COVER NGP US_FINAL:may09
BACK TO FRONT
The battle between generics and branded products Page 36
Why drug discovery should come from the patient Page 62
Robert Spiegel forecasts troubled times for the industry Page 42
Schering-Plough’s move from Rx to OTC Page 72
www.ngpharma.com • Q3 2009
UPWARDS How new CEO Chris Viehbacher plans to transform sanofi-aventis Page 28
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ED NOTE:may09 11/06/2009 14:36 Page 3
Editor’s note 3
Double trouble What will the rise of generics mean for the pharmaceutical industry?
eneric versions of branded products are nothing new – back in the 1920s, Bayer tried to prevent copycat versions of aspirin from reaching the market, but lost its fight in court. Generic drugs, however, were not always well tested for safety and effectiveness. As recently as the 1950s and early 1960s, drugs were allowed to go to market with the idea that if they caused severe side effects, they would be withdrawn. The widespread birth defects caused by the sedative thalidomide were a tragic outcome of this policy. In 1962, the FDA introduced new regulations requiring extensive testing in humans before drugs could be sold to consumers. Although the rules also applied to branded products, generics producers had the additional hurdle of having to wait for the brand’s patent to expire before they could start testing. As a result, production of generics dropped to 35 percent of drugs with an expired patent. Now generics are on the rise again. Thanks
“It’s when you run into difficulty that you suddenly realize you’ve got to explain where your strategy is” Chris Viehbacher, CEO, sanofi-aventis (Page 28)
to President Obama’s decision to increase access to them as a way of bringing less expensive treatments to the American public, the generics star is once again in the ascendant, and their production is now nearly 100 percent of their branded rivals. What will this mean for the pharmaceutical industry? It depends on your point of view. Companies whose main business is the production of generics champion their relative cheapness and the fact that they serve to increase competition. Makers of branded drugs – who have often invested millions in their R&D processes – argue that extended patent periods are necessary for them to recoup their investment. Without this, they say, drug development will dry up and we will miss the chance to discover valuable and potentially life-saving new treatments. Who’s right? Most industry watchers are taking a wait and see approach, but with the President’s backing, it seems likely that generics are headed for a position of strength once more.
Meanwhile, pharmaceutical company heads have other things on their minds, including patent cliffs, a lack of new blockbusters, and the ongoing international financial crisis. But one of their number, at least, is optimistic: sanofi-aventis CEO Chris Viehbacher has big plans for his new company, as he tells us on page 28. Also in this issue, Brent Saunders, President of ScheringPlough Consumer Health Care, explains how his company plans to beat the patent expiry crunch by investing heavily in Rx to OTC switch. Big pharma has always been good at dealing with whatever the market throws at it, and this latest round of challenges will probably be no exception. Generics or no generics, the industry has a knack of coming out on top. n
“Putting more focus on generics will bring prices down in the US by a significant percentage” Barath Shankar, Senior Industry Analyst, Pharmaceuticals, Frost & Sullivan (Page 36)
“If we say generics are good enough, and we don’t need any new medicines, 20 years from now we’re going to have major issues” Robert Spiegel, Chief Medical Officer, Schering-Plough (Page 42)
Marie Shields Editor
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CONTENTS:ngpus6 11/06/2009 14:24 Page 5
In with the new Sanofi-aventis CEO Chris Viehbacher on mergers, mega trends, and why he’s optimistic about the pharmaceutical industry’s future
72 A limited shelf life? Schering-Plough’s Brent Saunders examines the industry’s move to OTC switch
Checkmate Will the rise of generics mean end game for big pharma’s branded products?
CONTENTS:ngpus6 12/06/2009 08:56 Page 7
42 Turbulence ahead Robert Spiegel on transparency, health-care reform and the notorious failure of Vytorin
50 Changing times Wyeth’s Thorir Bjornsson talks attrition, mergers and what the future holds for the industry
56 Complications Alexander Kamb of Amgen examines the genetic complexity of cancer
62 Looking backward to go forward Why GSK’s Anne Phillips believes drug discovery should focus on the needs of the patient
94 Comparative effectiveness research in the real world Why OCER is need to fill the gaps
92 Beth Harper, Clinical Performance Partners, Inc. 118 Jay Bigelow, MicroMass Communications, Inc. 124 Sati Sian, IMS Health
ASK THE EXPERT 137 Tania Pinilla, Motorola University CLINICAL RESEARCH
101 A flash of insight Qingqin Li explains how bioinformatics helps us to understand biological processes MARKETING
106 Keeping in touch Karen Smith looks at the importance of adherence in physician-patient relationships
78 Running the risk
TROUBLESHOOTER 40 Richard Lake, Restek Corporation 48 Michael Costello, Siemens Water Technologies
Ellen Strahlman explains why a balance of safety and efficacy is essential in clinical trials
84 Trials and tribulations John Smith examines the importance of good decisions for ensuring patient welfare
113 BRANDING With Artcraft Health Education’s Marc Sirockman, Guard Dog’s Camille DeSantis and Maria Casini, and Lisa Kindig of Hall & Partners
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CONTENTS:ngpus6 11/06/2009 14:24 Page 9
70 Masao Moriyama, GE Healthcare 76 Paul-André de Lame, Anabase International Corp. 126 Tom Mattus, Successful Strategies International, Inc.
Bayer’s Edgar Sur explains how Lean and Six Sigma can work together
NEXT BIG THING
140 Balancing act
54 William LaRochelle, 454 Life Sciences
IN THE BACK
128 Joining forces
133 New concepts in risk control Bayer’s Helmut Mothes examines the success of Lean
Sammy Rashed on clearing the barriers to supply chain security
144 Thought leader 109 The future of DTC How will direct-to-consumer advertising hold up in troubled times?
120 Personal best EMD Serono’s Jim Hoyes on the need for individual accountability to ensure sales force effectiveness
Novartis’ Steve Dreamer is the champion of continuous manufacturing
148 Cut down, collaborate and focus on the customer Pfizer’s Kim Sendall is busy designing the manufacturing facility of the future
152 Regional focus 154 Events 158 Profile 160 Photo finish
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UPFRONT NGP US16:nov08
Negative stain electron micrograph of the Swine Influenza Virus
ON THE VERGE OF A PANDEMIC
THE WORLD HEALTH ORGANIZATION (WHO) says the H1N1 virus (often referred to as ‘swine flu’) has now spread to 73 countries, with 139 deaths from the disease since it was first detected in April. The latest WHO figures, released on June 8, show more than 25,000 people have been infected with H1N1 worldwide.
The United States tops the tion appears to be taking list with more than 13,000 hold outside North America. cases – followed by The WHO had said preMexico, with more viously it needs to The United than 5700. Most of see clear eviStates tops the the deaths from dence of suslist with more than swine flu have octained curred in community cases, followed Mexico. transmission of by Mexico The World the virus from perHealth Organization has son to person in at said it is closer to declaring a least two regions of the pandemic because the infecworld before it raises its alert
UPFRONT NGP US16:nov08
Frontline THE BRIEF
to the Phase 6 pandemic in the country aboard a stage. The alert level is curflight from the Philippines rently at Phase 5. began showing sympMeanwhile, toms and later More than authorities in tested positive Saudi Arabia for the virus. people have been confirmed the In the infected with country's first Philippines, the swine influenza case of the virus. health officials H1N1 Saudi Health said De La Salle worldwide Minister Abdullah alUniversity in Manila Rabeeah told news media has suspended classes for 10 that a nurse who had arrived days after a foreign student
tested positive for swine flu. Officials in Chile say a 37year-old man has died after contracting the virus, and Egypt reported its first case. The Mayor of New Orleans was placed under quarantine in China after a fellow passenger on his flight to the country exhibited flulike symptoms. Mayor Ray Nagin, his wife, and one member of his staff were being held in Shanghai. Nagin’s office said the three were quarantined as a precaution. It says no one in Nagin’s party has displayed symptoms of the flu. According to the Centers for Disease Control, swine influenza is a respiratory disease of pigs caused by type A influenza virus that regularly causes outbreaks of influenza in pigs. Swine flu viruses do not normally infect humans. H1N1 is a new influenza virus causing illness in people, which was first detected in the United States in April 2009. This virus was originally referred to as ‘swine flu’ because laboratory testing showed that many of it’s genes were very similar to influenza viruses that normally occur in pigs in North America. But further study has shown that this new virus is very different from what normally circulates in North American pigs. It has two genes from flu viruses that normally circulate in pigs in Europe and Asia and avian genes and human genes. Scientists call this a quadruple reassortant virus.
64% of adults 65 years and over received an influenza vaccination during the past 12 months
5-20% of the US population gets the flu each year
The CDC has antigenically characterized
1567 seasonal human influenza viruses since October 2008 It has also characterized
84 novel influenza A (H1N1) viruses Between October and May, the influenzaassociated hospitalization rate for children aged 0-4 was
3.85 per 10,000
Source: www.voanews.com and www.cdc.gov
UPFRONT NGP US16:nov08
NO COLONOSCOPY? THERE IS DISPARITY in colorectal cancer screening (CRCS) among different socioeconomic and ethnic groups in the US, according to a recent review published by F1000 Medicine Reports. Inadequate medical insurance amongst the poorer socioeconomic and ethnic groups has influenced the uptake of certain types of screening. Of the several screening modalities currently available, colonoscopy, sigmoidoscopy and fecal occult blood testing (FOBT) have been shown to reduce colorectal cancer incidence or mortality. Some screening methods are less likely to detect flat lesions, and patients who opt for these modalities (perhaps for financial reasons) could be at risk of lesions being missed.
53 million people in the United States are living with Alzheimer’s
WAIT TIMES EXAMINED RESEARCH CONDUCTED by consultants Merritt Hawkins & Associates has found a dramatic difference in wait times to see certain specialists in 15 US cities. In Atlanta, for example, residents wait an average of 11.2 days, the shortest time among the cities polled. Boston has the longest wait
times, at an average of 49 days. Wait times in Boston apparently increased after the state of Massachusetts made it mandatory for residents to have health insurance, which had the effect of increasing demand for physician visits. Survey researchers called the offices of five types of specialists (1162 offices in all) between September 2008 and March 2009.
REVERSING ALZHEIMER’S RESEARCHERS IN THE US have found the gene that can reverse the effects of memory loss in mice. The study, led by Li-Huei Tsai of the Picower Institute for Learning and Memory at Massachusetts Institute of Technology, is published in the 7 May issue of Nature. The researchers believe the HDAC2 gene and the protein associated with it are promising targets for the treatment of memory impairments. The gene also seems to bring about long-lasting changes in how other genes are expressed. This enhances memory by increasing synapses and altering neural circuit structure, Tsai explains. Mice were bred to have Alzheimer’s-like symptoms and were
The callers requested the first available appointment for a new patient. In addition to Atlanta and Boston, the cities polled were Denver, New York, Portland, Detroit, Miami, Minneapolis, San Diego, Seattle and Washington, D.C. Between 10 and 20 offices in each city were called, for each of five specialties: obstetrics/gynecology, cardiology, orthopedic surgery, dermatology and family practice. According to the survey, US residents wait an average of 27.5 days for an ob-gyn appointment, 15.5 days for a cardiology appointment, 16.8 days for an orthopedic surgery appointment, 22.1 days for a dermatology appointment and 20.3 days for a family practice appointment.
then treated with histone deacetylase (HDAC) inhibitors, drugs that target HDACs, enzymes that control gene expression. When the mice, which appeared to forget tasks they had previously learned, took the HDAC inhibitors, they appeared to regain their long-term memories and were once again able to learn new tasks.
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UPFRONT NGP US16:nov08
IN MY VIEW
BERNHARD KIRSCHBAUM, Executive Vice President of Research and Development, Merck Serono We see a significant opportunity to build and create the right momentum and so there is no talk of job cuts. On the contrary, we are further building our R&D capabilities, particularly in the new core areas that we have announced.
longer periods. I did live through this during my time at Aventis, when you always had to look at the stock market and to sometimes make short-term decisions that were not absolutely in line with regard to long-term requirements.
Until we find cures or better protection for cancer, there will be a medical need because there are still many people dying, many cancers are not very treatable and we are far away from cures.
There was one compound that I accompanied to the market at the beginning of my career and that was just a great experience and a huge learning curve. This was one of the reasons why I have stayed in the industry, because the experience is so manifold and so broad.
The whole industry, including ourselves, is looking for disease-modifying agents that are able to at least postpone the onset or the progression of these diseases. That would have a huge impact on the individual patient and also on society, if you think about the explosion of the cost and the burden associated with the aging population. The Merck family has invested a lot in this company, not just money. It’s not like with some other families who might invest here and there and when the one business suffers they pull their money out and put it into something else. That’s not the case with us, which brings additional stability. We also have both the chemicals and the pharmaceuticals business sectors and this helps us to balance things out. We don’t have to look every day, every minute at the stock price; instead we can think in
The development in autoimmune disease during the past decade has been dramatic. It was interesting to see such a field where people were on the one hand anxious to treat pain and on the other hand there were cheap generic compounds available and you had to decide if it was worth the effort of embarking on further work. There were already treatment options but there was – and still is – medical need in this area. We have created a structure where people are interacting much more. They are encouraged both by the structure and by management to interact, and we are seeing good progress in this. As one of the most recent activities in this area, we have merged the research and development departments into one function, headed by myself. It is a big advantage to have everybody around one table.
UPFRONT NGP US16:nov08
Frontline H1N1 SPECIAL REPORT
Sporadic Local Regional Widespread
US HUMAN cases of H1N1 flu infection Source: CDC
A weekly Influenza Surveillance Report prepared by the Influenza Division. Weekly influenza activity estimates reported by State and Territorial Epidemiologists* Week Ending May 30th 2009 * This map indicates geographic spread and does not measure the severity of influnenza activity
FUTURE IMPACT OF THE VIRUS THE NOVEL INFLUENZA H1N1 flu is thought to spread in the same way as seasonal influenza viruses: through the coughs and sneezes of people who have the virus. Since the H1N1 outbreak began in the United States, an increasing number of states have reported cases, with associated hospitalizations and deaths. By early June, all 50 states in the United States and the District of Columbia and Puerto Rico were reporting cases of novel H1N1 infection. Nationwide influenza surveillance systems indicate that
overall influenza activity is decreasing, but novel H1N1 outbreaks are ongoing. Investigators are still not sure how serious this novel H1N1 virus will be in terms of how many people will die or develop serious complications, or what affect it will have during
the influenza season in the fall and winter. Because it is a new virus, most people will have little or no immunity against it, and this may cause a more widespread and severe illness. Also, there is currently no vaccine available to protect against H1N1. The Centers for Disease Control anticipates that there will be more cases, more hospitalizations and more deaths associated with it. At this time, most people who have become ill with novel H1N1 in the United States have recovered without requiring medical treatment and have experienced typical flu symptoms.
2 3 4 5
7 8 9 10
Massachusetts 787 (0)
UPFRONT NGP US16:nov08
VITAMIN SALES ON THE RISE AS MORE AMERICAN WORKERS continue to find themselves unemployed, many are switching their prescription drugs to over-the-counter products in a bid to save dollars. Sales of vitamins and nutritional supplements have been rising consistently for years, but in recent months there has
been a surge in buying, much more so than before, which is reflected in the falling pharmaceutical stock market. Professor Reinhardt, a Professor of Economics at Princeton, has commented on the rise of the increased vitamin sales and notes it to be an indication of consumer-directed health care.
MORE EMERGENCIES RECENTLY RELEASED FIGURES gent cases were seen within the recommended two minutes. SHOW that emergency departPrivate and public hospitals ments are growing at a faster admitted 7.9 million people in rate than other hospital ser2007-08, an average annual invices. In 2007-08, more than crease of 3.6 percent. Same-day seven million people attended admissions grew at a rate of 4.4 emergency departments, an percent, while overnight average annual inadmissions grew crease of nearly 2.5 percent. five percent In 2007-08, Thirty four since 2003-04. more than days was the The figaverage waiting ures also people attended time for elective showed that emergency departsurgery in public one quarter of ments hospitals in 2007people who 08, which was two days showed up at emerlonger than 2006-07 and six days gency departments were seen longer than in 2003-04. The within the recommended time longest median waiting time was for their category of urgency. 68 days for eye surgery, while the Almost all of the extremely urshortest was 12 days for cardiothoracic surgery.
FROM THE VAULT In the Q4 2008 issue of NGP, SEAN HARPER, SVP of Global Development at Amgen, examines the global health burden caused by osteoporosis, and looks at the exciting new treatments now appearing on the market. Harper also outlines Amgen’s groundbreaking work in translational medicine. To read more go to www.ngpharma.com, click on ‘Previous issues’ in the left column, choose ‘Issue 14, October 2008’ and scroll down to ‘Cover stories’ to read about Amgen’s efforts to tackle a disease that costs the country’s health-care system $20 billion a year.
FANAPT APPROVED FOR SCHIZOPHRENIA TITAN PHARMACEUTICALS, INC. global sales from the class of has announced that Vanda atypical antipsychotics exceeded Pharmaceuticals, Inc. has received $20 billion. FDA approval to market Vanda has said it Fanapt (iloperidone), plans to make an atypical anFanapt available In 2007, global tipsychotic, for in pharmacies sales from the class of atypical antipsythe acute treatlater this year. chotics exceeded ment of adult Titan will repatients with ceive royalties schizophrenia. on global net Schizophrenia sales of Fanapt is a chronic debilitating equal to eight percent disorder affecting more than two on annual net sales up to $200 million people in the US, and mil- million, and 10 percent on annual lions more worldwide. In 2007, net sales above $200 million.
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UPFRONT NGP US16:nov08
FOOTBALL PLAYERS FACE HEALTH RISKS
AMONG SPORTS FANS, football that our largest athletes; the ofis considered the most popular fensive and defensive linemen, sport in the US, and young men would compare not so favorably have trained to become physito the general population with cally larger so they can comrespect to glucose [blood sugar] pete in this rough game. But and cholesterol,” he says. “In recently, doctors have been fact our larger athletes, as well concerned that these athletes as the average NFL player, comare gaining too much weight, pare better than the average putting them at risk of American with respect to heart disease. glucose and comparaHead ble from lipids Recently doctors have been Physician for [fats].” concerned that these the Baltimore But these athletes are gaining Ravens, Dr. young athletes Andrew showed a weight, putting them Tucker, says greater prevaat risk of heart that for the last lence of high blood disease two decades, bigpressure compared ger has been seen as to other men their age. better for linemen [offensive High blood pressure can lead to and defensive players who line heart disease, stroke and kidney up in forward positions]. “Being failure, especially as people age [a] larger size in the blocking and become heavier. scheme, as well as on the deIn a 2006 study of early fensive line has become inmortality among NFL players, creasingly important.” medical experts suspected While size has mattered on body weight was a factor in the playing field, it is also raistheir deaths. Fifty-two percent ing concerns among sports of those players died of heart medicine experts. Tucker has problems, stroke and cancer, studied the risk for cardiovaswhich are common problems cular disease among 500 playlinked to obesity. Source: www.voanews.com ers in the NFL. “We expected
APTUIT APPOINTS NEW SVP AS PART OF THE COMPANY’S commitment to growth and an ongoing dedication to customer service, Aptuit announced the appointment of Colin D. Terry as Senior Vice President, Sales and Marketing. Terry will work with Aptuit’s operations leaders, and sales and marketing teams to differentiate the Aptuit service offering and expertise, and enhance customer relationships through a new structure in sales and marketing. “Colin’s unique blend of knowledge, experience and proven leadership will be a significant addition to Aptuit’s management team,” stated Timothy C. Tyson, Executive Chairman and Chief Executive Officer of Aptuit. “His proven track record of success will be a great asset as we move into the next phase of growth and opportunity.” Terry brings years of marketing and sales experience in the area of respiratory products and a deep knowledge of the pharmaceutical industry. He most recently served as the General Manager and Vice President at Valeant Pharmaceuticals International, where he combined operational responsibilities of sales and revenue
for Western Europe and the Middle East with a regional business development role. He began his career at 3M Health Care before moving to GlaxoWellcome, where he held positions of increasing responsibility, becoming Director, Asthma and Allergy, and Respiratory. While in global strategy teams at Glaxo, he was responsible for the inhaler devices for new product launches, including inhaled corticosteroids and asthma medications: Advair, Flovent and Serevent. He also worked in Canada as part of the respiratory franchise team. Terry received a degree in Microbiology from Queen Mary College, London University and accreditation from the Chartered Institute of Marketing. “Aptuit is uniquely positioned for market leadership and I embrace the challenge of expanding the sales reach to serve the company long-term,” said Terry. “I am excited by the opportunity to bring my expertise to Aptuit, as the company continues to establish innovative programs which help customers to address their drug development needs across the entire drug development continuum.”
POWDER ALERT BAYER SENT 33,561 packets of white powder through the US Postal Service in a promotion for aspirin, triggering a federal alert to local emergency services. “Police departments are going to be inundated with calls about this. The anthrax scare
is still fresh in people’s minds,” said Lawrence Police Chief John J. Romero. “After 9/11 it’s a whole different ballgame, and I think the company should have probably realized it.” The white powder was Bayer’s Quick Release Cystals, which is being launching in the US.
UPFRONT NGP US16:nov08
THE UK’S National Institute for Health and Clinical Excellence (NICE) has issued its Appraisal Consultation Document for Nexavar (sorafenib) for the treatment of advanced liver cancer.The document does not recommend the use of sorafenib for the treatment of hepatocellular carcinoma (HCC), a decision which directly conflicts with current UK and worldwide guidelines for the recommended treatment of HCC.These are preliminary recommendations and are open for consultation.
LOW BIRTH RATES and high life expectancies have caused a 35year decline in the proportion of children in Japan’s population. This could cause numerous problems for the country, according to a report by the AP/Miami Herald. According to a report by the Ministry of Internal Affairs and Communications, the percentage of children younger than age 15 as of April 1 fell to 17 million, or 13 percent of the country’s 128 million people.
ChemGenex Pharmaceuticals Ltd., an Australian drug-maker, has revealed that its experimental leukaemia drug was able to kill cancer-causing stem cells in laboratory experiments, suggesting it could be used to help cure some patients. In fact, evidence shows that the drug killed as much as 90 percent of stem cells in the tests.
HCC is the most common form of liver cancer and accounts for 80-90 percent of all primary liver tumours. In the UK more than 3100 new cases were diagnosed in 2005 and liver cancer causes more than 3000 deaths every year in the country. The Hepatocellular UK Group (HUG) recently launched guidelines for the management of suspected HCC in adults, which state that sorafenib is the standard of care for patients with advanced HCC for whom no potential curative option is available.There is a feeling among many doctors that patients with advanced HCC should be able to access the latest specialised medicines via the NHS.
The proportion of people older than 65 is on the increase, and now accounts for 22.5 percent of the country’s population. Japan trails 30 other countries in the proportion of children, including the US, where children make up 20 percent of the population.
At a summary of the tests data, presented at the European Hematology Association’s meeting in Berlin at the beginning of the month, ChemGenex revealed that Omacetaxine mepesuccinate – as the drug is called – fought chronic myeloid leukemia in patients who don’t respond to Novartis AG’s bestselling cancer drug Gleevec. Evidence even showed that the new drug could be used in combination with treatments such as Gleevec to rid patients of cancer.
UPFRONT NGP US16:nov08
Frontline INTERNATIONAL NEWS
TIME TO DELAY
While the economic recession may not have hit the pharmaceutical industry as hard as some of our other industries, experts believe bad times are on the horizon. Largely, this is because of the massive loss of income and sales as a result of patent expirations of blockbuster drugs, the decline in prescriptions, doctor visits and the overall consumer spend because of the economic recession.
Earlier this month, leading Japanese pharmaceutical company Takeda announced that it would delay seeking European approval of a key diabetes drug candidate from the original target of this year to 2012, in a concerted effort to conduct an additional study on the drug. However, this news marks the second major setback for the drug.
Despite raising concerns with the EU, troubles for generic companies that export drugs to developing countries via Europe are continuing. According to a report in The EconomicTimes, a shipment of the popular antibiotic Amoxicillin was seized in Frankfurt recently. Customs authorities, who seized 3,047,000 pills (quantity equivalent to 76,000 courses of treatment) of Amoxicillin (250 mg), held the shipment â€“ worth $35,000 â€“ for almost a month before releasing it, with sources saying that the consignment was detained on grounds of suspected trademark infringement.
Furthermore, a new report from IMS Health has revealed that the global pharma market is expected to slow down from 4.8 percent to between 2.5 and 3.5 percent in 2009, with the US portion of this market declining by a full percentage point due to all of the reasons mentioned above.
The delay for alogliptin, also known as SYR-322, which Takeda has positioned as the successor to its top-selling drug Actos, does not come as much as a surprise after US regulators said they wanted more data for their review. But, the decision to conduct another study has been made without prompting from European regulators. The new delay means that alogliptin, which belongs to a new class of diabetes drugs called DPP-4 inhibitors, is now far behind other rival candidates that work through the same mechanism of action, but are now in the advanced stages of development.
However, experts pointed out that there was no valid reason for detaining these medicines since the name Amoxicillin is an international non-proprietary name. In 2008, there were 16 similar cases of seizures of medicines shipped from India in the Netherlands.
UPFRONT NGP US16:nov08
DEPRESSION IS PREVENTABLE
COST-EFFECTIVE MEDICINES THE NEED TO ACCESS emerging demanding access to new and markets with new, cost-effeceffective treatments at the same tive drugs, the reduction of time as the rest of the estabNCEs that have been introduced lished markets, but at a price to the market, the diminishing that makes the products affordblockbuster product model, and able to them. the far more complicated lifecyCPS is able to help these incle management programs are novator companies by offering just some of the new innovative solutions and ever-changing through cost-effecCPS is challenges that tive development able to help these innovative and manufacturinnovator companies pharmaceutiing as well as by offering cal companies with cutting face in today’s edge science. It solutions through environment. is by delivering cost-effective This is amplified solutions to the development by the increasing problems that the incost pressures from the novators encounter where side of health-care payers for CPS brings value. Because of Dr. both governments and healthReddy’s experience in delivering care providers alike. high-quality, cost-effective medHowever, what has reicines across the globe, CPS has mained unchanged in the inthe proven skill set to help the dustry is the need to deliver innovator forge their way high-quality, efficacious and through these new and serious cost-effective medicine to pachallenges. We believe that only tients while delivering highthrough intensified collaboravalue returns to the investors. tions, are we able to address Even the emerging markets are these external forces.
For more info visit www.drreddys.com
DEPRESSION IS A COMMON mental disorder characterized by sadness and lack of energy. It is a leading cause of disability worldwide. In severe cases, it leads to 850,000 suicides around the world each year. “[It] can affect their school, their relationships with friends, increased risk for suicide and increased problems with drugs and alcohol,” explains Judy Garber, a doctor of psychology at Vanderbilt University. She presented the results of a study on teenagers and depression at a conference in New York. She studied teens because adults who suffer from depression say it often begins in adolescence. Garber led a study on more than 300 teens who already had one episode of depression. Half the teens were in a control group. The other half had regular group therapy that examined depression and taught coping skills, ways of
solving the problems that caused their depression. “We focused on looking at how they were thinking about things, particularly how they deal with stress, particularly when a stressor occurs,” she explained. “Do they blame themselves, do they think that things are going to be terrible forever? Do they think that it’s all their fault? We get them to look realistically at what are the consequences of the events, consequences of their own actions, and then, what they can do about it.” When the study ended, those in the prevention program had an 11 percent lower incidence of depression compared to the control group. Garber points out that preventing depression has broad social implications. Depressed teens sometimes act out and commit crimes. Preventing depression saves precious community resources. Source: www.voanews.com
REDUCING THE COST OF CLINICAL TRIALS WITH THE PRESSURE from generics squeezing profits for many large pharma companies, speeding up the clinical trials process for new products and reducing costs is more important than ever. Speed and efficiency in clinical trials processes are vital to this goal. And as ever, having the right tools for the job is a prerequisite. When it comes to managing randomized data and other variable information on labels for clinical trials supplies some companies still use labor intensive, error prone manual processes. However, using an automated la-
beling management system that meets FDA requirements for a secure, auditable system will deliver accuracy and speed up the labeling and distribution of supplies and complete patient kits. A product like PRISYM ClinTrial which provides a single system for the randomization of data, design and production of labels and automatic, signature linked, time and date stamped records of activity on the system is a significant advantage in the quest for faster, more efficient and accurate data management and labeling.
For more information please visit www.prisymid.com
UPFRONT NGP US16:nov08
Frontline COMPANY NEWS
DRUG DEVELOPMENT CHALLENGES MANY COMPANIES and researchers understand the complexities of discovering new drugs for the multitude of diseases and conditions that exist in the world today; however, how to get this new generation of drugs through the development stage has recently become an obstacle. These challenges are the cost associated with drug development and the process of taking the drug through the regulatory process with a relatively new group of drugs that do not fit the small molecule drug development paradigm. As more and more proteins, antibodies, polymer/drug combinations and genomic based drugs and therapies come out of our research institutions, the technical complexities and high
cost of taking them through the development phase is often not realized until it is too late. The nation’s biomedical funding and training system are set up to do one thing – make discoveries.What researchers are not well trained in or funded for is how to use existing technology or validate technology that can be used to move their drug to the next level. To remedy this, researchers should, early on, not ignore the obvious; these drugs are not the status quo! Most of the technologies in the industry are designed for small molecules. Nine times out of 10 if your drug is a peptide, protein or antibody you will have an issue with pharmacokinetics, analytical development for GLP/GMPassays, and manufacturing for scale up. There is some light at the end
LOOKING GOOD of the tunnel. New technologies like non-propriety depo and lyo formulations exist and can help in maintaining constant exposure over longer periods of time and help in the stable storage of the new drugs, respectively. On the analytical front, the Corona Charged Aerosol Detector from ESA Bioscience has been shown to be very effective when proteins and peptides are too sensitive to MS or do not have UV absorption.
For more information, please visit www.synomicspharma.com
TAKING INTEGRATION TO THE NEXT LEVEL OMPPLUS, OM Partners’newest software solution for the pharmaceuticals and chemical industry, incorporates the latest integration technology and know how in supply chain planning. For the first time, a software solution makes integrated demand planning, supply planning and scheduling a reality.With OMPPlus you can replace traditional, sequential and time consuming planning cycles by an integrated, synchronized planning approach. OMP Plus allows you to work on different planning levels at the same time. You don’t need to worry anymore about whether to acquire a forecasting, planning and/or scheduling tool: OMP Plus does it all. Depending
on your needs, you can pick the modules you require and combine them. OMP Plus offers a solution from the strategic down to the operational level. OMP Plus now introduces in-memory integration of these planning modules. OMP Plus permits integrated master planning and scheduling. A typical planning cycle starts with the creation of a volume-based, bucketized plan by the master planner. In the next step, local planning or production makes a production schedule. The schedule takes into account sequencing rules, individual machines (reactor, dryer and so on) availabilities, pipeline connections, storage capacities, packaging constraints, shop floor feedback etc. With
For more information, contact OM Partners: firstname.lastname@example.org
OMP Plus, the impact of changes in the short-term schedule will instantly be visible in the master plan and vice versa. Unique capabilities of OMP Plus are those such as the managing of co and by-products – modeling complex process flows (fixed and variable product ratios possible); campaign planning optimization of production runs to avoid setups or quality problems; tank scheduling – dedicated or multi-purpose with specific constraints (min/max capacities, one product at a time, loading/unloading, pipelines and so on); multi-reactor planning – taking into account each specific reactor constraint; flawless integration with other ERPsystems.
IVI DESTINATION MANAGEMENT has grown significantly since its founding in 1986; we believe that our success is grounded on the trust of our clients together with the core values that we constantly supervise are an ethic of honesty and service; quality work and customer satisfaction; and caring about our people. IVI Destination Management was a pioneer in Mexico in implementing servicing standards as a DMC. We offer extensive local knowledge, expertise and resources in designing and executing: program logistics including registration services, professional staffing, housing assistance, hospitality desk service, photography, gift items; special events, décor, light, sound and entertainment; recreational, sports and teambuilding activities, pre/post event tours, dinner programs, site inspections, transfers, VIP arrangements and everything imaginable not mentioned here. More than 3500 testimonials sustain our performance. All of the above supported by ISO 9001-2000 Quality Standards, highly qualified staff, upper level technology, price guaranteed for five years, intern security department, community support programs through our friends of the Maya Foundation, $2 million and $5 million dollar liability insurance and our web page www.dmcquest.com that is a great tool to meeting planners. WecurrentlyhavefullDMoperationsin20destinationscovering: Argentina,Brazil,CostaRica,Dominican Republic,MexicoandPanama.Allof themmanagedbyastrongexecutive leadershipteamcommittedtomeeting customersatisfaction. We tailor anything you need: from the formal to the absurd and from the artistic to the comic. In short: we make you look great.
UPFRONT NGP US16:nov08
COMPANY NEWS DON’T MISS...
CANCER VACCINES SHOW PROMISE TWO NEW STUDIES presented at a gathering of US cancer doctors and researchers in early June show therapeutic vaccines can be effective in fighting some forms of cancer. The vaccines target lymphoma and advanced melanoma. Researchers at the University of Texas M.D. Anderson Cancer Center, in Houston, say results from the two studies show great promise. The lymphoma vaccine extended the life of patients up to a year longer than patients who received a placebo and the vaccine may soon be approved by the FDA for clinical use. The other study shows that a vaccine can be effective in
fighting advanced melanoma, one of the most lethal forms of cancer. Doctor Patrick Hwu, Chair of M.D. Anderson's Department of Melanoma Medical Oncology, said of the melanoma vaccine study, “I think this is another step along the way that we are seeing some daylight with a cancer vaccine, inducing a big phasethree randomized study some benefit of the cancer vaccine compared to the control group.”
A total of 185 patients at 21 cancer centers around the United States took part in the study. The patients who received the vaccine, along with the immunotherapy drug, Interleukin-2, had a response rate of 22.1 percent and a progression-free survival of 2.9 months, compared to 9.7 percent and 1.6 months for those who received only Interleukin-2. Source: www.voanews.com
28 IN WITH THE NEW Chris Viehbacher restructures sanofiaventis
COMPANY INDEX Q3 2009
Companies in this issue are indexed to the first page of the article in which each is mentioned. 3P Partners 19 454 Life Sciences 54, 55 Aerotek 6, 35 ActivX 68 Amgen 56 Anabase International Corp. 76, 77 Aperio 67 Aptuit 20, 21 Artcraft Health Education 113, 117 AstraZeneca 106 Bayer 128, 133 Beckman Coulter 44 Biotechnology Industry Organization 36 Boehringer Ingelheim 84 Charles River 59 Clinical Performance Partners, Inc. 92, 93 CompuPharma 111 CPP 92
CS International 132 Cellular Technology Ltd. 80 Dr. Reddy’s 4, 24, 39 EMD Serono 120 Epidauros 89 FedEx 2 Finesse Solutions 53 Frost & Sullivan 27, 36 GE Healthcare 70, 71 Genentech 28 Generic Pharmaceutical Association 36 GlaxoSmithKline 28, 62, 78 Guard Dog Brand Development 112, 113 Hardrada Medica Group 108 Hall & Partners 113, 115 Health Ed Group 15 Image Metrix 103 IMS Health 123, 124, IBC IVI Destination Management 25, 157
Johnson & Johnson 101 Kaye/Bassman International Corp. 11 Meettheboss 60 Merck 28 MicroMass Communications, Inc.118, 119 MMG 90 Motorola University IFC, 137 MPI Research 47 Novartis 140, 144 OM Partners 25, 143 Pfizer 28, 148 PreAnalytiX 8, 83 PricewaterhouseCoopers 72 PRISYM ID 24, 147 Randox 64 Restek Corporation 40, 41 Roche 28 sanofi-aventis 28 Santarus 72 Scarab Genomics 86
Schering-Plough 28, 42, 72 SherTrak 135 Shire 36 Siemens Water Technologies 48, 49, OBC Six Sigma Business Solutions 131 Successful Strategies International Inc.126, 127 Symyx 100 Synomics 24, 151 Thermo Scientific HyClone 61 Waters 98 Wyeth 50
COMPLICATIONS Why cancer is more complex than we thought
REGIONAL FOCUS Inside China’s pharma industry
frost and sulivan AD.indd 1
NEW When Chris Viehbacher arrived to take up the reins as CEO of sanofiaventis, he found a company with an image problem that had forgotten how to communicate. Now he plans to change all that, as Marie Shields finds out.
Photos by Paul Cooper, www.cooperpix.com
ou could say Chris Viehbacher has been around. He started his working life at PricewaterhouseCoopers, then in 1988 he moved into the pharmaceutical industry with GlaxoWellcome, which later became GSK. He holds both Canadian and German passports, and has lived and worked in the US and Canada, as well as Germany, France and the UK. But it’s his latest move that is big news. Last December he left his position as President of GSK’s Pharmaceutical Operations North America – after being passed over for the top job in favor of Andrew Witty – to become CEO of its French rival, sanofi-aventis. The move caused shock waves throughout the industry – the previous CEO, Gerard le Fur, had been in the position for only 18 months. The company’s share prices dropped in 2008, following the rejection in the US of Acomplia, a treatment for obesity, which had once been seen as sanofi’s mostpromising drug. And last July, sanofi and partner Oxford BioMedica said their TroVax medicine had failed to meet the target of a kidney cancer study. Investors became understandably disgruntled and the company obviously felt that a change was called for. When Viehbacher’s appointment was announced, there was a widespread view that he was being brought in as a kind of savior, to turn around a troubled company. Immediately after the announcement, sanofi’s shares rose 6.8 percent, their biggest gain in more than two years.
Building up While he admits that sanofi-aventis has recently suffered from a bit of an image problem, Viehbacher insists he has a strong foundation to build on. “I had two months between leaving GSK and starting at sanofi, and as part of the analysis I carried out during that period I found a number of strengths coming into the company I would not have known about. When we presented our fourth quarter results, where we talked a bit about the strategy, even people in France who’ve known the company for a long, long time discovered new things. “The first was that we have a leadership position globally. We’re often perceived as being a company which is very franco francais, very French, but actually this is the company that’s got the number one position outside the US and Europe. It was the first company into China, it has a major position in India, big positions in Latin America, and a major position in Africa. “When you think that in the future more than 50 percent of global pharmaceutical market growth is going to come from outside of traditional markets, sanofi is positioned with not just the market share, but also with the people, resources, local market knowledge and government contacts to benefit from this period of growth. “We’re also a lot more diversified than people realize. We’ve obviously got a leadership position in vaccines, and a position in OTC that I don’t think anybody realized we had, either inside or outside the company. It provides a basis on which one can build. We have fledgling operations in generics, which we have since reinforced, and we have quite a significant older product range that continues to grow, and which really supports the business globally.”
“We had the building blocks lying on the ground, but there was no plan to make the house and no real explanation of what house we were going to build”
Let’s talk What then, was the problem? Viehbacher feels that one of sanofi’s mistakes in the past has been a lack of effort to communicate with investors and the general public. “Sanofi is a company that experienced significant success for many years, and didn’t pay attention to the need to communicate. It’s when you run into difficulty that you suddenly realize that you’ve got to explain where your strategy is and where the strengths of the company are,” he says. “Management didn’t focus enough attention on it, and we never expressed a vision about where we wanted to go. We had the building blocks lying on the ground, but there was no plan to make the house and no real explanation of what house we were going to build. There’s been some work needed on architecture and construction. But at least the fundamentals were there; it’s just a question of now building upon those and turning them into something.” There also needs to be more emphasis on external growth, Viehbacher explains. He says he wants to see the company open up more to the outside world. “We were a company that was more focused internally; a company that lived within its own walls. We didn’t embrace enough of a customer perspective, we didn’t embrace enough of a partnership perspective on looking for new products. We were looking principally inside in
our own research for new product opportunities, and we weren’t spending a lot of time communicating with the outside world. “One aspect of my plan is to bring the outside world into the company and open it up to what’s out there. We have just carried out a pipeline review within our research and development organization, and we examined it not just from the traditional point of view of safety and efficacy, but we also looked at the value to customers. Cutting 14 out of our 65 projects was clearly a strong signal that we’re only going to progress those medicines that are not only safe and efficacious, but also add value to patients. So there is a need to change the culture.” Viehbacher has also been looking at R&D structure. He says it’s important to keep in mind that there is a lot of fantastic science going on outside the company. “The model – if there is such a thing – is to say you’re going to be doing some research inside, but you’re also going to be doing a lot of research through collaboration. To a degree, outside research is still
seen as adding to internal efforts, and to that I say, ‘There are plenty of companies outside and they’re doing plenty of things. Why replicate that?’” Companies still need to do enough of their own research to be able to understand the research being carried out externally, and big pharma companies will always have some depth of expertise that smaller outside companies don’t. Viehbacher stresses, however, that for him, the discovery research model is very much one of osmosis, and not so much about creating smaller units and organizing the structure. He believes in moving money and resources across a range of projects and teams, some of which may be internal and some of which may be external.
Time to collaborate It’s for this reason that Viehbacher is willing to allocate up to 50 percent of his research resources to outside collaborations. He gives the following example: “When we put forward a proposal to build a biotech-
nology factory in France, I said, ‘I’d like to make sure that this factory is also available to other biotech companies who might want to use the facility.’ That’s an interest for us because we might be able to partner with some of those companies. “Right now a lot of those companies are forced to subcontract the manufacturing to people who specialize in manufacturing, but who aren’t necessarily interested in partnering. They’re just doing it to make as much profit as they can. Traditionally business development has centered on the idea of adding something to the company, where we don’t think the pipeline is enough. But when we think our own internal pipeline is enough, then it becomes harder to bring in new products to the company. “After 20 years, I can say with certainty that you can never have enough pipeline. There isn’t a company in this industry that has enough pipeline, and enhancing that and working collaboratively outside has got to be a way of life – and a constant way of life, not just something you do on an ad hoc
basis to supplement your own. The model we must move away from is this notion of ‘We’re going to just keep throwing money at a black box’ – which is the way I often perceived research and development in my past years – and hope that we can do everything from A to Z, from discovery through to commercialization.” With external collaboration, there’s obviously a process of competition that doesn’t occur with internal projects. It’s through this competitive process that some of the best ideas come out, and weaker projects often get weeded out. Companies don’t always put the same level of due diligence and rigor behind the choice of internal projects, because they’re committed to sites and committed to teams. “This might mean we need to bring a lot more rigor to deciding which are the best ideas to invest in,” Viehbacher says. “Then we need to get behind them, make sure the teams have passion and conviction, and give them the latitude to decide. The construct of a team may differ from one therapeutic area to another, but at the end of the day we are betting on
teams and their ideas. It’s a question of how do you identify those, encourage them and put some stress on the testing of those ideas? “You have to let them run and try to keep as little process and bureaucracy as you can from impeding those efforts. Then after three or four years, you see what results they have come up with. That’s also something that in our industry we haven’t been good enough at – looking for the results early on. As an industry, we do development pretty well; it’s the discovery research piece that we’ve got to go back and look at from a people point of view. “You’ve got to be able to voice a problem before you can solve it. To a degree, we’ve been dancing around a number of issues in this industry and haven’t wanted to face up to them. We do need to acknowledge, for example, that we don’t have enough new products to replace the ones we’re going to lose. And we probably have not been realizing an appropriate return on the money we have been spending on this area, and we probably do need to spend a lot more on research and development in terms of how
“One of the reasons the industry is having difficulty in discovery is that we’re still pursuing the same targets. At some point you have to branch out and go after some new frontiers” we restore the creativity and productivity there. “Nobody has really gone far enough, in my view, of saying, ‘We’re going to address this.’ We’ve been taking baby steps, when we need to be a little bit more radical.”
Diagnosis merger The industry has recently seen a spate of mega mergers – Pfizer/Wyeth, Roche/Genentech, Merck/Schering-Plough. What does Viehbacher think of this trend, and is it one he’s considering buying into himself? “One way or another, we all have to think about where we’re going to get sustainable growth from, and everybody starts off with a different set of cards.” he explains. “You have some companies that have become almost purely small molecule-based in Europe and the US, and when you’re facing a patent cliff and you don’t have an awful lot of other things in your hand, you pretty much have to do something to continue to survive. Pfizer has said, ‘We need to be more diversified. We need more biologicals and vaccines, for example, and OTCs,’ which they didn’t have, and so it was a way of getting that. “Merck’s Peter Kim recently said in an interview that they want more pipeline. Everybody starts with a different position. For us, we’ve got a lot of elements upon which we can grow. I don’t necessarily need to do a big deal to seek that out; and in fact if you are trying to get away from dependence on blockbusters you want to focus on those businesses that have differ-
ent competitive profiles and different barriers to entry. And they’re not necessarily going to be easy businesses either, but they’re going to have a different longevity and a different perspective in terms of growth. “My first objective is to continue to build on this notion of a global health-care company as opposed to a pharmaceutical company based in the US and Europe, and therefore have an acquisition strategy that builds upon those things where we already have a strong presence. Like vaccines, like emerging markets, like OTCs and generics, where we’ve been weak but where we can strengthen ourselves. I don’t think the size of the acquisition necessarily matters. It’s a question of we all are looking to strengthen our companies as we face patent expiries, and some of us, like sanofi, have things upon which we can build internally; some of us have to seek more externally.” Viehbacher says that the big question, whether you’re buying big, medium or small, is still going to be around innovation. He believes most companies are struggling with the question of how to come up with an innovation model that is sustainable. He doesn’t think anyone has found the solution, but he stresses that innovation is something that needs to be worked hard at, and that you can’t let merger and acquisition activity completely dominate that.
Diversify and multiply Since becoming CEO, one of Viehbacher’s constant refrains has been that he aims to turn sanofi-aventis into a diversified health-care company with a more global reach. What exactly does this mean? “If you think about strategy you essentially start off with a certain number of things,” he says. “The first is: where is there an attractive market, and you come down to that by looking at what are some of the mega trends amongst consumers? What are some of the disease areas of unmet need? What’s the evolution in the marketplace in terms of payers and insurance companies and regulations? And you try to then marry that with where you’ve got some sort of capability, presence or experience, and try to focus in on those market areas that are the most attractive. “On the pharma side, we’ve gone too long where we start with a medicine and go look for a customer. If you look at the fundamentals of the health-care market, it’s huge. There is going to be economic growth at some point; we do have the economic crisis, but even in the economic crisis you’re still seeing quite a number of markets growing, although not as much; for example, in countries like China who suddenly decided that they need to significantly increase the level of investment they have behind health care. “If you look at the aging population as a mega trend, if you’re looking at obesity, you’re looking at a trend for wellbeing, you’re looking at time compression, you’re looking at urbanization of populations. You’re suddenly seeing that there is going to be a focus on health care, but on a certain type of health care, and that our style of living is creating new health-care issues. To me, health care – especially if you don’t define it too narrowly – is fundamentally a strong area. And you’ve also got major diseases that still are not well treated – such as diabetes, oncology, Alzheimer’s disease. “Therapeutically you’ve got some very interesting areas, but then of course not everybody can afford the same level of health care. We’re seeing an increased presence of government regulation trying to go after some of the private sector in terms of over-the-counter, or in countries where
there’s no real social security or health insurance today – which is true of most countries in Asia – and you have to ask, can you get into more services, OTCs, generics, some devices? There are all kinds of growth opportunities out there, and the strategy is around going after those versus just saying well, we’re a pharmaceutical company.” Another constant lament within the industry is the lack of new blockbusters. Viehbacher points out that blockbusters are unlikely to disappear completely. “The model that didn’t work was betting on the blockbusters; relying upon them for your success. There will still be blockbusters, you just can’t count on them in terms of timing. You’ve got to also then organize yourself, because there’s no question that there’s no better business in terms of profitability, with low levels of resources needed, than when you’ve got a blockbuster. If you’ve got one you’re in a great place, but you can’t always count on those.”
Increasing productivity Another area that Viehbacher feels the industry should be looking at is the strength of its R&D. With this in mind, sanofi recently carried out a portfolio review. “Our intention was to do what a lot of other companies had already recognized, and that is that you can’t develop a new medicine unless it adds value to patients,” he explains. “In so doing we’ve established new processes where the market is represented at the decision table as to when we advance a product – nothing revolutionary there. The next step is to ask five questions of R&D. The first two we’ve already answered: do our products add value, and who needs to be at the table when we make decisions? “The third, fourth and fifth questions are: how do we restore creativity and productivity back into our organizations? How do we make sure our organization is as interested in seeking science outside the company as inside? And, what are the new technologies and areas for investment that we want to be in? Science is moving on – where do we want to place our bets? “I’m not going to define all those; we do know we have some issues. I’m meeting with some of our scientists right at the bottom of the company. We have anywhere from nine to ten hierarchical levels between the head of R&D and the scientist. That means a lot of our best people have become managers, and you get a promotion in the company by becoming a manager, not by being a great scientist. We’re not doing enough to recognize innovation. We’ve got some great people, but it’s very hard sometimes to get a project advanced if you really believe in something, because you’ve got to go through so many steps. “We’re trying to go back and have a very basic look from a human point of view at who are the people who can succeed, how do we test whether they’re going to succeed, and how do we give them a chance in our organization and give them enough latitude? We’ve become quite risk-averse as companies, and you’ll very often hear that we’re trying to manage the risk of the companies. And to a degree that makes sense – certainly when you get to development you want to manage risk. “One of the reasons we’re having difficulty in discovery is that we’re still pursuing a lot of the same targets, and at some point you have to branch out and go after some non-validated targets, some new frontiers of science. We haven’t allowed enough of a risk profile at that level of the organization to branch out into new areas. If you look at the targets in oncology, in metabolic disease, and in CNS, and you compare how many companies are going after the same target, it’s incredible.”
Gérard Uféras/Rapho/Cianfaglione & Gravereaux Architectes
The sanofi-aventis group head office
Recession-proof? It is unlikely that any industry will emerge completely unscathed from the current recession, and recent rounds of job cuts among pharmaceutical companies are an indication that they too are feeling its effects. The Pfizer/Wyeth merger resulted in the loss of nearly 20,000 jobs. GSK eliminated 800 research positions late last year, and recently announced it could shed up to 6000 more jobs across its global operations. AstraZeneca also said in February that it would cut its workforce by about 6000 positions. Sanofiaventis, while it hasn’t yet made major reductions to its R&D staff, has cut nearly 1000 sales jobs in France, and several hundred more in the US. When asked about the possibility of further job reductions as part of cost-cutting measures under his leadership, Viehbacher refuses to be drawn. “We will certainly go through a process of looking at how we can reallocate and reorient our resources, and that may end up in fewer resources. But nobody’s going to invest in this company because we cut costs. One of the lessons I’ve learned in the last 20 years is if you want to provide shareholder return you have to present a company that’s got a sustainable growth prospect. If you just go through endless rounds of cost cutting you end up with an organization that becomes very distracted and very demotivated. “We’re becoming more of a global company. We’re going to focus a lot more of our growth into emerging markets and places like vaccines and OTC. Those all have ripple effects within a company; if you’re suddenly in generics, the manufacturing organization has got to be able to support a hundred launches a year versus fifteen; a launch being the launch of an SKU, not a new molecule. And so you’re going to have a different organizational model – you don’t necessarily want to smother your generics businesses. “You want to provide some different perspective. You’re going to be doing a lot more outside collaboration. What is the type of person, what
is the type of competency you need for that? I think we’ll probably end up saving some cost, and this company has done that very effectively over the years. “We’ve got the lowest SG&A ratio in the pharmaceutical industry. Sanofi has never stood up and beat its chest and said, ‘We’re going to eliminate all these jobs.’ It has just quietly and effectively managed its costs, and we did that again in the first quarter. To me cost management is just part of good management. We’ll continue to do that, and there are certainly opportunities to take some costs out of the business. “An endless round of cost cutting is not necessarily helpful, and it doesn’t create value longer-term. It has to be to get the company growing on its feet again.”
Optimistic outlook Despite the challenges his company and the entire industry are facing, Viehbacher is optimistic about the future. In his opinion, there is too much focus on the patent cliff, when the future is in health care. “In our company we’ve got a lot of talented people and we’ve got a lot of financial resources. There are a lot of patients out there, and we’ve got the medicines and vaccines to help them. “We’re going to be a company that grows well on into the next decade. We need to get past the blockbuster phase, but the base business that we have and our ability to partner and do acquisitions gives me an awful lot of excitement for the future. “Health care is still something that matters more than anything else – there is huge unmet need out there. It’s a massive marketplace, and if we’re a little bit creative and a little bit flexible in how we go after it there are big opportunities.” Despite the initial controversy surrounding his appointment, Viehbacher seems to be settling nicely into his new role. As he looks forward to the rest of his family joining him in Paris this summer, perhaps this ‘man on the move’will decide to stay put for a while.
Generic drugs, having long been minor players in the pharmaceutical marketplace, appear to be gaining a strategic advantage. Is this end game for branded products? By Marie Shields
hanks to President Obama’s recommendation that they should be used as a way of making cheaper treatments available to the public, the fortunes of generic drugs are on the rise. What effect will this have on research-based pharmaceutical companies, which have argued for years that extended patents on their products are necessary in order for them to recoup the millions they invest in research and development? Add to that the fact that big pharma companies are facing a host of other pressures at the moment: problematic pipelines, a dearth of new blockbusters, patent expiries – not to mention the global financial crisis – and you have a potentially explosive situation for the industry. According to Barath Shankar, Senior Industry Analyst, Pharmaceuticals and Biotechnology for Frost & Sullivan, big pharma is facing an almost unprecedented amount of competitive pressure. “They’re losing their pipelines and losing out on their big drugs to generic versions that are flooding the market, especially in areas like cardiovascular. “It’s taking a leaf out of Europe’s book: in many European countries generics account for a significant number of the prescriptions being written, whereas in the US, branded drugs do drive price and revenue growth. Putting more focus on generics will bring prices down in the US by a significant percentage.” Big pharma companies may be forced to change their business models. Rather than focusing on finding blockbuster drugs, they will need to look at developing their pipelines for the long term. Companies will need to become more flexible, perhaps combining several cores specialties, and perhaps even producing their own generics. If reviews of competing drugs and treatment and clinical trials become the norm, companies with expertise in handling these issues within different parts of the business will do well.
Big investment Big pharmaceutical companies point out that they put a lot of money into developing their products, and if the returns that come from patent exclusivity are withdrawn, the drug development process will come to a halt. For example, Robert Spiegel, Chief Medical Officer at Schering-Plough, argues that “if we say that generics are good enough, that the current medicines you have today in 2009 are probably good enough and we don’t really need any new medicines, 20 years from
now we’re going to have major issues with an aging population and many diseases that still have major unmet medical needs.” Shankar, at least, doesn’t buy it. “I think that argument held true back in the ’90s and probably even the early 2000s,” he stresses. “But if you look at the way innovation is being driven in the current scenario, it’s a global market. Companies need to drive down costs. There’s a lot of outsourcing happening with regard to clinical trials and contract manufacturing, so companies have to re-look at their business models and understand what their core competency is and then look at areas they should invest in. “Overall, the idea that profits from branded products are needed to invest in new research is tapering off. Having a comprehensive business model that works in the current situation is more important.” The situation the pharmaceutical industry finds itself in can be compared to that of the automakers. In times like these, it’s important to stick to your core business – designing the product – and then having a solid supply chain. Companies may also need to look at other areas, such as vaccines and perhaps biologics, in order to provide a steady income flow.
Specialization Some companies have already been smart enough to move in this direction – the specialty areas where the returns and reimbursement rates are high. One company that has done this very successfully is Shire. Its Human Genetic Therapies division, for example, focuses exclusively on the rare diseases known as ‘orphan diseases’. As Sylvie Grégoire, President of the division, explains, “Our portfolio of products focuses on the very rare end of orphan diseases – the populations we treat are between 2000 and 3000 worldwide. We are able to gain sufficient revenues and profits even though there’s a rarity of patients by commanding a high price for these products. If they don’t receive these replacement therapies or the drugs that we develop, their quality of life declines and they suffer from a very high morbidity as well as often early mortality.” It’s certainly been a successful strategy for Shire, with six product launches in the past three years, and within Human Growth Therapy, 300 additional staff taken on in 2007, and another 275 in 2008. In addition to focusing on specialty therapeutic areas, many big pharma companies are also investigating the potential of biologics. President Obama’s
budget proposed the development of a faster pathway for generic biologics, and as competition within the industry increases and margins grow smaller, generics producers may also see biologics as their next big opportunity. While this could spell yet more trouble for big pharma, it seems like great news for generics producers. When the budget proposal was announced, Kathleen Jaeger, Chief Executive of the Generic Pharmaceutical Association, said, “As the White House and Congress work to reform health care, our shared goal must be to work together to increase generic use. By doing so, we will increase access to care while also saving our government and consumers money.” The biotech industry was understandably less thrilled by the prospect of a greater emphasis on generic biologics. Commenting on a bill introduced in March to establish a pathway for the approval of biosimilars, Biotechnology Industry Organization President and CEO Jim Greenwood said, “Unfortunately, the legislation introduced today would take patients and our industry down the wrong path – a path that jeopardizes the continued development of new breakthrough therapies and potential cures for debilitating diseases such as multiple sclerosis, HIV/AIDS and Alzheimer’s. This bill seeks to cut prices but instead cuts corners. This proposal leads us off the map as we seek an effective, fair and safe pathway to a biosimilars market.” Despite opposition from big pharma and biotech companies, it seems likely that the development process for generic biologics will be improved. However, there are still hurdles to be overcome. Frost & Sullivan’s Shankar sees the main problem as the lack of a clear ideas as to how the regulatory pathway – will work. “It’s early to comment on that, but I believe the FDA will require a stronger proof of bioequivalency and potentially also require some small-scale clinical trials, because the way in which biologics work is completely different to the way small molecules or traditional pharmaceuticals work. “That could create some complications. It could be a situation where companies are following a ‘wait and watch’ policy, but it is definitely something that will happen because in the current situation, with the way the pricing of biologics has been moving, this is a way to introduce a competitive marketplace and to encourage companies to compete more and create more opportunities.” One problem may be the FDA and whether it decides to require proof of bioequivalency. If it does, this could make things much more complicated for generics manufacturers; and if it doesn’t, this could mean that people don’t trust generic biologic drugs to be true copies of the originals. Shankar points out that the first concern for the FDA is from the biotech lobbies. “The biotech lobbies are saying this is not going to work because it completely differs from traditional generics. When you’re working with proteins, if you make a small change to the process, you’ll end up with a completely different drug. Whereas with small molecules, it doesn’t matter what process you use, the end product will have the same chemical composition. That’s their argument. Then the generic manufacturers are saying that this is not something they can’t do. It’s been done before.” Both parties have a fairly strong argument, and at some point a decision will need to be made. There is no doubt, however, that the approval timeframe and marketing process for biologics will be different. Generic companies could see this as an opportunity to make more money with less competition, by building core competencies in a particular set of biologics.
Outside competitors As if the growing competition from generics weren’t enough, in March four senators introduced a bill that would allow US-licensed pharmacies to import cheaper FDA-approved medicines from outside the country. And in May, President Obama himself proposed allocating $5 million to the FDA to “develop policies to allow Americans to buy drugs approved in other countries.” Barath Shankar says that one potential roadblock to these plans is the issue of oversight. “The problem is maintaining oversight over the FDA-approved manufacturing plants where these products come from,” he says. “That has been a problem. The FDA ran into trouble with some overseas generic manufacturers in the recent past where they had problems with safety records and contamination issues. “The lobby that is against importing drugs from other countries could then question whether the FDA has the capability to have oversight over these areas. Though I know that the FDA is moving in that direction in the sense that they’ve established offices in India, which has the second-largest number of FDA-approved manufacturing locations outside of the US.” The opening of the FDA’s Indian offices seems to indicate that cheaper imports could be allowed at some time in the future, which could help lower costs because it would increase competition. But the concerns about safety are bound to persist, along with the questions about whether the FDA would be able to manage those locations and make sure they were regularly audited. Another potential pressure point for the pharmaceutical industry is the new government’s tax reform proposals, which could raise the effective tax rate from an average of 23 percent to 30 percent by closing loopholes and cutting R&D tax credits. “For big pharma it’s going to affect where they raise the effective taxes,” Shankar says. “That could have a negative impact on the work that companies do, because they’re already starting to bleed, especially the big pharma companies. And for smaller companies, again in the current economic downturn many are going out of business due to lack of funding, and companies that are just about starting to make money could obviously take a bigger hit because of it. However, I doubt these reforms will come into effect. I personally believe the government will open up channels for companies to get credits on other fronts and effectively neutralize any change in these rates. “The key for these companies is building the supply chain, whether it be the big pharma company or big biotech, or small biotech. It’s important that they have a strong supply chain in place, similar to that of a more mature manufacturing industry.” It seems, in the long run, that big pharmaceutical companies will have to change the way they do business. They will need to collaborate, which will enable them to play to their strengths and let their partners take on the work that isn’t essential to their core businesses. This could mean a change in the supply chain, which could then impact a number of different areas. If a pharmaceutical company hires a contract research organization to deal with potential changes in the way clinical trials are carried out, for example, this will be one less thing the company has to worry about. With generics on the rise and the potential for competition from cheap imports and changes in tax legislation also posing threats, the future looks challenging for pharmaceutical and biotech companies. But this is a powerful sector, with a lot of money and experience behind it. Chances are, most will find a way to come through unscathed.
DR REDDY'S SNOW AD.indd 1
Strategic choices to reduce acetonitrile dependence By Richard Lake
n todayâ€™s economic climate, laboratory productivity is an increasingly important key to bringing new drugs to market efficiently, and the current acetonitrile shortage has created a significant challenge to productivity for many labs. Acetonitrile is the most widely-used organic solvent in the pharmaceutical industry, and suppliers have indicated that rationing and/or cost increases should be expected until at least the end of 2009. When we consider the large number of analyses that are validated using acetonitrile mobile phases and sample preparations, any disruption in the supply could increase the cost and time required for drug development. While the duration of this shortage is unknown, it presents an opportunity to review laboratory practices and make strategic changes. This article presents both short-term solutions for reducing costs by cutting current consumption levels and long-term method development tactics for reducing overall dependence.
diameter columns is generally the easiest, most immediate way to reduce acetonitrile use. Details on implementing both strategies are available at www.restek.com/acetonitrile.
Smart platform choices Another way to reduce solvent consumption is by implementing fast LC through ultra high-pressure liquid chromatography (UHPLC). The merits of UHPLC have been discussed at length by advocates in recent years and, in light of the acetonitrile shortage, past conversion to UHPLC may have been fortuitous as the savings in solvent consumption are dramatic. With UHPLC, solvent reduction occurs not as a result of lower flow rates, but rather as a result of shortened analysis time. UHPLC, due to greater efficiency and linear velocity, can reduce analysis time by as much as 5-10 fold. UHPLC is a viable short-term solution for labs that have already adopted this technology. However, UHPLC equipment can require a substantial capital expenditure, and labs that
Decrease consumption today Using smaller columns is one of the most commonly recommended ways to reduce acetonitrile consumption over the short term. By decreasing the internal diameter of the analytical column, a 52-80 percent reduction in solvent consumption can easily be achieved (values vary based on system performance and method parameters). Larger diameter columns require higher flow rates, and thus larger volumes of mobile phase, to reach the desired linear velocity. Reducing column inner diameter is a simple way to decrease the volume of acetonitrile used, while maintaining equivalent method performance. Switching to an alternate solvent system is also often cited as a short-term solution. While viable, this fix is not as simple as it may appear. With alternate solvent systems, the chemical properties often differ and prior to implementation several points must be considered, including: mode of separation, detector issues (e.g. UV cutoff), and analyte compatibility. Revalidation is usually necessary when an alternate solvent is used, thus, using smaller
Richard Lake is the Pharmaceutical Market Development Manager at Restek Corporation. He is responsible for overseeing the development and application of chromatographic products for the pharmaceutical industry. He has over 13 years of experience including positions as lead chemist, LC and GC method developer, stability manager, and study director for pharmaceutical studies.
have not invested in these systems yet may be reluctant to do so in the current economic climate. Labs interested in the benefits and practical applications of UHPLC can find more information at www.restek.com/uhplc.
Strategic method development While there are several short-term solutions available, these techniques are not always optimal over the long term. In order to reduce dependence on acetonitrile over the long term, labs must focus on developing methods on columns that perform better with other solvents. While C18 columns are the most commonly used phase in drug development, other phases can give better performance with alternate mobile phases. For example, phenyl columns are more retentive and provide alternate selectivity when using methanol instead of acetonitrile1. Restek has developed a biphenyl phase that is comparable to C18 and other phenyl columns when used with acetonitrile, but provides much greater retention and selectivity than other phases when used with methanol. This versatility makes them ideal for method development with either solvent. For more information on the practical use of biphenyl columns, visit www.restek.com/biphenyl. Over the long term, method development strategies that optimize chromatographic column properties can make laboratories less vulnerable to solvent supply fluctuations. It has yet to be determined whether the current acetonitrile shortage is a shortterm or long-term problem; but, regardless of its duration, the current shortage highlights the importance of adaptability. While shortterm solutions can solve immediate needs, long-term strategies that invest in versatile column chemistries will be necessary in order to maintain development timelines and overall laboratory productivity. n Restek is committed to helping chromatographers through trustworthy and sound technical advice. For help selecting and implementing a solvent-reducing strategy, contact us at 800-3561688 ext. 4 or at email@example.com. Reference 1 M. Yang, S. Fazio, D. Munch, P. Drumm, J. Chromatogr. A. 1097 (2005) 124.
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Turbulence ahead Robert Spiegel shares his views on transparency, health-care reform and the notorious failure of Vytorin.
obert Spiegel is Schering-Plough’s Chief Medical Officer, responsible for pharmacovigilance as well as running the company’s Safety Review Board. Both are areas in which costs have spiraled, with clinical trials being the third. “I have a scientific background,” Spiegel says. “I trained at the National Institute of Health and National Cancer Institute as an oncologist, and it’s valuable for a CMO to understand the basic science, especially in emerging areas; just to better understand where your drugs have come from or to understand other things that could be looked at, particularly when a safety issue comes up or when you’re evaluating the overall risk to benefit of a product.”
Safety The reporting structure of the CMO role at Schering-Plough involves a large global pharmacovigilance group for worldwide reporting of safety issues. “Frankly for my own personal career growth I’ve enjoyed being able to move into areas that had issues, tackle them, work with them, and then whenever possible hand them off to other people for long-term management. “For example, Schering-Plough about five or six years ago had some major issues in our manufacturing area, which actually resulted in a consent decree, which is a very severe step to take to allow you to continue manufacturing but under a very close eye of the health authority and of an outside audit function. We went through a painful period of having to get control over manufacturing processes and convincing the health authorities that we were in control and we no longer had frequent issues with manufacturing quality. “It wasn’t exactly Six Sigma, but it was that type of look at creating, not just fixing the squeaky wheel of the moment, but putting in place quality processes, and we thought afterwards that it had been painful but such a useful exercise that it would be interesting to see if we could apply some of those same principles to the research area. “So beginning with an area that I had responsibility, which was pharmacovigilance, we’ve put in place a very comprehensive quality system. We’ve built very robust metrics to track and measure our performance in that area, and with that under our belt we then decided to expand that to other parts of research including clinical development and manufacturing of clinical materials,” Spiegel says.
â€œI am truly concerned about the model of big pharma, which probably is not sustainable for the long termâ€?
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Key metrics However, when quality processes and metrics are put in place, there’s always a human side to dealing with that change. “Instead of seeing it as an auditor slapping your hand when you’ve had an error, over time we begin to embrace the fact that it’s continuous process improvement. “People began to relish the chance to look at deviations, determine the root cause, put in place a corrective action plan, and then be able to track that with metrics so over time we were able to eliminate those and begin to run it 99 or 100 percent efficiency. So it really is a cultural change, but if it’s done properly, and not in a way that people feel you’re only there to catch them when something goes wrong, it can be very successful.” This method of operation is not uncommon. A large amount of pharmaceutical majors are currently engaged in this sort of race, Robert Spiegel is SVP and wholeheartedly embracing Lean Chief Medical Officer at manufacturing and the ultimate Schering-Plough. supply chain. But why did it take so long to embrace this approach and is this now the future of pharma? Spiegel says it isn’t – each company has its own experiences from which it may take lessons. “Some companies were dependent on single sources of manufacturing and never had a breakdown or a reason that they couldn’t manufacture, and so they decided that the lesson from that was to have duplication and they never wanted to be in that situation again,” he explains. “There was a tendency in the industry to have multiple sites and multiple countries and never be caught in a situation where you only had one or two areas for supply, or if you ever had situations where you couldn’t provide enough product for a successful product it can be very painful, and the lesson learned might be to never get caught under-resourced for that. “On the other hand it’s easy to get lessons learned from other industries that have done just in time manufacturing or to outsource and almost create a virtual company where you don’t have to maintain those sites themselves, but you can use it. Big pharma is experimenting with that, and of course we’re all under a new pressure for cost control, so if it is a much more efficient way people will start to move more in that direction,” explains Spiegel.
Troubled times This doesn’t mean that Schering-Plough hasn’t had its problems. In 2008 Merck and Schering-Plough jointly marketed Vytorin, a drug aimed to reduce the likelihood of artery-clogging plaque buildup more than those patients on a placebo, but the trading fell after the drug failed in a study to prevent complications from heart-valve disease and was linked to a higher rate of cancer. At a time when Schering-Plough’s sales teams were already demoralized by job cuts due to economic conditions, the company had to respond to the even greater trouble of drug failure. “There are a lot of lessons to be learned from the ENHANCE experience,” says Spiegel. “I personally feel that it was widely misinterpreted when the results first came out. There were a number of media articles
and even some opinion leaders who jumped to the conclusion that this was evidence that the drug doesn’t work. With retrospective scope now a year later looking back at what actually happened in that trial, there have been some thoughtful editorials and some thoughtful perspectives. Unfortunately sometimes when new information comes out of a clinical trial it does take some time for the medical community to digest it and really interpret it. “What we believe now is that the ENHANCE trial had design flaws in the way it was executed, the kinds of patients that went into it. In retrospect there are other trials in this area where you measure the thickness of the carotid arteries and try to see what interventions can do for them. Some other drugs that are very successful, in fact some drugs in this area of cholesterol reduction, have actually failed in these trials as well and people have found different explanations for that, but they’ve rarely been interpreted immediately as proof that the drug doesn’t work. “So in the case of ENHANCE we believe the most likely explanation is that when the trial was started, most of these patients with a very particular type of extremely high familial hypercholesterolemia had been heavily pre-treated for many years, and with many cases via quite potent statins, so when they entered our trial the thickness of their arteries was already quite improved and not that thick, so that our drug wasn’t able to show the shrinkage that is normally expected. “However, in the ENHANCE trial there was an active comparative arm with simvastatin, and even that statin, which has been available for years and is regarded as effective, wasn’t able to show any effect. So at least one expert has said, ‘It’s as if you tried to show the effectiveness of an antibiotic in a patient with no infection.’” “We think the basic problem now, if you look back at the ENHANCE trial, was that the trial design didn’t pick up that we were probably going to be recruiting patients who wouldn’t be able to show any benefit. Unfortunately the immediate press attention and some of the explanations in the medical literature seriously questioned the value of Zetia and Vytorin as means of lowering cholesterol, even though they’re well known and well accepted to be among the most potent ways to lower cholesterol, and for many patients who can’t get to their cholesterol goals these drugs are very valuable and allow more patients to reach those goals than available statins. “The reaction of the company has been to try to get more balance into the medical and scientific discussion, to try and emphasize what we can with the backing of decades of work that lower LDL – the most important thing that people can do to actually improve their cardiac risk factors when they have some degree of cardiac risk to begin with. We’ve tried to get that message out, but we’ve been very careful to not go beyond the data. We also now have some long-term studies that unfortunately will have to wait a couple more years to show true outcome data,” he expounds.
Transparency Spiegel stresses being “careful not to go beyond the data,” but how is he able to provide more transparency into the company whilst simultaneously ensuring that the general public have access to the information and are reading it? He explains that together with Merck, Schering-Plough has a very active role educating the scientific community. “We outreach to physicians who are leaders to try and help them understand the details of the ENHANCE study. There have also been some other studies with competitive products that were not able to show the ability to reduce carotid arteria intermal media thickness, the CIMT measurement, so we’ve tried to put that information out there. “There are some newer studies. Some of them are sub-studies or relooking at available data that do suggest that there are clinical outcomes that correspond to this. We also have published recently a full review of all of our preclinical data to help the doctors who want to spend the time looking at the literature and have more access to this information. It’s also important for our sales force to know that we do have confidence in the drug.
“We went through a painful period of having to get control over manufacturing processes and convincing the health authorities that we were in control” “One of the odd things about the ENHANCE experience was no one ever questioned the safety of the product, and so we think we have a good product that does lower cholesterol, and where we are right now is in a new world where everything is being questioned – including decades of knowledge about drugs that were thought to do good things with surrogate outcomes. We’d have to wait until the final outcome state is available, but we have full confidence that this is a very useful and efficacious way to lower your cardiac risk,” he says. As Spiegel notes, pharma companies are currently under mounting cost pressures in the manufacturing arena. President Obama recently revealed his more in-depth health-care reform agenda, and it doesn’t look like he’s going to back down on his stated aim of increased access to generics, which leaves much speculation as to what impact this will have on Schering-Plough and on the wider pharmaceutical industry itself.
Health-care reform Spielberg acknowledges the complexity of reforming the American healthcare system, but observes that a strong partnership between the new administration and the industry will bring fruitful results. “The collaboration that’s previously existed between academia, the government, the pharmaceutical industry and the biotech industry has been extremely productive and has led to some of the great advances in public health. “We’re very concerned that either changes to the health-care system and its reimbursement could affect adversely public health or could easily shift this delicate balance that has worked well in the past as a way to make sure that new discoveries do get developed and turned into medicine. So
it’s ironic that part of the stimulus package will be pouring money into the NIH to improve and give funding, which has been not as high as it could have been in recent years to basic science, but if we really want to achieve the results of the real science advances we need a viable pharmaceutical and biotech industry.” In order to move public perception from believing that to be a business decision, Spiegel notes the creation of the drugs themselves is key. “One of the unfortunate secrets is where drugs come from. Even if you talk to medical students, fellows, and even some doctors in practice there is surprisingly little understanding that new drugs don’t come from the NIH, they don’t come from university research labs, they only come out of the industry that’s made to develop and find ways to turn the advances in science into drugs,” he explains. “Part of it is an education process that pharma has stated for years and hasn’t done as good a job as they could have to make the public aware that this is where new medicines are going to come from, and that ultimately the burden of poor health in the United States is going to be solved to some extent. “You can do some things with improving lifestyle, you can do some things with improving access and everyone talks about shifting more to prevention as a way to address health, which I’m not arguing against, but we have very good examples in recent years of how public health really has improved because of the introduction of some major new medicines into the armamentarium that doctors have. “I don’t have easy solutions – we do have an uphill battle to educate people that if we turn off the system, if we say that generics are good enough, that the current medicines you have today in 2009 are probably good enough and we don’t really need any new medicines, then 20 years from now we’re going to have major issues with an aging population and many diseases that still have major unmet medical needs.”
Predictions And so what high hopes does Spiegel hold for revolutionizing drug therapy in the future? He advises that science is better than it has ever been – some of the molecular understanding and the technological tools allow for the understanding of basic disease processes to be better than ever. The engine of drug discovery is more refined, systematic and scientifically based: finding new candidates and putting them into the system that has been created has led to a greater effect on basic disease mechanisms. “It’s not so much trial and error as it once was,” he explains, “although there’s still some of that and we still rely on luck at the end of the day sometimes to get a good drug out there that will really affect a major disease. So those are all positive developments and do bode well. “I am not optimistic that we’re going to enter personalized medicine any time soon. I don’t have reasons that they won’t work, but stem cells have been somewhat oversold currently about what they might do, but there are very many other approaches that could help us get treatments for new diseases that haven’t had major breakthroughs recently. Having said that, I am truly concerned about the model of big pharma, which probably is not sustainable for the long term and we are going to see some changes for drug discovery and development in the future.”
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SIEMENS WATER TECHNO:12june 12/06/2009 08:57 Page 48
Reducing water and energy usage Michael Costello of Siemens Water Technologies explains the depth and impact of increased efficiency. Costly recirculation for microbial control Often, microbial contamination is the most difficult and costly aspect of pharmaceutical water system designs. While chemical and organic impurities can usually be addressed with little difficulty, bacteria, viruses and other organisms can challenge even the best system designs. The propensity of microorganisms to adapt and thrive in many environments increases the need for a comprehensive sanitization plan. For decades, the pharmaceutical industry has used a conventional sanitization approach within high-quality make-up water systems, particularly in the recirculation process. When water is not needed, water systems typically flow in a standby recirculating mode to help control microbial proliferation within the water and on system components. Ultraviolet lights, ozone injection and other unit processes are frequently incorporated to further control organism population growth. While usually adequate in controlling microbial contamination, conventional approaches can quickly consume valuable raw water and electrical and steam utilities, as well as produce unnecessary amounts of waste that must be discharged.
A health-care products manufacturer needed to increase production without increasing the water needs and water discharge requirements. Its current water system requirement was a 150-gallon per minute (GPM) treatment plant, producing high-quality pharmacopoeia purified water. The specifics for this water system include operations being conducted seven hours a day, five days a week, 50 weeks a year; a feedwater cost of $1.33/1000 gallons; a wastewater discharge cost of $2.77/1000 gallons; and an electrical cost of $0.05 kWh. The project goals are to add 150 GPM make-up water capabilities to existing capacity; reduce wastewater production by over 16 million gallons/year; enhance water and energy efficiency to increase production with less cost and waste; improve water quality over existing standards; and operate in a community-friendly environment.
The manufacturer partnered with Siemens Water Technologies to maximize savings and optimize production. They chose the S3 system with Siemensâ€™ Ionpure CDI-S3 modules. This revolutionary sanitize, start, stop process provides lab-tested, verifiably significant microbial control over conventional systems, using a quick 20- to 30minute heat sanitization cycle. Operation stops during dormant periods rather than continuously recirculating as in conventional systems,
Real impact The economic and water savings from the S3 system are dramatic, with 16.4 million gallons of water saved per year. Large water systems, redundant trains, high raw water costs, high water discharge costs and water discharge limitations can greatly increase the savings of the S3 system. While the savings are greater on larger, redundant systems, using the S3 system on even relatively small, single-train water systems with moderate water costs still results in rapid payback and significant savings.
COST SAVINGS FROM S3 SYSTEM
Real depth of solutions
providing significant water, energy and cost savings. Also, a rapid pulse sanitization just before use ensures consistent optimal water quality. The S3 system consumes considerably less water and energy; creates significantly less wastewater; reduces the need for system consumables, such as salt and pH chemicals; lengthens the life of components, such as pumps, membranes, UV bulbs and CDI modules; requires less space and unit processes; and retrofits easily to existing systems to best control microbial contamination and biofilm formation.
Raw Water & Filters
S3 Operational Cost
The projected savings over a 10-year period is significantly more than the total water system costs, with savings dropping immediately to the bottom line, typically after a period of three to 18 months.
Sustainable solutions, such as the S3 system, help reduce raw water needs, electrical consumption and waste production, dramatically lowering operating costs while improvMichael Costello is Global Director at ing water quality and product safety. These solutions Siemens Water Technologies. With over 25 help optimize your process for highly efficient operayears of process experience, Costello tion, maximize water recovery for lower water concurrently directs the water business for sumption, decrease cost of disposal and waste Pharma and Life Sciences. His vast treatment and achieve more production with less engineering, operations and field service waste. Siemens Water Technologies offers the largest experience has led him to engineer portfolio of innovative solutions, providing real results hundreds of water systems, develop over 50 for all your pharmaceutical water needs. n patented, innovative solutions, and author numerous published technical papers. For more information, please visit www.siemens.com/iceberg.
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Wyeth’s Thorir Bjornsson talks to NGP about dealing with attrition, the fallout from the merger with Pfizer, and what the future holds for the industry.
Changing times T
he targets have been set. By refining the number of potential therapeutic targets analyzed and decreasing development times, R&D expenditures are expected to drop substantially. But how can the industry achieve this? Wyeth’s Thorir Bjornsson advises that a number of industry challenges must first be addressed, from decreasing productivity to increasing guarantee costs. “The most important issue affecting the industry, certainly from my perspective, is attrition. Attrition is very high and varies from company to company, from therapeutic area to therapeutic area, but by and large it’s about 90 to 95 percent. What this means is that the likelihood for success for any given new compound that comes into development is around five to 10 percent, which is terrifically important to keep in mind.
“That’s the baseline where we are today. Anything we try to do to increase productivity means we are up against this, so the question is how can we become more productive? Productivity overall is the underlying solution to the challenges that we have today, and so the fundamental solution has to focus on a better understanding of compounds, a better understanding of the likelihood of success and how likely is it that that will become a positive outcome. We also need to ensure that safety issues are not going to become safety problems with our compounds. “Similarly, it’s important to understand how the body handles the compounds, and when we do, then we can add up these different characteristics and if they all line up then our likelihood of
success and thus productivity will increase drastically. So productivity is key: predicting the likelihood of what will happen and getting the desired outcome,” says Bjornsson. The subject of increasing productivity has always been high on the industry agenda. Historically, the approach to attrition within the pharmaceutical industry has varied from company to company. Wyeth’s approach is steered by the recent works with metrics instituted by former President of Research Robert Ruffalo when he joined the company in 2002. “We set productivity metrics, meaning you get so many compounds per year that are put on the development track and so many R&Ds per year,” he explains. “Wyeth very recently tuned down the number of compounds going into development to a lower number. For us, the issue is always quality, and the ability to have compounds better characterized and therefore likely to succeed.”
Global challenges Wyeth’s R&D centers are situated across the globe, and despite the obvious benefits of multinational operations, the challenges these centers face are increasing. Bjornsson notes the latest big trials and the problem of conducting them with the US and Western Europe, due to bigger regulatory requirements. Most major pharmaceutical companies now conduct many of their biggest trials in the emerging markets of China, India and the Far East, as well as in Eastern Europe were the number of hospitals is increasing. “It brings increased challenges in terms of the monitoring of sites, due to some of their practices not being perhaps exactly the same as we are used to. Similarly, there are regulatory agencies in those countries that we have to work very closely with, and they become more cumbersome in a way. There are now more regulatory agencies involved, rather than the FDA or the individual regulatory agencies previously used in individual European countries. “Also, the number required for such trials to get to a statistical outcome has led to an increased number of patients. With diseases also ever-changing, the process becomes more complicated, and again requires a higher number of patients than before.” When asked if the days of so-called ‘easy wins’ for the big drug companies have come to an end, Bjornsson agrees. “I’ve been in this
industry for a while and looking back, I’m not sure I would call it the good old days, but it is true, certainly for those where disease cases were easier to investigate. Studies were shorter; it would take a shorter time to see whether you had clinical effect or efficacy, and you would see the results much sooner. “Nowadays, studies are much more complicated, and chronic diseases, such as Alzheimer’s, are now of key interest to the major drug companies. Some of the immunological diseases – arthritis, lupus and so on – only require a year maximum to see a meaningful clinical outcome.”
Mergers The recent pharma buyouts are sure to only increase these challenges, as the bigger the operations, the bigger the challenges. The mergers – Pfizer/Wyeth, Roche/Genentech, Merck/ Schering-Plough – met with a mixed reaction within the industry. For example, John Lechleiter, CEO of Eli Lilly, was dismissive: “I think we’re seeing deals that are really driven more by weakness than what I would describe as strong strategic combinations. They are predicated on synergies and massive cost cutting that will improve short-term problems but fail to answer the long-term question of research productivity,” he said. So how is the focus on R&D retained during the merger and acquisition process to ensure Wyeth continues to combat these problems? Bjornsson is quick to note that staff at Wyeth “are all extremely excited” about the planned acquisition. “It will create the world’s biggest pharmaceutical company and will build on the strengths of both companies. When you add those together you have a hugely diverse pharmaceutical company that crosses all platforms: small molecules, biopharmaceuticals, vaccines and then subsequently also the new avenues for development like nucleotides. “That’s the view we have taken and we fully embrace the future as a part of Pfizer. The merger will create an extremely strong company capable of doing things even Pfizer wouldn’t necessarily have been able to do on its own.
“The merger will create an extremely strong company capable of doing things even Pfizer wouldn’t necessarily have been able to do on its own” “Granted, over the years there have been various criticisms, questions or people raising doubts about mergers and acquisitions in the pharmaceutical industry, and certainly, if you go back 20 years, you see how many companies have just disappeared. Prediction is always on a case-by-case basis, but as for this particular one that is facing us, we’re extremely positive and focused on the future and will be sure to make certain that people remain optimistic and focused on the projects they have to work on today, because that will only make the future better for the combined company.”
To combat any disruption that the merger may cause, Bjornsson notes Wyeth’s strategy of focusing at local levels. He advises that by keeping individuals focused on their individual projects, the amount of disruption will be kept to a minimum. Simultaneously, on a higher level, plans are being formulated as to how the combined company will work.
One of the more infamous challenges within the pharmaceutical industry was the recent health scare regarding GSK’s Avandia. Bjornsson says that the pressure on the pharmaceutical industry is too much, and that responsibility should be placed on the national agencies, rather than leaving it to the drug firms to find every disease cure. “We are all in this together. We all Disease therapy die at some time. We all have diseases. Bjornsson says it’s impossible to It is too much to expect that only the predict how the industry will develop in pharmaceutical industry will identify the the future. “I wish I had the answer to challenges in the societies we have. The that. There has been a lot of interest in pharmaceutical industry certainly will bioinformatics to better understand biodo its part and has done so in the past. logical pathways, to understand what But pharmaceutical development is an pathways fi t best with a given disease extremely costly endeavor, and we need or a given indication. Similarly there to have the room to be able to identify the has been a lot of interest both in the future breakthrough drugs that will evenlay press and the scientific press about tually come. topics like personalized medicine. “Most of us in the pharmaceutical “Those two are related. Our underindustry feel that some of the criticism Thorir Bjornsson is Vice President standing of what causes a disease in that has been leveled against the indusof Early Development and Clinical one person or another may not be extry is just not well-founded. The industry, Pharmacology at Wyeth. He joined actly the same on disease expression, through its various organizations, has Wyeth in 2001 from Bristol-Myers but it looks very, very similar. So looktried to make its case, but it takes a lot of Squibb, where he was Vice President of ing to the future, probably more than effort and some other mechanisms might Clinical Pharmacology and Experimental two decades, one does fully anticipate be utilized to explain the value that the Medicine. and hope that with increased scientific pharmaceutical industry has to society,” understanding, better systems biology he adds. and increased user technology, eventually we will progress to be But times are changing. The Obama administration has unveiled able to address the most significant diseases,” he says. the preliminary details of its health-care reform plan and is display“There is one thing we should never lose sight of. If you look back ing a commitment to provide wider access to generics, which is sure over the history of drug development, many of the big successes – to have an impact on the pharmaceutical industry. such as cholesterol lowering, and the oncology diseases, like the “We’ve only seen the broad strokes of what the new administraPhiladelphia chromosome that led to Gleevec – in both instances the tion is thinking about so far, and in many respects it isn’t that different from what we saw in an administration one or two removed. “From my own department we’re dealing with the earliest part of generic development, and I don’t see it impacting on that a whole lot, except we all have to be doing better and applying greater science to identify the best possible way the drugs can benefi t those who need them and finding valueadded medicines through better tests. Personally, it challenges us to do better from a pharmaceutical scientific basis that led to those very successful therapies was due perspective. I’m not quite certain how that will all play out. to medical knowledge that had been accumulating over fi ve decades. “I firmly believe that when there are challenges, we need to rise So even though things are challenging and difficult, things usually to them and the history of this country has proven we can do that. become better and better. We also have to be patient; it takes time With the challenges come new solutions and we will typically do for science to move on and become evidence-based.” better at the end of the day.”
“We’ve only seen the broad strokes of what the new administration is thinking about so far, and it isn’t that different from what we saw in an administration one or two removed”
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NEXT BIG THING
The era of personalized health care Next-generation sequencing and genomic enrichment arrays facilitate new research approaches for drug discovery and disease management.
he rising costs of bringing a drug to market and the cost pressure under which health-care systems operate has created an environment in which the development of successful drugs has become increasingly challenging. In order to grow profitability, pharma must focus on both reducing the costs of drug development and on increasing the medical value for segmented patient populations. Flexible solutions are required to address the needs of the drug discovery process and support downstream clinical trials. Next-generation sequencing, coupled with genomic enrichment technologies, offer new research solutions for more efficient pharmaceutical and diagnostic development.
The genomics revolution Genetics plays a large role in human health and DNA sequencing has proven to be an important tool in understanding the genetic basis of disease. However, the cost and throughput of capillary (Sanger) sequencing has limited the scope of genomic analysis of disease. The next-generation sequencing era, marked by the commercialization of the Genome Sequencer System from 454 Life Sciences in 2005, triggered a fundamental change in the way researchers approach personal genetic variation. Rather than analyzing a single sample at a coarse level, the speed and throughput of next-generation sequencing systems enables scientists to study hundreds of samples at significant depth and quality. With the introduction of genomic enrichment technologies, such as Roche NimbleGenâ€™s Sequence Capture Array products, the time and cost of sequencing has decreased further as it is now possible to capture and sequence only the human genomic regions of interest.
These arrays target specific candidate gene or exon sets, the whole human exome, and contiguous disease-associated regions. The combination of the 454 Sequencing System and NimbleGen Sequence Capture arrays has created a paradigm shift for the analysis of variants within genomic loci and megabase sized disease regions that play critical roles in human health. The challenge is now to rapidly
William LaRochelle is the Head of Healthcare Business Development at 454 Life Sciences, a Roche company. He joined the company from CuraGen Corporation, where he directed the Preclinical Drug Development Program. Dr. LaRochelle earned a B,S, degree in Biochemistry from Manhattan College and a Ph,D, in Biochemistry from Dartmouth Medical School.
and accurately apply these technologies to understand how disease-associated genetic variation can ultimately lead to powerful discoveries of new drug targets, guide therapeutic selection or explain clinical outcome.
Accelerating discoveries Collectively, these technologies enable innovative approaches to develop novel therapies and diagnostics and are considered one tangible pathway towards personalized healthcare in the future. Recent studies have used
the 454 Sequencing System alone or in combination with NimbleGen Sequence Capture Arrays to uncover new insights into the genetic basis of a wide range of diseases, including oncology. In a pivotal paper published in Nature Methods in 2006, Thomas et al. demonstrated that the 454 Sequencing System could be used to elucidate cancer tumor microheterogeneity. The study identified two minority EGFR populations at a frequency of two and three percent of the total EGFR, both of which were associated with clinical resistance to EGFR inhibitor drugs. In another study, the combination of the 454 Sequencing System and NimbleGen Sequence Capture Arrays was used to analyze specific exons in a lymphoma cancer cell line (Albert et al. Nature Methods, 2007). The study demonstrated the effective capture of exons with high coverage of the targets. Viruses and infectious diseases are another focus. The throughput of the 454 Sequencing System has allowed researchers to deeply analyze viral populations and identify viral subtypes. Recently, Simen et al. ( Journal of Infectious Disease, 2009) used ultra-deep sequencing to identify low-frequency drugresistant HIV variants in patient samples. The study found that mutations present at the one percent level are likely lead to premature failure of treatment. Identifying these rare viral mutations may ultimately enable prescription of a more effective drug regimen and sophisticated surveillance based on an infectious agentsâ€™ genetic characteristics. A further area of examination is autoimmune diseases. In another recent study, Nejentsev et al.(Science, 2009) outline a path from genetic association to the identification of protective and causative alleles for type 1 diabetes, marking a key step towards the development of clinical applications based on previously identified molecular markers.
Clinical sequencing While there is still tremendous progress to be made towards the dream of personalized healthcare, current medical research demonstrates the power of the next-generation sequencing technologies to uncover the genetic basis of human disease and reveal novel strategies for therapeutic intervention.n 454, 454 SEQUENCING, 454 LIFE SCIENCES and NIMBLEGEN are trademarks of Roche.
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Complications Amgenâ€™s Alexander Kamb explains why cancer may be more genetically complex than we originally believed.
n 2007, Alexander Kamb co-authored an article for Nature entitled, ‘Why is cancer drug discovery so difﬁcult?’ highlighting the difﬁculties of cancer drug discovery. As he explains, it is a lot more difﬁcult than originally thought ﬁ ve or 10 years ago, when drugs such as Herceptin came on to the market in a buzz of hype. The drugs made huge differences for patients, in some cases were effectively curative, and received responses unlike any before. This is what set the precedent of cancer drug discovery as ‘easy’. “All the investment in research over the last 30 years or so is beginning to pay dividends and we understand a lot about cancer, and so now we can be much more predictive in what we do,” admits Kamb “We can predict if we inhibit this target, attack this part of the cancer cell that predicatively it will die and the patient will survive. “However, what has become clear in the last few years is that cancer is actually not as simple as that; in fact, the view that cancer might be a simple disease genetically – with a few changes that convert a normal cell to a dangerous cancer cell - is being challenged. In some cases that’s true, but it’s a limited number of cases and the most lethal cases. For the most widespread cases like colorectal cancer, prostate, breast and lung and so forth, the disease when you look more closely is actually genetically very complex, with minimally dozens and possibly hundreds of genetic cases. So taking that information now and deciding what we will do with that complexity is our challenge and it’s fair to say we don’t yet understand how we will tackle that problem.”
to do is to generalize that further and find simple predictors of nonresponse – you can exclude patients at least from treatment with drugs that usually carry some kind of risk and more importantly would be to be able to understand why the subset of tumors that have wild type K-ras do respond. Only a subset of tumors that have wild type are normal K-ras gene respond to these drugs, and we really don’t have any idea why. So that’s one of the mysteries and one of the challenges we face, and a lot of people are working hard to try to understand that,” he says. The technologies underpinning these developments are biological, with a lot to choose from. There are many different ways of carrying out the development: multi-plexing techniques, different methods of measuring biological substances and so on. It is done very precisely and to a varying degree of
“There’s no question that the trends are toward decreasing productivity and companies want drugs. They still have the resources to test them, but the supply is diminishing”
Biological challenges Kamb, who is Executive Director of Oncology at Amgen, explains that one of the greatest challenges currently facing his team is the question of determining which tumors will respond to a given drug and which won’t. “In some cases we can do that. We can predict, which is a very powerful thing to be able to do. You keep patients from being exposed to drugs that might be harmful and have no benefit, and today the challenge is not technical, it’s biological. “K-ras is one of the cases, and there are only a few, where you really can ascribe non-response of a tumor to a particular mutation acquired by the tumor during its development. These are mutations that you don’t inherit, the tumor develops these by mutation and they benefit the tumor so they take over, so that when it’s fully formed is composed of cells that have this mutation. That mutation blocks response to a drug that targets the EGF receptor, which is a protein present on normal cells but also on these tumors. “Some tumors appear to depend at least in part on EGF receptor and K-ras mutations essentially short-circuit that need, so tumors that contain K-ras mutations don’t respond. What we’d like
Kamb explains how the methods of drug discovery are relatively straightforward; it is understanding the biological substances and their behavioral change in the disease state versus their normal state that is challenging. Kamb decrees the ultimate solution for this to be personalized medicine. “Cancer, as we’ve learned in the last few years, has many, many mutations that it acquires in its natural history as it develops, and understanding that complexity is very, very challenging. As we move forward and try to understand it we will employ a lot of these technologies that are emerging. It’s not magic. “These are genes that are inactivated in some cases and activated in others. They are parts of a very little machine, a cell, but it’s a very complex machine and it’s hard to study. It will take time and if nothing else we will make incremental progress; the safe thing to predict is incremental progress in the coming years.” Instrumental to drug discovery are imaging techniques – in determining sizes of tumors and growth change over time. This is one of the methods used to discern whether a drug is working, through noninvasive MRIs or X-rays to image the tumor and follow its behavior. This is one of the fundamentals in the clinic, and Kamb explains that this is developing as new technologies are coming online with the ability to monitor those tumors that are a little more speciﬁc. “For example, it’s reasonable to suppose, and in some cases this is documented, that if you interfere with cancer metabolism the cancer cell will respond. It will die or at least not grow, and so you can imagine using this kind of imaging as an early endpoint, something that you can ascertain earlier. In aggregate, if those benefits are added over many patients in many clinical trials, that’s a significant saving in money and hopefully will increase our efficiency in the clinic. Amgen has the capacity to do those kinds of things, metabolic testing in the clinic noninvasively as well as other imaging technologies.
“One technology that’s also interesting has to do with understanding whether your drug actually interdicts or modulates the target that it’s designed against. This is pretty easy to test in vitro, in test tubes, maybe even in cultured cells or in animals. It’s obviously hard in humans because you can’t go poking around in humans and taking out tissue. So there are now noninvasive methods to do some of this, and those will be increasingly important.” Exploratory images have huge benefits, but also huge costs. Kamb notes that the costs within the business are getting even higher. “One would hope that it will be much like computers: Bill Gates was proud that the cost of personal computers was always coming down as their power was increasing but it’s not clear that that same trend will apply here,” he says. “It’s not clear, but the hope is that by imaging, by getting early reads on drug action in people, you will save money and be more efficient, so ultimately there will be a cost saving.” But whether the situation then ends up with technology providing the data and the cost coming down remains to be seen. As technology develops, where do the skill sets have to be in pharmaceuticals moving forward? “This process is very complicated; even in terms of the practicality of making a drug there are many, many disciplines and expertise types that are required to do it successfully. It’s a long chain and each link has to hold, and so we in this industry have to rely on our colleagues who have expertise in lots of these areas and put together teams that are able to solve these problems. Human knowledge is increasing and our understanding of things is increasing, and that means there are more things to worry about.”
it is a business – we are embedded in a financial system and we have to provide a return to investors, otherwise the business isn’t viable. “There is obviously a role for business experts and creativity on the business side, but I think my view and the view of many of my colleagues is that if you treat an unmet medical need, the commercial success will follow. People, societies and individuals will always want to pay for their health. It’s one of the basics of life, food, shelter and health, and people that have my job should focus on treating the disease and trying to do it in ways that have significant impacts. The business takes care of itself.” In 2000, during his time at Novartis, Kamb was noted for highlighting the pharma industry’s desperate need for molecules, and he still agrees nine years later. “One of the things that you hear if you’re at meetings that in is just about every presentation, the first slide shows the decline in productivity in the pharmaceutical industry,” he says. “There’s no question that the trends are toward decreasing productivity, and companies want drugs. They still have the resources to test them, but the supply is diminishing, so that creates an opportunity. It’s an opportunity inside the industry to try to address that and obviously an opportunity for entrepreneurs and other kinds of people who don’t necessarily have the taste for big pharmaceutical companies to make contributions.” Kamb believes the economic situation has affected the value of licensing deals, “There are certainly in recent history several cases where you look at it and raise your eyebrow and can’t help but think that some of these deals were overvalued, but that is a measure not of desperation, but of the strong desire Bureaucratic cost Alexander Kamb is the Executive to get hold of new technologies and new mol“The more things we can see and monitor, Director of Oncology at Amgen. ecules, and of course the upside here is very, generally speaking, the more we end up doing very high. Not only for patients who could get and the more it costs, but hopefully the better access to a new breakthrough medicine, but also on the business the results will be,” Kamb points out. “As important as the technolside those kinds of successes are rewarded. ogy is, the key thing is still the biology. People who can understand “In part those high price tags were justified by this very favorthe biology have a vision, have ideas; those are the people that are able reward if the promise is fulfilled. I shouldn’t be forecasting much needed and are arguably in short supply.” what’s going to happen in terms of those price tags – there’s clearly The major pharma mergers have begun to formulate into actustill a strong appetite in the industry for good drugs. The quesality and a recent suggestion has formed that legal and marketing tion is, are we going to be looking more carefully? Are we going to expertise at the very top is taking precedence over science. In so be unwilling to take the risks that we used to take to make those many words, Kamb agrees with this. discoveries? That’s something that is in flux, as a lot of things are “I can’t speak for chief executives in pharmaceutical companow.” nies. Many of them are trained in the business world and of course
“There is obviously a role for business experts and creativity on the business side, but if you treat an unmet medical need, the commercial success will follow”
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Looking backward to go forward GSK’s Anne Phillips tells NGP why drug discovery should follow from the patient’s needs, rather than the other way around.
t is Anne Phillips’s background as a physician that led her to a patient-orientated area of pharmaceuticals. As Medicine Development Leader at GlaxoSmithKline, one of the world’s biggest pharma companies, Phillips works in the oncology group within Research and Development, overseeing the development of any one particular asset from the earlier preclinical development to managing it in different markets around the world. “I am fortunate enough to oversee the aspects of development of Eltrombopag, which is a drug that works to increase platelet count in patients who have low platelets and are predisposed to bleeding as a
result of that. We currently are indicated for ITP in the US, and the job is really fantastic because it brings together all of the experience that I’ve had in pharma to date,” she explains. So how has the transition from doctor to her recent appointment at GSK affected her management approach? Phillips advises that her role involves a multitude of management and leadership aspects as she oversees a huge number of individual projects. “As a physician I have this very strong desire to add value to the lives of patients. So it doesn’t really matter what role I’ve had, that’s always been core to what’s important to me. This role is fantastic
because the drug is very effective at increasing platelet count, and the patients who are at risk are really at risk of serious bleeding, so there’s a huge impact for patients,” she continues. “In my view, ultimately, it all moves towards making a very important drug of great value available to patients who need it.”
Clinical requirements Phillips’s entry into the pharma industry, specifically drug discovery, has come at a time of challenges. Modern drug delivery is now very different to the way it once was, for instance. She notes that even when proof of concept has been shown within a drug, conducting clinical trials themselves is a huge challenge in a global environment. “You have to make sure that you conduct the study in the right patients at the right dose and design the correct study. Sometimes the logistics in the global environment of getting subjects enrolled in the study can, in and of itself, be a big challenge. “There are clear regulatory challenges, differences across the globe, once again, in regulatory requirements and what is needed there. The safety hurdle that we’re seeing for drug development is now unprecedented globally. That is a huge challenge – it’s a very risk-averse environment. You have to anticipate those potential challenges to any drug, and then once you do get approval, what the label looks like and what that means to how you can get that drug then to the patients themselves is a struggle. There’s the payer component: so you can get a drug approved, but if you can’t get the payers to pay for it, really the patients can’t get the drug.
“It is unfortunate when any situation becomes a big media issue and people make their own decisions based on what they’re seeing rather than getting advice from their health-care provider”
Anne Phillips is Medicine Development Leader for Eltrombopag, a thrombopoetin receptor in the Oncology R&D Unit at GlaxoSmithKline.
“I can choose the individuals to work on a particular project. You have to have an incredible team spirit, an incredible commitment to development of an asset to run this kind of structure well,” she says.
Global challenges “So that, again, is a huge challenge, and there is such a diversity of payers and requirements and what they need and don’t need from any particular drug. That is not a new piece, but it’s a new and more important challenge than ever right now. And you need to be able to solve that in order to get the drug available for patients who need it,” explains Phillips. As Medicine Development Leader, Phillips has a small core team that works alongside her on an ongoing basis, with a number of broader teams that work to deliver the different aspects that feed into the core team. Phillips has no direct reports – no direct managerial control over individuals – but does have control and input into annual bonuses. GSK’s structure ensures that its individuals report up through their lines, determining efficiency within the different processes of the drug’s development.
GSK’s R&D centers are located around the globe, and so multi-site operations bring an even bigger possibility of challenges. “On the one hand, to have that available is fantastic,” says Phillips. “So you can get diversity of subjects enrolled in the clinical trial. Diversity in terms of input and expertise into how you develop an asset the best way can be incredibly beneficial. There’s wealth of patients around the world that you can access and get the drug to, so there are a lot of advantages. Time zones are often a problem – working on the east coast of the US and working with Japan and Australia makes both timing and language an issue. “Very often in clinical trials some of the scales that we use may be validated in one language, but may be interpreted quite differently in another. And as we have to have more and more health outcome measures, you have to make sure that what is important to somebody
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in the US is important to somebody in the country in which you’re conducting the clinical trial. Standards of medical care can be very different in different countries. Certain procedures may be routine in one country and not acceptable in another country. “So there are a multitude of differences in, for example, regulatory approval: you can get a trial up and running quite quickly in certain countries; it can take 10 months to go through just approval to get a study started in other countries. So there are a lot of huge differences, but in the end to get the diversity of subjects into a clinical trial outweighs those challenges.” Being part of a successful global brand does bring innate advantages, however. The size of the company, number of contacts and knowing individuals in different parts of the world are just some of the benefits that Phillips points out. She notes the way in which other global companies operate, working through CROs to enjoy similar benefits. But in the current pharma climate of major drug mergers and buyouts, how does this affect GSK and does it add to the list of challenges? GSK’s long-term strategy has been to install a very strong R&D group. Over a number of years, the company has been supplementing very strong scientific internal discovery engines with more externalization, which has been conducted many ways. Phillips notes ceedd as an example of this.
work that’s ongoing. So there are a number of different strategies. Importantly, there’s a diversification of the way that we are going to feed that R&D pipeline.”
Personalized goal Phillips’s own ultimate goal is not self-serving; her vision is to bring medicines of value to patients, and for her, 2009 is a year in which to be looking backwards, not forwards, in terms of revolutionary therapies. “There’s a change in the focus now, and we are beginning to take a look backwards, in a sense. So we work from the patient to what we’re actually developing. It’s the end-user that will be changing the focus as to how drugs are going to be developed. “What are the unmet medical needs? What is of real value to patients, to payers? What is that need, and then how do we develop molecules that will go there? Whereas previously we would focus a lot on developing as many molecules as we could. There were also a lot of ‘me toos’. The fast followers didn’t have to be terribly differentiated. “It’s not going to be acceptable going forward. Each new medicine is going to have to demonstrate clear value before it will be reimbursed and before patients will be able to get access to it. So we’re going to have to start thinking very early on, ‘What are the characteristics?’ – as early as possible, ‘What are the characteristics that are going to make this medicine add that incremental value?’ And just being a different new chemical entity – it’s very cool, but it doesn’t necessarily translate to value for the patient,” says Phillips. She explains that forcing these changes are challenges such as the death of blockbuster drugs and technological advances and being able to meet individual needs of particular patients. She also notes generic competition: “If you have a patient with a medical condition, and you have three to five genericized medicines, in order to rationalize paying for a new drug, you have to have value over the generic medicines in order to justify paying a premium price for new entry into a particular therapeutic market.” The pharmaceutical industry’s recent race towards super-fit manufacturing and supply chain was something blueprinted by the automotive and aerospace industry around 25 years ago, so why has it taken so long to get to this method? Phillips is quick to add that developing a drug has always been expensive – only one out of 10 molecules makes it to becoming a drug – and the process has always been difficult. “It’s even more difficult now,” she says. “My background isn’t in manufacturing, so I can’t speak specifics about what has happened in the past and what has happened going forward or what’s happening in the current environment, but certainly our manufacturing processes at GSK have always been extremely rigorous. Not only because they have to be creating medicines, but very rigorous in continuously improving and becoming leaner and focused. “Ever since I’ve been in industry, I have seen that very clear drive towards becoming very lean, very effective and maintaining the highest possible standards.”
“As a physician I have this very strong desire to add value to the lives of patients. It doesn’t really matter what role I’ve had, that’s always been core to what’s important to me” “So this center of excellence for external drug discovery is a very small group of individuals that has gone out over the past number of years to work with biotechs around the world, and create alliances with them to allow the biotechs who really have that very strong expertise in certain areas to develop their own pipelines in alliance with GSK. “The idea is that we don’t get in and interfere and take over their assets; they develop in a biotech way with their expertise to a proof of concept point, and at that juncture GSK can option that molecule. It’s a risk-sharing model, and it’s one where the biotech is incentivized by milestone payments along the way. So it’s a different kind of externalization of drug discovery, and it’s a way to supplement what is going on internally in GSK. Now what we’re seeing is more and more of this activity – in the different centers of excellence for drug discovery they have an increasing proportion of their work – they’re continuing those programs that they’re excellent at internally. “However, they’re also looking outside for individual assets that they might bring into GSK; on a bigger sense GSK is looking for smaller companies that we might want to acquire. Sirtris was an excellent example of a small biotech company that GSK recently purchased. There are a number of different innovative business models that we’re using and looking at around the globe to really supplement the core R&D
Safety scare However, slowing down the successes within the pharma industry is the recent safety scare surround Avandia, which produced quite a wide impact throughout the industry. But, from Phillips’ point of view, the handling of the situation was nothing other than successful. She remarks on the transparency: “The meta-analyses that GSK had done had been given to the regulatory authorities many months before this became a big media issue, so there was certainly transparency there. The data had also been in the public domain on the clinical trials register, so they also had been available for a long period of time. What happened around Avandia became larger than life. “It became a very big media issue, and patients reading the newspapers, listening to the television or listening to the radio became frightened, and I think it is a difficult situation. I’m not sure that there could have been any more transparency because the numbers, the data, the science were out there, but I think the very important relationship between a physician and their patient is where we had some difficulty. So a patient is frightened; here’s all this stuff in the media. If they don’t know to go to their physician and ask, ‘Should I stop this medicine?’ or ‘Is there a different medicine you’d want for me?’ then that dialog is critical. “And that relationship between physician and patient, for all medicines, is pivotal. It is unfortunate when any situation becomes a big media issue and people watching the media make their own personal decisions based on what they’re seeing rather than making sure they get the advice from their health-care provider.”
Phillips explains how GSK worked hard to place the science in the public domain at that time, and published all of the data, but the difficulty remained with the attractiveness of a sound bite. It can be digested and incorporated, and the scientific explanation doesn’t lend itself as easily to a quick sound bite, and is therefore a difficult message to get across. The key, for Phillips, is to “continuously make sure that the science is in the public domain, is available to those who can understand it, digest it and then transmit it to patients and to the public in an appropriate way.
Lessons learned “With Avandia and with any drug, the key was and is to be transparent. If you have data, get it out there, let people know it, understand it, query it, and that is what we had done. That clinical trial register – we had done that with the regulators. We had been in constant communication. “It’s what is expected. As with Avandia, publication is critically important, not just to try to generate information, but it has to get into the public domain. So that’s done in different ways. It can be done by registers, publishing in journals, presenting at scientific conferences – there are different venues for doing this. It’s important to be very open and very transparent about the scientific data. So it wasn’t really a lessons learned. “The lessons learned was around the impact of a sound bite or what interpretation of data can do. You have to be rigorous about the science, you have to be rigorous about the safety profile of every drug, and you always have to be transparent about it.” n
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Laboratory asset management strategies Masao Moriyama explains how using a single provider for the management of laboratory equipment throughout its entire lifecycle reduces administration, improves efficiency and provides critical data to help optimize resources.
rocurement officers, as well as facility and lab managers, have traditionally had no option other than to work directly with original equipment manufacturers (OEMs) to manage their company’s assets, each with different service level agreements and requirements. When we take into account that most companies have multiple laboratories and multiple sites, this can add up to thousands of different suppliers and a correspondingly large number of contracts. Working directly with OEMs in this way carries a massive administrative burden and can divert thousands of dollars worth of time away from core scientific projects to deal with equipment contracts, troubleshooting and service calls. With the pressure mounting on R&D departments to deliver more with less resources, employing a company that can provide detailed data and insight on all assets offers a massive advantage. Consolidating contracts through bringing in an asset management service provider, such as GE Healthcare’s Scientific Asset Services (SAS), is one solution that companies are increasingly turning to in order to improve Powerful data and analysis is also a benefit. Data such as contract efficiency and drive down costs. The unique combination of services offered spend, service and maintenance history, preventative maintenance comby SAS can be adapted to suit the needs of each individual company, with pletion, and current asset market value, are collected for each instrument the ability to support the entire lifecycle of their assets from equipment fiand service event and held in a single, secure database, AssetPlus. These nance, maintenance and validation, to site moves and disposal. data can help to understand asset utilization and minimize under-use. Asset management service providers take control of equipment inCombine this with an understanding of current market value and compaventories, categorize and barcode each item to enable easier tracking, renies are able to make informed decisions about their surplus or unused view existing contracts to help customers choose the best service model, equipment. Options could include transparent storage or disposal, with any and implement preventative maintenance plans designed to fit around reproceeds fed back into the business. search schedules. Validation protocols can be customized and standardThis leads to the advantage of increased staff retention. As equipment ized, offering a combined solution with significant time and financial downtime is reduced to hours instead of days, there is greater freedom to savings, and simplifying the FDA auditing process. focus R&D resources on science. This has a positive effect on motivation The benefits of employing an asset manageand job satisfaction, resulting in improved staff ment service provider include cost reduction. A retention rates. detailed review of existing contracts is carried Summary out, which can be used to advise on the best type In the current climate of increased M&A acof cover to suit individual needs and to re-negotivity and decreasing budgets, pharmaceutical tiate more cost-effective contracts from individand biotech companies are under increasing ual suppliers. Thousands of R&D dollars can be pressure to enhance productivity whilst at the saved, as scientists’ time can be redirected away same time driving down costs. In a recent survey, from repairs to allow them to focus on key reAccenture found that executives at top pharma search projects. Purchasing agents can save vast companies rate analytics/data-driven insights as amounts of time that would have been spent neone of the top factors critical to outperforming gotiating contracts and managing invoices. their competitors. However, few companies colEnhanced service levels is another benefit as onlect all data potentially available to drive their site engineers drastically reduce response times, Masao Moriyama is Service Director, GE asset management programs. Partnering with a ensuring that repairs are dealt with quickly and Healthcare (Japan). Moriyama has years of global company that can adapt and grow to meet efficiently. If OEM engineers are required the experience in engineering, service logistics, a company’s needs and deliver a total solution for process is managed by the GE Healthcare team, and in-depth knowledge of health-care and asset management throughout its lifecycle prereducing administration and ensuring that qualSix Sigma methodology. sents an ideal long-term solution. n ity of service is monitored and not compromised.
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SHELF LIFE? Can pharmaceutical companies combat patent expiries by switching branded products to OTC? Schering-Plough’s Brent Saunders brings NGP’s Natalie Brandweiner up to speed.
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aving begun his career in compliance at PricewaterhouseCoopers, Brent Saunders is a noted speaker on risk management issues in the health-care industry – a useful tool in his current position as Senior Vice President, and President, Consumer Health Care, at Schering-Plough. Knowing when the time is right to risk the success of an over-the-counter switch requires a certain element of business savvy, and Saunders certainly seems to be the man for the job. He describes OTC switching as a very simple process: the switching of an FDA-approved prescription medicine to a non-prescription overthe-counter or OTC status medicine. In essence, he says, the process is more efficient, as there is less need for patients to visit a doctor and receive a prescription for a drug if they can enter a drugstore and buy it themselves. Saunders explains that OTC switch is becoming more and more prevalent as both drug companies and patients themselves are keen to reap the benefits of this simplified system. “If you have a well-established medicine that is safe and effective and you believe that consumers can self-diagnose and treat with your medicine, then it’s appropriate for OTC or over-the-counter status,” Saunders says. “The reason a company may be interested in doing this is that on the prescription side they may either be losing their patent or they may see their market eroding and recognize that a better place for the medicine may be in the OTC status versus the prescription status.” But facilitating the decision as to when a prescription medicine should be switched and what sort of process in which to conduct the switch involves a variety of factors, each one having a unique set of circumstances that need to be considered. Saunders advises that generally, those major switches that have occurred over the last two or three years have been due to patent life, each switch requiring a complex process. “We have to work out with the FDA whereby you need to demonstrate that the drug is first and foremost safe, and then you have to go on to also establish that consumers can self-medicate without harm or concern.
“a lot of governments are becoming more interested in self-medication or OTC status for drugs because it shifts the burden from the public health system to the individual” “There are different ways of doing this. One of the primary tools we’ll use is label comprehension studies and surveys. We’ll spend a lot of time understanding how a consumer views a label and what their comprehension and understanding of how to use a medicine is,
Brent saunders is Senior Vice President, and President, Consumer Health Care, for Schering-Plough Corporation. He joined Schering-Plough as Senior Vice President, Global Compliance and Business Practices, in November 2003. Saunders came to Schering-Plough from PricewaterhouseCoopers, where he led the firm’s compliance business advisory services group.
and whether there is any potential for misuse or misdiagnosis. Then we work with the FDA to ensure that labeling is clear and appropriate for each medication in its OTC status,” he explains.
More efﬁcient Saunders believes that the impact of OTC switch on the healthcare system can benefit consumers – providing greater time efficiency. The move toward customer choice and self-medication has become more and more popular with Americans, who prefer to control their own health care. Saunders notes the financial side as another benefit, because the patient doesn’t need to pay for the doctor’s appointment or co-pay for their insurance to cover the prescription drug. However, he also advises that on the negative side, the patients do have to then self-pay for the medicine in its OTC statusin most instances. “It really depends on the drug and the category,” Saunders continues. “With many drugs, the consumer will pay directly out of their pocket for the medicine, but when you factor in the doctor’s visit and the co-pay, it probably becomes even. “Also, when people have to pay out-of-pocket for something, they tend to use it only when they need it, versus if it’s completely reimbursed or the cost is passed through, so that it’s in essence free to them. Take a category like upper respiratory infections. A Con-
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The OTC switch market Kalorama Information has released a new report, ‘Rx to OTC Switches 2009’, to further understand the effects of the increase in OTC switching. They note that OTC medicine currently saves American consumers more than $20 billion per year, both in direct and indirect costs. The Rx-to-OTC market was valued at $6.7 billion in 2008, and is an increase of eight percent annual growth is expected between 2009 and 2013. They examine the benefits of OTC switching for pharma companies as having the ability to extend patents, and therefore a product’s lifecycle, rather than the previous method of fighting the generic competition through the courts. Kalaroma has identified the areas most open to Rx-to-OTC switches in the near future as being gastrointestinal drugs, cholesterol-reducing drugs, osteoporosis treatments, overactive bladder, sexual dysfunction and contraceptives.
sumer Healthcare Products of America study showed that moving treatments to OTC status saved the health-care system about $4.75 billion annually. “What we are seeing around the world, not just in the US, is that a lot of governments are becoming more interested in self-medication or OTC status for drugs because it shifts the burden from the public health system to the individual,” he says. President Obama’s health-care reform plans have pledged to expand health-care coverage, but will this mean a lesser need for over the counter drugs, as patients will now be able to receive medication through their insurance? Saunders says that this will depend on the category to which the drug belongs. “For example in the PPI category, or the allergy category, most of the prescription drugs, though not all, are moved to a third tier co-pay. The co-pay for some of those medicines can be between $35 and $45, so it’s either the same price as the OTC for treatment or it’s more expensive than the OTC treatment itself. In prescription status, that drug may cost $200 and in an OTC status it may cost $20 dollars, ” he explains.
Patent expiries Often the cause for OTC switch is due to patent life. But along with expanding insurance coverage, Obama is also hoping to promote the use of more generic drugs and allow them to become more available, which will supposedly make medicines cheaper. But it remains to be seen how these two issues, patent expiry and generic usage, will run in tandem, and if this is to be done over the counter. “In most instances when you go over-the-counter you do face competition from store brands” Saunders says. “Generally stores will create their own version of your compound, so it then it becomes a brand competition. There are certain people that tend to like brands and there are certain people who are more cost-conscious and tend to trust or look to a private label or store brands,” he says, suggesting an OTC switch can provide competitive benefits to a drug that is already on the brink of losing its patent.
He provides Schering-Plough’s drug Claritin as an example of this. “Just for the US marketplace alone, when the patent life ended, we could have simply walked away from the category, or we could have switched it. By switching it, we’ve generated well over $2.5 billion of additional sales since the patent expired. That’s a nice lifecycle strategy for a brand. Claritin as a prescription had a finite patent life, but now Claritin as a brand should last forever.” Saunders says that there will always be people who will prefer a brand to a generic product, and as marketers, companies must demonstrate why a brand is more important. Schering-Plough ConsumerHealthcare is continuing to innovate Claritin by looking at new formulations and combinations to stay ahead of the private label companies. “Innovation doesn’t end simply because the patent has expired and the drug has been switched to OTC status. Innovation in the hands of a good consumer health-care company continues through the entire lifecycle. This year we launched a new formulation of Claritin in a liquigel format, which was never part of the prescription life of that product. It was something we innovated. We had to file with the FDA for a new drug application for that formulation. It took us a couple of years to do it, but we now have Claritin Liqui-gel availble for consumers.
Strategy OTC switching is certainly a determined strategy for ScheringPlough. Ninety-five percent of the company’s OTC products were once prescription, compared to an industry average of 26 percent, making the company an industry leader in OTC switch. “We’ve had a very solid 30-year track record of doing it, and frankly we do it because it’s a strategic priority for our division,” says Saunders. “We focus on good medicines. We like to say that we provide products that really help consumers with their health care. By the time a medicine is a candidate for over-the-counter status, you have demonstrated efficacy because you’ve gone through a new drug application, you’ve gone through all the clinical testing required to
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bring an approved drug to patients, and you know the safety profile is strong. So it’s a really good basis for a successful product. Schering-Plough recently developed a proprietary switch process. Saunders explains that no two switches are exactly the same, and the world of switching is becoming ever more complicated. “A lot of the low-hanging fruit has already been switched,” he explains. “Switches in the future will require more thought and more expertise than ever before.” He explains that the company’s tried and tested best method to approach a switch is to bring together a small group of experts within Schering-Plough and to leverage outside resources, as appropriate. The emphasis is placed on ensuring a dedicated team is attached to each switch so that it can address the specific needs and requirements of each particular switch. The team must then manage the switch process through the lifecycle to the launch. The approach used by Schering-Plough differs from that of other companies – other companies often have people either in their market research or their R&D group who are responsible for switches. The main difference that can be attributed to Schering-Plough is their proven methodology, and their heavy use of a dedicated and structured team format for switching. Saunders is reluctant to highlight any of the switches that Schering-Plough currently has in its pipeline; the switching business is a highly competitive game. However, he does mention one that is currently in process – Zegerid, a prescription product in the US used for frequent heartburn. “It was filed by a company called Santarus out of California,” he explains. “They market it as a prescription product today. We have signed a licensing arrangement with them to switch the 20 mg product to OTC status. We are now in the process of working with the FDA to make that happen. We think it’s going to be a really unique entry into that marketplace.” Despite conducting a huge amount of switches in comparison to other pharma companies, the actual amount of switches carried out is
around one per year. As Saunders says, “A switch is a big deal. There is not a large pool of drugs that are at the stage of switching.” He notes a successful switch – two and-a-half years ago Schering-Plough switched a drug called MiraLAX, a medicine used for constipation – and to get to that stage of success took a relatively long period of time. However, the future for switching as an increasing trend looks promising. “Around the world we see governments more interested in self-medication, which is a positive for OTC switches,” Saunders predicts. “Public policy is moving in the direction to support OTC
“Innovation doesn’t end simply because the drug has been switched to OTC status. Innovation in the hands of a good consumer health-care company continues through the entire lifecycle” switches, and a lot of that is the burden that it relieves from the health-care system financially. “But by that same token there’s some counterbalancing in that the switches that are out there that are interesting are treatments for more chronic ailments. And those are more difficult switches to do: they require longer studies and more extensive studies to prove the safety case for the FDA. “Policy is moving in that direction, but the work that has to be done is a little bit more complex and probably more difficult. The industry has a bright future, but we need to continue to look at ways to use technology and good marketing practices to help ease some of the concerns of abuses around medicines in the OTC side,” he concludes. n
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the opportunity The current economic crisis is on everyone’s mind, even though the health-care sector seems to be weathering the storm relatively well.
ur individual and collective health concerns are neither better nor worse because the financial system of the world is falling apart. It would be delusional to believe that the economic crisis is the most prominent force driving the restructuring of manufacturers of pharmaceuticals, biologics and medical devices. Likewise, it would be shortsighted to believe that any restructuring can succeed if it is limited to a change in the organization chart. Historically, major restructuring occurs for corporate financial reasons, and is geared toward improving company productivity. Restructuring results in major stress to the company as a whole and to each employee. Faced with stress, it is normal human behavior to seek reassurance by adhering to well-known, seemingly ‘proven processes’. Yet, these proven processes were developed based on an existing structure of personnel and organization that restructuring destroys. Holding fast to such ‘proven processes’ is not the logical path to increased output, maintained quality, and a true increase in productivity, as the required resources are no longer in place. One common solution is an increased reliance on outsourcing. In this context, outsourcing has many faces. Former employees who were just let go are rehired as independent consultants to perform their same previous tasks. Established experts
are engaged to assume the tasks defined in the pre-established standard operating procedures, supplementing the remaining workforce. Also, entire functions (such as data management) are farmed out to companies that replicate established standard workflows. None of these approaches fosters true change.
“True restructuring is necessary for many reasons, and none are critically related to the current economic crisis” This type of restructuring, aimed at reducing headcount and related costs, is not conducive to challenging existing processes and procedures. Consequently, it does not help drive the productivity of the functional teams (which include in-house and outsourced personnel), even though the productivity of the company (in-house personnel only) may seem improved. Furthermore, the reliance on an outsourced workforce using traditional (and therefore emotionally comfortable) processes increases the complexity of project management, decreasing the effectiveness of the company’s core employees. The opportunity is clear, however. Processes should be challenged and refined concepts, systems and procedures developed. True restructuring is necessary for many reasons, and none are critically related to the current economic crisis. ‘True restruc-
Paul-André de Lame is Co-Founder, President and CEO of Anabase International Corp., a consulting company that provides its pharmaceutical, biologic and medical device manufacturer clients with strategic and operational support in clinical and regulatory development, guides and fosters process optimization, and offers integrated study and data management systems.
turing’ means assessing with an open mind what advanced work processes and supporting technologies offer, and determining how these can be integrated into a seamless workflow. The profile and contributions of key personnel should be analyzed, with the ultimate goal of improving the performance of new functional teams while reducing time to product release. Because our work is performed by humans and for humans, a solid grasp of the underlying intent and purpose of pharmaceutical development, and the mindset necessary to succeed at it, is critical to focusing teams around the proper processes. Furthermore, the acknowledgement and proper placement of each team member’s strengths
and attitude within the team is critical to success, as is the unconditional leadership that company management should provide regarding the true purpose of internal structural change, and the expected performance standards that are required to fill in the gaps created by lay-offs. Under these conditions, restructuring should be an ongoing process, aimed at continuously improving the company’s quality, speed and cost-effectiveness. Critical elements should include a core philosophy that is clearly supported by the company leadership and embedded in the corporate culture; product-focused teams empowered to enact process changes; support functions (such as IT, finance and HR) clearly assigned to facilitating the implementation of the required changes; an ‘open-to-the-world’ attitude, which should lead to hiring outside experts to help shape and optimize change; and open and flexible information systems that truly empower users and gives them the freedom to succeed. Following these points, corporate restructuring will be viewed as a streamlining opportunity, reflecting the restructuring processes of the global economy itself. n For further discussion, please visit the online version of this article or contact us at firstname.lastname@example.org
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Ellen Strahlman, Chief Medical Officer for GlaxoSmithKline, explains why a balance of safety and efficacy is essential in clinical trials.
s CMO for GlaxoSmithKline (GSK), Ellen Strahlman is primarily responsible for ensuring the safety of medicines and patient care. It may be a tough job, but Strahlman is certainly not lacking in passion. As a physician, her medical training began in general surgery and ophthalmology, which she admits to have initially given her that “flavor of things,” and that desire to influence patients’ lives through the pharmaceutical sphere. She explains her time spent in epidemiology and public health as that what attributed to the move into the pharma industry. “I was pretty uncertain at first; the first part of my career was at Merck, and I found that actually inventing a drug and bringing medicines to patients through that route was not only a very fascinating and complicated process, but also a way to really change the lives of millions of patients at a time,” she explains. “For me to see that GSK considers safety and potential risks, even in the design of the molecules and the drugs at the front end is an important statement about the values that the company has. Then wanting to use all the data at our disposal and inventing technology to do that, whilst being willing to share it displays this even more.”
for patients. As she puts it: “Quite simply, comparative effectiveness of treatment means comparing two or more treatments for a given condition. “In our view we do this all the time, even in the daily work of bringing medicines to patients and developing drugs. Of course, comparative effectiveness research now has a larger context, especially in the current debate, and not necessarily in the US but all over the world. We support this when its intent and focus is to improve the health of patients. We believe these comparisons should mainly be medical, assessing the benefits of a medicine versus the safety risks it may have, and then comparing among two or more treatments to determine which one is best for the individual patient.
Safety and efficacy In a recent presentation to the Harvard Medical school Strahlman notes the impossibility of separating safety from efficacy in clinical trials; in determining whether a drug is beneficial or not for patients. The two cannot be separated as a decision such as this is a benefit risk decision, which is made between patient and physician. Strahlman argues that from a scientific point of view, efficacy endpoints are established and safety parameters are prescribed, and the interpretation of the two must always be placed into consideration together, which forms the foundations of a benefit risk assessment. “For example, an adverse event in this situation where a patient has a life threatening illness is taken in a different consideration than if it’s a medicine people would take every single day for the rest of their lives. So, if you’re an oncology patient and you take a medication and you have a severe stomach upset, but it’s part of your chemotherapy or part of your regimen to save your life, you may tolerate that. If you have to take a medicine every day for arthritis and you constantly have a stomach upset, that would be a very different situation,” Strahlman explains. She also notes comparative effectiveness research within the presentation as being a major part of how GSK operates – from the test tube to the clinical trial, the company retains its emphasis on discerning how a medicine compares to other medicines that are currently available
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“Central to that is the health and wellbeing of the patients and the input of his or her healthcare provider. People want to know if their medicines work, and how well they work compared to other things, and that’s really where we think comparative effectiveness research has its greatest value,” she explains. The intent and focus on improving the health of patients is very much at the forefront of debate currently in the US, but there are often other focuses that are placed on comparative effectiveness research. Strahlman explains how GSK implement this themselves in regards to the medical and clinical aspects of comparing treatments for patients. There is also comparative effectiveness research that examines cost – it being a major part of the analysis after the medical benefit is determined. Strahlman once again provides an example, this time focusing on Phenylketonuria, a condition often referred to as PKU and an enzyme deficiency. “In the US all babies are screened for this,” she says. “It’s a very rare
condition, but if you have it the babies universally die; it’s fatal. It happens very rarely, so it’s not an inexpensive thing to do this for the entire population. But if it’s caught within the first few days of birth, it can be treated and the babies grow up to have completely normal lives. “So society indirectly made a decision that a very extensive screening program would be tremendously beneficial for their pediatric and their newborn population. What was realized is that there was a tremendous benefit to doing something in this situation, and then the cost decisions were made by the values of this society afterwards. One of the things that is important to us is that the medical benefits, in comparisons of treatment, be front and center and that doctors make those decisions for their patients. “However, an emphasis on costs, as we have seen in other parts of the world, we don’t think will be as productive. We want to bring medicines to patients to improve their health and well being, to treat diseases and meet unmet medical needs. We believe this is of tremendous value to society, so if cost becomes the front and center issue there’s definitely a feeling that we might lose some of the important benefit and value to society conversations.”
“People want to know if their medicines work, and how well they work compared to other things, and that’s really where we think comparative effectiveness research has its greatest value” Strahlman explains that the elements important to comparative effective research proposals should therefore include an understanding of benefits and risk, as well as an understanding of populations that respond differently. She describes that some of the ways that comparative effectiveness research can be conducted may be through randomized trials or observational data within the context of the real world, both elements being applicable to CER.
Real world data “You need both types of information to really understand the benefits and the risks of a medicine. Randomized trials are the ultimate experiment – the testing conditions are right, you actually test the benefit and the safety versus either the standard of care or some-
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“What better way as a physician with all this experience to be able to contribute to a company, to try to be the medical voice, the voice of science for the patients, and also for their care, safety and well being”
Ellen Strahlman is Chief Medical Officer at GlaxoSmithKline. She joined GSK from Pfizer Inc. where she was Vice President of Licensing & Worldwide Business Development. times the placebo, and in the purest sense, it gives you the most unbiased view of the effectiveness and the safety of a treatment. “The downside of randomized trials is that because the populations are selected, and everything is very well controlled, sometimes when things happen in the real world they don’t exactly go according to those criteria. For example, our population of diabetics would be in a clinical trial, a uniform population, to ensure that the experiment works well. But in fact, diabetics have a wide range of medical conditions. So in the real world, that may be different. “Therefore, clinical trials can’t always answer the questions about what happens to an entire range of people in the population. That’s the first thing. The second thing is, because of their usually limited size, if you have between 3,000 to 5,000 patients who have been in randomized trials, and safety or an adverse event happens one in 100,000 or one in 500,000, you may not be able to detect that. So, there are size limitations based on the rarity of events that may occur. “So randomized clinical trials are absolutely essential to establishing the foundation of the science for benefit and the safety of a medicine. What it doesn’t address is the generalization to the population and it doesn’t provide the capture for even more rare safety events. And that’s where real
world data comes in. The observational data that companies and regulators use have to do with the adverse events reporting systems, capturing that information. So you do need both,” she explains. This is certainly the case within the US. Insurers now have the access to patient data through electronic databases, allowing them to view information in regard to safety – a tool valued as extremely beneficial. It is the usage of these tools by the pharma companies that contribute to the industry as a whole; drug firms have the expertise to analyze the information and make it available to others, not just for themselves. Strahlman notes the tools GSK have developed specifically to enhance the pharmacovigilance process: “The regulations require that we analyze information, and I’m very proud of the fact that GSK goes beyond what’s required and in terms of what the regulations say, because we’re very interested in understanding the full range of benefit and risk for our medicines,” she says.
Innovation “One way we look at things is something called the online signal management, or the OSM tools. This is spontaneous data, adverse events reports that doctors and healthcare providers supply to regulatory agencies in general for all medicines. In the past, this was done more in an ad-hoc basis, and collected into a large, stacked database, which the FDA collected. GSK developed an online signal management tool to proactively identify, capture and make connections in a more streamlined fashion, and integrate the information back into where it needed to belong in terms of which drugs it was being accounted for. “The system was so good that the FDA and the European Medicines Agency (EMEA) uses it. So, the regulators now use the technology that GSK invented. As we were developing it, we brought them into the discussion so they had some input, it was a real partnership in terms of making that development, and then the company made the investment in the software and the tool, which it now makes available to regulatory agencies all over the world that want to use it. We’re extremely proud of that, and that’s our most salient example.”
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Strahlman explains GSK’s focus on CER as being “from test tube to the patient,” and what the benefit and risk could be for the company’s medicines. In addition, online signal management is used to evaluate adverse events for drugs that are currently on the market. GSK have an innovative tool to support this called Safety Works – she notes its recent win at the 2009 Bio-IT Innovation Prize. “This technology actually looks for benefit and safety information mining electronic claims health records, and we’re actually piloting it in a number of dimensions,” she explains. “We are working with a third party vendor called ProSanos, the weigh station for the licenses. GSK has invented this technology and developed it along with ProSanos, and we’re making the licenses available to anyone who would like to use it – regulators, payors, academic institutions and so on. There’s no profit for GSK involved; it’s a break-even endeavor for us. But we think this is going to be a very valuable tool to further leverage observational data, by being able to look at claims data and electronic health records. It’s a very new invention.” GSK also has another program molecular clinical safety intelligence system (MCSI), which is responsible for taking safety information for compounds that are already in development or on the market. It is then fed back to the company’s discovery organization so as they can choose which chemical entity to pursue. The process integrates toxicology as well as clinical data into that decision, which helps determine which molecules they will then pursue once the target is understood. “We’re integrating safety information into the decision for making a drug – we’re very proud of this tool as well, we also share this with our academic partners in particular, and also anybody who wants to use it,” she says.
Collaboration GSK’s commitment to immersing themselves in partnerships is demonstrated through Project Protect, an initiative that shares technology for both public and private partnerships. It is made up of 12 pharmaceutical companies, four academic centers and also certain patent organizations; the Innovative Medicines Inititative (IMI) sponsors the initiative. In Europe GSK participates in various programs for its Innovative Medicines Imitative, which it co-chairs with EMEA, strengthening the monitoring of benefit risk medicines in the region. This is reliant on the range of technologies and innovative methods that enhance early detection and assessments of adverse reactions. As a pharmacovigilance project, GSK will be partnering with the EMEA and other academic institutions that are interested in understanding proactively the early detection of safety information in the company’s medicines. The IMI’s role is to provide the grant money: several billion Euros have been set aside to create these public/ private partnerships for the advancements of science and technology. The
regulatory agencies will also be providing expertise at the initiative, whilst the academic centers and patient organizations will be proving staff and questions to advance the project. GSK’s commitment to finding ways to solve the problems of unmet medicals is the reason that attracted Strahlman to the company. The responsibility is not viewed as a chore but as an opportunity to ensure the safety of patients, as well as ensuring compliance is met within the various regulatory, medical and safety groups within the company. “What better way as a physician with all this experience to be able to contribute to a company, to try to be the medical voice, the voice of science for the patients, and also for their care, safety and well being,” she says.
Swine flu Although her tenure at the company has been for only under a year, Strahlman has certainly experienced the ups with the downs, as the US health care policy becomes repeatedly under strain and attracts global attention. She explains the tumultuous six weeks so far of the swine flu crisis since the disease reaches a level 5 pandemic status from the World Health Organization, but expounds that working for an organization with the ability to provide a solution brings an overwhelming sense of triumph. “GSK is a company that has medicines for flu and also makes vaccines. The response of the company to the WHO, to the CDC and to government is remarkable, we may be able to provide medications and services that would save millions of lives. It’s just a tremendous thing to be able to be a part of,” she concludes. n
ASK THE EXPERT
RNA biomarkers in clinical trials Arguably, RNA is the earliest biological measure of disease, providing a relevant signal of disease onset or progression before observable clinical manifestations.
istorically, the ability to develop commercially viable RNA biomarkers has been hampered by the lack of standardized reagents, methods and platforms for the stabilization, processing and measurement of RNA transcripts. Over the last 10 years, Source MDx’s dedicated efforts towards addressing these challenges have resulted in the development of robust assays (Precision Profiles) that are supported by a highly standardized process of sample handling and processing, from phlebotomy (‘stick’) to statistical analysis of data (‘stat’). This process-oriented focus has made Source MDx the industry leader in translating RNA-based molecular diagnostic assays into clinically useful diagnostic tests. Source MDx’s own efforts have been supported and accelerated by the industry’s response to these same challenges. For example, PreAnalytix’s FDA approved PAXGene Blood RNA System consolidates and integrates key steps in whole blood collection as well as stabilization and purification of total RNA. Such rigorous and global process standardization is key in developing technically reliable and clinically informative RNA biomarkers. The pharmaceutical and biotech industries are keen on the benefits – both for patients and industry – of utilizing RNA biomarkers as an integral part of drug development as well as a ‘risk-stratified’ approach to clinical trial design. The FDA and payers have suggested that the absence of validated biomarkers in clinical trials results in the inability to identify subgroups of patients that may benefit from or be harmed by a treatment. Source MDx Precision Profile assays have demonstrated utility in a ‘risk-strat-
ified’ approach to clinical trial design and execution. Recently, Source MDx and the Dana-Farber Cancer Institute announced that a Precision Profile for prostate cancer prognosis was able to stratify low risk castration-resistant prostate cancer (CRPC) patients from high-risk CRPC patients, suggesting a powerful tool for patient stratification in a clinical trial setting. Candidate prognostic and predictive biomarkers such as these are developed and rigorously vali-
Kathy Storm is one of the key originators of Source MDx’s Precision Profile technology. As Vice President of Laboratory Services, she oversees commercial laboratory operations and technical aspects of Precision Profile assay and diagnostic test development. She received a doctorate in Cellular and Molecular Biology from the University of Arizona. dated using independent test and validation sets. The benefits are clear – RNA biomarkers as validated tests can be powerful tools for accelerating drug development through improved understanding of a drug candidate’s effect on individual patients and subpopulations; stratifying healthy vs. disease and responder vs. non-responder populations; conducting longitudinal evaluation of safety and efficacy profiles; developing companion diagnostics for targeted therapies; rapidly identifying new indications for approved drugs; and identifying opportunities to reposition drugs that have failed late-stage clinical trials.
The Source MDx approach The Source MDx approach uses a simple blood draw to measure host response in cancer, autoimmune and other inflammationrelated diseases. Source MDx Precision Profile assays measure RNA transcript-based gene expression primarily in whole blood, as well as tissues and other biofluids, using quantitative PCR optimized for clinical use in a commercial setting. Key to the Precision Profile is the concept of precision (repeatability and reproducibility) and calibration (closely matched amplification efficiencies) achieved through proprietary reagents (target gene primer probe sets), high performance 384-well assay plates and strict adherence to narrow permissible levels of experimental variables. By rigorously controlling all variables associated with the assay, the gene expression levels in a sample of a given biological condition can be measured and clear comparisons can be made between gene loci, biological conditions and individuals. Precision Profiles are platform independent. Measurements across the same clinical samples have demonstrated equivalent results across a diverse range of commerciallyavailable platforms that differ substantially in optics and mechanics, from the microfluidic Fluidigm BioMark System, to the more industry standard Roche LightCycler 480, Cepheid SmartCycler and ABI Prism 7900HT Sequence Detection System. Source MDx’s ‘platform independent approach’ offers practical advantages for strategic partners including ease of assay transfer, translating to a more time and cost effective rate of adoption and commercialization of a diagnostic test. n For more information, please visit www.preanalytix.com
TRIALS AND TRIBULATIONS Boehringer Ingelheim’s John Smith tells NGP about the importance of accountability in the pharmaceutical industry and the responsibilities for behavior when a trial doesn’t quite go exactly to plan.
linical research has now standardized as a macro operation. Globalization’s emergence since the breakdown of international borders in the 1950s has steadily increased, making it mandatory for research to be conducted from various research centers. However, this does not come without its challenges. John Smith, VP of Clinical Research at Boehringer Ingelheim, explains the approach his company has used to combat the challenges found in multi-center trials. “We have a structure of international research where our different operating units have ownership of a particular trial allocated from our central clinical research in Ingelheim – the corporate clinical research center,” he explains. “By an operating unit taking ownership, they are responsible for co-ordinating the operations and allocation of the trial throughout the world. It is a challenge. “For many trials, particularly in some of the larger indications – for example, cardiovascular and diabetes – you need to have over 30 or 40 operating units, each with slightly different regulatory requirements, and standard of care may be a little bit different in each of the countries. “We want to be sure that we have a product that is investigated under a broad range of conditions, but that we can actually pool that data into a registration file that can be used throughout the world. We do it in a different way to other companies, where most of the research is centralized out of a single unit we do this in a more decentralized approach, and it has worked for us.”
Emerging markets As Western Europe and North America continue to increase regulations surrounding clinical trials, Boehringer is approaching the emerging markets, seizing upon the opportunity to gain clinical experience in countries that were not previously used for clinical research. However, Smith is aware of the need for caution with such an approach. He explains that in order to do so, Boehringer has set up regional centers in Eastern Europe, South America, Latin America and the Far East, and those regional centers then are responsible for co-ordinating the clinical trials in those areas. Through knowledge of local regulations and an understanding of quality and monitoring, Smith explains that these centers are making an increasingly important contribution to Boehringer’s clinical trials. Boehringer is essentially a science-based company with a long-term R&D focus, ensuring a constant chain of products in the pipeline and implementing complete sustainability. But Smith expounds that the company is not completely internally focused, ensuring that snap decisions cannot alter the overall company goal. “We have made some selected partnerships with companies along the path, and we continue to look for things that would complement the portfolio. We’re active in looking at licensing and co-development opportunities in most of our therapeutic areas, so it’s not that we have totally closed our eyes to outside opportunities, but clearly we’ve been successful with organic development internally,” says Smith. “A good company should constantly reassess what their strategy is and make sure that it makes sense for the current strategic period. Clearly, there’s some great innovation going on in some smaller companies, biotechs for instance, and we would be unwise to not keep our eyes open
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ny to cope with the negative publicity, even transforming it and turning the criticism around. “We do have responsibility to fully develop our products and we need to be careful about the choices that we make, but to realize the full potential of the products in the portfolio, sometimes it requires us to take a Attrition chance,” replies Smith. “This is so particularly if the prescribers see that But despite carefully selected “good decisions”, there are still big chalthere is an opportunity for the compound to potentially be useful for more lenges currently within clinical development. There is always the concern of patients, and that we have clinical the high attrition rate of compounds proof of that efficacy. So as a result from development, which impacts all we have embarked on a fairly large companies. Smith advises that as an clinical trial program in the past six industry, pharma companies need to to seven years. Unfortunately, in the make better decisions in investments case of ProFess it didn’t quite work earlier. out as well as we would have liked it “Our ability to absorb late-stage to. failures is past. As an industry, we re“But a trial that delivers a clear ally need to be leaner and making result shouldn’t be considered a negbetter decisions. The trials are getative trial. It informed the prescribers. ting larger and larger, which affects It informed the medical community. In our ability to get approvals – for exthat regard, it is successful. We’ve ample, traditionally, in cardiovascular learned a lot about our compounds, disease you could get approvals for John Smith is VP of Clinical Research at Boehringer in that exercise. Certainly, it would surrogate endpoints, but the tough Ingelheim Pharmaceuticals, Inc. He was formerly the have been better if it had turned out job ahead of us is keeping the trial Executive Director of the Cardiovascular and Metabolic the way that we had anticipated, but size appropriate so that we can still Clinical Operations group at BIPI. Prior to moving to BI, Smith that’s part of our responsibility as an continue to do work in some of the was Director of Cardiovascular Diseases at Centocor, Inc. industry – to continue investigating big areas like diabetes mellitus and and monitoring our products,” he cardiovascular disease. says. “We’re still involved in fairly The products involved in that trial are still of clinical benefit to the palarge programs in that regard with one of our compounds; so that is a contients, for which they’re indicated, and will continue to be available. Smith cern and utilizes resources that we could use in other therapeutic areas. explains that for those teams involved in the trial, they are still in the We continue to be vigilant in drug safety for our compounds, both in deprocess of understanding the results and producing further analyses and velopment and post-marketing, and that is an area where the industry has publications, which are widely anticipated. Clinical trials of that size, incorreally come a long way in the past decade. Just being able to service the porating a rich database, take great measures to understand the disease, portfolio of the company and try to make the best of what’s coming out of specifically if they don’t turn out as they were originally predicted to do so. our research pipeline. Obviously, we’ll have to make some choices as to to those opportunities as well, but it’s important to remember how we got to where we are now and making sure that we continue to make good decisions.”
what will be developed, and if we can be more efficient we’ll be able to develop more with the resources that we have,” he says.
“You learn when you graduate from medical school that being a physician and relieving suffering is one of the highest callings there is, and the industry is part of that”
To combat attrition, it is not uncommon for drug firms to severely focus on translational medicine, and the same is true for Boehringer Ingelheim – it being selectively done in several of the company’s therapeutic areas, specifically on the inflammatory diseases side. Smith believes this to be one opportunity to try to mitigate some of the early risk by translational or experimental medical approaches. However, some risks cannot be mitigated. Boehringer recently sponsored research into PRoFESS, the prevention regimen for effectively avoiding second strokes. Designed to examine the effects of different prevention regimens on recurrent stroke, including Boehringer’s product Aggrenox versus clopidogrel and Micardis versus placebo, the results were not brilliant in the company’s favor. Yet despite this, Boehringer was able to use the strategic processes within the compa-
“The model of disease is not quite what we thought it was, and that gives us an opportunity to explore new hypotheses. So there’s still a lot of work to be done on those data sets. They’re large, robust data sets, and we still have more to learn,” explains Smith. At the other end of the scale, Boehringer’s BIBW2992 product recently received fast-tracked status by the FDA, but Smith doesn’t believe this to impact the company’s other programs. “Obviously, we’re happy that the
FDA has given it that designation. Clearly, we now need to do the work and deliver the data on a similarly accelerated timeframe. It’s very exciting for us to be branching into this therapeutic area. It’s an area where Boehringer has been active on the research side for a while, but we haven’t realized success in the clinic. There is hope that this will launch our oncology portfolio, and clearly there’s a lot of competition for oncology in the US. “We’ll have a big hill to climb to get that recognition of Boehringer as an oncology company, much like we have for respiratory or cardiovascular diseases outside the US. But hopefully if we execute well, we’ll be successful and be able to take advantage of that designation by the FDA,” he says.
Mergers In light of recent partnerships, Boehringer’s former Chief Executive, Alessandro Banchi, told Reuters that a merger and acquisition strategy is, “Not the way forward,” citing Pfizer as an example of this. But Boehringer Ingelheim recently acquired Actimus Pharmaceuticals, taking a U-turn in previous company beliefs.
to say that they will be different responses, but there certainly may be a difference in terms of the timing because we’re going to study the issue as carefully. We certainly need to meet our regulatory reporting requirements, and that’s very important from a compliance standpoint. “But academics will be free to review our data and offer their opinion on this. So we are moving into an era of more transparency, broader discussion of the information; academics may in fact use combinations of clinical trial data from different sponsors, and that’s something that maybe we wouldn’t necessarily do: combine our data with that from another company. But certainly, that might happen with academics, and we will have to be proactive in trying to understand the findings, where they may differ from our conclusions, and have a healthy debate in public,” he explains.
Trust Smith believes this to be not the only area in which clinical research can build trust with the consumer. He advises that as a health-care consumer and a prescribing physician himself, there can be no way that the American public can be happy with the current treatment options. “For the past 50 years, it was the pharmaceutical industry that bridged that gap between where we are now and where we need to be in treatment options for the patients in the future, whether that be in chronic diseases, in malignancy, or in virtually any condition that we have under study. What we need to do is make sure that the public understands that we are working with their best interests in mind. “You learn when you graduate from medical school that being a physician and relieving suffering is one of the highest callings there is, and the industry is part of that. The physicians get the tools for relieving that suffering predominantly from the industry, and it’s unfortunate that that message has not gotten across. Certainly we want to make sure that we are fully transparent in our clinical research, that we do ethical clinical research; I think that we do that and that we get definitive answers to the clinical problems, and get them into the public domain as quickly as we can.” Smith concludes by looking to the future. President Obama’s health-care reform agenda has unveiled a determination to offer easier access to generics, a huge part of the pharmaceutical business. Boehringer – like other pharma companies, being intrinsically linked to the industry in terms of intellectual property protection – has a destined future, which to a certain extent is uncontrollable. But, as Smith has explained, the current portfolio of medicine does not meet the consumer’s need, and so there has to be a balance between access to affordable medications and intellectual property that allows the innovation to move forward. “Hopefully, we don’t undo a system that has really produced a significant number of medical advances over the past few decades. We’ve stumbled a little bit as an industry in the past few years – we’ve not had as many innovative approvals, and that’s with a footnote. There have been some really remarkable medications that have come out in the last five to 10 years. Given the amount of effort and spend by the industry we certainly could be doing better – making better decisions earlier in development and being more efficient so that we can bring more innovative compounds forward.”
“Given the amount of effort and spend by the industry we certainly could be doing better – making better decisions earlier in development and being more efficient”
“Not speaking necessarily for the company, but clearly the mega-merger model has run into some rocky ground here in the US and globally, and Boehringer has generally grown with organic growth by doing a good part of our research and development internally and making selective partnerships with companies for promising products that complement our pipeline. But my sense is that we watch what goes on elsewhere in the industry, and Dr. Banchi was quite wise in avoiding getting caught in those traps that maybe other companies have fallen into – that you can grow by combination. “We’ve been able to successfully grow organically. And while I don’t make those judgments going forward for the company, presumably our new leadership is also looking externally and carefully watching the industry, making good decisions for the company in the long run,” explains Smith. Pharma companies are often the first to be cast in a negative light by the public, but Smith believes this phase to be diminishing and communication to be increasing: “We are moving into an era where there is going to be more public availability of data, and that’s going to help. “There is obviously going to be more transparency in the industry broadly, mostly in terms of clinical trial disclosure, and we’ve made some very good strides in that regard. Results are now starting to be posted on the websites like ClinicalTrials.gov. There will probably always be a difference between an academic response and a corporate response. That’s not
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Trial and error Beth Harper explains the correct procedures needed to ensure a successful clinical study. Clinical trials are becoming more complex, with larger patient groups, and are often conducted internationally. How can pharmaceutical companies ensure that trials proceed in a timely and cost-effective manner? Beth Harper. Assuming a well-designed protocol is in place, two critical success factors are selecting the right sites for the study and setting them up for success. An overhaul of the traditional approach to site selection, feasibility assessments, recruitment planning and site training processes is needed to ensure that investigative sites, the suppliers of the subjects and data, have not only the experience and capabilities but the interest, resources, infrastructure, willingness and commitment to conduct the trial. This involves going way beyond the typical and often perfunctory transactions with the sites and adopting a true collaboration mindset to partner with our site suppliers in new and different ways. How have methods of patient enrolment/recruitment changed in the last few years? BH. Technologies such as web-based recruitment techniques and electronic health records that facilitate more efficient patient identification and pre-screening have emerged in the last several years. Beyond that the tactics themselves haven’t changed dramatically but there is a greater recognition that methods need to be tailored and customized to the particular region, culture and specific site. The ‘one size fits all’ approach doesn’t work and sponsors are starting to do a better job to marry the ‘top down’ study level recruitment ideas and initiatives with the ‘bottom up’ site level needs to identify and implement the tactics in a more focused, meaningful and costeffective manner. There is a huge push in the industry to develop and document clear, action-oriented, site-level recruitment plans so that the resources, requirements, tactics and
timelines can be clearly communicated and recruitment expectations managed across all the important stakeholders. What specific challenges are companies facing with regard to clinical site selection and improving site performance? BH. The age-old challenge that sponsors continue to face is the fact that the majority of sites don’t deliver on their enrolment commitments. Or stated another way, some 30 percent of the sites are responsible for delivering 70 percent of the evaluable patients. The root causes of this problem relate back to the way the industry traditionally selects sites and conducts study feasibility assessments. A questionnaire which asks how many patients can be enrolled is not only ineffective, but doesn’t fulfil the spirit of the ICH GCP Guidelines which stipulate that, “The investigator should be able to demonstrate a potential for recruiting the required number of suitable subjects within the agreed recruitment period,” (Section 4.2.1). We are starting to see sponsors and CROs transform their feasibility forms to conversations and working with their sites to conduct more robust enrolment validation exercises prior to confirming site selection decisions. What tools and technologies are available to help companies optimize their clinical trial research? BH. The industry is turning greater attention to the use of modelling and simulation tools to facilitate better data-driven decision making during the country allocation and site selection processes. Tools such as the Recruitment Funnel Planner and Quick Trial Modeler developed by my colleagues at Synapse Analytics, for example, help to facilitate the evidence-based enrolment validation exercise I describe above and allow for ‘what if’ scenario planning during the early trial planning stages.
Beth Harper is the President of Clinical Performance Partners, Inc., a clinical research consulting firm specializing in diagnosing, troubleshooting and preventing site and enrolment performance problems. Beth leverages her 25 years’ experience to help foster more productive sponsor-site relationships and enhance the clinical trials process.
More sophisticated e-communication tools that streamline sponsor-site communications and facilitate document and information exchange are continuing to emerge. Personalized communications platforms such as Lattice Connections developed by my colleagues at Animedix Clinical, for example, are bringing new and creative ways to train and engage sites in more meaningful ways. While technology is a great enabler of many processes, we can’t lose sight of the fact that clinical research is still a people business. To help foster productive sponsor-sight relationships a number of sponsors are going back to the basics of training their staff in what I like to refer to as ‘GeCPs’ or good effective communication practices. Investigative sites (and research subjects for that matter) still need and value the personal touch no matter how sophisticated the technologies become.
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Comparative effectiveness research in the real world By Richard Gliklich and Christina DeFilippo Mack
he cost of health care in the United States has grown from eight percent of the US economy in 1975 to 16 percent of GDP, and the Congressional budget office estimates that this growth in health-care spending relative to the growth of the economy will continue to rise.1 Physicians and public health officials are unsure if more expensive health services are actually more effective, either at all or enough so to justify the increase in cost. While clinicians and patients are interested in comparative effectiveness research (CER) to understand the relative benefit and risks of the real-world treatment decisions that are made every day, the driver for the current political interest in CER is more straightforward – it is hoped that somehow more effective care will ‘bend the curve’ of rising health-care costs. The American Recovery and Reinvestment Act of 2009 (ARRA) appropriated $1.1 billion for ‘comparative effectiveness’ research. As the spotlight on this type of research grows, it is increasingly apparent that comparative effectiveness (CE) is an evolving concept. ‘Effectiveness’ assumes a preference for real-world performance, as opposed to ‘efficacy’, which is primarily concerned with whether a treatment works under ideal conditions. For this reason, real-world research is critical to comparative effectiveness. While real-world, head-to-head effectiveness trials are probably the gold standard in this new paradigm, it’s simply not conceivable that all of the myriad of questions that face clinicians and patients each day can be answered with large, expensive trials. As a result, observational comparative effectiveness research (OCER) is increasingly being looked to as a means to fill the gaps left by randomized clinical trials for making clinical and policy decisions. Also of interest are so-called ‘quasi-experimental’ designs, such as cluster randomized studies, where the level of randomization is at the practice, institution or region so as not to disturb the real-world activity at the level of the patient-clinician interaction. Observational and quasi-experimental designs are very important to fill these evidence gaps for several reasons. First, it has been well shown that data from randomized clinical trials do not always
reflect real-world practice and outcomes. Second is the issue of generalizability. In making coverage decisions, payers like Medicare are focused on the treatment benefit within the populations that they insure. Patients in randomized clinical trials are typically younger, healthier and less racially diverse than those in the real world. Obtaining complementary data on other populations is critical to drawing inferences from the randomized trials results. Third is an issue of applicability. Randomizing patients to one treatment or another removes the physician’s preferences and behavior from the study. While this simplifies analyses, it removes the most important factor in how medical care is actually delivered. The subtleties of treatment choices and the patients who receive them are intertwined with the real-world outcomes that result from medical products and services. Fourth, there are far more questions to be answered than can be
ing. Confounding is the presence of an unknown (and undetected) factor that is related to both the treatment and the outcome – and, as a result, certain aspects of the outcome might be erroneously attributed to the treatment (rather than to the confounding factor). But study designs and methodologies have vastly improved in their ability to control for confounding, thereby allowing observational studies to efficiently produce real-world data that are generalizable to a wide patient population. Simply put, the methodological issues in discerning high quality research for observational comparative effectiveness raise different challenges than for evaluating randomized trials. Helping not only researchers, but also decision-makers to understand high quality OCER is critical to making such research useful and accepted. What we see across various stakeholders is a very high comfort level with randomized trials, and far less appreciation for observational data, even as an adjunct in some situations. Regulatory authorities have traditionally not accepted observational studies for significant label
“The methodological issues in discerning high quality research for observational CE raise different challenges than for evaluating randomized trials”
answered by large effectiveness trials. We must rely on other methods and sources such as observational studies. Recently, an IOM roundtable on evidence-based medicine quoted an AHRQ statement that “comparative effectiveness research typically will focus on realistic decisions confronting patients and their clinicians in actual practice… because of this focus on effectiveness as opposed to efficacy, these investigations will likely rely on both prospective trials and observational data to determine relative value in real-world settings.”2
Resistance So, given this need, why is there so much resistance to observational comparative effectiveness research or confusion on how to utilize it? Essentially, designing and interpreting observational studies for CE research can be challenging because of bias and confound-
changes; payers do not widely use observational data in formulary decisions and clinical guidelines relegate observational research to hardwired lower tiers of evidence. Some stakeholders are starting to recognize the value. As certain groups become more enlightened on the merits and limitations of observational comparative effectiveness research, it is being used in these same scenarios. For example, observational data for comparative effectiveness is clearly utilized in guidelines development, particularly when the treatment effect is large. Warfarin in patients with mechanical heart valves is such an example. For regulatory examples, the FDA decision to extend the indication for intraocular lenses to older patients came directly as a result of registry data from the American Academy of Ophthalmology. To summarize, the primary problems we see in using OCER data come from a sense of great heterogeneity in the quality of these studies and an inability to discern those with greater or lesser risk of
bias. Furthermore, the traditional evidence hierarchies, upon which For example, the first GRACE principle, ‘Identify evidence gaps the current generation of decision-makers largely trained, relegate and the potential value of an observational study,’ asks whether the observational study data to a lower tier of evidence and that has been research question of focus can be answered through observational slow to change. research. Within this principle, an evidence hierarchy is defined that What does this mean for the future of OCER? Will its value continue enables decision-makers to identify the situations that can provide to be questioned, dismissed by stakeholders or displaced in evidence the strongest types of evidence within an observational context, and hierarchies? It seems that perceptions are changing. For example, the then identifies other situations that can contribute useful information National Institute of Health and Clinical Excellence (NICE), in the United if paired with the right analytic tools.3 Kingdom’s Guidelines Manual on reviewing and grading evidence from The GRACE Principles provide insights on how to design OCER 2007, puts the starting position of observational studies at Level 2, constudies to meet the needs of stakeholders and how to evaluate sistent with the traditional evidence hierarchies of the mid-90s. findings from a decision-makers’ perspective. But, they are not a Yet, Sir Michael Rawlins, who founded and leads NICE, has recentmethodology guide. They do not examine in detail, recommend, or ly denounced the traditional evidence discuss the limitations of using various methodolohierarchy, and clearly change is ahead gies for analysis of observational data (e.g. when Richard Gliklich, MD, is President of at NICE. Ultimately, the value of obserto use propensity scoring and the limitations of it); Outcome, a provider of patient registries, vational CE research will be measured instead GRACE just notes that many techniques are studies and technologies for evaluating realby its impact in treatment, coverage, available and refers the reader to other sources. world outcomes. Gliklich focuses on clinical payment or other policy decisions and Other groups are now filling the gaps in identifying research on the effectiveness, safety and that will be the result of the information and assessing the most appropriate methodoloquality of care. He was Principal Investigator that is generated from CE research studgies and techniques for specific types of questions and Senior Editor of the AHRQ handbook ies multiplied by the perceived value of facing decision-makers. Through these efforts, Registries for Evaluating Patient Outcomes: that information. a new evidence hierarchy is slowly being weaved A User’s Guide, and also developed the Although there are many open questhat will have far greater applicability to the range American Heart Association’s Get With The tions, from a decision-makers’ perspecof studies to be used in comparative effectiveness Guidelines registries. tive there are two key questions that are research. obtuse to those who are not expert in Highlighted by the ARRA legislation, comparative the field. First, what are the methodologies that result in good OCER? effectiveness research has been growing in importance for several years And, second, how can or should OCER that is considered to be ‘good’ as a potential means for ‘bending’ the curve of rising health-care costs be used – meaning, how valuable is that investment, from a value of while maintaining or improving the quality of care delivered. Whether information perspective, relative to other choices? that is a realistic goal is yet to be seen. Nevertheless, comparative effectiveness research will become increasingly pervasive as funding grows dramatically. And, since observational study methods are key Quality to understanding real-world outcomes A quick review of existing and emerging guidelines Christina DeFilippo Mack is Research of treatments, the role of observational puts this in perspective. The GRADE working group was Coordinator in the Scientific Affairs comparative effectiveness research will initially established in 2004 as an effort to promote a group for Outcome, a provider of patient also grow significantly. more consistent and transparent approach to grading registries, studies, and technologies for With a coming avalanche of data, evidence and recommendations. GRADE focuses far evaluating real-world outcomes. In her it will be more important than ever for more on what constitutes well-designed studies: the current role, Mack performs research decision-makers to discern good restrength or weight of the findings and evidence that for the FDA and the AHRQ and manages search, and this will be particularly true is fit for a purpose regardless of whether the study the program design, specification for observational comparative effectivedesign is a randomized or an observational study. development, site enrolment and ongoing ness research where the methodologies The issue of what a decision-maker needs to look operations for industry-sponsored largeare more complicated and the risk of for in evaluating a single observational comparative scale patient registries. failing to account for confounding and effectiveness study remains less clear. What is needed bias are greater. It will become increasis a listing of which methodologies are appropriate for ingly critical for consensus initiatives to identify good practices and specific types of questions and then how to discern good practices and for decision-makers to be trained to use such practices in evaluating valid results in studies that have applied appropriate methodologies. and using real-world data. n The GRACE initiative (www.graceprinciples.org) is a relatively new initiative aimed at closing some of the gaps in using observational CE research. The initiative is developing good practice principles for the design, conduct, analysis and reporting of OCER. The primary goal of the project is to support the use of OCER by decision-makers, including payers, clinicians and patients.
1. The Long-Term Outlook for Health Care Spending. December 2007. http://www.cbo.gov/ ftpdocs/87xx/doc8758/MainText.3.1.shtml#1068746. 2. Clancy, CM. Making Comparative Effectiveness More than a Dream. 21 February 2008. http:// www.instituteofmedicine.org/Object.File/Master/51/635/Clancy.pdf. 3. Dreyer, NA on behalf of the GRACE Initiative. Do We Need Good Practice Principles for Observational Comparative Effectiveness Research? August 2008. www.graceprinciples.org.
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A FLASH OF INSIGHT Johnson & Johnson’s Qingqin Li tells NGP how bioinformatics helps us to understand biological processes.
ne of the primary goals of bioinformatics is to increase our understanding of biological processes by developing and applying computationally intensive techniques. Qingqin Li, informaticist and a Senior Project Lead in the Department of Pharmacogenomics at Johnson & Johnson, uses an example in next generation sequencing to illustrate how this works: “This is perhaps more focused on the computational loads than the computation techniques, even though the techniques in the sequence area have been in use for more than 10 years. Those techniques are primarily focused on long reach and next generation sequencing is more short-reach technology. “This technology allows us to identify normal polymorphisms and mutations within the whole genome or a predefined specific genetic region. Imagine if we have two related biological conditions, and we could use this type of approach to identify the underlying molecular difference that might explain the relevant biological process that might drive the phenotype difference. “With the next generation sequencing technology, each technology could generate hundreds of millions of sequence reads in a single sequencing reaction. This poses a big computational challenge for us. In order for us to address this type of computational challenge, we set up a cluster computing environment so that we could divide the computational jobs into chunks. For example, for the human genome, we could divide them by the number of chromosomes so that we could send out the computational jobs to different computing nodes simultaneously. And then once the jobs are done, we could assemble the results back into a coherent result. “Anybody who is working with next generation sequencing data would need to have some sort of infrastructure like this. This was not as much of an issue before we got into the next generation sequencing technology, since the traditional server was sufficient to deal with the computational load. But as soon as we got into the next generation sequencing technology, we realized that we would not be efficient if we did not have the cluster computing type of environment.”
Genetic varations At Johnson & Johnson, the type of bioinformatics activities Li is involved in are around pharmacogenomics activities. “All of these activities are related to the fact that they are genetic variations within the human genome,” she explains. “While a few are critical to the biological function, the majority of them may not be. “Our job is to try to find the few ones that have phenotypic consequence, being either disease risk, differential therapeutic efficacy or adverse events upon therapeutic intervention. People sometimes describe this as trying to find the needle in the haystack. “The first activity is focused on drug targets. You can imagine that if there are sequence variations in the drug targets some of them might interfere with the binding of the therapeutic agent; if there’s inadequate binding, you might expect insufficient efficacy. “What we do is to systematically provide the target variability information so that this type of information can be taken into consideration during screening assay design and during high throughput screening. After all, that’s the first step in identifying the lead compound for therapeutic intervention.”
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Li and her colleagues also work on discovering the biomarker impacting efficacy and adverse events using clinical samples. The team collects DNA samples from clinical trials, and through collaboration with the clinical team, they also have access to the clinical data. They then perform experiments to genotype individuals by looking at a set of predefined genetic variants using either a candidate gene approach or a genome-wide association study approach.
“We could use the information derived from this type of study to better understand the relevant pathway and the relevant target” “Both approaches allow us to look at the genetic sequence variation in a predefined set of loci,” Li points out. “Typically they are the ones that are common in the study population. People describe common as having greater than five percent of frequency in the population. “By combining the genotype data derived from these loci and comparing that to the clinical information using statistical models, we are able to identify markers that impact efficacy or side effects. Because of the nature of this type of markers, we typically call this a common disease/common variant approach in identifying the biomarker. “Another area is next generation sequencing. The next gen sequencing approach allows us to look at the rare variants within the human genome so that we can sequence a pre-selected panel of individuals and identify the rare variants, which include those not captured in the public variation databases. With the rare variant discovered, we are then in a position to do the association studies again but now looking at the rare variants.”
Development How then is the information that comes from these activities used in the drug development process? “Imagine we have a biomarker that could be validated in different clinical populations and have a good enough clinical effect size,”
Qingqin Li is an informaticist and Bioinformatics Group Leader, CNS/Internal Medicine, Department of Pharmacogenomics at Johnson & Johnson Pharmaceutical Research and Development, LLC. She has been working at the company since 2002, and is responsible for successful execution of data management, analysis and reporting of large-scale exploratory genetic association research projects, as well as enablement of next generation sequencing technology.
Li says. “Meaning that the subjects carrying the biomarker, for example, have a much better response than the overall population or have a less adverse event. If we have a marker like that, we could potentially use it to stratify the clinical population and use it in the subset of the population that has a better benefit/risk ratio. “In addition, we could use the information derived from this type of study to better understand the relevant pathway and the relevant target for a given therapeutic area and feedback into discovery as a next generation of drug targets.” The field of bioinformatics is in a constant state of development, and Li believes it will evolve in line with improvements in technology, and will address the additional computational challenges posed by this new technology. “This has been my experience in the sequencing field, in gene expression and now in the genetic area. For example, in the genetic field in the past 10 years, people were still using microsatellite markers. But with the International HapMap Project taking place and also the advancement of chip technology, we see new chip platforms coming onboard, allowing scientists to look at 10,000 markers at a time and then hundreds of thousands of markers and now millions of markers at a time. “The new methodology needed to address this type of data would direct the bioinformatics field to advance and address the question posed by the new technology. “Bioinformatics is an interdisciplinary field. It will continue to involve people from different fields such as molecular biology, statistics, computer science and mathematics, working together to come up with new analytic methods and information platforms to address the biological question.” n
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ASTRAZENECA:12june 11/06/2009 14:32 Page 106
Keeping in touch Karen Smith of AstraZeneca explains the importance of physicianpatient relationships in ensuring adherence. Effective messages should explain that it is important for people to take their medicines as prescribed if they want to experience the full benefit of the medicine and avoid future health issues. It is also critical to provide physicians with resources to help foster more open, frequent discussions with their patients about how their medicines are working and whether they have affordability concerns. What more is there to adherence in addition to online and offline marketing channels? KS. Case management approaches involving multiple care providers (physicians, nurses, pharmacists and so on) have been recognized as effective in helping patients take their medicines as prescribed. Innovative approaches using other patients who successfully manage their conditions as peer-coaches to other patients has also been investigated. Health technology companies can help patients take their medicines as prescribed by providing one-on-one, electronic patient support programs that reinforce the information patients receive from their physicians. For example, AstraZeneca partners with one company that uses text messaging to remind asthma patients to take their medication or schedule a follow-up doctor's appointment. E-prescribing systems can make it more convenient for patients to fill their prescriptions by allowing prescription transmissions and approvals to take place electronically, minimizing patient wait time and inconvenience. This same technology can enable doctors to send an automatic reminder to a patient who has not filled his or her prescription in a specific time period.
What is the importance of building relationships among physicians and demonstrating the value of patient adherence? How can we design programs that communicate and convey the adherence message to physicians and patients? Karen Smith. The physician-patient encounter during the time in which a disease is diagnosed is considered a teachable moment and is vital to adherence because patients learn about the impact of a disease, how it can be treated and how to avoid the risks and consequences of ineffective management. According to a Stanford University School of Medicine study of 185 physician-patient interactions, simple conversations were insufficient to promote long-term adherence to treatment. Providing research data regarding what works to improve adherence is an effective way to support physicians in the important role they play in demonstrating the value of adherence to their patients. According to an AstraZeneca survey of more than 200 office-based physicians conducted over What other adherence efforts are being made at AstraZeneca? a 12-month period, two out of three physiKS. In addition to these efforts, for the past 30 years cians surveyed noted that they believed they AstraZeneca has offered prescription savings programs Karen Smith is Vice President of External had the most influence over whether or not for patients who may have difficulty affording their Medical Relations (EMR) for the US business their patients follow their instructions. The reAstraZeneca medicines, and we ensure that physiciansâ€™ of AstraZeneca PLC (AZ). She joined the maining physicians believed that a patientsâ€™ offices can share information on these programs with company in 2007 to lead EMR in the caregiver, health insurance company, nurse or their patients. AstraZeneca provides a number of recreation of strategic partnerships with key pharmacist had the most influence over adsources to help physicians have more open, frequent organizations and stakeholders across the herence. An additional study funded by discussions with their patients about how their mediUS market. Immediately prior to joining AZ, AstraZeneca evaluated prescription data and cines are working and whether they have affordability Smith held key management roles with found that longer days of supply and lower concerns. In addition to the efforts noted above, we Bristol-Myers Squibb (BMS) in Australia, out-of-pocket cost of medicines also posiprovide physicians and patients with a patient checkCanada and the US. tively impacted patient adherence. list to help people track their medicines. n
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The future of DTC Why direct-to-consumer advertising could be in for an interesting time. By John Mack
hether it’s the economy, lack of new drugs in pharma’s pipeline or the new pro-regulation political climate, 2009 is shaping up to be the year that direct-to-consumer (DTC) advertising will suffer a round of budget cuts and setbacks not seen in a long time. Regarding the decrease in spending, a new study by TNS Media Intelligence reported, “DTC spending is down for the second consecutive year and is likely to not reach the $5 billion mark by the end of 2008 that many media companies had counted on.” According to the study, the annual spend has taken a 9.6 percent drop from 2007. The numbers are plotted in Figure 1. Nothing to “get alarmed about,” says Bob Erhlich of DTC Perspectives magazine. He made this remark back in November, 2008, when he estimated that the decrease would only be six to eight percent. He recently revised his estimate to a 10 percent decline, but others argue the decline will be 10 percent or greater.
2009, but we can speculate on overall trends. The broadcast part of DTC advertising is the most likely to suffer the greatest losses. Whilst it seems likely that bad economy and clogged new drug pipeline are the main forces behind diminished DTC spending, there will also be political pressure on the pharmaceutical industry to limit or perhaps even ban DTC TV advertising. In this context, we must consider that some formidable opponents of DTC are gaining access to the political and regulatory henhouses. Representative Henry Waxman, for example, is now Chairman of the Energy and Commerce Committee, but whether or not he will be less or more of a threat to the pharmaceutical industry than former Chairman Dingell is open to debate. Another key person is drug-safety crusader Sidney Wolfe, who has been appointed to a four-year term on the FDA’s Drug Safety and Risk Management Committee, which plays a key role in telling the agency which drugs are safe. Redefining drug safety and risk may affect DTC advertising, which could be required to add more safety information.
Predictions Some experts believe that 2009 will see a further decrease in the level of pharma spending on DTC, especially within broadcast. Yigal M. Marcus, CEO & Founder of AVTV Networks, Inc. suggested that, “Industry will spend more heavily on disease awareness for specific brands, as well as try and monetize their investments before patent expiration.” Consequently, he sees DTC budgets increasing between two and five percent in 2009. “There is no major systemic downtrend to DTC budgets,” says Bob Ehrlich, who predicts an overall 10 percent cut in DTC budgets for 2009.
DTC AD SPEND $6
Spend ($ billions)
This fear became amplified when pharmaceutical company CEOs publicly acknowledged that the benefits of DTC advertising may not outweigh the costs in terms both of money and industry goodwill. First Roche CEO, William Burns, called DTC advertising the “single worst decision for the industry.” Then GSK CEO, Andrew Witty, said he “think[s] there is too much [DTC]” and that his company will be cutting back on its US television advertising as it tries to spend its money more wisely and avoid some of the criticism aimed at heavy drug advertising. He advised that GSK will continue to advertise where appropriate, such as promoting drugs for sexually transmitted diseases. This suggests that any trends in DTC vary on a company-by-company basis. We don’t know what any particular company may be planning for
$1 $0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Year Figure 1 www.ngpharma.com
DTC:12june 11/06/2009 14:41 Page 110
ELIMINATE BUSINESS TAX DEDUCTIONS All
“Some experts believe that 2009 will see a further decrease in the level of pharma spending on DTC”
30% 25% 20% 15% 10% 5% 0% Yes
AMOUNT OF RISK INFORMATION IN DTC ADS All
70% 60% 50% % Respondents
“Like all pharma marketing budgets, DTC will be susceptible to cuts to protect profit. DTC spending based on GRPs will actually increase because of reductions in media rates caused by increased inventories as many businesses cancel ads.” R.J. Lewis, President & CEO of e-Healthcare Solutions, an online ad network, commented to a blog post on this topic: “It’s important to note that not all categories are impacted equally,” Lewis noted. Lewis lambasts dire predictions regarding advertising. “Some of the pundits are predicting outright destruction of the advertising industry, including online, with serious double digit declines,” he says. “Perhaps this is ‘capitulation’? Seems to me, marketers more than ever need to embrace good quality measurable promotion and get back to the basics of sales and marketing.” “The industry is going to be cutting budgets across the board this year,” says Kim Slocum, who has worked in the biopharma industry for over three decades. “Sales and marketing is the single biggest budget block on any firm’s income statement. DTC is now a big line item, the ROI is questionable and it draws a lot of political fire. Ergo, expect the knives to come out.” Slocum believes DTC spending will decrease between five and ten percent in 2009.
40% 30% 20%
The ROI of broadcast DTC is minimal and often negative, and pharma CEOs often have other stakeholders in mind when they make cuts in heads or marketing. In good times it’s easy to spend money even knowing the return stinks. but in bad times you’ll take heat for wasting money – but it’s still the same waste of money it’s always been. When there is a multitude of dollars coming in, you don’t stop and analyze every cent going out. You may not be spending those cents as wisely as you should, but that’s not an issue. But, when prescriptions are decreasing and pharma companies begin laying off R&D people, investors are going to be looking at those cents and ensuring they are better spent.
A DTC moratorium There’s been much talk about mandatory or voluntary DTC advertising moratoria. Representative Waxman, for example, recently voiced support for legislation that would give the FDA the power to ban direct-to-consumer advertising for some drugs during their first two years on the market. The Institute of Medicine (IOM), which is chartered by Congress to advise the government on scientific and health policy issues, also called for an advertising moratorium for new drugs. PhRMA’s guiding principles on direct to consumer advertising about prescription medicines does not specially call for a moratorium, but states, “companies should spend an appropriate amount of time to educate health professionals about a new medicine or a new therapeutic indication and to alert them to the upcoming advertising campaign before commencing the first DTC advertising campaign.”
10% 0% Too much
Tax deduction Rahm Emanuel, President Obama’s Chief of Staff, warned advertising industry leaders that the business tax deduction for advertising expenses could be taken away in 2009 tax legislation. Our recent Future of DTC Survey asked respondents if they thought the deduction for DTC advertising expenses should also be eliminated. (See Figure 2.) There doesn’t seem to be much opinion one way or the other on this issue. Perhaps people do not have enough information to make a decision. “I do not see why there should be a different treatment for this business expense versus others,” said Ehrlich. “Government should not decide which business deductions are acceptable.” A fair number of warning letters that pharmaceutical companies receive from the FDA regarding DTC advertising cite marketers for overstating benefits while omitting important risk information. The Future of DTC Survey asked respondents if they thought DTC ads, in general, had too little, too much, or just enough risk information. The results, which are shown in Figure 3, are self-evident and require no further comment. “Ads have plenty of risk information,” said Ehrlich. “What we need is a better system to communicate odds of those side effects happening.” n Reprinted with permission from www.news.pharma-mkting.com
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The effectiveness of branding
THE PANEL Marc Sirockman has 20-plus years of experience in the pharmaceutical/biotech industries. As Director, Sirockman implemented and trained sales reps on new access: prescribing behavior, and competitive product differentiation. Currently, as General Manager at Artcraft Health Education, Sirockman leads the efforts to solve brand challenges and build brand equity at the point of care, domestically and globally, through innovative patient education tools. Lisa Kindig serves as Global Head of Hall & Partners Health Group, overseeing business strategy and innovation for the Professional Health, New Drug Development/Payor Access, and Consumer Health practices. The firm delivers research-driven insights through seamless quantitative, qualitative, digital and ethnographic methodologies in mature and growth markets around the world. Camille DeSantis and Maria Casini are Co-Presidents and Managing Partners of Guard Dog Brand Development, LLC (GDBD), a novel and award-winning brand development company specializing in creating and fiercely protecting corporate, product and science identities in the pharmaceutical/life sciences industries.
As communications evolve, what new technologies can companies use to enhance branding? Marc Sirockman. In a world of information overload, industry and healthcare providers (HCPs), and patients and consumers are looking to simplify access, increase relevance and ‘brand’ the customer experience, through several marketing, product and educational channels. The most crucial step in the branding process is the counseling discussion between the HCP and patient. Social networking tools (such as MySpace, Facebook, Gather,
LinkedIn), blogs and podcasts, distributed content and video sharing are effective technologies that leverage, extend and build the ‘branding’ experience generated in the initial HCP to patient discussion, where fundamental trust is established. Lisa Kindig. To me, enhancing customers’ relationships with brands is more of a communications issue (how to best use new technologies), than a technology issue (what new technologies). It’s tempting to think that all the rules about building brands must be re-written. But while new technology has kindled some changes in behavior – quick and easy opportunities for people to share, explore, find, create and transact – human nature fundamentally has remained the same. Passionate people always have personalized their brand experiences, evangelizing for the brands they love and protesting against those they despise. Thus, meaningful online and mobile experiences require the same qualities of trust, purpose and rules of conduct that influential offline experiences require. New technology simply has democratized and multiplied people’s ability to act. Hall & Partners believes people participate digitally in two key ways: micro actions – ever-present but emotionally unsatisfying transactions; and focal actions – meaningful, purposeful actions springing from new connections based on shared values. Many brands solicit consumer participation through micro actions that require a few clicks, a bit of data entry, a moment or two. However, on issues with real personal relevance, people want the opportunity to engage in progressively deeper ways. To appeal to them, brands must create more layered opportunities for dialogue and relationship, and all new technologies offer interesting opportunities for doing this. Camille DeSantis and Maria Casini. The pace and number of potential choices in communications channels and technologies have clearly changed. This has created a multitude of novel options for a brand identity to be applied, which is what branding is. Stakeholders (e.g. analysts, investors, key opinion leaders, physicians, patients, advocacy groups and media) are willing to receive data from whichever ‘channel’ they select and use it to make decisions. New delivery forms create new ways for stakeholders to interact not only with each other, but also with the providers of
“The most crucial step in the branding process is the counseling discussion between the HCP and patient”
MARC SIROCKMAN the content. As we know, these forms include online publications, subscriber newsletters, blogs, podcasts, YouTube, Google alerts, RSS feeds, Facebook, Twitter, TrackerUR, just to name a few. As much as there have been changes in communications channels, it is important to remember that the principles of effective brand development have not changed, and that not every form is appropriate for every brand. What research techniques are used to understand the branding needs of the clients? CD/MC. Market research with all key stakeholder audiences of a brand is critical to ensure resonance. It determines unmet needs and unspoken motivations that drive brand-building behaviors. Interactive and iterative methods of market research, whether conducted in person or online, provide rapid, cost-effective and projectable results. It is essential to utilize techniques that delve deeper into the psychological and unique motivational underpinnings of key stakeholder groups and these insights are critical to creating a truly relevant brand experience regardless of which communications channel is employed. MS. In addition to standard research techniques, web analytics, online data collection and behavior tracking methods should be used to monitor, to periodically validate the ‘brand’ perception by the customer, and to modify messaging while reconnecting to the core mission of brand enhancement. LK. Unfortunately, there is no magic bullet ‘technique’. A good starting point is understanding that a customer’s relationship with a brand starts with his or her world view, not with the
brand’s. Another important consideration is that people generally don’t give active thought to what they are doing, why they are doing it, how they feel about it and why they feel that way. When asked directly, most people will earnestly seek to conjure a rationale for their choices or project their expected behaviors, but true drivers of thought and action often are complex and unconscious. Therefore, in-context research approaches offer some of the more effective ways to understand what a brand can offer its intended audience. These can include such activities as mapping centers of online influence, observing and interacting in online community dialogues, following people through their daily routines, interviewing close family members and friends, assembling related groups of people to discuss relevant issues, gathering individuals’ guided self-reporting through diaries, photos, and video – and often, engaging in these inquiries over time with multiple points of contact. In-context research reveals the inconsistencies between what people say, think and do, and is particularly is effective in yielding insights into unmet needs that participants themselves cannot easily articulate, linking those needs back to strategic brand opportunities. Branding firms are facing demands to respond to ever-increasing channels and more active customers. What tools can they use to help meet these requirements? CD/MC. Stakeholders of a brand are more mobile than ever before – which has made it both more challenging to connect with them and in some ways
“A good starting point is understanding that a customer’s relationship with a brand starts with his or her world view, not with the brand’s”
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“When a brand’s image fragments, stakeholders are left to define the brand themselves, often devaluing it or losing trust in it”
MARIA CASINI AND CAMILLE DESANTIS easier. Yet the two biggest challenges to address are these: first, is the brand identity strong enough to resonate; and second, have we established a clear set of guidelines and standards to effectively and seamlessly implement that brand identity across relevant communications channels? Market research will inform the process to ensure the communication channels selected are the ones that will most effectively engage the key stakeholders of the brand. Once we have addressed these challenges, then we can ensure we are not managing a brand’s identity in an ad hoc fashion – i.e. selecting the ‘fad’ technology du jour – rather, we are developing a brand from a strong, singular strategic platform. MS. Industry should focus on delivering a ‘branded’ experience to the customer, HCP, patient and all entities connected to the ‘patient-centric’ model. The branded experience needs to encompass consistency, personalization and streamline the steps for managing the patient in the health-care continuum. It must integrate the point of care experience to the online and mobile arenas, to deliver the right information at the right time, in the right medium. The point of care experience is the critical first step in the interaction between the patient and the HCP. The HCP uses health education teaching tools to improve consistency, efficiency and create a platform where patients can ask questions, within the context of their health management. These teaching tools weave key brand strategy messaging, with visually engaging illustrations, appropriate content and interactive components. This type of point of care patient education involves and engages the HCP with the patient, and allows the patient to experience many of the adult learning principles that extend to behavior modification resulting in increased patient compliance. In addition, these interactive teaching tools incorporate patient take-home recall resources that seamlessly lead the patient, family members and caregivers to recommended internet and mobile sites, where the patient can continue the journey within the health-care continuum. How do you see the future of branding developing in the next few years? LK. In pharma, I think we may see a shift from DTC to higher-impact patient education and adherence programs. Raising awareness among prospective
patients has intuitive appeal, but retaining compliant patients who persist with therapy over time is essential to brand longevity. Digital media has proven particularly vulnerable as a platform for DTC, yet simultaneously is very well suited for ongoing, participatory dialogues with established patients. For professional and payor communications, I suspect we will see an increase in value-based brand-building, such as P&G/Sanofi-Aventis’ recent move to reimburse the insurer Health Alliance for the costs of treating fractures suffered by osteoporosis patients taking Actonel. Similarly, Merck may link Cigna’s cost for diabetes drugs to how successfully type 2 patients control their blood sugar. Merck will give Cigna bigger discounts if more patients adhere to therapy. Adherence helps Cigna, because people who take their pills will have fewer complications of the disease, and Merck, because it will sell more of its products. To circle back to trends in consumer-focused communications, the assumption is that Cigna will engage in more aggressive patient adherence programs to urge people to take their medicine at the right times and in the proper doses. MS. The powerful forces of Web 2.0 technologies, online social networks, digital content and the shift from online ‘con-sumers’ to ‘pro-sumers’ will promote a marketplace driven by conversations, personalization, digital information and relevant customer solutions. Industry should evaluate the strategic shift from push to pull marketing and leverage every opportunity to build brand equity at the point of care, to the point of adherence and through the point of compliance. This can be accomplished with strong, effective patient education solutions, resulting in ‘BRAND’ becoming synonymous with ‘valuing customer experience’. CD/MC. There is a conflict that exists today that directly results in the devaluation of brands. Brand directors think in silos and their stakeholders think in terms of one brand image. The stakeholders expect all interactions with a brand to be consistent and cohesive and relevant to them – providing them with information and value that justifies their time, effort and money. The ad hoc utilization of multi-channel branding – or selecting from silos – promotes brand image fragmentation. When a brand’s image fragments, stakeholders are left to define the brand themselves, often devaluing it or losing trust in it, neither of which is desirable. So we see a future where brand directors would take a ‘channel neutral’ position and focus instead on the development of a consistent, cohesive and relevant brand identity strategy first, and then, informed by market research insights with key stakeholders, have a better understanding of where those constituencies ‘live’ in order to make the best strategic decisions on which communications channels to use for the brand.
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The evolution of communications Jay Bigelow examines the changing methods of keeping in touch with your customers. As communications evolve, why is behavioral science important as a tool for marketing? Jay Bigelow. The best way to reach today’s marketingsavvy consumer is by being relevant. Not relevant in a 25-to-44-married-with-two-kids-and-living-in-thesuburbs sort of way; relevant as in, no-one-has-everunderstood-me-like-this-before. The good old days of segmenting by demographics, psychographics or even the more recent and trendy use of purchase behavior are quickly dismissed by the empowered consumer. Today’s customers can see through these tactics and are able to dictate how you communicate with them. Behavioral science is the key that unlocks a truly intimate understanding of these consumers. It allows you to get inside their heads and find out what makes them do the things they do. Once you know what really makes them tick, you are on your way to a productive conversation. The emergence of digital space has presented great challenges to relationship marketing. What tools do companies need to build an effective program? JB. Challenge might not be the right word. If anything, digital has made the two-way conversation – an element crucial to true relationship marketing (RM) – more effective and certainly more possible. It has allowed us to make the shift from implementing regimented static programs to facilitating useful conversations between brands and consumers. As for building RM programs, the most effective ones incorporate dynamic communication streams rather than planned or timed communications. These dynamic communications might include forwarding, contributing, rating and responding to a poll or survey, for example. The bottom line is that they require the consumer and brand to actually interact with one another, which leads to an enhanced mutual understanding. Building an effective RM program requires that companies fundamentally retool their approach to customer service. They need to throw out the one-way, unilateral approach to answering customer questions and concerns and replace it with living, breathing dialogue. With an increasing range of behavior within professional audiences, what is the importance of tailoring communications program measures? JB. The increasing range of behavior we’re seeing in professional audiences reflects how the responsibility for patient care is spreading out among a number of groups, including physicians, nurses, health-care educators and managed-care entities. Like consumers, physicians and other health-care providers are people who come with their own principles, attitudes, beliefs and perceptions.
To provide relevant or tailored communications, it’s important to understand these differences. When they receive messaging that is based upon behavioral insight, professional audiences are more likely to see the value of what you’re providing, be receptive to your messages and take the actions you want them to take. How do you see the future of communications developing in the next few years? JB. We will most likely see growth in industries that already exist, versus the emergence of new ones. For instance, as integrated mobile devices that support voice and internet communications become more user-friendly and affordable, corporations like Facebook and Twitter will take hold, and they’ll continue to grow both in size and depth. The next logical step would be voice response and integration with everyday items like your car, which we’re already starting to see with devices like Ford’s Sync system. Also, with Windows 7’s upcoming release of built-in multi-touch, we should begin to see advances in interactive video chat. n Jay Bigelow is President of MicroMass Communications, Inc. Under his leadership, the Cary, NC-based company has become a nationally ranked full-service agency of record, demonstrated double-digit financial growth, vastly expanded its services, and built a roster of blue chip clients that includes Novartis, GlaxoSmithKline, Merck, Shire, Bayer, Auxilium and Akrimax. For more information, visit www.micromass.com
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SALES AND MARKETING
s the Chief Commercial Officer for EMD Sereno, Jim Hoyes faces the everyday responsibilities for sales and marketing within the US-managed organization. Included within this is the commercial excellence group, which incorporates sales training, marketing excellence, and sales excellence as well as the various support functions for those three commercial pillars, such as market research, analytics and business intelligence. But the arena of sales and marketing has not always been such a structured business. Hoyes explains that in recent years there has been a tremendous change in the pharmaceutical sales model, mostly due to the industry shift from an emphasis in primary care to specialty areas.
Personal best Central to the success of global drug firms is the need for transparency and individual accountability. EMD Serono’s Jim Hoyes explains why these characteristics play a crucial role in sales force effectiveness.
“That shift has occurred for two reasons,” he explains. “The first being very pragmatic: there have been a lot of the large primary care blockbuster-type brands going off patent, and on the flipside, a lot of the new innovation that’s been in pharmaceuticals has come into specialty space, in areas like oncology and neurology, for instance. So because of that, there’s been a move away from the mega sales forces where you had layered or mirror images of sales forces on top of each other driving call frequency, now to a shift towards call quality and driving value for the patient. “For us at EMD Serono, that is the model we’ve had historically because we’ve always been in the specialty space, so we spend a lot of resources on training. That’s becoming more important – not just product knowledge training, but training to uncover customer needs. Our concern is to understand how physicians interact with their patients in their practice. What’s the patient flow? What’s on the patients’ minds? What are the physicians trying to accomplish in their prescribing decisions? That adds a lot of value to the innovative pharmaceuticals that we bring to the market as well. “The other change is that there has been a move to more compliance training for sales forces in the industry, both from the chang-
ing landscape of the PhRMA (Pharmaceutical Research and Manufacturers of America) guidelines that our sales forces in the industry follow, as well as internal company policies regarding higher levels of compliance. So that’s an integral part of companies’ sales training programs, in specialty spaces and for companies like us. You’re getting a higher level of sales reps certified through a formalized training process that leads to a certification that allows you to move from a Level 1 to a Level 2, and you see that play out as well with legislation at the state level for instance.” The District of Columbia now enforces a law that sales professionals need to be certified to call on health-care professionals in Washington, DC. A number of states, including most recently Massachusetts, also have legislation pending about having sales reps certified to sell in their field. The result of this has produced focused, smaller sales forces with a clear direction, with the movement away from mirrored sales forces. This also creates better accountability, as it demands fewer reps calling on a certain physician and there is greater awareness of who’s driving the prescription activity.
that we sell in with patient call centers, so we can help offices align those activities and make sure that if a prescription is written it gets reimbursed and that there’s nursing support provided, whether that’s on simple things like injection training and how to reconstitute the product or later on down the road if they have questions about continued therapy. So none of this gets in the way of the physician-patient relationship, but it helps provide support for our patients to make sure they get the best outcome from the therapies that they’re on,” he explains. As trends are changing, sale forces must adapt quickly, which is not necessarily straightforward or an easy task. Hoyes explains a main shift in recent trends to have been the integration of EMD Serono’s managed care account managers into the sales and marketing mix. “They need to work as a team to provide the best solutions to large clinics and physician practices,” he says. “One of the main drivers that physicians look at after they make the right diagnosis and they look for the right therapeutic agent is what is the managed care coverage, and so they don’t want to write endless prescriptions that then end up getting called back or
“To sell effectively with innovative products, especially considering what’s going on in overall health-care reform, is going to heighten the value of a well-trained sales rep to a company” Customer care Another new significant focus for the industry today is on the payer system, Hoyes explains, and ensuring patients have the support they need to navigate what can be a complicated reimbursement journey. “We really need to understand the entire patient spectrum. What’s the role of managed care in a patient’s treatment paradigm? How can we help ensure that patients get reimbursed, or make sure that if there’s a device associated with a product that the two get linked together? “And so that’s where we have a very close interface in all of our therapeutic areas
any other form of a hassle factor about coverage. We focus very much on driving high access levels for our pharmaceuticals and then making sure that as we execute that at the physician office level, our sales, our marketing and our managed care teams are all seamlessly working together.”
Future Hoyes believes there is a promising future for sales force effectiveness, both within the industry and within the company itself. The result of the rising trend of individual accountability and transparency to create a more targeted form of sales force
James Hoyes is the Chief Commercial Officer at EMD Serono, Inc., and is responsible for business operations in the company’s key therapeutic areas of Neurology and Endocrinology, as well as Managed Care and Sales and Marketing Operations.
will create motivation amidst those individuals who understand the need for such a change. “They like to see the cause and effect of their work, and in the older models where there are four and five reps calling on a specific physician, again it was hard to see who was doing what. So accountability will be increasing. “The quality of the call will need to go up, and we’ll need to find ways to measure that beyond just tracking prescription data. There are potential ways. Do we need to be doing, for instance, 360 reviews with key prescribers to see what the reputation of the company is, how high the service level is, and then how useful our products are for them? “Another future trend will be the rise of companies assessing core competencies, for instance the ability to launch products effectively. If the window of exclusivity that you have is shrinking for a variety of factors, you’re going to need to get out of the gates very quickly, so launch experience is going to be very important. On the other hand, you may see companies start to use external sales forces – contract-selling organizations
– as products hit the more mature parts of their lifecycle. So greater flexibility, and a real evaluation of what is the critical success factor for your own company and your own product portfolio that you need to maximize sales, will become more significant than a
“We have to align patients, prescribers and payers into the story, so that’s something we’re focused on, and the other is making sure and measuring that our sales forces are improving year over year and are ranked one or two in their therapeutic
“There has certainly been a move to more compliance training for sales forces in the industry, both from the changing landscape of the pharma guidelines as well as internal company policies” one-size-fits-all approach that was used in the past,” says Hoyes. He attributes the success of EMD Serono’s sales teams to its teamwork approach, which has proved critical in drawing together the various means of sales, marketing and managed care, and bringing in the results.
classes in terms of effectiveness. We have a scorecard whereby we use a number of metrics to track that year over year – we want to look at it longitudinally, so again we can see the continued progress upwards and a number one or number two ranking in our therapeutic areas due to the work in pursu-
ing leadership in our therapeutic areas, and not just the brand. That includes the people that we have in the direct face of the customer and that’s usually our sales force. “The key of the specialty space is growing in importance, and that’s where the innovation is going to lie in the future from a health-care perspective,” says Hoyes. “To sell effectively with innovative products, especially considering what’s going on in overall health-care reform, is going to heighten the value of a well-trained sales rep to a company. It’s going to be critical that you have a strong sales force to be successful, and that doesn’t mean the old days of having a countless number of reps. “It’s an individual basis, and you’re going to have to have stars in your sales organization, and they’re going to have to be performers and they’re going to be held accountable for success in a very challenging environment. But sales forces enjoy that challenge and therefore they’ll continue to thrive.” n
IMS HEALTH AD:euro
NEW COMMERCIAL MODELS Sati Sian of IMS Health discusses the industry’s development of new commercial models.
NGP: Why are pharmaceutical companies seeking a new commercial model? Sati Sian: Within the world’s mature markets, a confluence of environmental factors are impeding the industry’s growth. These include tighter regulations and growing safety challenges, intense generic competition, downward pricing pressure, different decision-makers, and slowing innovation. Against this backdrop, sales force productivity has been steadily declining, making for an untenable situation. Most companies are coming to realize that their commercial model is no longer aligned to the changing needs of the health-care stakeholders. In the absence of change, companies realize that they will increasingly become disconnected from their customers’ needs. NGP: What trends are you seeing across markets? SS: Markets across the globe are at different stages of evolution. Those we call ‘pharmerging’ (China, India, Brazil, Russia, Turkey, South Korea, and Mexico) promise continued strong sales growth at the rate of 13-16 percent through 2013, and are expected to contribute more than half of global market growth in 2009. Here, where health-care systems and funding models are still developing, the traditional model still operates successfully. In a number of major western markets (the US, Germany, Italy, UK and Canada) companies urgently need to change their models. Here, payers and regulators have measures in place to control and manage the growth of prescription medicines, thus forcing a major decline in the return derived from traditional detailing to physicians. IMS forecasts that sales growth in the US for 2009 will fall off by 1-2 percent – a historic low. Growth in Japan, Canada and the major European markets will hover between 1-4 percent for the next fi ve years. In the middle are markets that can be described as well developed, but where the pressure for radical change is not yet as urgent.
Many of the southern European and Latin American countries fall into this category. NGP: How can a company evaluate the urgency of its situation? SS: Our research shows that the urgency of change is driven by two factors that vary by country: the nature of the company’s portfolio and the type of controls that payers exercise. We carried out extensive research using our local experts in each of the eight most mature markets to understand the current commercial context for products across more than 80 therapeutic classes. We’ve segmented the therapeutic classes in each market into three categories: differentiated, commodity and transitional. This research has clarified how the need for change varies by class and country, and what investments would now make a real difference in each market. Of course, each company must determine the required changes to its commercial model by segmenting its own portfolio in a similar way, a process that we are supporting with a number of clients. NGP: How should companies begin? SS: Each company should understand the real return it is getting from its go-to-market efforts before undertaking the downstream work of developing a new commercial model. Without this, it is impossible to prepare the business case and feasibility study to know how a given strategy will impact profitability. While most brand teams know that commodity products produce lower promotional returns, we found that most companies still massively over-promoted their commodity products and under-promoted the more responsive products. It became clear that companies are not sufficiently reassessing their promotional efforts as their products mature. Indeed, we identified $15 billion in promotional spending across the eight major countries that could be more profitably spent elsewhere.
Sati Sian is Global General Manager, Commercial Effectiveness for IMS Health. He is responsible for IMS’s commercial effectiveness, activities worldwide, leading a team that manages and develops this business across the continuum of information, analytics and consulting for the company.
NGP: How can companies settle on a strategic direction? SS: There is no one-size-fits-all solution. Companies must proceed based on their own portfolios, the competitive landscape and their threshold for change. But the choices are overwhelming without a framework that brings focus and structure to the process. The IMS New Commercial Strategy Framework, for example, groups possible tactics into three areas: those that address the ‘how’ of sales and marketing through efficiency and effectiveness improvements, those that address the ‘who’ within the market with tactics for improving relationships with stakeholders, and those that address ‘what’ is taken to market with tactics that expand the value proposition. Each of these areas can
be employed to varying degrees. Although most companies have focused on efficiency and effectiveness tactics, we are seeing increased experimentation with new initiatives at all three points of the triangle. And we are seeing a movement towards service-oriented approaches that involve reassessing the value proposition. This is particularly needed in the primary care market, where companies must transition from selling medicines into selling a healthy outcome achieved through improved diagnosis, presentation, adherence and persistence. NGP: What difficulties might befall companies as they adopt a new commercial model? SS: It’s all too easy for leaders to underestimate the strain of transitioning to a new model. Some common pitfalls include failing to completely understand the current environment, applying a one-sizefits- all approach in one fell swoop, underestimating all of the associated costs of implementation, including the systems and technologies that support a commercial’s daily operation, and cutting corners in the change management process. NGP: Can you point to some examples of companies that have gotten it right? SS: Companies are in various stages of examining their models, and few have completed their implementations. We are, however, beginning to see some companies moving resources from a national to a local level. In the US for example, three major players are adopting regional organizations that have the autonomy to respond to local needs.
One of our clients operating in Spain has also aligned its management framework to the geography of the new stakeholders. The company is seeing significant improvement in the uptake of new products as its market access teams are integrated at the local level. In another case, we worked with a top ten pharmaceutical company to isolate the variables that customers appreciate in their interactions with the company. We then recommended new metrics for driving behavior that included measures of customer value and plan influence by region, rather than share of voice. The company was able to realize an incremental $900 million annually in one country alone.
“It’s all too easy for leaders to underestimate the strain of transitioning to a new model” NGP: What does IMS bring to the challenge? SS: First, IMS’s global capabilities and strategically focused consultants provide a unique understanding of the issue and a fresh approach to the challenge. We begin with a diagnostic assessment of a company’s existing model as it relates to the market landscape. Even companies that already have agreed upon a new commercial strategy can often benefit from exploring the gaps between their current and ideal states. We then provide a framework for determining the most suitable go-to-market approach. We have an in-depth understanding of local markets and the outcomes that local providers are demanding. And the fact that we can incorporate findings on patient behavior using anonymized patient-level data (APLD) is also critical. Our consultants use this base of evidence to map out a future operating environment and outline what models would make the most sense in each geography and what skills, processes and assets a company would need. The next step is to actually shape the organization that will be needed, specifying the roles involved, defining promotional processes, determining the right sales force size and segmenting customers. At the same time, we ensure that the necessary systems and processes will be in place to support the day-to-day operation of the new commercial organization. Then, drawing on our global project and change management experience, we can guide the onerous and lengthy implementation process and measure the success of the resulting program. Our recent acquisition of Skura enhances our ability to implement customer-centric approaches with particular experience in implementing closed-loop marketing. n
Successful Strategies ED:12june
Customized training Why one-size-fits-all doesn’t work for today’s organizations.
or 10 years, SSI has been delivering quality and cost-effective training to organizations around the globe. As part of our philosophy, we do not believe that all employees require the same skill set training and that a generic training program is not the solution. That is why we have created a diverse, customizable curriculum enabling organizations to choose only the competencies applicable to their business environment. Whether classroom-based or simulation-based training, we give organizations the ability to ‘target the learning’ for faster, more effective results. We can reflect your organization’s current employees, products, processes and methodologies so participants walk away with training they can truly apply back on the job. Your employees gain only the knowledge they need – how they need it. Our team truly enjoys working with our clients to solve their business problems. Our commitment and insight into the training world allows us to bring you the most cumulative learning experience. We feature top quality instructors who are experts in their field, a development team with the highest educational standards and a group of others committed to bringing you quality, friendly service. Whether you are a small or-
What we’re best at We know how to learn your processes quickly, and use our knowledge of how people learn to turn your processes/information into something people can learn from quickly and easily, with the least expense in time and money and with the least intrusion to getting the rest of their job done. How we work with you: first, we learn about your organization, employees and specific issues to determine the objectives you need to achieve. Second: working collaboratively with you, we determine how to meet those objectives. If customized training will meet the objectives, we work with you to design the necessary training content and the best delivery method. If some other intervention is needed, our consultants will plan it with you. Third, we work with you to deliver the training or implement the right intervention. Fourth – we help you reinforce the achievements on the job and measure the return on your investment.
ganization or a large corporation, SSI wants to help you solve your real world problems through mentoring, motivation and leadership.
Why SSI? Tom Mattus, the President and Founder of SSI, saw continuous turnover in employees, and an inability to find great employees and make them productive. Tom also witnessed people attending inadequate, off-the-shelf training programs and thus, more wasted money and time. Tom soon realized other companies were having the same problems, and believed that with specific performance-oriented training, quality employees would be attracted to stay and grow with these organizations. SSI offers customized training and project management consulting to all types of industries through the unlimited backgrounds and experiences of our associates – PM consultants, training designers and facilitators. Our facilitators live and work all over the world, just like our clients. Because of this, we always have the time and expertise to handle your customized training and PM consulting needs. SSI is run in a unique way, and we're able to meet your needs because of our unique and cost effective structure.
Tom Mattus is the President and Founder of Successful Strategies International, Inc. (SSI), a successful training, leadership and mentoring organization that specializes in hands-on application project management and leadership development. Prior to forming SSI, Mattus was involved with the startup of several training organizations. He also was a senior manager at American Express and at Travelers Corporation.
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The terms Lean and Six Sigma have been used in pharmaceutical manufacturing for a number of years. Now there’s a new concept on the block that melds the two. Bayer’s Edgar Sur fills us in..
ccording to Edgar Sur, Head of Bayer’s Operational Excellence for North America, Lean Six Sigma is a combination of Lean, which is focused on removing waste, plus the value-added step of Six Sigma, which is all about reducing variation. “Both use the same approach in solving the problems,” he explains. “In Lean, we use the approach of plan, do, check, act; and in Six Sigma, it’s called DMAIC, which is define, measure, analyze, improve and control. It’s about putting rigor in the approach of problem-solving with the flexibility of using some Lean tools and some Six Sigma tools.”
The advantage of putting the two together, says Sur, is to prevent people from seeing them as two separate sets of toolboxes, but instead thinking of Lean and Six Sigma as a complement for each other: “In Lean there are a lot of things that you can immediately address and solve. For example, when you’re involved in a project, there may be things that would normally take three to six months. When you go through Lean, you can go to the improve phase in one week, as opposed to in Six Sigma, where you’ll probably get in an improve phase in three months. But certainly, there’s the shorter variation of period in time in addressing these things.”
Another advantage is increased efficiency. “You increase the cash flow through the reduction of your inventory,” Sur says. “Everything is data driven, so it can be defended when it’s questioned. There is a rigor, again, to the approach of solving the problem, which you don’t get from one phase to the other without completing or having the deliverables on prior phases. “It also forces people to partner, because you can’t do this in a silo; this is more of a cross-functional group of people that need to make things happen. Another advantage is that you focus on the customers – we always ask what is critical to quality for the customer. It’s not a shotgun approach where you try to hit everything. You go through the data to tell you what to do, you ask the customers what is critical to them, and you go after those things.”
Challenges That doesn’t mean there aren’t challenges involved in implementing Lean Six Sigma in the pharmaceutical sector. “It’s a highly regulated environment,” Sur points out. “There is a mindset and a culture that change cannot happen because it is not allowed. You continually want to challenge these things and ask the right questions, while ensuring that you stay in compliance with what the regulatory agency is asking us to do. “The other big thing that I see in a lot of companies is that because the profit margin is so high, there is really no pain and so there is no motivation to improve until it’s too late. And trying to build a culture that is sustainable is also a challenge. The other piece is also allowing time for people to have closure around the old ways of doing things and embrace the change – the new paradigm of how we approach things. Having the sense of urgency as opposed to taking our time as we did in the past.” Sur says there is also a challenge related to building the credibility and the impact of Lean Six Sigma. In the beginning, he explains, many operational excellence organizations will try to build their credibility by tackling the biggest problem projects that no one has been able to solve, which can obviously take some time. The issue of needing to gain credibility can arise from the fact that people are not always familiar with the process, and there is a certain amount of learning involved. “In Lean Six Sigma, there are also soft skills that you have to learn. It’s a change management piece where you don’t just drive change and hope that everybody will buy into it. It’s what I call the wilderness, where you allow people to just wallow and have closure on how they used to do things, so they can embrace the new things that are about to happen. Until they have had the time to have closure, this new approach can’t be effective.” There are also challenges in implementing Lean Six Sigma across different sites or different business units, as Sur explains. “One of these challenges is creating one voice, one roadmap that everyone can follow and measure themselves against to track progress. When you’re deploying Lean Six Sigma in many different sites, some sites will be in different stages of the process or of the deployment. What
Definitions of Lean and Six Sigma Lean Lean manufacturing is a production practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination. Working from the perspective of the customer who consumes a product or service, ‘value’ is defined as any action or process that a customer would be willing to pay for. Lean is centered around creating more value with less work. Lean manufacturing is a generic process management philosophy derived mostly from the Toyota Production System (TPS). It is renowned for its focus on reduction of the original Toyota seven wastes in order to improve overall customer value. Lean is a variation on the theme of efficiency based on optimizing flow; it is an example of the recurring human tendency toward increasing efficiency, decreasing waste and using empirical methods to decide what matters, rather than uncritically accepting pre-existing ideas.
“There is a mindset and a culture that change cannot happen because it is not allowed”
Six Sigma Six Sigma is a business management strategy, initially implemented by Motorola, that today enjoys widespread application in many sectors of industry. Six Sigma was originally developed as a set of practices designed to improve manufacturing processes and eliminate defects, but its application was subsequently extended to other types of business processes as well. In Six Sigma, a defect is defined as anything that could lead to customer dissatisfaction. It uses a set of quality management methods, including statistical methods, and creates a special infrastructure of people within the organization, who are experts in these methods, using a system of ‘belts’ similar to that employed in martial arts. Each Six Sigma project carried out within an organization follows a defined sequence of steps and has quantified financial targets (cost reduction or profit increase).
you need to do is make sure there’s one roadmap that they can follow. It doesn’t really matter what stage of the process they are at in their implementation, they need to know that in the end it will be a similar approach to what everyone has done, so that you have the consistency. Everything’s standardized and it’s one voice, and everyone can share and benchmark off each other.”
Implementation Sur explains that when you’re implementing something like Lean Six Sigma, it’s important to integrate that into an overall operational excellence rollout, again because of the need for consistency. “It’s important to ensure that you’re talking the same language – not reinventing the wheel – and making sure that your goals and objectives are aligned and they’re not conflicting each other. Again, if you don’t have that aligned approach, there may be conflicting goals and objectives that can go against each other, and that would not add any value to the process.” In operational excellence at Bayer, Sur is working to build a culture that is sustainable. “In a way, I’m trying to work myself out of a job, so that the ownership and accountability transitions from the OE organization to the site because that’s the only way you can have a sustained program, if the ownership and accountability is back to the site. Sur has experience in carrying out similar programs in different industries and sectors, including aerospace and IT in a technology environment, and he believes a lot of what is done around operational excellence is transferable from industry to industry.
“It’s sometimes difficult when you go to the health-care sector where if you don’t have the background around health care, they’ll often say, ‘Your skill sets are not applicable,’ but I think that’s where the mistake is in sometimes trying to retain some of these skill sets that other individuals have. When there’s a process that needs to be addressed, OE has a place for it and whether you use Lean or Six Sigma, it’ll get you to the same end result. He is also keen to point out that Lean Six Sigma is just not used in operations. “We’ve done this in an HR environment. We’ve done this in global supply chain as well as procurement. I’d just like to get the message out to all the practitioners that this is applicable to just about anything and everything.”
“It’s important to ensure that you’re talking the same language – not reinventing the wheel – and making sure that your goals and objectives are aligned”
The original concepts of Lean and Six Sigma have been around and been developing for a while. How does Sur see them continuing to transform in the future? “I think they will continue to grow and expand,” he confirms. “There’s always a need for these types of programs. There’s a need to stay competitive with other companies cost-wise because, going forward, the need for quality and efficacy will be a given in our industry. The opportunities are speed to market, response to customer needs, and reducing costs, so that we can transfer some of these savings to the patients.” n Edgar Sur is Head of Bayer’s Operational Excellence for North America.
Building Capabilities for a Competitive Advantage
LEAN SIX SIGMA SERVICES
YOUR CHALLENGES CHALLENGING THE CURRENT STATE TEAM DEVELOPMENT
RISK MITIGATION DASHBOARD METRICS SAFETY
SPEED TO MARKET PROCESS PERFORMANCE COST CONTROL
PROCESS CONTROL WITH ESCALATION PROCESS STANDARDIZATION
OUR SOLUTIONS IMPROVING PROCESS CAPABILITIES DESIGN FOR SIX SIGMA
REAL-TIME OPERATIONAL PERFORMANCE METRICS WITH USER-FRIENDLY GRAPHIC VISUALIZATION
KNOWLEDGE TRANSFER OF TOOLS
DETAILED VALUE STREAM ANALYSIS
DESIGN OF EXPERIMENTS
SIMULATE TO STIMULATE TEACHING LEAN CONCEPTS USING A PIZZA SIMULATION You will be surprised at what you will bring back to your work environment after attending the one day “Pizza Simulation Workshop”. Forget the lectures and learn by doing. Your team will have 3 business simulations to understand the process and design improvements that will take you from a very poor process capability to a capability that will be a competitive advantage.
current process capabilities. In a competitive environment, they will learn that without significant improvement, they will lose valuable accounts. Each simulation will introduce changes that are agreed to by the participants. By the end of the simulations, the teams will have demonstrated real improvements to customer satisfaction, sigma levels and employee satisfaction, while improving operational effectiveness.
Attending this 1 day workshop, you will learn:
Whether your company is proficient at Lean, or not, you will find this a valuable exercise to communicate the principles and methods of Lean to the entire organization. Participants rate this as highly interactive and relevant to their work environment.
• Demonstration of Lean Thinking Principles used to improve a process • Interdependency of Customer Satisfaction to Employee Satisfaction and Process Capability • Value-Add Analysis that leads to break through thinking • Introduction to methodology and tools that can be applied to the participants’ work area. During the workshop, participants experience the process variation as it adversely impacts real customer issues. They will develop “Critical to Quality” measurements, and collect the baseline metrics to assess
Attending the workshop is good for 8 hours of continuing ed credit for PMO
“What a fun & interactive way to learn key concepts that I will long remember” - Tim Stroh USDA ITM Projects PMO
NYC - Philadelphia in Sept; London in Oct; Washington DC in Oct; Orlando in Nov
Stephen Johanson has had practical experience applying Lean Fundamentals to manufacturing, transactional, pharmaceuticals and government applications.
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CS INTERNATIONAL AD.indd 1
IN RISK CONTROL
Bayer’s Helmut Mothes examines the success of Lean and the development of operational excellence.
n recent years, the life sciences industry has faced increasing challenges, often due to long development cycles, uncontrolled failure risks and growing competition. As SVP and Head of Process Technology at Bayer, Helmut Mothes is discovering new concepts in the development and manufacturing of drugs to address these issues.
He explains the significant challenges created by the long development cycle for drugs, and the risks produced by the complexity of the tasks, advising the solution for the industry to be applying specific concepts proven to speed up the process, containing those risks in its early phases: “If failure happens in an early phase, the risk of having spent too much money already is avoided,” he says.
early stages of generating small quantities of an active compound, through to efficient ways of managing clinical testing. “Of course, there are new ways to improve performance,” explains Mothes. “I would like to describe that with an example, which is not so much related to drug discovery, but to the synthesis of active ingredients and how to get an active ingredient or an active substance from the early stages towards the production scale. “For example, when you start a development you generate the first milligram of a Helmut Mothes has been Head of the Process product, and the synthesis route you have Technology Division at Bayer Technology chosen to do that will affect what you have to Services since January 2002. Prior to this he invest later on in the production side, it will worked at Bayer’s Animal Health Business affect how complex the process development Group in Mannheim, where he was responsible will be, and it will also affect what the risks for operations (manufacturing, supply chain are. We try to implement a concept so that management, quality assurance. He began his you generate the first milligrams of a product career at Bayer in 1984, working in the Process with technologies that can be easily scaled Engineering Department of the Central Research up and then put into reality in a production Division. During his five-year stay in the US, he plan: microTechnology. worked first at Bayer Corp. (formerly Miles Inc.) “The reaction is done in a single channel and then at Haarmann & Reimer as manager of and then later on the production is done in the biotechnology pilot plant and later of citric a multiple number of channels, but what acid production. is happening in a reaction channel doesn’t change. So scaling up is not really a problem. This is very simplified, but it makes clear that it is possible to use the same technology platform when you produce that are very standardized, very modular, and that allow you with the first milligrams of active substances, and you use the same prinminimum risk to achieve the goal, to break through pre-clinical and ciples late in production. That of course significantly minimizes the clinical development, and then to launch the product. Thirdly, comrisk of failure and also optimizes the speed of the positive element bined with that second concept, it’s necessary to have standardized processes.” technology platforms, particularly with respect to manufacturing. According to Mothes, there are three major concepts that you could apply to manage that process efficiently. “The first thing is you have to introduce what you could call proof of concept or proof of visibility in the developmental cycle very early, and during the early phases of a developmental project you have to focus on activities that help to lead to the proof of concept. “You also need workflows, particularly after proof of concept,
So these are the three things that are important to speed up the process and to take the risk of failure into early phases,” says Mothes.
Data management In terms of improving handling of information, a more efficient creation of data is important to transfer some of that failure risk to earlier phases in the development cycle. Mothes explains that central to this is the development of a drug, whether a chemical compound or biological, that will create a huge amount of data. However, this does not come without its challenges. “The problem arises as to how to manage this data appropriately and also, a challenge even more important in the future, is how to extract the right information out of this data to support decision-making. Essentially, you need efficient ways to manage huge amounts of data, not only for a single-track development project, but also for a variety of projects, because that may create additional information and opportunities. Also, combining data management with modeling and computational tools could allow you to extract further information to create more insights into structures, things you can see by simply handling data.” In order to shorten the time between target discovery and approval of the active substance, Bayer has implemented many of the standard procedures, from high throughput screening in the
Lean The move to Lean and towards operational excellence is continuing to dominate discussions within the life sciences industry, and so it has become a major topic for biotechnological services, to address topics related to performance and operation. “The idea is to apply operational excellence in an integrated manner. We want to operate the process, the plan and the facility as optimally and as efficiently as possible, so that’s the target, and this objective is particularly challenging at the moment with all the changes in raw materials and global competition,” says Mothes. “To be really successful in operational excellence you need integrated programs that address three topics. First of all you need an assessment of where you are and where you could go with your performance. This assessment has to be neutral. It should not be biased by beliefs that you carry from the past, so that’s the first element: assessment. Second thing, you need methodology. Very often we get proposals, which we improve, but methodology means you have to have tools, software and handbooks that guide you through the process of implementing operational excellence projects. So assessment, methodology, and the third level that is automatically linked to operational excellence is the topic of sustainable implementation: you need things that allow you to monitor, to steadily improve the key parameters.
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“For example, you need online monitoring with respect to key parameters: assessment, methodology and sustainable implementation to bring an integrated approach. At biotechnology services we have put together a package that integrates these three levels and the package actually aims at different targets,” he says.
Efficiency matters Mothes notes the importance of efficiency in improving speed and flexibility during drug synthesis in the manufacturing of active substances. He advises the first step in this to be in synthesizing an active substance, starting with the technologies that are easy to scale up, which is often done through the setting up of laboratories that are able to produce very small quantities in a manner that is similar to a later production side. “Important to this process are modular and standardized concepts, along with being able to prefabricate certain things later on for production. Currently active ingredients are manufactured in multi-purpose, multi-product plants, which require upfront investment, and it’s always difficult to get a high utilization in these plants. These multi-purpose, multiproduct plants are very flexible but they are less efficient. “We try to overcome that problem by moving towards continuous production, and by small but dedicated processes to manufacture active ingredients. This could change the way active substances are manufactured: we move away from a multi-purpose, multi-product chemical plant towards a more automotive kind of production for active substances. “Whether that will actually happen, we will see. There are certain challenges in terms of technology that is required, but what I consider to be the most important challenge for us is changing production strategies in such a manner that will require a paradigm change, because you cannot implement a multi-purpose plan in a small, dedicated line. That will not allow you to utilize all the benefits, meaning you have to strategically approach the topic. Therefore Bayer’s biotechnology services, together with other major companies, has started an initiative we call F3 factory.” Bayer’s F3 factory project is supported by the European Commission, and is set up to allow different companies to put together more flexible concepts, at a faster pace. Since it’s a paradigm change, companies cannot push their individual concepts through. Instead, a consortium of partners must work together to standardize modules and interfaces. The change from a multi-purpose, multi-product bench production towards continuous dedicated production is one of the trends currently being seen in the life sciences area. Bayer also recently signed a partnership agreement to use their modeling and simulation software, and as a result has implemented some of the necessary hardware. “These are the first very promising projects running,” explains Mothes. “What are we aiming at? We think that these methods could enhance certain development tasks, such as the area of codings and in the area of formulations and drug delivery systems.
“It’s important to integrate these computational methods with what you do in a standard manner with experiments, and these computational methods allow you to reduce the number of experiments, but they also allow you to challenge your mental models and that creates new knowledge. We have applied these things to two or three actual topics in drug development and we think that these theoretical methods definitely supplement what we do during the normal development cycle.”
“We want to operate the process, the plan and the facility as optimally and as efficiently as possible, which is particularly challenging at the moment”
Innovation Bayer follows a strategy that can be described as openly innovative: the complexities of the challenges are only successful if handled without a network of research units, institutes and universities. A single company is not capable of providing all the necessary resources, making it essential to build a network of research collaborations. Mothes names the catalysis center in Aachen as one example of this: “It’s one element, together with biomaterial signs, biotechnology services and the university, which we have set up. In the center there are people working from the university but also Bayer people, and in this environment we are carrying out projects that are more long term. “We are going for what we call dream reactions. Currently, we have a product that you synthesize in plans with five or six steps. It would be very beneficial if you could reduce the steps to get to a polymer from five or six to let’s say two or three, by combining new technologies, new catalysts and ionic liquids, and that will reduce raw material demands and investment. “Since it’s very long-term research, we also need some time. That’s the reason we’ve supported the center for at least five years, but there are already some developments that indicate there is a potential. There’s still some way to go, but first results show that we are very likely to be successful there,” he says. Innovation is important to Bayer, especially in terms of economics. “If you look at a product like polycarbonate, then currently you are doing that in plants where you have several steps. You synthesize step-by-step and find the product would be polymer. It is feasible to take two of the main raw materials, carbon dioxide in this particular case, and synthesize that polymer. There have been a lot of efforts in the past to pursue so-called ‘dream reactions’ and in principle they are plausible, but up until now they haven’t been achievable. “With nanotechnology, new catalysts and new process technologies, like microTechnology, there is a good opportunity to be successful.”n
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Six Sigma for the pharmaceutical industry By Tania Pinilla, Six Sigma Master Black Belt
harmaceutical companies are faced with the daunting tasks of dealing with the global economic crisis, as well as worldwide health issues. Companies are attempting to ﬁnd ways to reduce internal costs and cycle time while maintaining a high level of service to the customer through innovative designs and efﬁcient response to sudden increases in the demand for a product. However, balancing cost reduction and innovative design can sometimes prove to be difﬁcult. Six Sigma and Lean methods can reduce costs while enhancing research and development in these challenging times. Six Sigma is an established continuous improvement methodology focusing on defect reduction, and has expanded with Design for Six Sigma (DFSS) and Lean Six Sigma. DFSS centers on developing robust designs to meet a customer need while Lean Six Sigma focuses more on creating efﬁcient processes. The methodologies can be used independently or in concert. Today, many companies in a diverse range of industries have adopted Six Sigma to improve efﬁciency in a variety of areas. DFSS and Lean Six Sigma can likewise be successfully applied in the pharmaceutical industry to address various cost factors and impediments to proﬁtable innovation. A brief overview of the two methodologies with a selection of tools will be provided.
Design Finding the untapped market and need is critical to the bottom line of a pharmaceutical company. The underlying principle behind DFSS is of understanding the unmet customer need and translating it to a technical requirement, after which statistical techniques can be used to meet and optimize the requirements. The critical ﬁrst step is to clearly understand the Voice of the Customer (VOC), through techniques such as interviews or observations. Through VOC activities, stories are gathered with rich descriptions of the customers’ uses that help develop a robust design.
Another aspect of DFSS is preventing defects from occurring in the ﬁrst place. In the US, the Food and Drug Administration requires risks to be evaluated and documented. Failure Modes Effects Analysis (FMEA) is an important tool in the Six Sigma toolbox to help identify and prevent defects from occurring. Once potential failure modes are evaluated, designs are optimized using traditional statistical techniques like comparative methods, design of experiments or reliability analysis. The DFSS framework accordingly provides tools and techniques to enhance effective product development.
Lean Six Sigma With the rising costs in the pharmaceutical industry, companies are evaluating ways to minimize waste to reduce costs and cycle time. Lean Six Sigma provides a way to identify redundancies (as seen sometimes with mergers) and help reduce costs and cycle time in almost any process, ranging from small internal processes to larger scale manufacturing concerns, by eliminating the non-value-added activities and focusing efforts on the value-added activities. Non-value-added activities are deﬁned
as activities that take time and/or resources yet do not contribute to meeting a customer requirement, while value-added activities are those that directly meet customer requirements. Value Stream Mapping is one of the tools to visually capture the ﬂow of value and non-value-added activities. On the manufacturing side, companies need to be prepared to balance mass production with excess inventory. Just in Time (JIT) manufacturing within Lean Six Sigma prevents overproduction and uncontrolled inventory, and improves ﬂexibility to schedule and react to changing customer requirements. In simple terms, it is a method of pulling inventory rather than pushing. The current environment provides a particularly rich opportunity for companies to evaluate their internal processes and employ new techniques to sustain a proﬁtable business. Simply addressing costs may stiﬂe product development. A combination of Design for Six Sigma and Lean techniques can help achieve a successful balance. Companies using Six Sigma typically have strong upper management support driving the initiative, and Six Sigma trained personnel (ranging from the basic skills of a Six Sigma Green Belt to the more advanced Black Belt or Master Black Belt) within the organization to help facilitate methodology and tool use.
Tania Pinilla has been in the engineering industry for 17 years and is currently a certified Six Sigma Master Black Belt at Motorola, teaching and driving DFSS. Her earlier experience was in product development, designing cellular products. Prior to Motorola, she worked as a Development Engineer at Zimmer Orthopedics, and a Research Engineer at Harvard Medical Orthopedic Biomechanics Laboratory.
BALANCING ACT Novartisâ€™ Sammy Rashed talks to NGP about clearing the barriers facing the supply chain in these turbulent times.
s procurement continues to move up the corporate agenda, the switch to Lean processes has put pressure on sourcing departments across the pharmaceutical industry. Sammy Rashed, Head of Global Sourcing at Novartis, explains that security of supply is a priority. “When looking at the supply chain that goes into making our products, there’s a certain responsibility we have to ensure the continuity of supply. That has to do with ensuring the financial health of our suppliers, certainly given that the current situation is both a threat and an opportunity. For example, if suppliers have a high debt level, if they have a lot of sitting inventory, if they’re exposed with idle capacity, if their prices are linked to very highly fluctuating commodity prices which they’ve hedged, this is information that we must be aware of so we can adjust our strategy accordingly. “What we’re trying to do overall is look for the suppliers we can keep growing with, that we can keep collaborating with, and we’re getting even closer to than we’ve done before. This is the basis of supplier relationship management. But how exactly the crisis is going to change the landscape, I’m not sure. It’s our job to try to be able to see ahead of time which are the ones we can work with, which are the ones we can help, and which are the ones we feel may become a greater liability, for which we may have to put in contingency plans. “We recognize the risk, but also the opportunity. We’re fortunate enough to be working in the pharma industry, which is typically not as hit during a recession. We’re still impacted, but we’re not hit as hard as maybe more variable spend industries, although we certainly have our business pressures to look for efficiencies and economies of scale. On the other hand, the supply base that we deal with is probably even more fragile, and because of that we do have to be a little bit cautious.” Rashed and his colleagues are working to understand what their suppliers need given the current conditions, what their debt levels are, what sitting or idle capacity inventory they have to carry, how exposed are they to hedging decisions they’ve made or to commodity prices, and to a certain point also how they are being impacted by currency fluctuations.
Stability “Whenever we see some vulnerabilities, as a large, multinational pharmaceutical company, we can offer stability of volume,” he says. “We can offer assistance with cash flow – there’s a high level of certainty that we’ll be able to pay our bills at the end of the day – and we can also look for commitments beyond the immediate short-term future. So we can both leverage the market opportunities and also work with our vendors to strengthen them in those times of turbulence, and that’s how we’re adjusting the strategy.” The effect of this turbulence on the required skill sets for procurement executives is drastic. In a stable market negotiation is essential, and the relationship between buyer and seller is balanced: following the transaction, one person will lose something and one person will gain. Rashed explains that in the current economic crisis, there are certain situations in which negotiating and pricing is not suitable,
and instead companies need to take an overall look, not just from a sourcing leadership aspect, but also the business continuity and the business element. “Now is the time to make some changes; like everyone else, we will seek gains to make it through the market conditions, but we also have to think a bit more longer term, and this goes beyond the purchase order transaction,” says Rashed.
New strategy A strong department depends on good people, and in 2005 Rashed launched the ‘Talent Management Initiative’ within the manufacturing department, which was considered an unusual move. He did this not because of any personal desire to stand out, but from a logical and business necessity. “I had just moved into the European role and there were 100 people in the team, spread across 27 different sites, the majority of whom had not come from sourcing. We had some who were new learners coming on board to the function, and it was hard to distinguish who was who and what they knew. So it originally started off as an assessment tool, to understand competency skill levels and requirements – what is the demonstrated level versus the need? When the findings came out, they were pretty revealing, but then the question was, ‘What do we do with that information?’ “We identified a lot of gaps, the outcome being that we put together a program, which was meant to not only address the talent gaps but also bridge them, and by doing so the needs of the function were actually evolving faster than we were able to do so, and that’s when it became a more comprehensive program,” explains Rashed. The initiative originally started as a tool to correctly assess the right people, based on skills competencies, but actual outcome was far greater than expected. It became a talent development program of on-the-job action learning and mentoring, expanding the potential for growth and contribution of each individual. “In this way, we can make sure we hold the top performers in the organization. It took us about a year and a half to build and is very useful; it was once again applied out of necessity, but we took that as a base to expand and make it a global sourcing program, which is now being carried across all divisions,” he says. According to Rashed, the difference following the initiative has been huge, “If you look at the quantified numbers, the savings have undoubtedly been a lot more than in the past. We’ve doubled or tripled our savings performance from being probably lower middle of the pack to being among the best-in-class companies. If you look at the ROI of our functions, measuring the investments versus the return based on salaries, overhead, the fi xed costs and so on, ROI has pretty much doubled versus what it was, so it has been a very good investment. “This has come through a change of requirements in skills and competencies. The support function, the more traditional role, has mainly been either automated, delegated, outsourced or sometimes just purely eliminated, and we’ve constantly moved upstream in the decision-making chain getting closer to a customer, but adding value much earlier in the process.”
War for talent
skill sets. “I can tell you that, from my This is a well-publicized war for talent discussions with the people impacted, within procurement, which begs the question this is having a drastic change within their of what exactly must the hiring organization day jobs. The quantity of available talent get absolutely right. Rashed advises that the is going up by a tremendous amount. If answer to this involves a variety of dimenanything, when you have mergers and sions, the first being what is the exact level at acquisitions, there are usually a number which you want to hire? of redundancies that happen as a result “On one hand, you want to make the job of that, and the function as a whole is responsibilities as attractive as possible, and becoming leaner. at some point they all convert from the soft “The market has seen more availskills that we’re looking for, and we’ll talk ability of resources in the procurement about this during the required skills. But you field, but the quality is not there. People get to a certain level where you’re competing who can navigate through those turbuwith much more established functions, so lent times have got a strategic mindset, Sammy Rashed has 17 years’ experience in you don’t want to over-specify the requirea good vision, good engagement skills procurement management across various industries, ments needed from the individual. and are strong communicators. These and currently heads sourcing globally across Novartis’ “You also don’t want to over-promise are not the typical skills of procurement pharmaceuticals sites. His areas of expertise include what the job will do if the reality is you’re professionals, and these we’re still lookregional program deployment and talent development in building the competencies that you need ing for, referring back to the war for talent. the sourcing function. two years from now, and it’s not going to Anyone who has got those qualities will Prior to his current role Rashed managed local, be ready to be deployed until then. In other be doing very well in the market despite regional and category organizations at Novartis and words, if you hire someone with a strategic the number of people available,” he says. Merck, and has a project management background in mindset, who comes with a bag full of ideas mechanical contracting. He holds a college degree in and wants to change the world, but you put On trend architecture and an executive MBA from UQAM, Canada. them behind the desk to tactically negotiate In terms of how procurement skills will with vendors and ensure compliance, that’s a develop over the next few years, Rashed big mismatch. This has actually happened a few times in the past. From doesn’t see much change from current trends. The things he emphasizes that perspective, it’s about getting the level right. are the ability to understand and align with the business strategy, the “The second thing is the environment. If I look at our company speability to engage with senior stakeholders – how you get them to accept cifically, we probably offer more sustained and faster career growth than that you understand their needs and to trust you sufficiently to give you the average company: every so many years, you can expect to move on to the leadership of the projects to get their needs met – and being more the next level. What comes out of that is the notion of the career curve. entrepreneurial, being able to essentially identify, build, initiate and lead “You can assess an individual’s progress by measuring what has cross-functional projects. “You’re not working for the business; you’re been the growth historically versus the level of responsibility, and if you working with the business, often in a project leadership role where you see someone with a relatively flat curve and the position we’re offering rally different team members from different functions together towards a them now is way above the normal trend they’ve had in the past, that common goal, and you essentially elevate your role internally to a busishould raise some alarm bells. Likewise, if it’s a parallel move by someness productivity champion, for instance. one who’s fully done the role before, they may not get the same level of satisfaction from coming in and doing the exact same role again. “From a summary perspective, it’s about sizing the job, not just from an aspiration perspective, but also in terms of reality: what will the job look like, and how does that fit within one’s career growth? The keyword for me is ‘growth’. The function is growing “If I compare skills with technical competencies, the technical comquickly, and we’re looking for people who can sustain the growth, come petencies can often be trained; the skills are a bit harder to come by. The in for a while, either grow with the function or grow out of the function at transferable skills usually play a heavier weight in the decision to hire or some point back into the business. But at the current moment it’s not a not than the technical competencies, and you can usually get a feeling place to come and look for stability for the next five years; it is moving too as to whether the person has those skills in the first few minutes of a quickly,” explains Rashed. conversation or an interview, then the rest becomes a set of validation. If there ever was a time for thinking outside the box, this is it. The It’s finding those candidates that are ready now with those skills and recent mergers and acquisitions within the pharma industry are producbehaviors. Again, every other function is looking for the same skills and ing a knock-on affect on the ability to combine different procurement mindset, we’re not unique in that.” n
“You can asses an individual’s progress by measuring what has been the growth historically versus the level of responsibility”
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Thought leader Steve Dreamer talks about the big idea that is helping Novartis keep pace with an ever-changing industry.
teve Dreamer always knew that achieving his desire to change the way in which pharmaceutical management operated would be painful, but as he discovered, with much pain comes much gain. “We started off in the US in implementing some of our operational excellence programs and we proved that they worked there, so then we brought them over to Europe,” says Dreamer, who is Global Head of Pharma Engineering for Novartis. “There was some skepticism up front as to whether this would this really work or if this just an American way of doing things; Europeans often like to have 100 percent of the answers before making a decision.” “We were able to move very rapidly in the US on some of our implementations and they recognized that and admired it, saying, “Well how do we get our people to think differently? What can we do so that they can adopt some of these 80/20 type thinking so that we can move forward as well?”
so what we want to do is coach them and that helps them through the One of the key ways in which Novartis developed its process teams transition,” he explains. to bring about a change in managerial direction was to put the quality Novartis’ structure can be described as the creation of a much flatcontrol laboratories within the process team. The traditional thinking ter level of management organization: the company has laid out various would be for the quality control laboratories to be standing alone, as a places in which people with specific qualifications are needed, and then separate group, but Dreamer argues that by combining the two, there is increased the management responsibility to ascertain educational decian increase in open communication and an improvement in quality. sions as to the positioning of these people. Dreamer explains that if this “What the agencies are really looking for is to be able to solve is done in the right way, then management are able to take a step back, these problems collaboratively, not the previous confrontational type and the operations should be able to successfully run independently. arrangement. As we try to collaborate with the agencies, this builds “If you don’t address the process first,” says Dreamer, “If you a level of trust and comfort, so by doing that and showing that these just go in and try to do cultural training, you don’t gain anything. I’ve changes are accepted by the agencies, that helped open up communihad a lot of people ask, “We don’t want to change our processes. We cation,” he says. just want to change the culture. The people and the processes within “I’m not convinced that simply changing manufacturing take primary importance for the culture will work because, although you “Part of the reason we’re Dreamer, rather than the equipment and the may change people to think differently, they materials, the other two elements he be- successful is that we’re consistent; don’t act differently. So by changing the we do the same thing every time lieves to be detrimental to the manufacturing process they have to act differently and that process. People and processes are the more forces them into a new way of thinking. Then and it’s very predictable” sustainable elements, and the parts where you get a culture change. We try to follow the most opportunities for improvement lie. that step and if you do that in the right way “When there’s a new technology on the market, people often and you remove the ways from processes and people working with buy this, thinking it to be ‘cool technology’: it runs faster and makes this new process they can’t drift back to the way it used to be. You’ve things prettier. They implement it and then they forget about the other eliminated all the different levels of management. elements. So it may be a fast piece of equipment but if the materials “In some of our sites we had eight levels of management. Today on don’t allow you to run fast you don’t get any gains; if the process is all of our sites we’re at three levels. There’s one or two still at four and of upstream and downstream of that new piece of technology, and if they’re moving to three levels. When you get to that point you’re never they aren’t in line, you don’t gain anything, and certainly if the people going to come back in and add layers, so you only hire the people that aren’t on board you certainly don’t gain anything either. can work within this new framework and we’ve done that for 18 sites “So we always look at those for elements to make sure that things now quite successfully,” he says. are in sync. When we look at an improvement we try not to look at just a silo or unit operation, we try to look at what’s the impact of the Target 2010 business. So if we want to change the business we look the process Successful is certainly an accurate word in which to describe Noof material and the operations that are going to impact the business, vartis’ management change, with a full implementation of a lean strucand then we look at the roles of the people, and then finally the people ture almost in place. Dreamer attributes this to the managerial adoption that are in those roles. So we always follow that formula and it seems of a “top-down vision”. “You can’t just sell – people go out and do Lean to work,” says Dreamer. or people go out and do improvements. They’ll walk different directions There is no specific formula for the model of these iterations. so you have to bring it together; they want something to work towards Originally, the changes that came in the traditional way did so via a so we try to put this vision in place. We call it ‘Target 2010, The Toyota person joining, changing the organization, bringing in new people, of Pharma’, which is a five-year plan. We put it in place in 2005 and it’s and then letting them pick the process. However, this system was running through 2010, and we’re not wavering from the program. simply not efficient enough for Novartis, who have instead decided to “Often in large companies each year they come out with a new flavor, flip the process around. but we’re trying not to do that. We have a vision as to what we want the supply chain to look like and we work towards that bottom up. We Management change enable the people, we give them the tools, we describe what processes “We do this on a local scale, as well as on a global scale. There’s we want and we let them work. They start at the low level site-by-site a change management program that goes with it, which makes aware and we start connecting it together, adjusting the people as we go. of how uncomfortable the change is going to be, so we take people “Some of these new supply chain techniques are not learnt in univerthrough this training and we support them. sity. Nobody else in the industry has done it, so you have to create the “The most important thing of all of this is that we’re trying to people and that takes time. You have to bring them along, educate them, develop leaders as coaches, not as managers. We don’t want people and sometimes you have to change people as well, but eventually we that are going to go out and tell their operators and workers what to work towards that vision. We have measurements along the way that do. These people know better than anyone how to make medicines, we look at: throughput time, customer service levels, productivity and
overall asset effectiveness. We monitor those and you advance in one area, and then you work in the other area. All of those things have to line up well in order to really achieve that vision,” he explains.
“We have a vision as to what we want the supply chain to look like and we work towards that bottom up” However, the implementation of Target 2010 does not necessarily mean a rigidity of the system, because of course with learning, change becomes necessary. “One of the things that we always tell our people is identify 80 percent of it and go. Twenty percent of it you’re going to have to figure out along the way. If we tried to get all 100 percent we’ll never get anywhere. So somebody asked the other day, “Okay, 2010 is next year. What’s the next vision?” We don’t know. We’re comfortable in saying, “I don’t know”, because when we get there we’ll figure out the next step. If we start thinking about it now there’s still opportunity over the next year to realize certain improvements and we may forego something if we try to do it too soon,” he explains. By the end of 2009, the vision for Novartis’ next plan is due to be implemented. Rather than a master plan, like the one implemented in 2005, this time round the company is opting for a step-by-step proposal, allowing them to continue learning on the way. The established values of Novartis’ traditional structure are steadily being replaced to encompass a learning organization, and change the culture in which managers think, encouraging them to be positive about the changes and inspirational as to what the next steps should be.
Continuous manufacturing Another policy that Dreamer is championing is continuous manufacturing. He explains how the advantages of this creation of a Lean structure is to reduce overall throughput time end-to-end, from the first chemical step all the way through distribution. “In some cases, for major products, we’ve been able to go from 550 days down to 200 days. If you continuously manufacture, you conceivably go from 200 days down to 35 days or less, and it’s not just changing existing batch processes and connecting them together in a continuous way, but it’s changing the chemistry. “One of the advantages is that it should be significantly less capital investment. We combine all of the steps of the drug product together into one manufacturing step and, because you put stuff in one end of the pipe and you get tablets out the other, you can control quality better. You don’t have all of these intermediate tests that you have to deal with. No other company has done this. It’s a 15-year journey for us: we’re in pilot now this year and we’re starting to see some progress with it that makes us believe it’s going to be real,” he explains. The move to Lean and the push for continuous manufacturing are coalescing
As Head of Novartis’ Global Pharma Engineering and Innovation Quality Productivity, Steve Dreamer is responsible for providing technical and project management for major capital investments, and for building operational excellence capability for the TechOps organization to achieve ‘Target 2010, The Toyota of Pharma’ vision by embedding Lean, process-oriented organization and other reengineering processes.
that vision, which is displaying the innovation part of the process. Dreamer notes a Lean program already in place, Innovation Quality Productivity (IQP), which focuses on the quality removing variability from our processes. He explains this to be the typical Six Sigma, whereas the innovation part of pharma proves to be a little more difficult.
Innovation “We’re innovative in the products that we develop, but we don’t want to have operators running around the plant being innovative and trying new things. Part of the reason we’re successful is that we’re consistent; we do the same thing every time and it’s very predictable. There’s no room for innovation in the way you make the products. However, if you can redesign the whole process, innovation can make a difference there and we believe this might be a strategic advantage for us in the future. “Innovation in the pharmaceutical industry is producing products that solve disease issues in a different way: it’s the overall health of it. Is it important to have innovation in the way you make the product? We’re not in the business because we make the product. We’re in the business of healing, of solving unmet medical needs. That’s the innovation part and that’s what the industry should focus on. “We should be able to make it with the highest quality, with the fastest time, and with the lowest cost, and if innovation can help drive that then we will look at it, but innovation in making product brings probably not a lot of benefit to the customer in the end. Ultimately, they’re going to get a tablet and they won’t know if innovation took place in there, not like an iPod or other devices that a consumer would see. So for us, innovation is improving quality, reducing cost, or being more responsive to market demand, but the real innovation for pharmaceutical is in the patient healthcare,” Dreamer concludes.
Prism ID AD.indd 1
Cut down, collaborate and focus on the customer
Pfizer’s Kim Sendall lets NGP in on his vision for the manufacturing facility of the future.
or Kim Sendall, building the ultimate pharmaceutical manufacturing facility is not about bricks and mortar or machinery – it’s about people. Sendall, who is Pfizer’s Director of Manufacturing, knows what he’s talking about. He is currently project director for a new biotech plant under construction in Strängnäs, Sweden. He believes that of manufacturing’s four elements – equipment, product material, processes and people – people are the most important. “If you have a newly constructed facility or an old facility, you’re more or less stuck with the equipment. It sits there. So you need to work around with processes, or you need to find clever ways of utilizing people better, such other ways of working shifts, for example. It’s also about empowering people to feel, ‘I can do my job and take decisions within my responsibility.’ “The people element of it, that’s the most important thing; that’s where you can make a difference. Everyone can buy the right equipment,
everyone can get a fairly good process, but if you don’t have people who are passionate about moving the process along and developing it continuously, you will not be leading edge.” Once you have the right people in place, the next issue to be tackled is the constraints of legacy equipment. Sendall says this can be overcome by building in flexibility from the very beginning, “When we’re building a new facility, it’s very much about building in flexibility, in line with our knowledge. Of course there will still be constraints, but it’s mostly about getting to a point in the construction of a facility where you are very aware about your bottlenecks and your constraints so that you have made conscious decisions as to what you end up with. “When you have constructed the facility, you will then know the ways out of potential future problems. You have to do a really big, good planning exercise before you start building so that you know if you build it like this, you will have a bottleneck in say, step one. Or if you do it like this, you can remove the bottleneck in step one, but then
step four becomes the bottleneck. You have to think forward and see where this facility could go in the future. If you have a consciousness about that, it’s much easier to work around. Otherwise, if you build something for a certain purpose described in the business case at that point, you can be sure that it will change in five years, and then you don’t have the flexibility.” Manufacturing is an integral part of the pharmaceutical process, but it is often not considered thoroughly enough in the design process. Sendall says this will change, with the facilities of the future being designed to be multipurpose. “You have to have someone with a good imagination and good knowledge about what might come, and you have to make some educated guesses, so that you don’t focus solely on that one product. Building a dedicated facility is a terrible waste of capital. You need to look at a broader perspective, but you still have to go back to the process that you’re aiming at to start with to make sure that you can reach the quality attributes you need. “One of the most crucial elements is having customer input from the beginning. You need to think about things like user demands and flexibility when the design is still only on paper. If you do it later, you will already have built in restrictions that might be less desirable. It’s about getting a customer focus: you need to have the customer on board in the product early so that you can make the right decisions. “Otherwise, you might miss the long-term goal; you might not give enough consideration to lifecycle costs, for example. It might be wise to spend $10 million on something rather than $1 million, because if you choose the $1 million engineering solution, it might not help in the long run, because you might need to spend $20 million on people in the following 10 years because you need a complicated workaround.”
but until batch one is done, you can’t start batch two. It will never be a fully continuous process. “The other big drawback of having a continuous process when you’re working with fermentation and high potential drugs, is that you have such enormous value in the facility, it’s nice to have isolated batches if something goes wrong. It could be very expensive if you have continuous operations and it takes 10 days to shut the facility down. That might mean you have lost several million dollars worth of product.” There are those who say that the pharmaceutical industry should not only break down silos within its own walls, but that it also needs to reach out and learn from other industries when it comes to introducing more future-oriented manufacturing processes. In much the same way that Novartis has said it wants to become the Toyota of the pharmaceutical industry, Sendall says that his company can learn from other manufacturers on its home turf. “I think that’s the same thing for us. The pharmaceutical industry is way behind on this – way, way behind, maybe 15 or 20 years. We definitely have to step up our performance. “We can make a quick comparison on the existing processes we have today and the existing facility and compare that to the new facility that we’re building up now. We will produce the same products, but we have a new generation of process. Today we need to handle about nine batches to get to one final batch of a certain size. In the facility of the
Breaking down silos Sendall says that part of the innovation process for the future of manufacturing will involve encouraging people to think in a broader context. “It’s very much about getting a mixture of people and trying not to look at the departmental things. It’s about saying, ‘I’m working for the capital product, so I’m focusing on my parts in the capital things. I look at equipment.’ “But you also have to have someone coming from the process side talking to these people and saying, ‘Yes, but if you do it like this, it will be much more beneficial from a process point of view.’ It’s all about mixing a team, and as a manager being proactive in that and bringing in a cross-functional team. Somehow you have to, as a manager, force people together, because it’s very easy to sit in your silo and say, ‘I’ll do my work and he’ll do his.’ And that’s not the way of the future.” One concept in streamlining that many other industries have introduced is continuous manufacturing, but Sendall points out that this method is not particularly suitable for the pharmaceutical industry, which tends to stick to the batch process. “We are working with E. coli fermentation, for example. E. coli is a really rapid organism to work with: it grows for 48 hours, and after that it has generated so much cell mass, you can’t handle it within the equipment. You have to have a batch break. I think we’ll still stay with batches for a long, long time. You do need to have a process where the batch flows smoothly through the system so that you don’t have to wait to empty the whole facility,
Kim Sandell is Director of Manufacturing at Pfizer.
future, we will be able to handle one batch all the way through with a three times higher yield. So we are replacing 27 batches with one batch. “Those are the things you have to do to move forward. You can’t just have a lab model that you scale up 1000 times; you need to look at around step one – what effect does that have? – to step two, and try to get into a free-floating thing so that you can have a batch flowing through. “Today we have to have a lot of intermediate steps, and that wastes a lot of time, because you need to collect a product, and then start the next step. But in the new facility, we can start from point A and run all the way to point Z without having any stops. We’ve been more moving toward that and looking at less intermediate steps and trying to gain yields as well – and of course, looking at waste time. “We will reduce the lead time on these processes with about 75 percent moving from the old facility to the new facility, just because it’s a more streamlined process and we can streamline work around it as well. Just imagine handling 27 batches at the compared to one; it’s a huge impact.”
Reining in spending
“It’s not all about saving, saving, saving, cutting away and cutting away. Freeing up capacity is more the thing; ﬁlling that up”
Sendall believes there is no need for enormous capital expenditure in creating and building these new labs. “That’s the beauty of it: the new processes don’t have a new specification. They use the old specification, so we can use all the old methods. The analytical labs stays intact. You use the old labs for doing the new processes, so what you are doing is freeing up a lot of time in those labs for doing more production or using personnel, wherever the needs are. The best thing would be if you could have more products coming in and you can do even more with the same amount of people. Otherwise, you would have to take away people if the volume stays the same. “The dilemma you end up with when you are working with operational excellence is having to be very careful that you don’t start to use it solely as a savings exercise, because that takes away all the engagement from people. They will start thinking, ‘If I do good work here, that might mean that I don’t have a job on Monday.’ It’s very important that operational excellence is about freeing up capacity and then trying to fill that capacity. “It’s not about freeing up people and taking them away and minimizing the organization. I guess that’s why companies like Toyota have been really good at this, because they have been working from one capacity base, and they needed to increase capacity. It has not been about being more efficient in that way, but they gain all the efficiency anyhow. It’s all about doing more with what you have. “I’m a bit worried about the turmoil in the pharmaceutical industry now, because it’s more about saving money, and even at Pfizer this operational excellence initiative that we’re running now more or less started as a saving exercise. That doesn’t empower people, and that doesn’t engage people because in the course of the work, you might lose your job when you are making improvements.”
Given this, what other metrics can we then use to measure operational excellence, because everyone says cost is the driver, because it gets the executive buy-in. How can we ensure operational excellence empowers the people to do well without threatening their livelihood? Sendall says it’s about showing what you can do with the facility and the equipment you have. “Say that you can be so efficient so that you can free up 70 percent of the capacity. Then it’s about, for management, filling that capacity; it’s not about trying to shut it down or laying off people. We need to find something to fill it with, and if we don’t have products in our own pipeline, we can try something else, such as going out to do contract manufacturing. “We can show that we will free up this capacity, but that it should be used for something else. Otherwise, you won’t get those great benefits that you might think, because you’re still saving money, but you might spend things in capital to make these improvements, and you’re still stuck with the same volumes. All that goes back to the same volumes, and you don’t get the big leverage on the improvements that you would get if you could still utilize all the capacity you have.” In the end, Sendall is looking to make Pfizer a leaner, more flexible manufacturing entity. “We would like to fill up what we have spare in terms of other products, and if it’s not a Pfizer product, it would be great if we could find a third party, and we’re working on those strategies. It’s not all about saving, saving, saving, cutting away and cutting away. Freeing up capacity is more the thing; filling that up.” And ultimately, Sendall says, the big drug companies can use this to gain background in the battle against the generics. “You can take the electronics industry as an example,” he explains. “There are a lot of joint ventures around facilities where they are producing the same kind of microchips, but it might be Phillips or Sony or someone else using the same facility; the only thing you are changing is the layout of the plasma screen. “In the same way, why not have a growth hormone production site where you have a joint venture of five big companies making growth hormone. Why should they all have separate facilities? If you consolidate that into one facility, you get much better gain out of that facility and you might utilize the capacity up to 90 percent instead of having five facilities that might be used to 50 percent. “We need to go to more alliances like that into the future and think in a much less conventional way. If you look at all other industries, this is not something new. But in pharmaceuticals we have been too protective.” Once it opens up to these new ideas, pharmaceutical manufacturing will never be the same again, and may even prove to be the secret weapon that helps big pharma stave off generic competition and come through the recession more or less intact.
SYNOMICS AD.indd 1
REGIONAL FOCUS: CHINA
An already established manufacturing epicenter and emerging R&D market, China is receiving investment into its pharmaceutical industry, both at home and abroad.
ith a region that encompasses almost a ﬁfth of the world’s population and an area of 9.6 million square kilometers, China is the world’s second largest country by land area. Shanghai is the country’s largest city in terms of population, housing over 20 million people. It is the largest center of commerce and ﬁnance in mainland China. China’s second largest city, Beijing, is a metropolis in northern China, and a major transportation hub. The city is recognized as being the cultural center of the People’s Republic of China and played host to the Olympic Games in 2008. The city is renowned for its opulent palaces, temples, huge stone walls and gates. Its emphasis on art has long remained integral to its title as the city of culture.
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Pharmaceutical market China accounts for 20 percent of the world’s population, and as its health-care environment continues to change and expand, so does its pharmaceutical industry. The health-care sector within the region is changing and a target has been set to extend basic heath insurance to a wider section of the population. As a result, the operations of the pharma industry are set to expand dramatically to cope with the change. Great Wall of China
The industry itself is highly fragmented, which has been attributed as the cause of its greatest problems. As the number of pharma companies continues to grow, the government is recognizing the problem with compliance. There are almost 6000 pharma manufacturers and around 14,000 distributors operating within the country and there are around 3500 drug companies competing within the $10 billion dollar market, but without any of them carving up enough of a slice to become a leader. During the last few years, China has put together several regulations and reform measures within the State Drug Administration – the organization is now responsible for all drug trading, manufacturing and registration. Since 2004, the SDA has been sanctioning and closing down manufacturers that do not meet the Good Manufacturing Practice (GMP). China’s over-the-counter market is simultaneously growing just as fast, becoming the fourth largest OTC market in the world. Foreign pharma giants have been noting the trends in the Far East and have begun expansion plans, targeting China as an emerging market. Merck announced the launch of its OTC program in September 2003; Roche has listed China as one of its 10 core markets, aiming to expand its OTC sales by 50 percent in the next five years; and both Novartis and Wyeth are setting their sights on the region for expansion purposes.
Shanghai- industrial city
China has mostly remained at the latter end of the research giants. It is only in recent years that the government has begun to invest time and money into R&D, in its aim to boost further expansion. Shijiazhuang Pharma Group is based in Shijiazhuang, the capital city of Hebei Province in northeast China. It is one of the largest drug firms and typical of China’s emerging pharma companies with an interest in research. It works very closely with universities and research groups to develop its own research, as well as applying for generic drug rights before drug patents expire, and has also modernized the traditional Chinese medicines (TCM) to a quantifiable method. Wuxi Pharmatech operates as a pharma and biotechnology R&D outsourcing company, providing laboratory and process manufacturing services in the process to pharma companies. Its operations include process development and manufacturing of advanced intermediates. One of the more major and successful companies, Wuxi Pharmatech is listed on the New York Stock Exchange. Harbin Pharmaceutical Group Co. is currently planning a $250 million capital infusion from two foreign investors, Warburg Pincus of New York and Citic Capital of Hong Kong, with the aim of expanding its R&D operations. As the industry continues to grow, domestic pharma companies are clearly becoming more competitive. n
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International events A roundup of upcoming conferences and events across the globe.
Drug Delivery Summit London, England 2 Sep - 4 Sep 09 Tel: +44 1787 315120 email@example.com www.selectbiosciences.com/conferences/DD2009/
18th International Mass Spectrometry Conference Bremen, Germany 30 Aug - 4 Sep 09 Tel: +49 30 2093 6985 firstname.lastname@example.org www.imsc-bremen-2009.de/
AestheticMed St Petersburg Exhibition Centre Lenexpo, Saint Petersburg, Russia 7 Oct - 9 Oct 09 Tel: +44 207 596 5221 email@example.com www.primexpo.ru/aesthetic/eng/ 7th International Bottom of the Barrel Technology Conference & Exhibition Athens, Greece 8 Oct - 9 Oct 09 Tel: +44 207 357 8394 enquiries@EuroPetro.com www.europetro.com/epc/
Biotechnology for the Non Biotechnologist Radisson SAS Hotel, Basel, Switzerland 23 Sep - 25 Sep 09 Tel: +44 1483 730071 firstname.lastname@example.org www.management-forum.co.uk/gxp/eventid/1127
ICSE International Contract Services Expo IFEMA, Feria de Madrid, Spain 13 Oct - 15 Oct 09 Tel: +31 346 559 489 email@example.com www.icsexpo.com
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Drug Discovery & Development Week Boston, MA, USA 3 Aug - 6 Aug 09 Tel: +1 800 390 4078 firstname.lastname@example.org www.drugdisc.com
Microarray World Congress South San Francisco, CA, USA 6 Aug - 7 Aug 09 Tel: +44 1787 315110 s.sharpe@Selectbiosciences.com www.selectbiosciences.com/conferences/MWC2009/
Next Generation Pharmaceutical Summit Ritz Carlton, Amelia Island, FL, USA 28 Oct - 30 Oct 09 www.ngpsummit.com Analytica - Anacon India Nehru Centre, Mumbai, India 23 Sep - 25 Sep 09 Tel: +49 89 949 22 121 www.imag.de
AnalyticaChina 2010 Shanghai, China 21 Sep - 23 Sep 10 Tel: +49 89 949 22 119 nicole.klammer(at)imag.de www.analyticachina.com
CPhI SA Transamerica Expo Center, Sao Paulo, Brazil 26 Aug - 28 Aug 09 Tel: 0031 346 559444 email@example.com www.cphi-sa.com
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As the merger between major drug firms Pfizer and Wyeth becomes reality, what will this mean for the pharmaceutical companies heads? Will the union between Bernard Poussot and Jeffrey Kindler result in a compatible partnership, or will it be a struggle for power with only one winner?
Bernard Poussot, CEO, Wyeth
lifer at Wyeth, Poussot has risen to power in a different way to Kindler. He began at the drug firm in 1986 as Deputy General Manager of Wyeth France and has risen up the ranks to CEO in January 2008. However, although his tenure as executive leader as been relatively short in comparison to Kindler, Poussot is not new to leadership roles, previously ranking as President of Wyeth Pharmaceuticals. In the announcement of the merger, Kindler described Poussot’s leadership as “strong and steady”, and stated him to be an “instrumental part of our integration efforts [who] will continue to provide us with critical counsel and support until the close of the acquisition.” His leadership style has been highly praised, receiving the Sabin Lifetime Award in 2003 and the Union Leage Founders Award for Business Leadeship in 2006 The relationship between Poussot and Kindler was tumultuous, involving eight months of negotiations. The courtship began in June 2008 after Kindler contacted Poussot proposing a buy-out. Following a number of stops and starts and problems with finances due to the economic conditions, a mutual share price was made of $50.19 per share and the sale agreed. It is thought that Poussot will receive $53 million if his position is terminated following the sell-out to Wyeth, but until the acquisition is closed and the organizational structure revealed, it is unknown ranking, if any, Poussot will take.
Jeffrey Kindler, CEO, Pfizer
rior to his entry into the corporate domain, Kindler’s background was based in law – he clerked for Supreme Court Justice William J Brennan and worked at the law firm Williams & Connolly – and it was because of this that he was specifically chosen to be Chief Executive. Rather than choose from a pool of 30-something-year experienced directors, the Pfizer board selected Kindler, showing a dynamic and fast-paced lawyer to be what is now needed for leadership in an industry where legal issues are growing dominant. On his appointment to the position, Pfizer’s previous Chairman, Henry McKinnell, described Kindler as a “gifted natural leader [who] inspires confidence, and offers visions and a fresh perspective.” His leadership is very much influenced by the style of both Brennan and Jack Welch, former Chairman of General Electric. The belief in creating an entrepreneurial environment for scientific leaders to flourish is the way in which he manages a creative business. Rather than a set model, he advocates that different people need different approaches, but at the same time, accountability dependent on results is essential. Kindler is also a supporter of the freedom of open and robust debate; through rethinking and challenging traditional ideas fresh perspective is brought.
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A picture is worth a thousand words: Advisory on H1N1 virus posted at university entrance in Manila
An advisory on Influenza A (H1N1) virus is posted at the entrance of De La Salle University in Manila, Philippines 04 June 2009. The university announced a 10-day suspension of classes, the first in the country, after a foreign exchange student tested positive for Influenza A (H1N1) virus. EPA/ROLEX DELA PENA
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