve today is dramatic. If you look at where the vision for tomorrow is, we should be able to delay the onset of Alzheimer’s disease by three to five years, and eventually prevent it. Hepatitis C should be cured – we are not that far from it. Schizophrenia should be totally controlled, with no relapses. Prostate and breast cancer should be cured. Th is is the vision for the next 20-30 years. In the 1970s and 1980s, a number of reasonably good targets were discovered, and the majority of major pharmaceutical products came out for these few targets with first, second and third in class. Most of that is exhausted now, so we need transformational science in order to get to the new therapies for the future. There are tremendous medical needs to be solved. Me-too’s are over; high medical need and differentiation are key. Products also need to be more effective and safe today, with the requirements from the regulatory agencies and from society. Everyone wants to have a perfect drug that is safe and effective, with no risk for society or the patient.
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On innovation Is there any argument for greater government involvement in funding drug development? PS. I think the better way to think about it is that we need more respect and understanding on the environment we need in which to innovate. We are partners in healthcare. If we, as an industry, disappeared, innovation in healthcare would struggle. Today, the ultimate driver for all innovation happening in healthcare is the product in the market. Whether you are in academia, biotech or pharma, academia does research, it goes into biotech, it goes into pharma, and gets into the market, and that’s where the value is created. The decreasing value of what is paid for drugs has an impact on the entire innovation chain. One of the biggest fears I have is that, if this continues, innovation will suffer very significantly.
The cost of that is huge, so it’s a big challenge to develop the perfect drug, to solve high medical need with Developing a differentiation. That’s why only a few drugs are approved new drug might every year. take 10 years I believe very strongly that the solution for the future is going to be an integrated solution. Developing a new drug might take 10 years of diagnostics, and you might get approved in three years. How do you bring that together as transformation over the years? It will be through partnerships, collaborations and significant new The return on ways of working in the pharmaceutical industry. R&D is only Let me get very personal. Jens, a good friend of mine, 2-3% for the got HIV in 1986 when we worked together in Africa. He shareholder had a life expectancy of two years. He had been on all the drugs you can imagine, and five years ago he was terminally ill, with a three-month life expectancy. We were able, with the new technologies, to figure out what drugs he was sensitive to and what drugs he was resistant to, People with what we should do on his PK, and how we should bring HIV now have several drugs together in a new way. a 20-30 year What we did over the last few years, as a company, life expectancy is measure the viruses of 350,000 patients across the world. We genotyped on the left and in the vertical axis; there were 400 patients on this slide. Only on the horizontal axis did we see the mutations of all these patients in their protease gene; massive diverse mutations. It took us five to 10 years to get a really good feel on it, but we were able to figure out which patients should get what drug. We went to phenotyping; from genotyping we took out certain pieces and learned. Then we went to the clinic, took 25,000 patient records and combined the phenotyping with the genotyping in the patient records. And we could perfectly predict which patient was going to respond to which drugs. As a proof of concept, taking information, genotype and phenotype, pulling that all together and figuring out which patient responds. Jens has now been alive five years, his disease is undetectable and his life expectancy is at least 10 years – it’s probably 20 years
today. He’s never felt so good; he’s back at work. And all because we were able to depict what his future was going to be based on that information. Today there are about 100,000 patients on this therapy. That’s a football stadium full of people who have survived because we are able to bring new drugs in a better way to patients, now. Th is took us 20 years from the first step in HIV to where we are today. What is the next step? We could go from one pill once a day to one injection once a month. And we’ll eventually, hopefully, keep HIV under control with 12 injections a year. What we need to do now in our business is identify the medical need we want to solve and figure out what science we need for that. For certain diseases, it’s genetic material. For others, like neurology, it’s imaging. Bring that together, medical need matching with the best science, and you get differentiated medicines. The real challenge in our business is creating the vision for the future. If you do market research today it doesn’t tell you anything on where you have to target your product in 10-15 years. The challenge is that, over time, market expectations go up, because certain drugs become generic, competition comes in, safety and regulatory requirements go up. You need to continuously think about what should be the level of innovation you need to tackle when you start your research. When you have a great idea, over time you always lose some of the features. If you don’t start high enough, over a 10-year timeframe you hit a wall. A lot of that is happening at this moment in this industry, where market expectations have gone up significantly, and productassociated research was initiated 10 years ago so that now we can’t change it. The market expectations are already higher than the drug you’ve got. Add to that the lack of capital for biotechs today and the lack of funding for academic research, and getting to transformation and innovation will be very, very challenging. I’m a big believer that much more cooperation should happen in large pharma. Other industries have been doing that for a long time already, where they get together in a pre-competitive consortium to figure out significant problems. Validation of biomarkers to accelerate the R&D in new products for Alzheimer’s, for cancer; typically, those things should be in collaborations together, and that’s happening at this moment, but it’s going far too slowly. We should have collaborations where we bring our forces together to accelerate the platforms we work on. Today, more than half of our products come from external collaborations and innovations, and it’s a matter of creating a swell of research, development and scientific capabilities, whether it’s diagnostics, safety or clinical
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“We should continue in healthcare research to be so advanced that, ultimately, we get to solutions that are simple and applicable to everybody”
operations. It’s all about partnership, and learning to work together in a different world. Sharing the value with other players is also a new world for a lot of pharmaceutical companies, and it’s a real challenge if you have to develop an imaging, a diagnostic and a drug in one indication, together with three partners, where the drug is reimbursed in a different way and by a different authority than the diagnostic, the information and the imaging. How do you get to one integrated solution? We’re working hard in our company on Alzheimer’s. It will be three different approaches: a combination of small molecules, large molecules and antibodies, and hopefully, eventually, into vaccines. We are hopeful that we will be able to diagnose Alzheimer’s early and provide a vaccine that will delay onset for several years. Th is will go together with significant information and imaging to follow up patients and to see what risk factors they have. In the future, I doubt that a lot of individual drugs will still get to the market without some kind of diagnostic. We need to learn to work in industry to make sure that a value point for the US and Europe is totally different for any other area, but the needs of the patients are the same. It’s the same as with the mobile phone; how it is possible that we all pay a few hundred pounds for a mobile phone with nice tricks, whereas in somewhere like Tanzania, the majority of people also have one? It’s the same technology at a different price point. We need to continue to be agile and drive an entrepreneurial spirit in the innovation world. And then there’s globalisation: the cost of development and the cost of what we do in R&D is so huge that you cannot afford to bring in a new drug if you can’t bring it in globally.
For me, the mission, the vision, the passion is: Stay with focus on the patient. Economies go up and down. I have seen the biotech crisis. I have seen a lot of fi nancial crises. One thing always stays on track: the medical need in patients doesn’t go away. If we solve a significant need, the business will follow. Excerpted from a speech given at the Economist’s Pharma Summit, February 24, 2010, Renaissance Chancery Court, London, UK.
On value to society How do you put a value on the benefit of a drug to society? PS. It’s a difficult balance, because very few people appreciate what the risks and the challenges are in developing a drug. People should try to understand how our world is organised. In the end, we are owned as a public company by society, which puts pressure on a company like us to be profitable. We use a lot of capital to develop new drugs. We have to have good return on investment, plus we have to have a good benefit to society. People need to understand the mechanism and appreciate it, because otherwise it will disappear.
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EXECUTIVE INTERVIEW
Patients and partnerships Mike Ackermann, Vice President of Global Commercial Strategy and Alliance at Quintiles, illuminates the significant barriers to successful biopharmaceutical commercialisation.
Michael Ackermann, PhD, serves as the Senior Vice President of Global Commercial Strategy and Alliance, Global Commercial Solutions at Quintiles. Prior to joining Quintiles, Ackermann founded and acted as President of Laurus, LLC, a business accelerator for start-up life science companies. Ackermann also spent 18 years at Eli Lilly, where he held numerous executive positions as a business unit leader as well as executive sales leadership positions and as positions in corporate strategic pricing and market research.
The biopharmaceutical industry increasingly finds itself facing a host of challenges – from declining productivity, increasing costs, a dwindling pipeline, lower earnings and an enormous patent cliff. What must the industry focus its efforts on to develop drugs successfully? Mike Ackermann. Most importantly, the industry must fully realise that the blockbuster model is gone. The days of launching a product en masse, with significant resources allocated to detailing primary care physicians, are over. Biopharmaceutical companies can no longer look to one product to carry the organisation and fund future R&D. Th is mindset has to change. The environment of the New Health now demands manufacturers to demonstrate clear value to multiple stakeholders compared to therapies that are already available for a specific patient population. And by value, I mean more than just cost. Value needs to be re-
defi ned to include real-world patient outcomes and an accurate benefit/risk profi le, among other things. Payers – both private insurers in the US and national health systems in Europe and elsewhere – are demanding more evidence of a product’s overall contribution to healthcare. Safety and efficacy benchmarks still apply, of course, but simply obtaining regulatory approval isn’t enough to ensure that a new product will be reimbursed. The most critical notion that biopharmaceutical companies must understand is that they need to develop medicines that are a demonstrable improvement from existing therapies and will therefore be paid for. Is the pharmaceutical industry currently structured in a manner to accommodate this overall shift? MA. The silo structure of most large biopharmaceutical companies is not at all conducive to a convergent approach to drug develop-
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ment. By and large, drug development is still compartmentalised into clinical development and commercial preparation; with each function basing success on different measures. In today’s environment, the knowledge and expertise of how a drug might be used in the real world, by whom and at what cost, needs to be understood and incorporated early into the clinical development plan. The end goal is to identify and to unlock the latent value of the product in the early phases of development, so when it actually launches, you have much better insights into how it will perform from both a clinical and outcomes perspective. The industry as a whole might certainly recognise this need – and our research indicates that 77 percent of biopharmaceutical executives say the convergence of clinical development and commercial operations will affect the success of their fi rm positively – but most companies are not yet structured to develop products in this manner. In addition to pressure from payers, will an increasing level of patient empowerment play a role in how, and which, drugs are developed? MA. Patients are now being asked to directly carry a larger share of their overall healthcare costs, so they’re naturally demanding a greater voice in their treatment. Commercialising a new product is no longer about detailing physicians; biopharma companies must gain a much better understanding of the decision process of patients and develop a new model for commercialisation that recognises a patient as a key stakeholder. Once this is recognised, the challenge is then to apply a patient-centric model to deliver the necessary information that demonstrates a product’s value and to help patients ‘experience’ that value in a realworld setting. Could this same type of information be used to demonstrate a product’s value to payers? MA. It might consist of a different set of data with different analytics applied, but the concept of stressing patient outcomes still applies. For example, commercialising a product in Europe is first and foremost about working with national and regional paying bodies to ensure that the drug will be covered. In the US,
biopharma must work with the large private insurers in a similar capacity. On a global level, many emerging markets are maturing and offer enormous potential for revenue growth, so understanding the market access complexities of each region is vital. The bottom line is that payers everywhere are simply demanding more evidence of a product’s differentiation, and most biopharmaceutical companies are not equipped internally to properly address market access. As such, partnering with an ally with knowledge and experience of the potential market, as well as the therapeutic area, could be tremendously valuable to help identify, promote and prove the product’s worth.
"Any commercialisation partnership must be tailored to the needs of the specific brand, the specific market and the specific partner" What are some of the key elements to a successful commercialisation partnership? MA. Biopharma companies must choose a partner that has both a track record of developing comprehensive commercial solutions for numerous product launches and an understanding of the complexities involved in successfully entering a market. That partner should also possess core capabilities to support the commercial model, including market intelligence, analytics, regulatory strategy and pharmacovigilance, as well as patient-centered solutions and observational studies. As for structure, any commercialisation partnership must be tailored to the needs of the specific brand, the specific market and the specific partner in order to unlock the value of the product. All of these functions then need to work in concert to support an overall brand solution that can identify, define and communicate value in a way that resonates with stakeholders. However, before entering into any strategic alliance, both parties should con-
duct a thorough examination of the product, the patient, the market, key players, the competition and the pipeline to fully maximise the brand’s commercialisation potential. Aside from unloading the burden of having to devote internal resources, what other tangible benefits can be had in developing a commercialisation partnership in support of a new product? MA. The benefits are numerous, but primarily, a strategic partnership to support a new brand gives biopharmaceutical companies the opportunity to manage its core business in a more focused and flexible way as they use their partners' capabilities to expand their resources. These resources could fulfi ll a therapeutic need or a geographic need. For example, should a company be looking to optimise a wide portfolio of products, but retain their internal focus on core strategic areas, a partner with deep therapeutic expertise could embrace assets that fall outside the company’s main priorities but which still have additional market potential. Quite simply, an effective commercialisation partnership can support a brand in ways that are more effective and efficient than most companies have the ability to do internally. Partners can also help in the convergence of clinical and commercial insights into earlier phases of product development. Biopharmaceutical companies need to understand that in order to create and demonstrate value, they must begin to embrace the needs of the New Health stakeholders – payers, providers and patients. Doing so would enable the creation of a ‘value track’ – focused on commercialisation requirements – to run in parallel to the traditional conventional regulatory-driven clinical development needs. Th is would ensure having the right data available to achieve optimal market access upon approval. The realities of today’s marketplace dictate that biopharmaceutical companies need to be both flexible and discerning in choosing the right criteria to determine which products to move forward and how and where to market them. It’s confusing and convoluted, but sharing responsibilities with capable partners can minimise risk, expand shots on goal and gain critical flexibility in the deployment of their internal resources to develop tomorrow’s innovative medicines.
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ASK THE EXPERT
Combination tactics for orphan drug manufacturers Marc Botteman explains how orphan drug manufacturers can combine pricing and market access strategies with health economics to optimise pricing and market access.
T
he number of new compounds in R&D with an orphan drug (OD) designation has steadily increased over the past decade. In 2000, only 12 compounds in R&D had received an OD designation by the EMA. But by 2009, that number had increased to 105. Overall, during that decade, 615 OD designations had been granted – yet, fewer than 10 percent of these agents received an authorisation over the same decade. Success in bringing any drug to market is fraught with numerous challenges. However, regulators have tried to facilitate this process for ODs. For example, unlike other drugs, ODs are always authorised via the centralised European procedure. Moreover, due to the small number of patients with, and the severe or life-threatening nature of most orphan diseases, EMA authorisation can often be filed immediately after conducting phase II clinical trials rather than waiting for phase III results. However, one hurdle that has not been streamlined for OD is many countries’ requirement to demonstrate cost-effectiveness for reimbursement. Even in European countries where costeffectiveness is not (yet) mandatory, the available cost-effectiveness evidence can help with pricing negotiations. Ironically, since many OD authorisations are based on limited data (i.e., small sample sizes for clinical trials and phase II study design), the body of evidence available to develop cost-effectiveness analyses at the time of market access is often incomplete. In addition, cost-effectiveness guidelines vary per country, resulting in the need to conduct analyses in each individual country for which market access is sought. Besides clinical and health economic research, companies can conduct several types of
strategic research that can help optimise the OD reimbursement process. First of all, landscape analyses help to identify the epidemiology and available drugs for the corresponding indication, their prices, safety and efficacy profiles and reimbursement status. Secondly, value messaging includes interviewing key opinion leaders to test the target product profi le (TPP) and to identify most important value messages and unmet medical needs. The utilisation of payer research should involve conducting interviews with local, regional and national payers to assess their perceptions regarding the TPPs (including price points) and value drivers. Companies should identify requirements for OD market access and reimbursement, and select comparators, data to be delivered and analyses to be conducted. Finally, they should initiate dialogue between regulatory and payer communities in order to align payer expectations with regulatory data. For ODs, the timing of conducting this strategic research is critical given the relatively short authorisation time-frame. The same is true for health economic assessment. Hence, to optimise drug pricing and market access, strategic and health economic research should be conducted in tandem as early as possible. There are also areas in which strategic research could benefit from health economic information. To begin with, companies should optimise the output of strategic research by including early health information in TTPs tested during payer research. Quantifying the identified value drivers in monetary terms and testing at an early state of development the cost-effectiveness of the drug based on numerous pricing scenarios and TTPs will also play a pivotal role.
Another type of research increasingly conducted by pharmaceutical companies during drug development is trial simulation, which helps to minimise risks and guide decision-making by formalising assumptions and quantifying uncertainties about the drug and upcoming trials. Trial simulations are especially valuable for ODs as there is often very limited data available due to the limited number of patients and comparisons mostly with placebo. This information could be used for registration but potentially also when designing subsequent trials, which might be a sine qua non condition to obtain preliminary approval and data necessary for reimbursement dossiers and pharmacoeconomic analyses. For instance, by imputing early clinical results in a health economic model, the optimal dose and best patient subgroup can also be identified to ensure the new drug’s cost-effectiveness. With its international reach and multidisciplinary staff, including experts in OD regulations, payer research, market access and health economics, and trial simulation, Pharmerit’s mission and passion is to help manufacturers seamlessly integrate pricing/reimbursement and pharmacoeconomic evidence and strategies to ensure that patients have access to needed treatments. Marc Botteman, co-founder of Pharmerit International in Bethesda, MD, has been conducting health economic, outcomes, market access, payer and pricing research for global sponsors since 1995 and has authored over 50 publications in peer-reviewed journals. He holds a Master’s degrees in economics from Namur’s FUNDP, Belgium and demography, Georgetown University.
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RESEARCH
Attention to
detail With a new aromatic molecule arrangement recently uncovered by scientists at University College London and the ISIS Neutron Source, pharmaceutical companies are anxious to ďŹ nd out what this could mean for the future of drug design and R&D.
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A
team of scientists led by University College London (UCL) and the Science and Technology Facilities Council’s ISIS Neutron Source has produced new experimental data that demonstrates how aromatic molecules arrange themselves in liquids. Aromatic molecules are very stable, ring-shaped molecules of which benzene is the most famous example. As these aromatic molecules are a factor in the selfassembly of many important biological molecules including DNA, RNA and proteins, this new discovery could have a profound impact within the drug development sector of the pharmaceutical world. Indeed, this new-found knowledge should lead to more efficient drug designs through the more accurate selection of the lead drug molecule – reducing the time and cost of developing new drugs to market. Intense research has exposed the limitations of current theoretical calculations by showing how they base themselves on how two molecules interact, as opposed to working off the model of many molecules packing together, as seen in liquids. Calculations using incorrect assumptions such as this are more likely to miss the best drug candidates, having a detrimental effect on the drug design process. To get to the bottom of such an important discovery, NGP sat down with the three champions of this new molecule and
asked them precisely what this could mean for the future of the pharmaceutical industry and the arena of drug discovery. First of all, congratulations to all at UCL. Your team has produced new experimental data that demonstrate how aromatic molecules arrange themselves in liquids. What implications does this have for biology in general, and for pharmaceutical R&D in particular? Chris Howard. We’re all physicists and chemical physicists and we investigate how molecules arrange themselves in simple liquids. Experimental methods available to do this atomistically have only really come online in the last 15 years or so in particular using advanced neutron scattering techniques. Scientists trying to understand larger systems often end up making inaccurate basic assumptions about the more fundamental interactions that go on inside these systems. Aromatic rings of six carbons are found in many molecules, from drugs and pharmaceuticals to DNA. In order to describe the interactions between these rings and then model this interaction, a good starting point is to measure how two simple aromatic benzene molecules approach each other in the liquid. No one has done that until now. We found out that the current understanding, which is based on a large number of theoretical calculations and less direct experimental methods, was not completely wrong, but that the structures that were assumed to be the most predomi-
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nant in the liquid were not the ones that were. Our results have profound implications for understanding the influence of the aromatic rings found in larger molecules such as drugs and DNA and their effect in important biological processes. Daniel Bowron. The ramifications are coming down to the fact that if you want to apply our knowledge about the structure of molecules and how they interact in solution into real situations, for instance inside biological systems such as the human body, a lot of the work that has been done is based on computer modelling. When you want to design a new system, for example, instead of spending millions of euros going out and testing everything, we’ll put our best computer models and knowledge to the test and see if we can find likely candidate interactions that might do the sort of chemistry or biochemistry that we want to do. All of this is based on an assumption about how these aromatic units would interact. When we did the experiment ,we found that if we did our modelling based on the basic assumptions without the experimental data, we reproduced all the standard effects – but as soon as we tried to introduce the experimental data to this, it rotated the interaction between the aromatic units slightly, which could have quite marked implications for how these molecular units will then interact with drug interactions and biological molecules. A classic example system would be painkillers – which are basically a benzene ring with a couple of small units on the side – so you can see how understanding that interaction is going to be important for that class of drug. In that sense, if we’re saying that our experimental data are telling us that our standard models are slightly wrong, when you go searching for alternatives and new methods, you might miss key interactions because your computer model is rejecting them; therefore you won’t get the key-in-the-lock fit that you need, whereas in reality it might work. We think the experimental data are giving us information that might allow us to improve our understanding of these types of interactions and enhance the ability to search through our models of these systems and improve our understanding of the biochemistry that goes on. Chris Howard is a Research Associate at the London Centre for Nanotechnology at UCL.
Neal Skipper is Professor of Physics in the Condensed Matter and Materials Physics group in the Department of Physics and Astronomy at University College London.
Daniel Bowron is the leader of the ISIS Disordered Materials Group and the instrument scientist responsible for the newly constructed Near and InterMediate Range Order Diffractometer (NIMROD) on the ISIS second largest station.
Neal Skipper. The way we did the experiments was to label the molecules we were interested in with hydrogen and then changed the isotope to deuterium. When you do that you see the difference between those different isotopes and therefore pick out in much more detail what the structure is. For this method you have to use neutron scattering – and the instrument ISIS set up is probably the only one in the world that allows you to use this technique. The difference we found between theory and experiment was very important.The benzene molecule is six-fold symmetric and there’s a rotation of one whole order of symmetry between the simulation and our experiment. If you put a group on the benzene ring, then that has a completely different posi-
The ISIS Based at the Rutherford Appleton Laboratory in Oxfordshire, England, the ISIS is a world-leading centre for research in the physical and life sciences, owned by the Science and Technology Facilities Council. Within the centre, ISIS produces beams of neutrons and muons that allow scientists to study materials at the atomic level using a suite of instruments, often described as ‘super microscope’. For those not in the know, a muon is produced when a proton beam passes through a thin carbon target upstream of a neutron target. The ISIS supports a national and international community of over 2000 scientists who use neutrons and muons for research within their respective fields. Started from an original vision over 30 years ago, ISIS has become one of the UK’s major scientific achievements and the world’s leading neutron and muon source.
tion with the structure that we found and the structure that people were assuming. Because drugs that have been developed so far have used the assumptions that are turning out to be wrong, could that mean that there is the room to develop better versions of those drugs? DB. In principle we have to accept that the drugs that already exist work. The question is – is our understanding of how they work sufficiently good to then move forward? When you’re developing drugs, you’re always going to look at a basic thing that you know already does what you want it to do, and then you’re looking for a variant on that theme to see if you can make it a more effective version of the system. Now, if your understanding of how things are working is not quite right, you might be missing an important class of improvements that you could perform. It will be a need that we have to develop eventually; a potential that we could test that would then have to go through a cycle to see what people have been rejecting to see if they are indeed missing those opportunities. But until somebody does, it’s very difficult to say definitely what would happen. Considering that you’ve now done the research and the results are known, what is the next step? DB. One of the obvious next steps is to go from the simplest system that we have of the benzene interactions to a benzene ring where we add chemical groups to different points around the ring, because then they become closer to the actual molecules that are used in the pharmaceutical system. For example, if we add a methyl group, one of the other systems that
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adding levels of complexity one at a time and building up from the very basic finding that we’ve just made. How will that work within pharmaceuticals; how will companies be able to take that version into their drug development or R&D? DB. What I suspect would be needed would be to see if we can tune the models that we’re using in our basic design protocols so that they now reproduce the experimental data that we have for these simple systems. Once you can reproduce that, you know your models are reproducing what we actually measure – as opposed to what we thought was the system – you can then move that forward. The next step is to make computer models reproduce experimental findings. We look at the interactions and can tell people where they’re not right and how they should expect things to look under certain circumstances, but it would probably be a more specialist computational scientist who would then have to tune the methods that they’ve got to make sure that they can reproduce the experimental data. Our role in this is very much to do the neutron scattering experiment, interpret that data and put the findings out in a forum that other scientists can use to improve what they do.
we studied in the paper was toluenea benzene ring with a CH3 group at one of the positions. What you gain from that is a movement towards a functionalised aromatic unit. We were also testing how that interacts in the liquid state. The next natural step is for us to move into different functional groups. You could move to phenol, where you add an O-H group into the ring, or you could add ammoniumtype groups. Essentially, there is a whole book of chemical units that do get added and we need to test each of those in turn. We have the methods now and we’ve proven that we can analyse and interpret the data, so the trick is to move forward,
CH. I guess we’re working toward the dream of understanding basic interactions between molecules and the building blocks of biology. If we can fully describe these interactions then we can simulate larger systems and hence work towards a complete understanding of many biological processes. We’re in quite a fortunate place because although large numbers of scientists have worked on the structure of liquid benzene, it’s only here at the ISIS Neutron Source that the techniques have been developed for us to perform this measurement. In fact, when we started this work we were originally looking at dissolving larger molecules in liquid benzene, but we thought we should take a measurement of the solvent first. Although initially it surprised us that no one had done this before, we realised that we were in a unique position to do this. Experiments performed at the ISIS neutron source are providing a detailed picture of the structure of other simple liquids such as water for the first time. What prevails, however, is often knowledge that has been gained in the past and written into textbooks, but not is based on the atomistic measurements of the structure. NS. We have had a lot of email traffic from people developing models, especially the ones that are used in drug design; they’re going away and re-thinking as we speak. In my opinion, within the next year or so people should have a revised model of these types of functional groups. Many drug designs being explored by computer simulation these days and a lot of the searches are done just by looking at lock-and-key interactions – and if you’ve got the basic shape of the key wrong, then ultimately it’s going to need fixing. ■
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RESEARCH
MOVING INTO
How Astellas has established a strong presence far from its Japanese base
K
en Jones lived in Japan for 15 years, and speaks the language fluently, which must come in very useful in his current position as COO for Astellas Pharma Europe. While the company – as its name suggests – has a European focus, its parent organisation Astellas Pharma Inc. was formed in 2005 from the merger of two big Japanese pharma players, Yamanouchi Pharmaceutical Co., Ltd and Fujisawa Pharmaceutical Co., Ltd. Jones has also spent time at other pharma majors, including SmithKline and Allergan. He joined Yamanouchi in 2003, two years before the merger that created Astellas. The formation of the new company was intended to allow it to become a truly global player and in the European context, Astellas is the largest and most successful Japanese pharmaceutical company on the continent. The company has achieved this partly through making innovation one of its core values, in line with the acknowledged need to ratchet up innovation throughout the industry. But what does this mean in practical terms? “We’re a young and dynamic company and effective innovation for us means making sure we are able to identify the fields and markets in which we can make
a difference and, hopefully, bringing products to the market more quickly than before,” says Jones. “To drive this we have formed a cross-functional, cross-regional team that we call STAR – Strategy Team for Therapeutic Area Reinforcement. The idea of this is to look at everything from the perspective of greater collaboration and dialogue between the clinical and commercial sectors of the business. “At the same time we moved our global development headquarters out of Japan to the US in order to leverage global talent. We recognise that to be successful globally, a company must be successful in the US and Europe. “A lot of clinical development expertise is held within the US, which is why we made this strategic change in tandem with our move towards a global development model. One of the dilemmas pharmaceutical companies have at the moment is how to make sure that their research is working effectively and delivering potential compounds. Another dilemma is the speed with which you decide to discontinue a project and the speed at which you decide to accelerate it, put resources against it and start bolstering the support for a molecule that you think has a higher chance of survival. “Th is is where a lot of companies have struggled. In our case what we’re trying to focus on is making those
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“One of the dilemmas pharmaceutical companies have at the moment is how to make sure that their research is working effectively and delivering potential compounds”
decisions at the right time, as quickly and efficiently as possible.” When it comes to putting these ideas into practice, Jones says the plan is based on globally and functionally integrated project teams designed to ensure that the right people are in the right place when the time comesfor decisions to be made. He stresses the need to bring down silos and foster a holistic view of each product’s potential and risks, in order to be more efficient and effective in making those decisions. Again, Jones emphasises that the biggest challenge is knowing when to cut projects. “Sometimes in R&D, projects can roll on for longer and longer before the decision is fi nally made to end them,” he points out. “If you think about it, you’ve wasted five years and a lot of money trying to keep some of these projects alive when they should have been called off earlier. “What we’re trying to do is be much more focused in identifying those molecules we should continue to support and those we should cut. It’s about having the right criteria and asking yourself, clinically, what’s the unmet need, what would that target product profi le look like – what is it that it should be doing if a clinician is going to prescribe it for that particular disease? Then you need to make sure that throughout the research stages, from proof of concept to phase I and phase II, it’s delivering against that target product profi le. Without maintain-
Ken Jones
ing a fi rm focus on these important criteria throughout the process of innovation, we risk developing molecules, rather than developing innovative medicines that fulfi ll unmet clinical needs. “When starting the process of developing a molecule, one has a very clear idea of how the resulting medicine would fit into clinical practice and will fulfi ll defi ned unmet medical needs. As the development process goes on, market research and clinical research provide a better understanding of both the molecule’s capabilities and the clinical and market environment into which it will launch. Unless a company critically evaluates this information against its original aim, it risks losing sight of what it set out to achieve and, as a result, pursuing the development of a molecule that is essentially a compromise and that does not have a significant role to play in clinical practice.”
Solid footing Jones says Astellas has been able to weather what has been a rough period of stalling innovation and drier pipelines for the industry as a whole thanks to its position as a global category leader in urology and in transplantation, in line with the company’s ‘Vision 2015’ goal. “In terms of urology in Europe, we have a treatment for BPH, benign prostatic hyperplasia,” Jones explains. “We also have Omnic Ocas, which is a next generation upgrade of a product called Omnic that went off patent in 2006. That is doing very well. We also have Vesicare, for overactive bladder syndrome, and Eligard for the treatment of prostate cancer. That franchise, all together for us in Europe, is worth about a half a billion euros. “In transplantation we have a treatment called Prograf, which is an immunosuppressant taken in order to prevent the body from rejecting a transplanted kidney, liver or heart. The next generation product upgrade is called Advagraf, which is a once daily formulation based on Prograf. “Urology and transplantation are our leading global therapeutic areas. We’ve been able, fortunately, to manage patent expiry issues in a European context by having good follow-on products. That’s how we’ve been able to continue to grow.” Another way of dealing with the need to ramp up innovation is to look outward and establish more partnerships with biotechs or academic institutions, or even – as Jones points out – with key thinkers in some of the disease areas. Jones sees this trend of collaboration as something that will continue for the foreseeable future. “Given the current fi nancial environment, some of the venture capital money that’s supporting some of these companies has been reduced in the past few years. That’s where we, as an
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industry, have had an opportunity to step into the breach in order to gain access to technologies. Going forward, these types of deals will continue to be very important.” There is a view from some quarters that big pharma companies are not always good at sharing and collaborating, but Jones disagrees: “Pharmaceutical companies have done plenty of collaborations before in terms of basic research, but more on an informal basis. What we are seeing now is a move towards more formalised collaborations. “What’s also changing is the degree of investment or ownership. There have always been scientific collaborations, but they’re becoming much more sophisticated and formalised and more overt in terms of ownership.”
New vision Astellas Pharma Europe recently announced its new vision to build a strong presence in oncology, a vision that supports the company’s objective of becoming a global category leader in several therapeutic areas where unmet medical needs exist. In deciding on this move, the company considered its Vision 2015 strategy as well as carefully assessing what the regulatory and health environments are looking for in terms of approvable, reimbursable products. As Jones explains, what they’re looking for are areas of high unmet need. “We were looking at where there is a huge opportunity for discovery,” he says. “Oncology is a massive area: there are still so many things we don’t know and so many opportunities to discover value-adding molecules. Th is is one of the areas that is very interesting for us as a company, and for many companies, in fact.
“At Astellas, we have a lot of experience in small molecules, which is an area of need in terms of cancer. We have also acquired Agensys, which is involved in monoclonal antibody platforms and, more recently, OSI, which also has small molecule capabilities. “From a basic research point of view, we’ve done a lot of work in this area and feel that it is one of our core competencies. We’re now building on this experience to make sure that we have the right platform technologies in place, and we’re excited about that.” Cancer is not the only area in which the company is building its product portfolio. In addition to its concentration on transplantation and urology in Europe, it has an established portfolio of treatments in dermatology and is launching a franchise in anti-infectives. Products in the area of anti-infectives include Mycamine, which was approved by the European Medicines Agency in 2008 for severe fungal infections and which is particularly relevant to transplantation and haematology patients; Vibativ, designed to target serious Gram positive infections, including drug-resistant organisms such as MRSA, which Jones is hopeful will get approval and launch sometime next year for the treatment of hospital-acquired pneumonia and complicated skin and soft-tissue infections; and isavuconazole, a novel anti-fungal currently in phase III clinical trials, which Astellas is co-developing with Basilea Pharmaceutica International Ltd. In transplant, it has launched Modigraf, a granular formulation of tacrolimus for people who have difficulty swallowing, which is indicated for the prevention of
“There have always been scientific collaborations, but they’re becoming much more sophisticated and formalised and more overt in terms of ownership”
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organ rejection in both pediatric and adult patients with kidney, liver and heart transplants. In pain management, it has recently launched Qutenza which, with one application, gives up to three months of pain relief to people living with neuropathic pain. In contrast to many other companies, Astellas Pharma Europe has quite a few products coming on to the market, thanks in part to its regional focus. “For example,” Jones says, “Qutenza is a product that we’ve licensed and are selling in Europe. We’ve been able to establish some regional agreements that may enable us to get products launched, so from that perspective we’re in a good space.” Astellas chose to establish a strong presence in Europe partly because it is one of the two traditionally strong pharmaceutical bases (the other being the US). Both of the company’s Japanese parents had looked at expanding into Europe: Yamanouchi bought Dutch company Royal Gist-Brocades in the early 1990s, and Fujisawa bought Klinge Pharmaceuticals, based in Germany. “For geographic expansion, they looked at the US and looked at Europe. In Europe they bought companies separately and independently decided to invest in infrastructure in order to launch their proprietary products,” Jones explains. “They took a long-term view in the late 1980s and early 1990s and we have benefitted from the platform for growth with which that has provided us. “Europe is obviously a very important marketplace from a population and an economic point of view, as is the US. They followed a dual strategy of both Europe and the US and that has been very successful within the European context.” In terms of future expansion plans, Astellas operates a four-point strategy, the fi rst part of which is expanding the franchises, including the move into oncology. Another important aspect is geographic expansion and the move into emerging markets, including Eastern Europe, Russia/CIS, India and Brazil. “The third part of the four point strategy is about marketing excellence,” Jones underlines. “It’s about making sure we’ve got best-in-class marketing, and understanding what the patients’ and prescribers’ needs are, and then making sure the products we develop are able to deliver against those needs. “The last part is about being an employer of choice. That’s important, because when you have highly engaged employees, you get high levels of motivation and productivity. Probably what you’re seeing in other companies is that they’re in a downward spiral where people are not very motivated; they’re a bit discouraged and not sure what their culture is, and that leads to less productivity. Our low staff turnover sets us apart from our competitors, particularly in R&D.
“That may be part of our Japanese legacy: making sure that we think about our employees. Employees are one of a company’s largest assets and if you don’t treat them right, then how do you expect them to do what’s right in terms of their workload?” When asked if he has noticed any other cultural differences between Japanese and European or American companies, Jones mentions that he fi nds the timeframes are different. “Unfortunately a lot of Western companies are very focused on investor relations and the quarterto-quarter results, which are short-term. What’s interesting about Japanese companies is that, while those things are very important, they also tend to keep an eye on the long-term future.
“Japenese companies take a much longer term perspective and there’s less shooting from the hip”
“They do take a much longer term perspective and here’s less shooting from the hip. The fl ipside of that is that some Western companies operate on a high risk/ high reward basis, where speed is important, so it depends on what the makeup of a company is and what the shareholders and the investors expect. “We are a Japanese company, so everything’s tied to the Japanese investors, per se. But we operate as a hybrid. The company’s been very good at adopting best practices from outside Japan – best practices from America, best practices from Europe. In addition, Astellas very much has a transparent and open culture in which constructive dialogues are encouraged and enjoyed. “Part of this is made possible through good, healthy debate, which I think is very constructive. Here, you can still have a professional disagreement and not have a problem.” Jones sums up Astellas’ key strength as being the fact that in the five years since its inception it has achieved a strong track record of growth. In his words: “We’ve built the pipeline; our task now is to keep delivering on it. With the follow-up of the oncology areas, we’ll defi nitely be a very strong player in the marketplace for years to come.” Ken Jones is COO of Astellas Pharma Europe.
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CLINICAL TRIALS
Getting the numbers right GSK’s Rosalind Cheetham tells Nick Pryke why pharmaceutical companies need to ensure that correctly forecasting clinical trial recruitment levels is among their top priorities.
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ver since James Lind’s demonstration in 1747 showing that citrus fruits could cure scurvy in sailors, clinical trials have been part and parcel of understanding how external substances – drugs or otherwise – can be applied to affect the biological state. In fact, the only thing that has significantly changed since then is whom the facts need to be proven to; from the individual to the commercial, the citrus fruits of the 18th century have become today’s blockbuster drugs. Yet with pipelines drying up and innovation sorely needed, the pharmaceutical industry is having to contend with rising costs, patent battles and a plethora of rights and welfare red tape just to reach the stage of clinical trials. Someone who knows the contour of this land better than most is Ros Cheetham, VP of Neurosciences MDC and Medicine Development Leader for GlaxoSmithKline (GSK). “First and foremost,” begins Cheetham, “whenever we think about anything to do with recruiting participants into clinical trials, everything that we do has to be
primarily focused on protecting the rights and welfare of potential trial participants and everything that we do must be grounded in that fact. “Taking that into account, in terms of sites being overly optimistic about their ability to recruit, I think conducting clinical trials is a very complex issue and there are multiple factors that impact both a site’s ability to successfully conduct a trial, as well as trial participants’ willingness and eligibility to participate in one. “As a sponsor of a study, we often seek study feasibility information from sites using protocols that are in a fairly early draft format, so they may not be complete at that time in terms of their inclusion and exclusion criteria. We do find that those initial recruitment estimates that sites make can be very heavily affected by later, additional or changed inclusion criteria in the protocol. As such, we sometimes go with incomplete information or information that is later changed that makes it more difficult for sites.”
Appreciation However, the list of reasons for a participant’s willingness to enroll is often exhaustive and unpredictable. A change in the number of visits a group might have to
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“Traditionally, we would finalise the protocol, get sites to commit and then we would hold an investigative meeting”
make could have a significant impact on people, as could the length of a visit. For example, if visits were initially a little less than an hour, and then rose with the inclusion of tests and examinations to two or three hours, that could also act as a deterrent to people participating in the trial. When companies initially go to sites, they can fi nd themselves with issues caused by not managing to access the most appropriate site personnel to make those recruitment estimates. By contrast, some sites may have different inclusion criteria that make participants easier to recruit. All of these can, and often do, lead to inaccurate forecasts. “There are plenty of variables,” continues Cheetham, “and one of the things that we are starting to do is to hold an investigative meeting before the protocol is fi nal. Traditionally, we would fi nalise the protocol, get sites to commit and then we would hold an investigative meeting. Th is either means that they have to live with the protocol the way it is or we’re forced to make amendments, which are very expensive and not the most cost-or-time effective way of doing things. “However, if you hold an investigative meeting before the protocol is fi nal, where the inclusion and exclusion criteria, required tests, examinations and visit frequency are discussed in detail – and where there’s peer discussion around the practicality of the trial – there’s still an opportunity for the sponsor to change that protocol and to positively impact the quality of that fi nal protocol. In doing so, it impacts the site’s ability to forecast recruitment more accurately and then deliver on those forecasts.” If this is the case, then it raises the inevitable question of why hasn’t this been done in the past. “I think it’s a combination of things,” admits Cheetham, “but to do it
this way round does require an infusion of money to cover the cost of that meeting before you’ve made your final decision on participation. It could also be viewed as potentially slowing down the process of starting a trial, but I think that those are very short-term gains where you might lose in the long run by it taking longer to recruit or being more expensive to recruit because of the need to add additional sites or make later changes to protocol. Those upfront costs, and potentially more time, are outweighed by the potential benefits. Perhaps we haven’t always appreciated that.”
Recruitment On that note, appreciation certainly seems to be the key when looking to improve on recruitment forecasting and an ability to recruit people more efficiently. The fi rst in a long line of tools that companies feel can aid in estimating more efficiently is at the site or sponsor level: a strong, historical database that documents success in recruiting for other similar trials seems to be the most fundamental tool in this context. “If that’s not available in-house,” offers Cheetham, “then it is possible to purchase such databases or access to databases commercially. I think we often fall into the trap of assuming that recruitment will be linear across the duration of a study – and historically that’s not the case at all. I tend to use the analogy of recruitment usually following the shape of a hockey stick. Initially sites are slow to get off the ground and, often down to a lack of familiarity with the protocol, some things need to be ironed out, so the initial recruitment is usually quite slow. “But once sites get into the recruitment phase and gain more familiarity with the
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protocol – in turn allowing them to see the results of some advertising for participants – then it accelerates rapidly and you get this hockey stick type of picture. There are tools with which you can predict non-linear recruitment in that sort of paradigm. From that, you can help sites better understand what their workload is going to be at a particular point. It also helps sponsors plan for the high workload at the end of the study to get the data in-house – but a tool where you can plot variable recruitment is likely to give you a far more accurate prediction of the likely recruitment rate. “Along a slightly different track,” continues Cheetham, “something that we have looked into on a number of occasions and I believe can be extremely helpful is getting sites to participate in a feasibility protocol. Normally, we just ask sites to fill in a questionnaire about their expected recruitment, but you can do something that would require IRB and ethical committee approval whereby sites would record high-level details about potentially eligible subjects over a two- to four-week period. For example, if you were conducting a study in bipolar disorder, you would ask them to record some very basic anonymous information for each subject with bipolar disorder that they witnessed over a four-week period. “From that, you can make an assessment on how many of those patients would have been likely to be eligible for the trial and may have agreed to participate in the trial. That certainly gives you more accurate information. Again, there is a cost and time element associated with that – but it’s still undeniably more accurate than the historical way of doing things.”
Quality
Ros Cheetham is Vice President for Neurosciences MDC and Medicine Development Leader for Glaxosmithkline.
Discussing the possibility of identifying sites that will result in a higher enrollment of higher quality subjects remains a subjective area. First of all, a sponsor needs to define precisely what constitutes a high quality site and quality trial patient. The problem stems from the fact that people often have different views on the subject; potential trial participants, their disease and sustainability for the trial, an ability on behalf of the investigational site to fulfill good clinical practice and an accurate report of their data in a timely manner are all factors that fluctuate depending on the person in question. Another inherent challenge a sponsor needs to consider is how high it is willing for recruitment to be at any one single site; if anything over 50 percent of trial participants emerge from one specific site then a bias sentiment could begin to prevail. What companies such as GSK are trying to avoid is sites that enter no subjects at all. Surprisingly, sites that enter just one or two participants are also a problem because they have the potential to introduce variability into the results.
“To identify excellent sites requires in-depth discussions with the appropriate site personnel and those discussions should, if possible, be face-to-face. We should move away from the impersonal paper-based, or even internetbased questionnaires, to a much more personal discussion where you can really discuss their experience, their past trial performance and honestly assess their ability to participate in the trial in an extremely transparent manner. Ultimately, it comes down to a relationship. “Those face-to-face discussions, especially with investigative sites that you haven’t worked with before, are very important. For sites that you have managed to work with in the recent past, a telephone conversation would probably suffice. There are definitely some variations on a theme here, but I think you need to promote some personal contact to have those honest discussions.” Obviously there is plenty for companies to keep in mind, but all of this becomes magnified once it reaches a global scale. Without a doubt, the biggest benefit of conducting global trials is the possibility of opening up access to larger populations of potential trial participants. The biggest challenge in working on a global basis is dealing with the different medical practices and treatment paradigms used in other countries. “A careful discussion with the sites about whether their patient population looks the same as what you’re expecting in other countries and whether their normal standards of treatment are the same, or very similar, is important, so that you’re getting a more consistent population of patients being entered into the trials. Again, there’s plenty of scope for clear discussion with the local staff who will be speaking with sites about expectations, what the requirements for those sites are, sharing definitions around quality and encouraging them to have those face-to-face or telephone discussions with sites to truly understand their patient base, treatment practices, trial experience and ability to comply with all the trial requirements. “Certainly, our philosophy is to conduct global trials and to use clinical sites in countries where not only are all these factors fulfilled, but where we also don’t see barriers later on to potentially market the medicine if we get to that point. Global trials open up vast possibilities but the same issues apply, and it comes back to clear communication and a definition of exactly what you’re wanting, and if possible, that early opportunity to look at the protocols and give specific feedback about what will and won’t work in their country. “It can be as simple as a rescue medication that is widely available and used in the US that a company may not have, but may have a very acceptable alternative. Making the protocol able to accommodate both those alternatives early in the process is going to make things easier for sites to recruit successfully.” ■
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EXECUTIVE INTERVIEW
Enabling greater clinical trial efficiency Paula McHale delves into the world of clinical trials and offers her expertise on how technology could enable better efficiency.
provided sponsors and study personnel with the ability to monitor patient and site activity more closely than in the past, which gives them access to the information required to make decisions quickly throughout the conduct of the trial. This ability to observe study data so closely has also added another level of competition for sponsors, because early access to study data makes it possible to adjust future studies and plan accordingly.
Paula McHale is Senior Director of Product Management, Data Management Solutions, at Perceptive Informatics. In this role, Paula helps ensure the ongoing success of the DataLabs Electronic Data Capture/Clinical Data Management System (EDC/CDMS) solution. She has over 22 years of clinical and technological experience in healthcare and drug development. Previously she worked at ClinPhone, where she served as the lead Product Director for its EDC solution. In August 2008, ClinPhone was acquired by Perceptive Informatics. Email: paula.mchale@perceptive.com
The pharmaceutical industry is under increasing pressure to improve the productivity of drug development and streamline the clinical trial process. In your view, what are some of the factors behind this? Paula McHale. Today’s biopharmaceutical industry is constantly growing in complexity and scope. The market has become highly competitive to improve product development processes and bring innovative compounds to market more quickly. There are also fi nancial goals to meet as sponsors are expected to conduct their trials more efficiently, and as cost effectively as possible. The growing demands from regulatory agencies to improve patient safety have required sponsors to supervise their trials diligently, which has encouraged the use of technology throughout many aspects of clinical trials. Web-enabled technologies have
Why is it important for companies to maximise the value of clinical trial technologies? PM. Technology plays a vital role in the effective implementation and management of today’s clinical trials and has enabled greater trial productivity and ultimately faster product development. By maximising clinical trial technologies to their fullest extent, sponsors can improve the visibility of their trials and possibly manage them with fewer resources that can ultimately save time and reduce cost. Sponsors can optimise the use of technologies by integrating systems that share redundant data. Some of the more advanced technologies converge multiple systems to streamline the data collection process for sites. This not only improves the overall site experience, but also eliminates the need to reconcile data from both sources at the end of the study and improves the overall data quality. Utilising technologies in this way can also reduce the time to database lock and speed up the reporting process. Sponsor companies are using technology strategically to run their trials efficiently to achieve critical milestones and significantly reduce high development costs. What specific solutions and tools can pharmaceutical companies use to ensure their clinical trial data is processed efficiently and effectively? PM. The biopharmaceutical industry can select from a variety of today’s technologies
to increase trial productivity and improve data processing. There’s a wide collection of solutions available to combat some of these initial market challenges, including electronic data capture (EDC), interactive voice and web response systems (IVRS/IWRS), clinical trial management systems (CTMS) and medical imaging and electronic patient-reported outcomes (ePRO) solutions. However, the appropriateness of any particular solution is dependent upon the studies being conducted and the needs of the trial. Dashboards and portals should always be utilised because they expose study-wide metric data to sponsors and study teams without requiring them to log into each system that is used in their trial. This data helps study teams to easily follow and manage the activity of the sites and shows the progress of the data cleaning process. Systems such as this provide simple access to data collected from all technologies used in the trial and can be useful in monitoring study team performance and CRO activity. How do you see the management of clinical trial data developing in the future? PM. Clinical trial technologies have enabled study teams to have ‘eyes’ at the site with more visibility to the data being collected on a day-to-day basis. EDC tools are continuously advancing to provide new and flexible tools to streamline the workflow process and improve the site experience. The desire to conduct deeper analysis of ongoing patient data will require more emphasis to be put on the ability to view, report and export patient data quickly and easily and in multiple formats. Having timely and detailed reporting for each site will allow sponsors to adjust the site monitoring needs based on how well sites perform. In addition, extracting data from electronic health record (EHR) systems will minimise the need for source document verifications (SDV) and reduce the need for frequent monitoring trips.
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NEXT BIG THING
Companion diagnostics and pharmaceuticals Chris Moriarty highlights the need for flexible diagnostic partners in pushing personalised medicine.
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ersonalised medicine is not new. Where possible, physicians have always tried to tailor a treatment to a patient’s specific requirement, but in many instances a ‘one size fits all’ approach was the only option available. Since the genomic revolution however, the power of molecular genetics has enabled a much deeper understanding of what is affl icting a patient and how they will respond to particular therapies, providing a much more targeted approach to medicine. Molecular diagnostics may now enable detection of a disease earlier, even at the asymptomatic stage, and can determine their response to specific therapies and estimate the optimal dose. These new advances, whilst opening up unprecedented opportunities to revolutionise healthcare, have thrown up a range of new issues that can only be met by the most flexible diagnostic partners. One such issue is the clear requirement to co-develop and bring to clinical utility a companion diagnostic assay at the earliest possible stage in the development cycle of the
drug itself. Th is is essential as the assay must go through the mid-late stage of clinical trials and regulatory submissions in tandem with the drug to gain regulatory acceptance as a companion diagnostic by bodies such as the FDA. What is required for this to happen? Firstly, the diagnostic company must have the in-house R&D expertise, flexibility and ‘bandwidth’ to allocate resources rapidly to the development of a companion diagnostic. There must be the ability to rapidly raise and screen antibodies in-house if it is to be an immunoassay based diagnostic to ensure reliability and consistency of supply. Alternatively, if it is a molecular based assay, robust and flexible development protocols are required, especially for SNP or gene expression arrays where specific and sensitive genetic biomarker detection is required in combination with algorithm based decision-making. Ideally, the diagnostic partner will have a proprietary multiplex platform enabling rapid validation and standardisation of both the assay and the platform in combination to meet regulations such as FDA 510k. No matter
which format the assay takes, the diagnostic results should be easy to interpret; ideally a low-density protein or molecular array, as adoption in non-specialised laboratories, is a proven key to the rapid roll-out of a companion diagnostic. The diagnostic partner should have an extensive track record of obtaining IVD and FDA regulatory approval for its own proprietary assays and associated technology (analytically validated device) as a proof point for successful clinical validation and regulatory approval of the companion diagnostic. Finally, the diagnostic partner should have reference laboratories and/or CROs utilising their technology to speed up roll-out and adoption of the companion diagnostic globally. With over 27 years experience in biomarker assay development, Randox Pharma Services is one of a limited number of diagnostic companies able to respond quickly to the demands of this new paradigm, capable of developing customised molecular or protein biomarker arrays for its award-winning Biochip Array Technology. This expertise is now being offered to large pharma partners to develop companion diagnostics and bring them to a clinical setting rapidly, thus ensuring personalised medicine is a reality. Chris Moriarty obtained a BSc (Hons) degree in biochemistry from The Queen’s University of Belfast. Following a 12 year career in business development and marketing, he was recently appointed Global Business Manager for Randox Pharma Services, a dedicated division within Randox Laboratories focused on the specific requirements of the Pharmaceutical and CRO industries.
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LEAD
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With the pharmaceutical industry evolving at breakneck speed, having the right leader in front of you is more important now than it has ever been. Fred Hassan, former CEO and Chairman of Schering-Plough, gives NGP his take on what makes a leader exceptional.
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ig or small, local to international, a company’s long-term success is defi ned by the quality of its leadership. That chosen one, that metaphorical shepherd amongst sheep, must not only let his or her ideas and visions cascade through all levels with intention and defi nition, but must also show the light at the end of the tunnel. Th is is true of all respected companies and their respective leaders, but when a merger takes place, fi nding the right leader for the job often takes on a whole new dimension of relevance. In the world of pharmaceuticals, mergers and acquisitions have, in recent years, become part and parcel of progressing the industry; one of the most recent of these was the merger between Schering-Plough and Merck in November of 2009. The man who led Schering-Plough into this merger was their former Chairman and CEO, Fred Hassan. When Hassan arrived at Schering-Plough, the company was being investigated by the FDA and SEC for accounting irregularities – not an easy introduction for any new management member, let alone one who was expected to lead it out of turmoil. “I’ve faced a lot of challenges in my career, but this one was the biggest I’ve ever seen,” admits Hassan. “There were several things that needed to be done right away, so you couldn’t do things in sequence; you had to do them at the same time. There were the immediate issues of the regulatory and legal challenges that the company was under at the time, but there were also fi nancial challenges in the sense that the major businesses were going down. Part of that fi nancial challenge was cash flow – something that is not seen very often in pharmaceutical companies – but Schering-Plough was looking at a big cash burn and something had to be done about it very quickly.” For Hassan, that meant setting up a “roadmap” as quickly as possible. Working with imperfect data, he anchored this roadmap with the board, shareholders and the entire company at a general meeting so that, from top to bottom, people understood what direction he intended to take. “It also showed that we had a problem, that we had to do a lot of work, but we had to break the problem down into bite-size pieces that we could deal with whilst still looking forward for a period where there was going to be strong, solid hope for the company. If people can see
the hope – the light at the end of the tunnel – then they do build up a sense of purpose.”
Leadership qualities However, in order to achieve that sense of purpose, Hassan had to fi rst use his leadership qualities to lead his team through the adversity they faced. “Perhaps the biggest quality that I try to work on is a sense of humility,” he explains. “If one keeps balance in one’s life and a sense of humility, then one becomes a better listener; you stay in tune with both yourself and your environment. If you can anchor yourself well within your environment then you can design a strategy to bring about change. “Once you’ve established a sense of direction, you have to build up a sense of urgency. If you can generate energy inside yourself and around you, the whole system starts to generate that sense of direction, letting you get on with undertaking some very purposeful things. Bringing about change is not easy, but once it starts to happen it’s a very good feeling because the whole organisation comes on board and people start to believe that they can make a difference.” More often than not, an understanding of how to create change in a commercial context evolves from an appreciation of overcoming a personal experience; Hassan is a prime example of this, growing up with a terrible stutter. “I couldn’t speak in school. I had difficulties and the more I worried about stuttering, the worse it got. I still have it, but it doesn’t hold me back anymore. I decided I was going to think past it and work at the job that had to be done and not worry about this problem that I, and countless other people, have. “You have to look at life beyond the challenge. Make a mental picture of how it might look and go for it. If I come into a tough situation in 2010, I have to make a mental picture of how things would look like in 2013 and 2014, and keep bringing it back as I go about dealing with the bite-size problems that need to be solved.” In fact, Hassan once said in an interview that: “No restructuring or strategy will succeed long term unless you get control of your top line.” In order to re-establish control with his top line at Schering-Plough, he needed to ensure solid customer touch and experience prevailed in order to help it grow. It’s relatively easy to get the bottom line to go up by slashing costs, but as Hassan states, that is a fi nite solution to a long-term problem.
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How to manage a pharma company through a merger
Make it fit Make sure that the fit with the other company is good. Look at the strategic aspect first: does it fit with the strategy that your company is trying to pursue in the next phase of its development? FInd out whether it fits the next stage of strengths, weaknesses, opportunities and threats. Communicate When you have a merger and you’re acquiring a new company force, get to the frontline managers early and get them to understand the strategy. Once people are challenged and encouraged, it’s surprising how much they can do. Keep it simple Grow the top line, grow the R&D pipeline, reduce costs and invest wisely. Once the strategy is clear, execution becomes the strategy. As long as you don’t shift on strategy, people then start to believe and execute on it. Focus on execution In the end, execution is what holds companies back. Strategy is not that difficult to formulate. It’s the execution that makes a difference. Avoid complacency Complacency is also a form of arrogance. You can rise to a certain level because of the skills you have, but then get derailed because you’re lacking balance and a sense of reality. Staying flexible and nimble is the key to dealing with challenges.
“If you’re growing zero to one percent and your cost structure is facing an inflation of three to four percent, you might be able to keep your bottom line OK in the short term by reducing costs. But long term, you have to beat inflation when it comes to the top line growth if you’re going to make the business prosper. Wherever I’ve gone, I’ve worked on the cost structure, but I’ve simultaneously worked on building the top line by making good advances with customer experience. If you can do that well, even while going through adversity, then you emerge far stronger on the other side of the difficult times.” Of course, entering a company during any period, but especially one of adversity, is usually followed by some degree of internal confl ict – and Hassan’s experience was no exception. “There are people who immediately see you as somebody who might not be very good for their careers. Some of them might become active
“‘If I say ‘I want a spirit of transparency and building trust,’ and the supervisor passes on a message that they want information to be hoarded in a certain department, I would definitely start to worry”
resisters – those are easier to deal with. It’s much harder to deal with the passive resisters: the ones who say they’re on your side, but they’re not and you don’t know about them until a lot later. When I develop a new programme or introduce change, I try to make a judgment about those people who are the fence-sitters, those who are the passive resisters and those who are the boosters. The boosters make the programme work a lot better. “The fence-sitters you can work on; you can try to convince them. It’s those passive resisters that you have to fi nd and ask them to make a basic judgment: are you with or against the programme? If you’re not with the programme then you probably belong somewhere else. That’s where I have been pretty aggressive, and in every place there’s been a wave of change in terms of people leaving the company within the fi rst 18 months. However, not all people who leave the company do so in that initial period, because sometimes it takes a longer time to fi nd those who really don’t belong with the company long term. “Usually, the way you fi nd the passive resisters is by listening to the praise they give you; you’re listening for signs on whether it’s real praise or not. Another way is to fi nd out what they’re telling their people about the
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Know who your friends are Four types of reactions CEOs may experience when implementing a new strategy
Boosters On your side from the start; show their support early and work with you to make the programme better.
Active resisters Relatively easy to spot and deal with; they make their objections obvious.
Fence-sitters Could go either way; you need to work on them to convince them. Passive resisters Trickier to spot; say they’re on your side when they’re not. One way to flush them out is to listen for insincere praise, or talk to their staff directly to find out what they’re saying about the programme.
programme. It’s my practice not to be bound by layers. I go to level three and level four. I talk with people in small groups and if the messages they’re hearing from their supervisors are not reflecting the values that I want in the new company then I do get very concerned about those supervisors. “For example, if I say ‘I want a spirit of transparency and building trust,’ and the supervisor passes on a message that they want information to be hoarded in a certain department, or if specific political things were to happen among departments, then I would defi nitely start to worry. You cannot succeed in a company if your management layers are not totally in line with the values. If there’s toxicity in the system, it’s not going to work. People in management jobs have a special responsibility to show with their behaviour that they are encouraging the culture that you’re trying to create.”
The right fit As President of the International Federation of Pharmaceutical Manufacturers and Associations (IFPMA), Hassan is aware of the most important trait in leadership:
listening. “The ability to listen is especially important for those who become CEOs, because they are in a situation where there are not too many people who challenge them and they often end up spending too much time talking and not enough time listening. I go out of my way to structure my time in a manner that I get to listen. “To give you an example, I joined a company in 1997 that was in great difficulty. There had been a merger between a Swedish and a US company that had resulted in a lot of problems, so I was brought in as a CEO from the outside to try and make this merger work. “I was in place in Sweden on a listening tour, talking to a medical doctor, and he said that the major product that this company was looking forward to for its salvation and future growth was compromised with a company in the US. Had I known that before I joined the company, I might not have taken that risk. But suddenly I realised that the future growth of this company had been compromised in a deal that had to be untangled. “I got the product back before it got approved by the regulatory authorities and paid a handsome price to do so. But afterward, the product went on to become a very
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large product in the marketplace. The price that was paid was far lower than if we’d let the problem fester and the product get approved – we probably would have had a totally different story for that company had I not been a listener at that point.”
Listening in Indeed, Hassan’s cautionary tale of “being a listener” spans decades. In the 1980s it was the automobile industry, while the 1990s saw a huge boom in home computing – and now we see the dominance of the pharmaceutical industry. The one common denominator is the fact that they’ve all been extremely reliant on mergers and acquisitions for their survival. “Look at the fit,” offers Hassan. “Make sure that the fit with the other company is good. When I look at a situation in my industry, I look at the strategic aspect fi rst. Does it fit with the strategy that my company is trying to pursue in the next phase of its development? “Don’t get enamoured by the attraction of the object of the target company; instead, fi nd out whether it fits the next stage of strengths, weaknesses, opportunities and threats. Of course, part of the strategy fit is the culture fit and how one is going to deal with that. The second is size fit. In a size-driven business like pharmaceuticals, you want to make sure that the size engine will be stronger as a result of this combination, so that the combined sales that would be generated are properly supported by the size engine. “In too many cases in pharmaceuticals the merger occurs, the fi nancial community applauds, there are two or three good years of increased earnings and cost reductions – and then the stock price starts to go down again because the R&D pipeline is not supporting the larger sales base that’s been created. That’s just shortterm thinking and it doesn’t lead to shareholder value increases in the long term. I work very hard at the size fit.” The fi nal ‘fit’ that Hassan highlights is one of fi nance. “If you go in at a price that is not correct and you overpay, then no matter how good a job you’ve done on the operational side after the merger, it takes a very long time for the shareholders to get their money out of the transaction. It’s very important that the fi nancial numbers are also correct. Of course, nobody can bat 100; the key is to recognise it early and deal with it. An early lesson I learnt was to know who you are and lead from your own strategy – don’t try and grab something just because it looks good.” Perhaps one of the biggest challenges facing companies involved in acquisitions and mergers is the tendency for the institution to dampen in inspiration as its size grows exponentially. Many companies begin as rising stars within the industry, only to fi nd themselves run-
ning into difficulty further down the line. To counteract this, Hassan believes that a reinvention cycle within the company every five or six years will help significantly in stopping the drift toward complacency and arrogance based purely on past success. “It doesn’t have to mean a new CEO every five or six years,” asserts Hassan, “but it certainly means a new sense of urgency and reinvention within that time period. The other way to deal with ‘bigness’ is to create the sense of a small company within a bigger company. In other words, empower people in smaller groups to innovate and drive the business forward while still taking advantage of the fi nancial strength and the infrastructure of a larger company. That’s not easy, but that’s the job of the CEOs of larger companies. “I believe that in a large operation it’s impossible to get complete energy and alignment with everybody unless you get the energy and alignment of the frontline managers. A typical frontline manager might be supervising seven to 12 people. If you can get them on your side, if they can become ambassadors of the centre to the people that they supervise, then the direct workers will be energised and motivated. Whether you come in as a new CEO or you have a merger and you’re acquiring a new company force, get to the frontline managers early and get them to understand the strategy.
“You cannot succeed in a company if your management layers are not totally in line with the values. If there’s toxicity in the system, it’s not going to work”
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“Once people are challenged and encouraged, it’s surprising how much they can do – and it’s surprising how little gets done in terms of reaching out to the frontline and how many CEOs spend time with their division heads, or the next level below the division heads, but don’t get to the frontline managers.” Unfortunately, the reality is that it’s one thing telling people what you want them to hear, but completely another knowing that they’ve listened and the necessary message has sunk in. “To make sure it does,” continues Hassan, “have a simple strategy like we did at Schering-Plough. Grow the top line, grow the R&D pipeline, reduce costs and invest wisely. Once the strategy is clear, execution becomes the strategy. We repeated this in different ways through different platforms and stayed the course; as long as you don’t shift on strategy, people then start to believe and execute on it. In the end, execution is what holds companies back. Strategy is not that difficult to formulate. It’s the execution that really makes a difference.”
Execution In order to get to the stage of execution, it’s pivotal to encourage others in the organisation to communicate the vision that will lead to that execution point – and that encouragement needs to come from all levels, or the “top and bottom” as Hassan puts it. “From the top, I expect managers to model the behaviour and messages that I pass on from my level. But I also get people at the frontline with my messages and encourage them to expect their supervisors to follow a certain set of behaviours. “Doing it in that manner encourages the middle management to align themselves with the DNA of the new company that we’re trying to form. Sometimes, if you’re only relying on the conventional hierarchy and the cascade, you become a prisoner of the hierarchy. If you can go around that hierarchy to the frontline managers and show them the expectations they should have of their leaders, that creates its own positive cascade too. “In my opinion, the biggest derailer of leaders’ careers is a sense of complacency – which is also a form of arrogance – that starts to creep in when people have been very successful. They have risen up to a level because of certain skills they have and they believe those skills will make them just as successful once they’re at a senior level. What they start to miss is being in tune with the environment and with themselves. Many times, people get derailed because they don’t have a good balance and sense of what the reality is when they face challenges. If one stays in tune then one can stay flexible and nimble to deal with issues. “One approach I use for group decisions is to encourage one of the group to play devil’s advocate and to show the other side of the case. As we discuss a problem it’s always good to look at the other side and help prevent bad decisions. Even in my private decision-making, I have one or two confidants at the minimum who are my naysayers in terms of things I want to do. I like to bounce things off of them, recognising that they might have the negative point of view, which may be a braking mechanism on what I’m about to do. It’s very important to have balance when it comes to decision-making.” Th is idea of balance seems to permeate through the majority of Hassan’s principles. He says his executive team would think of him as a good person to work for – as proof, he points to how many people have followed him throughout his career – and he is also quick to suggest that they would also think of him as a “tough” leader with extremely
high expectations for both himself and his staff. Indeed, these high expectations stem from making mistakes in the past – the only true way to create a successful business. For Hassan, his favourite mistake is an easy one to recall. “My favourite mistake is not moving fast enough when I go into a new situation,” reveals Hassan, “and then regretting that I did not do it fast enough, but then hopefully learning, so the next time I see something like that I would move faster. In the case of Schering-Plough, I moved faster than I normally would because the opposite happened when I was at Upjohn in 1997. I was taking my time on the cultural changes and transformation. In Schering-Plough I didn’t lose a lot of time; even though I had imperfect information, I moved pretty fast. The key is to recognise one’s mistake and to learn from it in order to get better. That’s when the best learning occurs. “I’ve learnt from a lot of people and am very fortunate to have had good mentors along the way. My style is not to have a single mentor dominate, but to learn from many. One of those people was a former schoolteacher who happened to become my boss. I was in Lincoln, Nebraska, and he used to say things to me then leave the points he made on a little card, which I kept, and that was a very good way to learn. I still remember that person extremely well.”
Principles It is from such experiences and lessons that Hassan has formed his principles by which he runs his career and, perhaps as you would expect, they can be applied to the wider context of life principles: “Treat people with respect, make people want to come to work and succeed, make people want to have fun and they will succeed. If people are having fun, they’re likely to succeed. If they’re not, they’re most probably not likely to succeed as a team. There are times when one has to fall backwards and give way to the other side. There are times when one needs to move forward as a persuader and get them to change their point of view; that means dealing with external audiences on public policy matters, with customers, with one’s own board and with one’s own executive management team.” One would presume that after the Schering-Plough merger, Hassan would be willing to put his feet up for a bit and watch the world go by. In reality, nothing could be further from the truth. For the former CEO of ScheringPlough, the present involves him working with a private equity fi rm. For the future, who knows? Hassan certainly doesn’t: “I’m looking for a time when I might be able to take a break, but it seems as though people are always interested in accessing me as soon as possible.” Perhaps this level of focus is the greatest characteristic of a leader – and the biggest lesson to be learned from Hassan.
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Green medicine
Why pharmaceuticals need to clean up their act when it comes to waste management.
T
he world of pharmaceuticals contends with its own waste on a daily basis. Packaging, chemicals and disposable equipment are unavoidable byproducts of the drug-making process – but with the importance of carbon footprints and eco-friendly programmes slowly seeping into the psyche, it’s time for the corporate collective to step up and change tactics. In a bid to reduce such waste and provide cleaner, more environmentally friendly options to the pharmaceutical sector, some companies are taking it upon themselves to ‘go green’ and work towards reducing their environmental footprint. Spearheading this initiative is Healthcare Without Harm (HCWH), which aims to implement ecologically sound and healthy alternatives to healthcare practices that pollute the environment and contribute to disease. The Executive Director of HCWH, Anna Gilmore Hall, knows better than most the extraordinary number of options available to both the healthcare and pharmaceutical industries when working towards a greener future. “As you can imagine,” begins Gilmore Hall, “pharmaceuticals are a real problem because people are putting their unused medicines down the drain in their homes and hospitals. They either go down the toilet or down the sink drain and they end up in the water system; you’ve probably heard or read a lot about changes in the aquatic life based upon what pharmaceuticals people put in the water. We need to come up with a better solution for it. Incineration isn’t a good idea. Flushing them down the drain isn’t a good idea. There are plenty of chemical processes that can be used, but not one that can take
care of all the different kinds of pharmaceuticals that are out there. “What might work in a chemotherapy drug that has an alkaline base isn’t going to work in a cardiovascular drug that has an acid base. There’s no good answer right now. What is necessary is for us to come forward with some technologies around pharmaceuticals, which we’re trying to currently work out with a few different people and organisations. It’s an example where working upstream is really important. For instance, we’ve been talking to doctors and insurance companies to ask if there’s a way to prescribe medicines differently. The reason we’re throwing away pharmaceuticals is because we don’t use them for one reason or another.”
Reducing waste Allergies, reactions and pure stubbornness all contribute to a problem that leaves the patient with days worth of unused, and unwanted, pharmaceuticals that inevitably get thrown away. To combat this, Gilmore Hall and others
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“What is necessary is for us to come forward with some technologies around pharmaceuticals, which we’re trying to currently work out with a few different people and organisations”
have been working in partnership to find a way to develop and implement a voucher programme. “People could get two to four days of a specific pharmaceutical to see if it fits. If it does, they could go back and fill in a prescription that they know works while at the same time reducing costs and levels of excess waste. Just as we’ve done take-back programmes with electronics, we could take the pharmaceuticals that we’re not using and send them back to the manufacturer so that they could dispose of them in a way that’s better for the environment to just dumping them down the drain. “We’ve had some conversations with pharmacy chains, including people like Wal-Mart, to ask, ‘By working together what can we do to manage some of these issues?’ People are very interested in trying a few things here and in Canada. Having these voucher and take-back programmes piloted and talking to physicians and nurse practitioners to suggest that, instead of prescribing 30 days of pharmaceuticals, maybe you just need to prescribe a week, has helped push the message.
The Swedish touch How doctors in Sweden are utlising a new database to offer up the greenest of medicines to their patients. Unlike other physicians around the world, when Swedish doctors write out prescriptions for their patients they check a database. Nothing unusual there you might be thinking. But the database they check is the first of its kind in the world, offering information as to whether a specific medication might harm the environment. If it does, a more environmentally friendly alternative is available at the click of a mouse. It truly is as simple as that. With antidepressants, painkillers, antibiotics and oestrogen winding up in treated sewage that eventually gets released into the environment, the European Union has adopted guidelines from 2006 that grew out of a concern about traces of drugs discovered in waterways and drinking water. While the US focuses on figuring out how to keep drugs and other chemicals out of the nation’s waterways, the European Union’s approach goes right to the source, evaluating the dangers of medications when they are created – before they enter the environment. However, evidence suggesting that a chemical may harm the environment doesn’t necessarily mean that a product will be banned. Instead, the legislation requests that all pharmaceuticals are now evaluated by the European Medicine Agency under the same standards, with products on the market being exempt unless their use or form carries changes. The initiative, known as JanusInfo, rates pharmaceutical substances in terms of their toxicity, persistence and bioaccumulation potential based on data given by pharmaceutical manufacturers. It comes as part of Stockholm’s larger effort to reduce levels of the most environmentally hazardous medicines in waste and surface water by 2011. JanusInfo was so well received that it was soon extended across the whole of Sweden to include the addition of risk assessments that rate substances based on the probability that they will cause adverse effects. With this in place, the hope was that doctors would use the data to pick the greener option between two drug equivalents – and its success is there for all to see. So far, the database boasts roughly 1100 substances, although only 60 percent have been environmentally reviewed. By the end of this year, it is hoped that all pharmaceuticals marketed in Sweden will be assessed, excluding those unlikely to have an environmental impact – such as vitamins. The database is located online in the Swedish Medicines Information portal, or FASS, a commonly used resource for both doctors and the general public. While there are currently no statistics available on how many doctors have used the database, an industry expert alleges that the site registers about five million visits per month and is now regarded as the most important pharmaceuticals website in Sweden. So why isn’t this becoming a standard across Europe?
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A saviour in Bhopal Just before midnight on December 2, 1984, a Union Carbide pesticide plant in the town of Bhopal, Madhya Pradesh, India, erupted its mixture of methyl isocyanate (MIC) gas and various other toxins into the night sky. The events of the following two days would result in the estimated deaths of 20,000 Bhopalis, the hospitalization of 170,000 and an induction into the world’s worst corporate disaster. 25 years on, 390 tonnes of toxic chemicals abandoned at the Union Carbide plant continue to leak into the groundwater, polluting the only source of clean water available to the residents of Bhopal. The effect of the toxic leak has caused countless primary and secondary issues for women and children alike; deformities, severe menstrual and birthing problems – not to mention the inherent mental conditions – have left Bhopalis stranded, fighting a battle they had lost before it had even started. The Indian healthcare system was not set up to handle such a disaster; Union Carbide and its parent company, Dow Chemicals, have made no recent contributions to the situation, which has left hospitals and institutions in and around Bhopal severely crippled. Those being offered pharmaceuticals and medical attention often end up with generic steroids and ineffective antibiotics in an attempt to treat all conditions as one. To combat this, Health Care Without Harm (HCWH) set up its Sambhavna clinic in 1996 with the sole intention of giving the people of Bhopal a glimmer of hope. Sambhavna now boasts its own medicinal herb plantation, with doctors working in accordance with both allopathic and ayurvedic medicines to offer patients specific prescriptions. Their onsite laboratory for hematology, biochemistry and microscopy allows the staff to not only understand how pharmaceuticals work on a commercial scale, but more importantly allows the clinic to produce medicines and drugs at a far cheaper cost; more than 30 medicines at a cost three to five times cheaper than market preparations, to be exact. The buffer to all of this – Bhopalis are now flocking to the clinic at the rate of around 10 new patients per day. Great care is taken by all at the clinic to ensure that any prescribed drugs do not add to the damage already caused. As a matter of principle, the clinic only buys the medicines it needs from non-profit organisations. As little is known about the efficacy of different drugs in treating exposure-related injuries, special efforts are made to monitor the effects of both allopathic and ayurvedic therapies. Doctors and therapists have evolved a system of grading the severity of different symptoms so that relief obtained in each symptom can be documented with some degree of precision. The clinical data is then entered into a database and assessed on a monthly basis to assure the efficacy of different drugs. Aside from the allopathic pharmaceuticals that are bought, many ayurvedic medicines are grown, developed and assessed within the clinic grounds. Tinospora Cordifolia, for example, is known to aid the reduction of fevers, while Ricinus Communis plants are good for relieving pain in the chest, abdomen, limbs and joints – all key symptoms of gas exposure. Not only are these plants grown within the clinic grounds but they are also offered out to patients in order to be grown at home. As a complement to allopathic treatment, such ayurvedic medicines have literally helped save and change hundreds of lives. Dr. Deshpande, Sambhavna’s ayurvedic specialist, said: “The first problem was that we had to create an awareness of herbal medicines. In the beginning, people did not think so highly of ayurvedic medicines. Then the patients who tried them quickly found that they were getting much and sustained relief.”
Tinospora Cordifolia: Used as a hepatoprotectant, protecting the liver from damage and aiding the prevention of hepatotxicity that is otherwise produced as a side effect of conventional pharmaceutical treatments for tuberculosis. Also used to lower fevers.
Tamarind tree: Used to treat stomach disorders, general body pain, gastric or digestion problems and in cardioprotective activity.
Ricinus Communis: Offers pain relief for chest, limb, joint and abdomen problems. Also commonly used as a purgative and to flush out less-adverse toxins. More commonly known for its castor oil ingredients.
With the primary mission of HCWH well underway, their second mission isn’t far behind. With huge quantities of pharmaceuticals ending up in waste or aquatic systems, HCWH aims to protect people and the environment from the contamination of ultimately avoidable hazardous chemicals. Albeit on a very different scale, where Union Carbide failed to stop seepage into Bhopal’s water system, both the pharmaceutical industry, and each of us as individuals, need to begin to understand the potential impact pharmaceuticals could have on our environment. HCWH highlights how important it is to consider a medicine’s PBT: persistence, bioaccumulation and toxicity. Although levels are usually too low to result in acute effects such as organ damage, there is little information to suggest what else could be affected. The Bhopal clinic has already proven that an elementary version of ‘green chemistry’ can work in the harshest of contexts; perhaps more interestingly, it has worked out of necessity as opposed to choice. For the pharmaceutical industry, the choice of whether to begin to develop ‘green chemicals’ should be an easy one.
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“We also have to talk to the insurance companies because some of them encourage people to receive their drugs in 30-day batches. If you consider somebody who’s been on chronic medication for a long period of time, for example in a nursing home, and they die, they literally have pounds and pounds of unused medication that they have to get rid of because they can’t use it for another patient and there’s no alternative option. Pharmaceuticals are a real challenge to us because we know that they’re toxic to the environment. We know that they’re difficult to dispose of and frankly, no-one wants them hanging around their house.” Regardless of lifestyle or profession, almost all of us share that same secret of hoarding pharmaceuticals in drawers and cabinets. We’re all guilty of waste, but that’s only because we don’t have an alternative. Worryingly, some teenagers are starting to take it upon themselves to find a place for these unwanted drugs – by bringing them to parties, mixing them into a bowl and dealing with the consequences. In addition to reducing waste, reducing the danger to people is just as important to Gilmore Hall; with greener options come less danger for all concerned.
good way to start to address some of these issues.” And with carbon footprints gaining more of the spotlight in today’s society, addressing such issues cannot come soon enough. For the large majority of hospitals, this will mean a serious re-assessment of their waste management and greener purchasing options in order to ensure that the future of their hospital is set up to work by aiding not only its patients, but also its environment. Fortunately, there are already the clever few who have taken the green ethos to heart and have not only adapted accordingly, but have noted dramatic differences in doing so; it is they who have set the standards for the rest to follow. Until then, it’s a case of pushing the message of viability and necessity and putting trust in those who make the decisions.
“With carbon footprints gaining more of the spotlight in today’s society, addressing such issues cannot come soon enough”
12 principles of green chemistry With the spotlight on corporations to become more environmentally friendly, the US Environmental Protection Agency has outlined 12 principles that could turn pharmaceutical companies into green machines
Difficult choices “There are no good answers around pharmaceuticals,” she says. “I think the thing that we need to do is think about their design and what we can do to make them greener. That’s important. One of the issues from a manufacturing point of view is that they want as many preservatives in a drug as possible so it has a longer shelf life. I understand that. It makes good business sense to me. The problem is that when I take that drug and it’s excreted from my body into the water, the chemical that gives it a longer shelf life will also preserve it in the water. “It’s a complicated situation that we’re dealing with and I think the real issue around pharmaceuticals is prescribing practices, take-back programmes, working with the manufacturers around designing drugs a little differently and working with the insurance companies to see if there are better ways that we can dispense drugs in a way that’s still helpful, doesn’t waste money, and obviously makes sure that patients are getting the pharmaceuticals that they need. “We have a few colleagues in Stockholm City Council who have already developed a database that is available to physicians and nurses who have prescribing practices that list all the drugs, patient outcomes, side effects and impact on the environment. If I’m a physician and want to prescribe an antibiotic for someone, and I can choose between one that has a lesser environmental impact but the same patient outcome as another drug, I can choose to prescribe the one that has the least environmental impact. Figuring out a way that we can get that kind of information out to healthcare providers in a more systematic way is also a
1
Prevention: It is better to prevent waste than to clean it up once created 2 Atom economy: Design synthetic methods to maximise the incorporation of all materials used in the process into the final product 3 Less hazardous chemical syntheses: Synthetic methods should be designed to use and generate substances that possess little to no toxicity to human health and the environment 4 Design safer chemicals: Chemical products should be designed to minimise their toxicity levels 5 Safer solvents and auxiliaries: The use of auxiliary substances should be to a complete minimum and innocuous when used 6 Design for energy efficiency: Energy requirements of chemical processes should be recognised for their environmental and economic impacts and should be minimised 7 Use of renewable feedstock: A raw material or feedstock should be renewable rather than depleting whenever technically and economically practicable 8 Reduce derivatives: Unnecessary derivatisation should be minimised or avoided whenever possible 9 Catalysis: Catalytic reagents (as selective as possible) are superior to stoichiometric reagents 10 Design for degradation: Chemical products should break down into innocuous degradation products at the end of their function 11 Real-time analysis for pollution prevention: Analytical methodologies need to be further developed to allow for real-time, in-process monitoring and control prior to the formation of hazardous substances 12 Inherently safer chemistry for accident prevention: Substances and the form of a substance used in a chemical process should be chosen to minimise the potential for chemical accidents For more information ,visit www.epa.gov/greenchemistry
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INDUSTRY INSIGHT
Specialising in pharmaceutical water and beyond Johann Bonnet explains how water solutions fit in to the bigger picture of pharmaceuticals.
V
eolia Water Solutions and Technologies (VWS) started its pharmaceutical water grade activity at an early age, about 20 years ago. The pharmaceutical industry was, and still is, using water for its active pharmaceutical ingredients (API) process or manufacturing such as formulation, compounding and mixing. Pharmaceutical grade water enters into contact with the drug itself and is regulated by national or international pharmacopoeia standards such as USP 33, Ph Eur VI or JP 14 editions. These regulations defi ne the characteristics of the water – purified water and water for injection and clean steam. They haven’t dramatically changed in terms of water quality, but instead have changed in peripheral matters such as quality and risk management of products. VWS is one of the world’s leading partners in pharmaceutical, biotech and healthcare markets. Purified water is our original activity and the most common grade of water used in the pharmaceutical, cosmetic and biotech industries. It is the only utility generated on-site. End-users use it for cleaning, washing or as a by-product. When the company started this market, the industry needs were different; clients were interested in having a water treatment supplier able to design, build, commission and validate a sole purified water treatment system and nothing more. Specialising in this application, we have engineered dedicated systems to fit the market needs. Our flagship products are ORION, to produce purified water, and POLARIS to produce water for injection. This type of segregated project management has created issues for packages’ interfaces, responsibilities and duplicates of sub-project management. Not limited to water production
but aiming to design storage, distribution, automation and control of water plant and waste water treatments, VWS Technologies offers a broad portfolio for a complete pharmaceutical water cycle solution. In the meantime, the regulations and the industry have changed and moved to a more structured project management with GAMP 4.0 (good automated manufacturing practice), followed by a revision 5.0, which is a risk-based approach, and have implemented the 21 CFR Part 11 chapter, which is a milestone in automation and control of installations (such as system access management with audit trails). This evolution has changed the vision of how customers handle projects. As a water company, we have seen more and more requests for quotations of turn-key projects, in which a client has a need for water for his production and requests a supplier to design a complete solution from A to Z. Thanks to our pharmaceutical years of background, coupled with our broad portfolio of solutions, we have been able to follow this trend and secure major water and wastewater pharmaceutical contracts with companies such as Pfizer, Leo Pharma and AstraZeneca. For a couple of years, we have witnessed other changes approach our shores, including sustainable development and water management (also called outsourcing). The top 10 blue chip companies all have their own sustainable development programmes with clear energy, resources objectives and saving. On the other hand, the pharmaceutical industry is already used to outsourcing almost every step of its process from R&D and supply chains to payrolls and specialised production. Being different, Veolia Water Group has developed decades of expertise in water management solutions. We have brought our suc-
cess and expertise in water management to the pharmaceutical industry with contracts such as Novartis and Wyeth – good examples of energy and natural resources management underlined with a pharmaceutical project management execution. The water management solution offers many advantages to a pharmaceutical company. The key is for it to stay focused on its core business of the manufacturing of pharmaceutical drugs. The installations’ responsibility is transferred to a tier company. The operation and maintenance is still done by experienced, trained and qualified people. For the last 20 years, we have seen the industry and our client’s needs changing. From single packaged water generation systems to water cycle management solutions – as a group with a vast spectrum of expertise, we have been able to change and proactively follow those new needs. Beyond that, we see some new great challenges coming up within the pharmaceutical industry with opportunities such as creating energy from waste or chemicals, raw materials recovery from waste and valorisation. Challenges that we’re already working on. ■
Johann Bonnet took over the responsibility of the pharmaceutical market of Veolia Water Solutions & Technologies as global Market Manager. His responsibilities include global marketing and communication, key account management and international sales support. Bonnet has a professional membership with ISPE and has conducted several conferences about critical water utilities.
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COMPLIANCE
Beware the
Bribery Act
Strategies pharmaceutical companies worldwide will need to take to avoid criminal liability. By Tony Lewis and Alison Dennis
P
harmaceutical companies with activities in the US and in other countries around the world are – or ought to be – aware of the US Foreign Corrupt Practices Act (FCPA); indeed, some very substantial fi nes have been handed out to pharmaceutical companies found to be operating in breach of the FCPA. However, the UK Bribery Act 2010 (the Act), which became law in April 2010 and is expected to come into force on October 1, 2010, has the potential to go even further than the FCPA in the activities that might be found to breach its terms. Coupled with the recent appetite shown by the UK’s Serious Fraud Office (SFO) to pursue executives caught up in bribery, reaching through to capture activities of middle management, there are real reasons for pharmaceutical companies to look closely at the detail of the Act and at whether their current compliance policies are adequate enough to keep this new ogre at bay. The jurisdiction of the Act is wide. Its net will be thrown not only over companies that are incorporated in the UK, but also any companies that carry on a business there. What constitutes ‘carrying on a business’ in the UK has not yet been tested, but it could be a low threshold, perhaps requiring as little as a single sales agent or repre-
sentative in the UK. This means that companies with any reach into the country should be aware of its scope. The corporate offence under the Act will also apply to any act of bribery wherever it takes place in the world. The Act therefore raises the spectre of prosecution in the UK of a non-UK based company for bribery that takes place wholly outside the UK, even if that company has the weakest business link to the UK.
In the spotlight Active bribery occurs if, directly or indirectly, an individual or company offers, promises or gives an advantage to another, intending to induce that other person to do something improper or to reward them for behaving improperly. The key elements are that there must be a fi nancial or other advantage linked to improper performance of a relevant function or activity. Financial or other advantage is not defi ned in the Act but it will include anything of value. Clearly there is no need for money to change hands for an offence to be committed. It also constitutes bribery if someone directly or indirectly offers, promises or gives a fi nancial advantage to another person and he or she knows or believes that the acceptance of the advantage would itself constitute
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improper performance of a relevant function or activity. The Act defi nes relevant functions or activities to include any function of a public nature, any activity connected with a business, trade or profession, any activity performed in the course of a person’s employment and any activity performed by or on behalf of a body of persons, whether corporate or unincorporated. Essentially, all activities performed in a business context – whether in the public or private sector – will be caught. Th is goes very much further than the FCPA, which applies only to a limited population, namely foreign public officials. However, not every defective performance of one of these functions for financial advantage engages the law of bribery. There must be an expectation that the functions are to be carried out in good faith, or impartially, or the person performing it must be in a position of trust. Improper performance is then defined as performance that breaches that expectation or that trust. In order to ensure that the offence still bites where bribes are paid in jurisdictions where it is culturally acceptable to do so, the Act imposes a UK standard of ‘expectation’. Accordingly, UK standards of behaviour are imported into the determination of improper performance for the purposes of establishing liability. In addition to the active bribery offence, an individual or entity in receipt of a bribe will also be guilty of an offence of passive bribery. The passive bribery offence is essentially a mirror image of the active offence and requires the same constituent elements, namely a fi nancial or other advantage and improper performance of a function or activity. For example, a recipient in the UK who is bound by the GMC code on good medical practice will arguably commit an offence by accepting hospitality breaching that code, even if the hospitality is outside the UK and even if the recipient is unaware that he or she has breached the code.
The foreign bribe Like the FCPA, the Act includes a specific offence of bribery of a foreign public official. To be guilty of an offence under this section, the giver of the bribe must intend to influence the recipient acting in his capacity as a foreign public official and must intend to obtain or retain a business advantage. The offence is not committed if the law applicable to the foreign public official permits the payment, but the law has to be written and custom will not suffice. In addition, unlike the FCPA, there is no carve-out for facilitation payments. Th is is a strict liability offence that puts the onus fi rmly on the individual or entity making any payment, however small, to ensure that it is legitimate. Pharmaceutical companies that are reliant on foreign governments to allow their products to be trialled,
“It is essential that pharmaceutical companies take steps now to review current compliance codes to meet the more stringent requirements”
imported into, promoted, sold and used in a country will want to be aware of this in their dealings with anyone who may constitute a foreign public official – including regulatory authorities, ethics committees and hospitals. As ‘custom’ is no defence, there may be no substitute for obtaining a local legal opinion as to what payments are permitted by the local written law in order to ensure that an offence is not inadvertently committed. When considering the penalty for this offence, and the other offences in the Act, up to 10 years imprisonment for an individual and an unlimited fi ne for companies can be expected.
Prevention failure The most controversial area of the Act is a new corporate offence of failing to prevent bribery. This is a seismic shift in the law. Under existing bribery laws, it was exceedingly difficult to convict a commercial organisation under corporate criminal liability principles. The fault element of the offence had to be attributable to someone who was, at the relevant time, the ‘directing mind and will’ of the company. However, under the Act an offence will be committed by a commercial organisation for one of two reasons. The first will occur if a person performing services for the commercial organisation bribes another person by way of active bribery or bribery of a foreign public official. The second will prevail if the bribe is in connection with the commercial organisation’s business; in order to successfully launch a defence against such a charge, the commercial organisation will have to show that it had in place ‘adequate procedures’ designed to prevent bribery being committed on its behalf. The extra territoriality of the offence is particularly worrisome. An offence is committed irrespective of whether it takes place in the UK or abroad. If an agent, for example in the Middle East, made payments styled as ‘professional education’ to a healthcare professional in the Middle East, the agent’s principal could potentially fall foul of the provisions if it could be shown that it did not have adequate procedures in place to prevent such a payment being made. The penalty for the corporate offence is an unlimited fi ne. Under the second limb of this offence, liability will arise from the activity of those ‘performing services’ that may be outside the practical control of the commercial organisation. The Act stipulates that the capacity in which a person is performing services does not matter. The person may be an employee, agent or subsidiary, but these are just examples. There is a presumption that an employee will be performing services, but beyond that the Act makes it clear that the issue will be determined by reference to all the relevant circumstances and not merely the nature of the relationship with the company. It will not be possible to identify any particular class and determine in advance whether that class will be
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deemed to be performing services or not. Consequently, the position will need to be considered on a case-by-case basis, and clearly has the potential to include the activities of third parties whose activities the pharmaceutical company does not control on a daily basis.
of legislation are likely to have to review their compliance codes with this in mind.
Self-reporting
Adequate procedures It is likely that in order to demonstrate adequate procedures, a commercial organisation will need to provide a variety of procedures. First of all, it must provide evidence that it has an anti-corruption culture across the whole business, supported from the top, and that it has assessed the risk areas on its business and reflected them in its approach. It also has to show that is has a written anti-corruption policy in place that has been disseminated across its business and is understood. Finally, it has to highlight its use of due diligence in relationships with third parties and defi nitively show it has systems in place to monitor compliance. Clearly a one-size-fits-all approach will not suffice. Different businesses will be faced with different risk profiles, and will have to tailor their approaches accordingly. For pharmaceutical companies there would appear to a number of factors that put many into a high-risk category. First, companies are often selling into countries that are known to be susceptible to corruption. Second, the nature of the market means that companies frequently interface with foreign public officials. Third, there is the constant use of agents, whose activities will be imputed to their principal for the purposes of the Act. Finally, the market is unusual in that those who assist in development may also be customers of the end product, thereby greatly increasing the scope for corruption. Consideration will also need to be given to the interface between procedures that are put in place for the purposes of the Act and any existing codes or guidance. In particular, pharmaceutical companies that adhere to the ABPI Code will be faced with reconciling that Code with the provisions of the Act. Unlike the Code, the Act has no de minimis approach; any fi nancial or other advantage can trigger liability if it’s linked to improper performance. There is a danger that, if the Code does not mirror what would objectively be considered as improper under the Act, that compliance with the Code could trigger criminal liability. Guidance from the UK government on the interaction between industry codes and the Bribery Act would be helpful. Companies that also need to be compliant with the FCPA will face the additional burden of reconciling the requirements of the Act and the requirements of the FCPA. An obvious conflict is that the FCPA expressly carves out ‘facilitation’ payments; the Act does not. Pharmaceutical companies with activities potentially caught by both pieces
“The most controversial area of the Act is a new corporate offence of failing to prevent bribery”
Tony Lewis is Head of the Fraud & Anti-Corruption Group, and Alison Dennis is Head of the Life Sciences Group, at Field Fisher Waterhouse LLP. Email: tony. lewis@ffw.com and alison. dennis@ffw.com
The SFO has indicated that while having procedures in place is key to any decision to prosecute, it will also be greatly influenced by whether the alleged bribery comes to its attention as a result of self-reporting rather than as a result of an investigation initiated by the SFO. The incentive to self-report is the prospect of being dealt with more leniently – the SFO says that it will resolve such cases through a civil settlement wherever possible. A civil settlement also avoids the prospect of a ban from public procurement in the EU, which would follow from a criminal conviction for bribery. The SFO’s civil strategy initially met with success, with a number of self-reporters, notably Amec and Balfour Beatty, agreeing to civil penalties. In more serious cases, where the SFO considered a criminal conviction was required, it also began to develop US-style plea bargains, agreeing the penalty as part of a criminal settlement. Initially successful, it has now come unstuck as a result of judgments in the criminal and appellate courts in the cases of Innospec and dePuy. In the Innospec case, a plea agreement was reached with the US and UK authorities. The settlement involved a guilty plea by Innospec of conspiracy to corrupt and payments of US$40 million in fi nes to the US and UK authorities. The settlement was subject to court approval. Lord Justice Thomas reluctantly approved the settlement terms but emphasised that “the SFO had no power to enter into the arrangements made and no such arrangements should be made again” and that “the SFO cannot enter into an agreement with an offender as to the penalty in respect of the offence charged”. The Court of Appeal affi rmed this in considering the dePuy case. In that case, despite Mr. Dougall being a middle manager at dePuy who cooperated fully with the SFO, the court declined to endorse the 12-month suspended prison sentence agreed by the SFO. Although his sentence was reduced on appeal, management of pharmaceutical companies still need to become savvy to the fact that assisting authorities in the UK will not necessarily reduce a prison sentence imposed under the Act. The message is clear: With the expected October 2010 implementation date for the offences under the Bribery Act on the one hand, and the limited scope of the prosecuting authorities for leniency on the other, it is essential that pharmaceutical companies take steps now to review current compliance codes to meet the more stringent requirements and to ensure that they have adequate procedures in place to reduce their risk of being caught in the far reaching jaws of the Act.
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SOCIAL MEDIA
Pharma and
social media
– an EU perspective
By Tim Worden
T
he FDA’s November 2009 hearing into the challenges of the internet and social media for pharma was followed closely by industry and regulators in the European Union. The hearing represented the first substantial public review by a regulator of the pharma industry’s uneasy relationship with the array of social media channels available in the digital space. Although regulators in the EU have yet to tackle fully the use of social media channels by the pharma industry, the European Commission has acknowledged consumers’ hunger for online health information. Indeed, this is one of the drivers for the Commission’s proposals for new legislation to allow the provision by pharma companies of high quality health information to patients. Th is article looks briefly at the Commission’s proposals, which although extensive, do not go as far as to suggest the introduction of direct-to-consumer (DTC) advertising of prescription-only medicines in the EU. With those proposals – and the DTC prohibition - in mind, we go on to look at the legal and regulatory land-
scape in the EU that pharma companies need to navigate when engaging in social media channels, as well as the associated risks for pharma companies. Finally, we examine such guidance as there is currently from EU regulators, and consider briefly what the future might hold for pharma companies wishing to engage through social media channels in Europe.
The EU position The main piece of legislation governing medicines in the EU is Directive 2001/83, also known as the Community Code. It is here, in Article 88(1), that you fi nd the prohibition in Europe on the advertising of prescriptiononly medicines to the public. In February 2008, the EC launched a public consultation on its proposals to introduce legislation to ensure that all patients throughout Europe have access to good quality, up-to-date and non-promotional information on prescription-only medicines. The apparent driver for the changes was a fundamental lack of harmonisation within the EU as to the level and quality of health information available to patients in different countries.
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When the proposal was first launched, there was talk of it being an attempt to get DTC advertising in through the back door. While this is clearly not the case, the changes would represent a considerable new opportunity for pharma companies in Europe to interact with patients in a more meaningful way. More than two years after the consultation, however, the legislation remains some way from becoming a reality. Despite the ban on DTC in Europe, the Commission’s ‘information to patients’ proposals are very significant in the context of the opportunities available to the pharma industry through social media channels.
The dynamic challenge All social media channels – be it Facebook, Twitter or any old blog – have at their heart user-generated content (UGC). It is the dynamic nature of UGC that provides so many opportunities for marketing, information provision and discussion. At the same time, this is the source of the real challenges for pharma in the social media space. At a general level, there are a number of ways in which UGC may expose the host or sponsor of a social media channel to liability in the EU, including defamation – UGC may feature defamatory content; private and confidential information – UGC may contain information that is (or at least was) private and confidential to a third party; and copyright infringement – UGC may include material that infringes the copyright of a third party. A company hosting a website needs to consider whether or not to moderate the content on the site to remove material that may, for example, be defamatory. On one level, pre-vetting UGC completely removes one of the key features of social media channels: the dynamic and spontaneous nature of the material they contain. From a legal perspective, we need to consider the provisions of the EU Directive on e-commerce. It provides that a host of a website is not liable for information on that site where (among other things) the host has no knowledge of the illegal activity. Under English law at least, this provides the foundation for a reasonable argument that the host of a blog that permits the posting of unmoderated content should be able to rely on this defence if they had no control over, or knowledge of, the content. As a result, you would expect companies hosting blogs to take the view that they should not – from either a legal or a commercial perspective – moderate UGC. The position in a heavy regulated industry such as pharma, however, is not so simple.
Pharma-specific issues Many of the risks for pharma companies engaging in social media channels in the EU are the same as those in the US, such as outside-of-licence references. However,
the EU prohibition on the advertising of prescriptiononly medicines to consumers adds a further level of risk compared to the US position. The prohibition on DTC is even more troublesome when you view it in the context of how easily a pharma company can fi nd itself responsible for the UGC on a website that, in the pharma company’s view at least, it has no control over. While it is difficult to generalise about the position throughout Europe, there is no doubt that there is at the very least a substantial risk that a pharma company will be deemed to be responsible for the contents of a website (including UGC on it) where it sponsors, advertises on or instigates the site. If you then imagine how easily UGC could contain promotional statements about one of the pharma company’s products – thereby putting the pharma company in breach of the prohibition on advertising such products to the public – it is understandable that European pharma companies are reluctant to enter the social media fray.
Current EU guidance There is currently very little EU guidance that refers expressly to any social media channel. The UK’s Prescription Medicines Code of Practice Authority (PMCPA) – which is responsible for administering the Association of the British Pharmaceutical Industry’s Code of Practice for the Promotion of Prescription-Only Medicines (the UK Code) – has issued some brief guidance on blogs. The guidance states that if a pharma company were to sponsor a blog about a medicine or a therapy area, it would need to ensure that all information contributed to the blog complied with the UK Code. In other words, it would need to pre-vet all UGC on the blog. The PMCPA goes further, and states that pharma companies should not sponsor websites that are intended, or could reasonably be expected, to discuss medicines and their uses “as it would be impossible to guarantee their compliance with the Code”. There is no doubt that it would be difficult to guarantee compliance with the UK Code for all material on the site. In addition to the substantial resources required for a pharma company to pre-vet all the UGC on a website, imposing such a regime on a website would all but kill off the UGC on it. One possible way round the problem of prevetting is to take a step back and examine the situations in which a pharma company should in fact be regarded as being responsible for all material on a website. Indeed, this is an area that received substantial attention during the FDA’s November 2009 hearing, and it is hopefully one that EU regulators will address before long. The European pharma industry body, EFPIA, has also published some guidelines on websites available to healthcare professionals, patients and the public, in its
“The EU prohibition on the advertising of prescriptiononly medicines to consumers adds a further level of risk compared to the US position”
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Code of Practice on the Promotion of Prescription-Only Medicines to, and interactions with, Healthcare Professionals, Annex B (October 2007). However, as becomes clear on reading the guidelines, websites containing UGC were not contemplated at the time the guidelines were written, so they offer little assistance in relation to social media channels.
Managing the risks In the absence of any express guidance from EU regulators, there are a number of ways in which pharma companies can attempt to manage the risks of engaging in social media in the meantime. These are generally no different from the steps that a pharma company would take in the US, and it is important to note that not all of them can be applied to all social media channels, since a pharma company will not, for example, be able to exert a sufficient level of control in relation to third party sites. Very briefly, ways to manage risk include terms of use and other policies – covering a range of areas, including the basis upon which the site can be used, the type of content that is prohibited, the company’s ability to remove or moderate content, and the method that should be used to report any adverse events relating to the company’s products. They also include transparency – making clear statements as to the intended audience (e.g. patient or healthcare professional), the pharma company’s involvement and any jurisdictional limitations; and third party sites – informing users when they are leaving a page for which the pharma company is responsible and linking through to a third party site. Indeed, this is an express requirement under the UK Code.
What next in Europe? The European Commission already recognises the growing role of the internet as a tool for the provision of information about medicines to patients. Although its attempt to harmonise the law in the EU to allow for the provision of high-quality, non-promotional information by pharma companies to patients is proceeding slowly, it continues to represent an opportunity for the industry and regulators to discuss and formulate guidance on how information can be disseminated using the internet. It clearly makes sense for those discussions to go a step further and consider social media channels specifically, as the FDA has in the US. In reality, there is unlikely to be any further substantial guidance in the EU until the FDA issues its guidance on pharma, the internet and social media. Even once the FDA guidance emerges, there will be a period of review when regulators and industry consider how that guidance might be translated into a different regulatory environment, in particular one that does not permit DTC.
“The European Commission already recognises the growing role of the internet as a tool for the provision of information about medicines to patients”
In the meantime, pharma companies in the EU are likely to remain reluctant to enter the social media fray in any meaningful way. The biggest issue as matters stand is the fact that pharma companies will be held to be responsible for content, including UGC, that they can’t control – and if they do put in place mechanisms to control content to the extent required, they will fundamentally undermine the dynamic nature of social media. The degree of control is a point that was examined in detail at the FDA hearing, and one that received considerable attention in the written submissions from pharma companies. Th is element of any FDA guidance will be of particular interest in the EU, and is likely – more so than any other parts of the FDA guidance – to influence the approach taken in Europe. Tim Worden heads Taylor Wessing’s Pharmaceutical Regulatory Practice in the UK.
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EMERGING MARKETS
Reframing pharmaceutical industry strategy for emerging markets John Singer’s tips for making the most of new opportunities.
M
any people, and certainly most organisations, fail to appreciate that they operate in a system. There is a general frame of reference that treats the world as inherently disconnected and divided into ever-smaller pieces, which in turn are ‘out there’ in the operating environment somewhere. Each piece is considered to be independent from the other, moving in its own autonomous domain. Each piece is shaped by its own policies, and ‘optimised’ by different technical methods and calculations to predict and control how it performs. Being guided by a habit of breaking things apart to study them, we then get data that proves the correctness for this way of thinking, so that all seems to correspond to a fragmentary worldview. In other words, the operating environment is responding according to the theory with which it was approached. Pharmaceutical companies are confronting degrading trends across multiple dimensions to their commercial model. Sales growth in the United States is anaemic, despite companies spending somewhere between US$30US$60 billion a year on promotional activities. (Reliable data are hard to nail down and goes to the heart of the debate about industry image; the lower estimate, based on IMS Health market intelligence and cited by the GAO, supports the industry’s vision of being research-driven; the higher estimate, based on a new methodology pub-
lished in 2008 by Canadian researchers, reinforces the critics’ portrayal of a marketing-driven industry.) In the next five years, pharma will lose about US$142 billion in revenue as patents expire on 18 of the world’s 20 biggest drug brands. On top of all this, IMS predicts that by 2015, 80 percent of the marketplace will be undifferentiated; the very essence of the industry – science supporting product claims – will not provide a sustainable competitive advantage. Searching for new growth, the industry is now thinking strategy for the emerging markets – Brazil, China, India, Mexico, Russia and Turkey – which are set to overtake Europe and the US in pharmaceutical sales. China, with a population of 1.3 billion, saw its pharmaceutical sector grow by 26 percent in 2008. But instead of re-imagining its value proposition to take advantage of the blank slate these new markets afford, volume from price cuts is the dominating idea to drive business. Th roughout Asia, Eisai, GlaxoSmithKline, and Sanofi-aventis are slashing prices to less than two-thirds of the levels in Western countries in order to spur patient demand. Poor strategy is expensive. A problem going down this road is that drug companies already give high rebates to governments and other bulk buyers, and price cuts are already being forced upon drug companies by governments. Germany is imposing new discounts of up to 16 percent and will ban price increases on branded
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drugs; the Philippines’ government is asking major drug companies for ‘voluntary’ reductions of up to 50 percent; it is standard practice in the United States to give huge discounts, sometimes up to 70 percent, just to gain formulary access. Said another way, the same strategic reasoning that has brought the industry to where it is now in established markets is being used to guide its strategymaking process for emerging markets. The nature of the strategic environment has changed. Companies are abstractions more than they are factories and offices. Products and services are more about knowledge and linkages than about steel and mass, and globalisation has more to do with structural transformation in society than it does competing against an enterprise from another country. Networking capabilities have not only changed the economics of information, they have also changed the way individuals and organisations relate to one another. So in addition to a significantly more complex environment, the nature of self is more complex. This means that the boundaries between customer, competitor and collaborator are essentially meaningless, calling into question the defi nition of industry as it is conventionally understood. Against this backdrop, common sense should call for a new way of thinking. A different mindset would imply a dramatic change in how companies view themselves, customers, markets and the idea of creating value. Pharmaceutical companies, however, still see their purpose as making and selling drugs, a concept of organisation little changed since the turn of the 20th century. There is also
Case study Visa remains the best case of a company deliberately conceptualised as a collection of assets managed as a purposeful system. Its system vision, developed over two years by its founder Dee Hock, positioned Visa as an “enabling organisation that exists for the sole purpose of assisting owners/members to engage in providing devices for the exchange of value with greater capacity, more effectively, and at less cost.” In other words, Visa is a corporation whose product is coordination. It consciously established the reference point for selforganisation and created the conditions for new systems concepts and ideas to emerge. Founded in 1970, Visa today has an annual sales volume of US$1.4 trillion and grows at 20 percent a year.
an entire economy – marketing services, information technology providers, data vendors, research and development companies, analysts, healthcare organisations, government bodies, regulatory agencies, the investment community – a system of systems – whose actions and reactions are pegged to this organisational context.
Creating new systems concepts Changing a system means changing that system’s fundamental character; it is not something that can be achieved by graft ing new technology (social media, for example) on to old modes of thought. A dinosaur in a fur coat is not a mammal. The crucial competence for managers today is the competence to work with system design, to create value from new forms of aggregation. The skill to do this lies in a process of creatively conceptualising a territory that does not yet exist, and then organising a new value proposition to take advantage of the white space. United Healthcare used this kind of system-level approach to assemble a new commercial model from disconnected pieces. In early April, it linked with Walgreen’s and the YMCA to essentially form a new health system, one whose common purpose is to improve outcomes in diabetes. China is another good example. At the heart of healthcare transformation in China is a landmark US$125 billion in government funding targeting substantial improvement to the nation’s healthcare infrastructure. Rather than applying its standard linear business model of extrapolating how many diabetics (for example) there will be in China, and then promoting the technical merits of an undifferentiated drug that competes on price, the bigger payoff will come from a market strategy that repositions a drug as the keystone to a new system of health. The pharmaceutical becomes the reference point in a new industry ecosystem designed to change the effect of disease. The customer is not the patient, but the Chinese government and regulatory policy. Physical, technological, biological and social systems all share structural similarities. They have the same principles. Th is is why a deep understanding of how to work with complex adaptive systems can reveal unique insights and create new solutions for a broad arc of settings. It is an approach that can be scaled for tactical, operational and strategic applications. The successful companies in the 21st century will be those who can internalise this mindset to produce systemic logic. For the pharmaceutical industry, this is how it can reposition itself as part of a new value-creating system, one designed specifically to improve health as a whole. It can be applied to not only emerging markets, but also in places like Africa and North America. ■
“Changing a system is not something that can be achieved by grafting new technology on to old modes of thought. A dinosaur in a fur coat is not a mammal”
John Singer is Managing Director of Blue Spoon Consulting.
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iStrategy Europe 5th-6th October 2010 The Millenium Gloucester Hotel, London, UK Transforming the Enterprise with Digital Expertise
Participation in Social Media and Interactive Marketing is no longer revolutionary.
it’s crucial.
In 2009, companies with dedicated social media activity boosted sales by over 18%, while those with minimal or no presence saw a 6% decrease. As 2010 marks a shift in consumer mentality from recession to recovery, companies must adjust their strategies according to how customers make purchasing decisions. Brand differentiation will be key, and companies must be at the forefront in areas like social web, mobile apps and SEO in order to create a distinguished customer experience. iStrategy October 2010 marks the next step in your marketing strategy. Here, you will learn: • The biggest trends in consumer spending online • Innovative technologies for communicating with customers and how to best implement them
• The top 10 most important factors in your social media strategy • How to measure your social capital and monetize your efforts • Hot buttons to bring people to your web store front • How to find your best fit in integrating email and social media • How to deliver a response-driven, relevant message The simple truth is that there is no magic one-sizefits-all marketing mix. iStrategy will arm you with the deep understanding of aligning social media and digital strategy according to your organization’s processes and operations to achieve the objectives you’re after. Join us in October to network, share ideas, and most importantly find out how to build your marketing strategy to its fullest potential.
For More Information, Please Call: Max Ford, Global Event Director. Tel: +44 (0) 117 915 4753. Mobile: + 44 (0) 7798 820 711
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Travel I Gadgets I Books I Leisure I Money
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Eastern promise With the biggest population in the world and one of the oldest civilisations, China is a traveller’s paradise.
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Sit back and wait in style
A look at tomorrow’s ideas today
Healthy body, healthy mind
India’s rural vaccination project
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hina’s splintered history of civil wars, imperialism and ancient dynasties has left its mark on the century’s people, but it remains a nation that refuses to step down – which is precisely why it continues to entice people from all over the world. From the terraced rice fields in Yunnan to the hustle and bustle of Shanghai city, the sheer size of China means that whatever you’re looking for, you’re more than likely to find it here. To narrow down your search, NGP thought it would be a good idea to put together a few sure-fire hits for your next journey. All you need to do now is find the time.
Beijing: The Forbidden City S The official Chinese imperial palace from the Ming Dynasty to the end of the Qing Dynasty, the Forbidden Palace served as the home of emperors and their households for over 500 years. Construction of the Forbidden City began in 1406; it would eventually take 15 years to build using more than a million workers. In 1644, the palace was captured by rebel forces led by Li Zicheng, who proclaimed himself emperor of the Shun Dynasty – perhaps not his best move, seeing as he fled as soon as the combined armies of the former Ming general had anything to say about it. The design of the palace was meticulously planned to reflect the Dynasty’s religious and philosophical principles, but above all to symbolise the majesty of Imperial power. If you look at the statuettes on the rooftops, you can defi ne which is the most important building by how many stand on the top from one to 10. Find the most superior, fi nd harmony and leave feeling refreshed – so the story goes. W Beijing: The Great Wall It goes without saying that Beijing is not the only place you’re going to see The Great Wall, but it’s a good starting point seeing as it’s the best preserved – running over 373 miles and containing roughly 827 wall platforms. However, if you’re travelling through peak season, it might be an idea to visit the Mutianyu Great Wall instead. Alternatively, go with the flow and get those legs burning up steep peaks and broken bricks to challenge your curiosity. If you really looking for some Chinese adventure, it might be worthwhile taking the ‘Beijing Great Wall Tour’: five days of tripping around the Wall, stopping at the Forbidden City, Hotong and a few other ancient musts. Just remember to keep your water levels up – no one wants to be the main attraction in a tourist group.
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X Shanghai: Huangpu River Wriggling down towards the East Sea, the Huangpu River divides Shanghai into east and west and is considered an ancient lifeline of the city, with its uses for drinking water, shipping, fisheries and flood discharge. Perhaps not the most exciting thing in the world, except when you see it at night, when it glows under the nightlights of Shanghai’s skyline – then it takes on a completely different form. Cruises are available every day on practically any time scale; if you want to get the most for your money, however, a serious suggestion would be to time your cruise with the marvellously named ‘Th ree Waters Mingle Together’, where the blue-grey waters from the Huangpa River, blue coloured waters from the East China Sea and yellow coloured waters from the Yangtze River merge together to form a water show that you’re unlikely to see anywhere else. Perhaps not for those without sea legs though. X Shanghai: Nanjing Road Th ree words: shopping, shopping and shopping. Okay, one word three times, but you get the drift. China’s premier shopping street boasts over three miles of top-notch shops that attract thousands of fashion-seeking shoppers every month. From KFC to D&G, Nanjing Road provides anything and everything to exchange your hard-earned cash, or plastic, for. If you’re after more traditional wares then be prepared to go weak at the knees with a plethora of shops providing silks, jade, embroidery and furniture deals amongst others. If you’re looking for a present for your other half, this is the place to go. If you’re looking for your other half – you’re already too late.
Hong Kong: Ocean Park S Admittedly this one is more for the kids, but you’re unlikely to see another theme park like this in your life. The most interesting way to get there is by hiring a boat for the day and sailing over to the island – yes, it has its own island, complete with cable cars to navigate the shores – and moor up. After you get through the standard minefield of turnstiles and ticketing booths, go over and see the high divers that will leave you shocked, before jumping onto the cable cars that will see you rocked. Only kidding – but they take you across to the other side of the island, where the fun really begins. Suffice to say, if adrenaline and heights don’t agree with you, you might want to prop yourself up against the island bar, where you’re sure to enjoy the sights and sips. W Hong Kong: Victoria Peak Th is is, without fail, the best spot to admire the sights and sounds of Hong Kong. Travelling to ‘The Peak’ up one of the steepest tramlines, your arrival literally verges on the mystical. Go at night and soak up the famous Hong Kong skyline; take the plunge when it’s overcast and walk through low-sitting clouds and ancient mists; get romantic and take your loved one up at dusk. To be honest, any trip up to the Peak is going to take your breath away. If it doesn’t, try asking Hong Kong for your money back.
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ON THE MOVE
First class airport lounges Take a break and recharge your batteries by stopping off at some of the world’s best equipped airport lounges during your next long haul flight. Luft hansa First Class Terminal, Frankfurt W
Lufthansa has taken the lounge concept one stop further at Frankfurt International Airport by creating an entire all First Class Terminal. Features include private spaces with daybeds and luxurious bathrooms. Private office units with a telephone and laptop are also provided for those who are unable to clock off. The restaurant hosts a seasonal menu and first class wines, and an extensive buffet is also available.
Virgin Clubhouse, Virgin Atlantic, San Francisco
The Wing and The Pier Cathay Pacific, Hong Kong
Virgin’s Clubhouse lounge at San Francisco Airport boasts spectacular views of the city’s iconic landmarks. To best reflect the bright harbour lights and distinctive buildings of the city, it features moving glass panels which are coloured to create different atmospheres within the same space. Five monitors displaying digital art and a magnificent view across the Bay further embellish the setting. For the busy executive, there are laptop points throughout and 24-hour business facilities. The centrepiece of the Clubhouse, the bar made of glass, has won a string of prestigious design awards.
Located within Hong Kong International Airport, The Wing and The Pier premier lounges both offer exceptional first class facilities. The lounges pay attention to individual details, and feature six DayBreak rooms and Personal Living Spaces. Relax in an armchair with a private television, or take full advantage of the top of the range broadband-connected personal computers. There are multiple places to dine within the Lounge; The Haven offers a stylish menu and interior or choose a meal at the Noodle Bar. For a concierge service, the Marco Polo Club is available.
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X Club Lounge, British Airways, Heathrow BA’s Terminal 5 hosts six lounges within its Galleries arrivals area. The BA Club Lounge, features luxurious furniture classically tailored in rich velvets and herringbone fabrics. A restaurant menu is provided, with waiter service allowing passengers to dine before boarding their fights. Also located within Terminal 5 is the Elemis Travel Spa, which provides spa therapies for both men and women to refresh and relax passengers.
W Premium Lounge, Etihad Airways, Abu Dhabi Elegant, warm and welcoming, Etihad’s lounge offers the comfort, space and facilities to make your journey through the airport a pleasant experience. The lounge is well equipped with laptop connections, high-speed internet access and fax and telephone facilities. There’s also an excellent range of audio and video programmes to keep you entertained, as well as a fine selection of refreshments and hot and cold buffet dishes to choose from. Situated on the first floor of the airport, it offers a stunning view of the runway.
X Golden Lounge, Malaysia Airlines, Kuala Lumpur Designed with families in mind, the Golden Lounge at Kuala Lumpur International Airport features a man-made rainforest, a river and a Creative Kids’ Corner. There is even a slumber room for tired children. For adults, there are also plenty of opportunities to unwind, including massage chairs and an extensive drinks and food menu. Travellers can also take advantage of wireless LAN, meeting rooms and Malaysian stock market update displays on screens around the lounge.
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EXECUTIVE TOYS
Technology for today’s executive W Apple iPad Apple believes the new tablet will occupy a gap in the market between an iPhone and a MacBook. Downside: it’s too big to fit in your pocket and too impractical to replace a laptop. There’s no denying the iPad’s seductive curves and glorious 9.7-inch screen will already have Apple fans’ palms perspiring, and it’s initial sales are impressivebut its ability to garner long-term mass-market appeal looks uncertain.
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X Fujifi lm Finepix REAL 3D W1 Camera manufacturer Fujifilm has capitalised on the current 3D hype with the world’s first digital camera with three-dimensional imaging. The W1 uses two lenses and two sensors, which take an image of the foreground and background. This is processed to create an image that jumps out at you. Users can either view the image on the camera’s 2.8-inch screen or buy a special eight-inch digital photo frame (sold separately).
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Denon AH-D7000 headphones
Can you ever justify shelling out US$1080 on a set of headphones? Denon thinks you can, which is why its premium AH-D7000s have been receiving critical acclaim from both tech experts and audiophiles. These lighweight cans produce stunning sound quality across all music genres. The build quality is sumptuous – personified by the glossy mahogany enclosures and soft leather earcups.
Desirability rating: aaaa
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W LG GD910 A watch that doubles as a mobile phone; what’s not to love? Thanks to LG and its futuristic-looking watch phone, the stuff of dreams when you were a kid is now a reality. As a wristwatch it’s on the chunky side, but its pleasing looks more than compensate. It boasts a touch screen, high speed internet and video calling capabilities. Oh and it displays the time too.
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EXECUTIVE HEALTH
Healthy body, healthy mind Work-related stress getting to you? NGP explores three of the top retreats in the US, giving you the perfect excuse to disappear into the wilderness on your next American business trip.
The Lodge at Sun Ranch A luxury eco-lodge located in southwestern Montana, near the angler-acclaimed Madison River and just 40 minutes from Yellowstone National Park, Sun Ranch is in the center of a 26,000-acre sustainable cattle ranch. Recreational opportunities in the Madison Valley include y-ďŹ shing, horseback riding, hiking, canoeing and bird-watching. Stay indoors and savour a culinary lesson with the chef or enjoy the indulgence of a massage in your cabin.
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Blackberry Farm A rustic retreat hidden away in the Great Smoky Moutains in Tennessee, Blackberry Farm is situated on a pastoral 4200-acre estate, with great views and boundless luxury. Regardless of the season, Blackberry Farm offers countless activities and adventures from nature hikes, mountain biking and fly-fishing, to pure indulgence at the Farmhouse Spa.
The Greenbrier An award-winning resort located in White Sulphur Springs, West Virginia, the Greenbrier has been around since 1778 and is full of southern American hospitality. With an unparalleled tableau of outdoor adventures to challenge the widest range of interests, it is impossible not to find something to your liking within this 6500-acre playground. The resort offers more than 50 activities, including whitewater rafting, hunting, falconry, billiards, bowling, croquet and wine tasting.
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ccredited Social Health Activist (ASHA) Radha Das, administers Hepatitis B vaccine to a two-month-old child at South 24 Parganas district, 40 km south of Calcutta, Eastern India. The National Rural Health Mission (2005-2012) seeks to provide effective healthcare to rural populations throughout the country. The government of India launched the Mission in an effort to reform the structure of the country’s basic healthcare delivery system. The Mission adopts a synergistic approach by encouraging good health in the segments of nutrition, sanitation, hygiene and safe drinking water. It also aims to bring the Indian systems of medicine into the mainstream to facilitate higher standards of healthcare.
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