The Ecosystem Paradigm If you’re not thinking ecosystems, you’re not thinking

THE ECOSYSTEM PARADIGM

If you’re not thinking ecosystems, you’re not thinking

It has become fashionable in the life sciences industry to use the word ecosystem. Read the industry media or listen in at a conference and it won’t be long before you hear phrases like ‘patient-centred ecosystem’, ‘innovation ecosystem’ or ‘oncology ecosystem’. The term has become ubiquitous. But trying to find meaning in these various uses of the word is more difficult. More often than not, ecosystem is used as a modish synonym for a part of the market or a relationship between different organisations within the market. Language has its fads and it’s pointless to rail against this particular semantic trend. But thinking about our industry as an ecosystem has so much more value than sounding fashionably smart. In this article, I’ll guide you through how ecological thinking helps business thinking and addresses real-world challenges in the life sciences market.

Brian D Smith, Principal Advisor, PragMedic To an ecologist, an ecosystem is a biological community of interacting organisms and their physical environment. This concept helps us to see that ecosystems in the life science industry are not simply sub-parts or the market or the industry. They have wide boundaries and those boundaries blur and overlap with other ecosystems. This definition also emphasises complex interaction, which is central to understanding how our industry works. Ecologists also subdivide ecosystems into the biotic and abiotic. The former is all of the biological organisms in the ecosystem whilst the latter consists of its non-biological elements, such as geology and climate. Ecologists understand that the biotic components of the ecosystem, the different species of plants and animals, adapt not only to each other but also to the abiotic environment. To a lesser but important degree, the biotic component also influences the abiotic, such as when rain forests shape the weather and grazing animals change surface geology. As we will see, these fundamental concepts of biological ecology become useful when we start to think about how the life sciences industry works.

From biology to business

If we eschew the fashionable but illinformed use of the term, thinking of ecosystems in the same way that an ecologist does gives us a powerful and practical way to understand and manage the industry that provides healthcare professionals with the tools to do their job.

The first idea to transfer from biology to business is the definition of an ecosystem. It is best to think of the life sciences ecosystem broadly rather than narrowly. It makes little sense to talk of an oncology ecosystem when it is connected at manufacturer, user and patient levels to most other therapy areas. Similarly, to describe the innovative ecosystem as innovative companies in big pharma and biotech is too narrow when it is so closely connected to payer systems and to publicly funded basic research. Oncology (and other therapy areas) and innovation (and other parts of the value chain) are really just parts of a wider life sciences ecosystem, just as the tree canopy and the ground vegetation are part of a rain forest ecosystem. Most misleading of all are terms such as patient-centred ecosystem, which is as platitudinous as calling the forest tree-centred. The life-sciences ecosystem is a community of interacting commercial, governmental, non-profit and other organisations, embedded in their sociological and technological environment that employs science towards the betterment of human health. Using this wider, biology-like, definition of our industry ecosystem also reminds us that, although distinct, our industry is adjacent to and intimately connected to adjacent ecosystems such as the health provider ecosystem and government finance ecosystem.

The second useful idea we can borrow from the biological ecologists is the biotic/ abiotic division. Looked at that way, the life sciences ecosystem includes a biotic component of many different ‘species’ of organisation, from pharmaceutical, device and diagnostic companies to distributors to contract organisations to regulators to Health Technology Assessors (HTAs). As in any ecosystem, these species are interdependent and are in a constant state of co-evolution and adaptation. Drug development and the regulatory environment are good examples of this. So are how we sell our products and how our customers wish to buy them. Equally, many pharmaceutical innovations today emerge from the way that big pharma has adapted to work with small, focused innovator companies. Overall, a truly ecological perspective helps us to see our industry as a massively interconnected network of many different and differing business organisations, just as a coral reef is a similar system of biological organisms. Our industry’s parallels to the abiotic part of ecosystems are less obvious but just as informative. Whilst biological organisms adapt to geology and climate, business organisations in the life sciences ecosystem have to adapt to their sociological and technological environments. The former includes laws and regulations but also political systems, demographics and social attitudes. The technological environment encompasses both directly relevant technologies, from CRISPR to the many ‘omics’, and indirectly relevant technologies, such as information technology and nanotechnology. Just as biological organisms can shape weather and geology, life science businesses can shape the sociological and technological environments. Consider, for example, how control of infectious diseases has shaped demographic and epidemiological trends. Or how companies such as Illumina have shaped the availability of genomic information. Overall, understanding that the ‘biotic’ life science companies co-exist and co-evolve with the ‘abiotic’ sociological and technological environment is an important step towards understanding our industry’s complexity.

Transferring these concepts from biology to business, as opposed to simply throwing the word ‘ecosystem’ around, is of more than academic interest. It has many important practical implications, some examples of which I will describe in the following paragraphs.

As in any ecosystem, pharma and medtech firms, government agencies and nonprofit organisations are interdependent and are in a constant state of co-evolution and adaptation.

Speciation

We often talk of the changing pharma business model or the evolving medtech business model. If we equate business models to species, both of these ideas are, from an ecosystem perspective, naïve and simplistic. In biological ecosystems, the evolutionary struggle for survival leads to speciation and biodiversity. Research into the evolution of the life sciences industry reveals the same speciation process. There is no longer a pharma business model, there are many. The medtech business model is not evolving, it is diversifying into many related but distinct models. Practically speaking, this means that life sciences firms have to understand that speciation process and deliberately direct the evolution of their own business.

Holobionts

Biologists talk of ‘holobionts’, which are interdependent networks of distinct organisms that work together to survive. A coral reef is a holobiont but so are you with your gut microbiome. From an ecosystem perspective, the idea of one company competing against another is again too simple. In nature, one holobiont competes against another and building and maintaining a holobiont is a critical survival skill for many organisms. The same is true in the life sciences industry,

where external innovation and outsourcing mean than no company competes alone. In practice, this means that life science firms need to build their capabilities to attract and retain partners. The holobiont concept has many lessons for how to do this.

Keystone species

The ecologists’ concept of keystone species refers to one that is widely and diversely connected to other species in the ecosystem. The concept is important because changes that affect a keystone disproportionately impact the whole ecosystem. Bees, starfish and India’s Cullenia tree are all examples of keystone species. In the life sciences ecosystem, for example, elite universities and their associated teaching hospitals are keystone species. So too are certain global innovator companies. Functionally, being aware of the keystone organisations in the life science ecosystem helps life science companies to drive change in clinical practice and to develop innovative markets.

Niche construction

Some biological organisms can modify the abiotic environment to improve their evolutionary fitness. Beavers’ dam building is the most often cited example but earthworms, termites and, of course, humans also change their own environment rather than just adapt to it. The concept of niche construction is important in explaining the success of certain species. In the life sciences ecosystem, some companies have extensively influenced their own environment. For example, industry-shaped regulation creates barriers to entry whilst laws around orphan drugs have created a profitable market sector. From a real-world perspective, niche construction activity is often a better competitive strategy than simple adaptation the environment. Again, biology has important lessons for business here.

Habitats

Ecologists define habitats as regions with specific characteristics and that are populated by specific species. Desert, forest, grassland and ocean are all examples of biological habitats. The concept is important to understanding why certain species thrive or fail in different regions. In the life sciences industry, habitats are defined by how value is created and for whom. For example, many life science companies are limited to the habitat where value is created for institutional payers by means of technological innovation. By contrast, generic pharmaceutical companies operate in the habitats where value is created by operational efficiency and for either institutional payers or consumers. The application of the habitat concept helps life sciences firms both to plan growth and anticipate competition.

Holism

The ecosystem perspective has allowed ecologists to develop practical approaches to managing natural environments based on some key principles. Central to this is the idea of holism, the opposite of reductionism. From an ecologists’ perspective, it is foolish to do one thing to an ecosystem and expect a single, direct consequence. The complex interconnectivity of an ecosystem always leads to indirect effects. The same concept of holism also means that ecosystems can only be improved or sustained by adjusting multiple factors at once in order to keep the system in balance. The concept of holism applies well to the life sciences ecosystem. The introduction of Sovaldi and Harvoni, for example, transformed hepatitis C management but had unintended consequences for the financing of some health systems. The human genome project did not have the immediate, direct consequences many predicted but had wider, indirect results. The passage of a single act in the US, Hatch-Waxman, was intended to improve competitiveness but also transformed the global generics business. Understanding the holistic nature of the market is essential to crafting strategy in the life sciences.

The ecosystem paradigm

When executives in the life sciences industry set out to manage their businesses, they necessarily work within a certain paradigm that shapes their thinking. For many years, the pipeline metaphor was that thinking. Others have seen the industry as a garden where tending to basic research grows new medicines. Like all metaphors, these have their limits. The ecosystem paradigm is a much more comprehensive, coherent and useful paradigm for anyone wanting to understand the global life sciences industry. It is more than a metaphor. It is the only way to make sense of the most important industry in the world.

Brian D Smith is a worldrecognised authority on the evolution of the life sciences industry. He welcomes comments and questions at brian.smith@pragmedic.com

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1.Could you share with our readers about the story behind the emergence of the new brand Aragen?

From our humble beginnings two decades ago offering chemistry and informatic services to a small group of clientele, we have now grown into a ‘Partner of Choice’ for both large pharmaceutical firms and cutting edge biotechs. We now offer a wide range of solutions and partner with customers from Concept through Commercialisation, and have a broad platform that includes small molecules and biologics. Over 95 per cent of our revenue comes from the West. Recognising the growth of the firm, and with our 20th year Anniversary this year, the Board and the Management Team decided that a name change that reflects the current firm would be more appropriate. We wanted the new brand name to represent more than just chemistry solutions, be recognisable in the West, and best show who we are today. After a 9 month process, several intense discussions, and in consultation with a brand agency, we identified the name Aragen. Aragen is a name that we already own, through our acquisition of biologics capabilities in the US. The new name Aragen Life Sciences (“Aragen”) combines our small molecule (GVK BIO) and the biologics (Aragen BioSciences) platforms into one seamless solution for customers.

GVK BIO IS NOW ARAGEN

In every molecule is the possibility for better health

2. Digging deeper into the name itself, how do you feel the Aragen Life Sciences name will drive your future and is there anything that fellow brand marketers should realise bringing a replacement name into the world?

Aragen is a name known for its scientific expertise and customer centric culture in the West. We are now investing in branding around the name – our initial feedback from both current and prospective customers has been very positive. They love the name, the colours, the purpose and our identity. Our employees are quite excited, as the social media chatter reveals. We expect the name to be a great foundation around which we can build a great future for the firm.

3. What big, bold bets is Aragen Life Sciences making to leap ahead of competitor and customer expectations to ensure sustained growth in the long-run?

We believe the new investment by Goldman Sachs, at this important juncture in our company’s development underscores the tremendous opportunity ahead. Working with Goldman Sachs, we are well-positioned to address the opportunities in front of us to become a leading, global player

Manni Kantipudi

CEO Aragen Life Sciences (formerly, GVK BIO) with comprehensive end-to-end solutions for drug discovery and development,” said Manni Kantipudi, CEO of Aragen Life Sciences.

Goldman is one of the largest financial institutions in the world, among the most prestigious, and has deployed more than US$3.6 bn in capital in India since 2006. We are excited by the opportunity to work with the global Goldman team, harness their intellectual horsepower, leverage their strategic thinking, and judiciously invest our new access to significant capital. We have some big ideas that I expect we will pursue over the near future, but what will not change is our fundamental intent: invest in solutions that will accelerate our customer’s journey to market. We will continue to be solely a service company, with no conflict of interests by competing with our customers. The outsourcing market is an exciting one for us, and there are more than enough opportunities there to propel our long-term growth.

4. Rebranding goes way beyond a logo change or a marketing exercise. What is your approach with making a steady and cohesive message that traverses all components and channels of your brand?

During the re-branding exercise, we delved deep into the most intricate details of the organisation to identify the personality of the organisation at large, re-visit our brand purpose and accordingly renew our brand purpose – ‘In every molecule is the possibility for better health’. Our brand personality AURA is the acronym for Ambitious yet Understated, Resilient and Agile makes us an organisation that is quick to adapt to changes and deliver outcomes to support our customers.

5. Can you brief our readers how your logo colours share certain emotions about your brand and why does that work best over others?

Aragen’s brand colors are loaded with symbolism and meaning. Deep Blue conveys the possibilities of science. It also cues confidence, strength and resilience.

Vibrant Orange symbolises life and better health. It also conveys ambition and energy. Measured Grey balances the colour palette and conveys the understated in us. The acronym of the symbol AURA (Ambitious, Understated, Resilient and Agile) as mentioned earlier, has an in depth meaning to it.

Known to be ambitious, we are far sighted and we think big. We seek to be the preferred discovery, development and manufacturing partner to the

global life sciences industry. In spite of that, we are understated. We support so that our customers succeed. We are focused on results and deliver value to customers with quiet confidence. We also believe that resilience is in our DNA. Whatever the challenge, we make it work. Any challenge that does not break us, will only make us stronger. Being an agile organisation, we are quick to respond, always listening to our customers’ requirements and continuously adapting to their changing needs.

6. What are the key elements that drive you and Aragen?

The key elements that drive me and Aragen are defined by our purpose and promise made to ourselves. Aragen’s brand purpose (In every molecule is the possibility for better health) has evolved from the fact that customers come to us because they know that we look at every program as the most important program we have. Aragenites are engaged and energised knowing that their work is making a difference to human health. Our inspiring and powerful purpose is like our north star, it guides us at every step of the way. Aragen is known around the world for its focus on every molecule, every program, every customer, irrespective of how big or small they may be. Our focus is driven by our belief that possibilities lie within every molecule, and it is up to each one of us to find solutions for better health. Our renewed promise of ‘Together Ahead’ is to our employees, customers and other key stakeholders: • Your Science. Our Solutions. Together Ahead • Our Support. Your Success. Together Ahead • Aligned Values. Diverse Talents. Together

Ahead • Global Clients. Local Presence. Together Ahead

Our Values E T H I C S

Empowerment Freedom to make a di erence.

Teamwork One Team. One Purpose.

Honesty & Integrity Say what you do. Do what you say.

Innovation Unlocking our collective genius.

Customer Focus Exceed expectation consistently.

Safety & Compliance First and Always.

Value Differentiators

Customer at the Center Innovation Mindset & Empowered Teams

Concept to Commercial

Agile Partnerships

Technologyenabled Platform & Operational Excellence

Our advantage is driven by the customer centricity the organisation offers for stakeholder’s success. We ensure the customer is always at the centre surrounded by empowered teams with an innovation mind-set. Through our agile partnerships, technology enabled platforms and process excellence, we drive programs from concept to commercial to accelerate the success of our partners.

7. How do you see Aragen evolving over the next decade?

I see Aragen evolving as a global organisation in the next decade. We were the first CRO to make an overseas acquisition in 2017. Inorganic growth will continue to be one of our approaches to scale our range of capabilities and solution offerings to our customers across the small and large molecules. We have made significant investments in our current facilities which will also propel us in our ambition to be seen as one of the global leaders in this space.

8. Would you consider rebranding as an opportunity to strengthen and reaffirm your company’s identity and values, both internally with your employee base and externally with your customers?

Most definitely yes. The re-branding exercise has given us an opportunity to re-discover our strengths as an organisation and build upon it. The company has grown from strength to strength over the last 20 years. While our values remain the same, it is now aligned to the new brand promise and purpose. Our promise and purpose is something that is carried by each and every employee of the organisation During this exercise, we were able to streamline quite a bit to bring in a structure to our vision for success. We are expanding our employee base and we are looking at a new hiring strategy in the year to come.

9. What according to you are the steps to ensure a smooth transition into the new name for your clients and other stakeholders?

We have constantly been updating our employees and clients on the name change and the new identity. The brand personality, purpose and promise has been defined keeping in mind every employee’s mindset within the organisation. It is rooted in our DNA and the same is being shared with our customers too.

10. Final Comment for our audience?

Aragen is now well positioned to be a partner of choice to our customers. With a strong track record performance and a clarity on what we want to accomplish in future, we will be able to bring in cutting edge solutions to advance our customer’s assets.

AUTHOR BIO

Manni’s journey with Aragen (formerly, GVK BIO) started way back in 2007. He joined as the President and then became the Director and CEO in 2009. Over the years, the company has emerged as a leading R&D and manufacturing solutions provider to the global life science industry under his leadership. During this tenure, Aragen Biosciences (based out of CA, USA) was acquired to expand service offerings for large molecules. Aragen (formerly GVK BIO) was probably the first Indian CRO to make an overseas acquisition as a part of our inorganic growth. Manni is responsible for the overall growth, providing strategic direction and shaping the culture of the company.