Opportunity knocks Unveiling the second wave of emerging markets Building excellence Opening the doors to Merck Serono’s House of Operations www.ngpharma.com
Heads up Joe Jimenez outlines plans for the future of Novartis
PHARMA’S PHARMA S KARMA Why the industry’s investment in Obama’s health reform is soon to pay dividends
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FROM THE EDITOR 7
A helping hand How the health reform is looking out for the industry in the long-term.
“Chalk one up for the pharmaceutical lobby,” exclaimed The Huffington Post’s Alan Fram days after Obama’s health reform bill was signed. And he wasn’t far wrong. For an industry that has taken hit after hit when it comes to realizing its future – from the ever-nearing patent cliff and tougher regulations, to drying pipelines and a call for open innovation – the emergence of which laws had passed on which bill was pivotal for the future world of pharmaceuticals. And, almost a year after the signing, it looks as though it’s truly a case of reaping what you sow. Taxes have been levied and proposals have been beaten back that, if allowed to go forward, would have meant the importation of low-cost medicines paving the way for Medicare to negotiate drug prices with companies. Instead, the arena of costly brand-name biotech drugs won 12 years of protection against cheaper generic competitors – no small victory for products that comprise 15 percent of pharmaceutical sales. And whilst the industry will indeed have to provide 50 percent discounts beginning next year to Medicare beneficiaries in what is being labelled the ‘doughnut hole’ gap in pharmaceutical coverage, those price cuts plus gradually rising federal subsidies will ultimately lead the industry towards more elderly patients buying more products. So whilst exact numbers are still unclear, there is no doubting that pharma will be forking out a substantial amount over the next decade to ensure its position – including $20 billion for an expanded rebate for medicines used by Medicaid, $28 billion for a new fee on drugs fi rms and a staggering $30 billion to close the ‘doughnut hole’. In fi nancial terms this is a big piece of the pie, but it’s one that needs to be cut in order to progress. And it’s not just within the industry that karma has
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raised its long lost head – a win for pharma also means a win for its customers. By integrating the industry within the healthcare sector at large, next generation personalized medicines, more efficient healthcare information technology and a literal overhaul of the US healthcare system can begin to prevail. In this edition’s cover story, we take a look behind the scenes of Obama’s reform to fi nd out exactly how pharma has benefited and where it should be looking to place its next steps. In an era where brand identity is everything, we also look at how the health reform could work to shine a more positive light on the industry in the context of its public perception. Pharmaceutical interests spent $188 million lobbying in 2009 alone, more than all but a handful of industry sectors according to the non-partisan Center for Responsive Politics, employing an army of just over 1100 lobbyists. Has it paid off ? Well, for the long-term there’s no doubting that it’s calmed the often-ferocious seas of pharma, but that doesn’t mean that the short-term haul won’t be just as testing. Fortunately, pharma is used to the old adage of ‘what goes around comes around’, which has proved it well over the decades. Let’s just hope karma comes back to smile on it once again.
“The system has gotten so bad and the need for reform so clear, that we just might have a unique opportunity to fix it.” Jeff Kindler, former Chairman and CEO of Pfizer, p.32
Nick Pryke Editor
Reform to re-form As we near the anniversary of Obama’s health reform bill, NGP takes a look at the plays that got pharma into the end zone
Riding the wave Frost & Sullivan’s Maik Klasen details the second wave of emerging markets and what they mean for the industry
Setting a new course We speaks to Novartis chief executive Joe Jimenez about life as a CEO and his plans for the future of the ﬁrm
38 Building the bricks of excellence EVP of Technical Operations HannsEberhard Erle opens the doors to Merck Serono’s House of Operations
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FEATURES 46 Rapping on the door of sensor technology Finesse Solution’s Mark Selker and Barb Paldus provide a quirky insight into dealing with lost batches
48 Innovation and collaboration Johnson & Johnson’s Ted Torphy examines the need for greater collaboration to boost innovation in R&D
52 Small is beautiful The future of SMEs in pharmaceutical development, by Jozsef Repasi
59 The new gold standard Amgen unveils its newly approved breakthrough therapy for the prevention of skeletal-related events
65 Manufacturing efficiency What Nycomed is doing to progress its manufacturing and supply chain operations
68 Supply chain analytics: pharma has to do better How to improve operations, better understand customer demands and devise more creative responses to market challenges
74 Patent cliff to drive industry consolidation? New research conﬁrms that the pharma industry is entering a critical phase as the patent cliff looms large
68 86 Asset management for the long-term Asset management is proving itself to be a pivotal player in pharma’s future, argues GE Healthcare’s Mike Benevento
82 Trends in outsourcing analytical support With David Beyerlein of MicroConstants, Inc. and Dominic Moore of Waters Corporation
96 Counteract the counterfeit As the market for generic opens up, the industry faces a new backlash of counterfeit products, by Siemens’ Hans Bijl
100 The eye of the social storm NGP takes a look at why sailing into the eye of the social media storm could be a recipe for pharma industry success
106 Social media anxiety disorder Phil Baumann outlines why the pharma industry needs to submerge itself into the binary world of social media
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DETAILS 110 36 hours inâ€Ś New Orleans 112 Why the Big Easy just got bigger By Tara Letort 114 Grand designs: Welcome to the workplace of the future 118 The crystal ball: Why 2011 will be a big year for tech 20 Final word: The lifecycle of the life science, by Patrick Leinert
ASK THE EXPERT 36 Manfred Zurkirch, Dividella AG 43 Omar Chane, Capgemini 72 Michael Federico, ERT 94 Chris Ellins, Total Flow 98 Nico Scheer, Taconic
INDUSTRY INSIGHT 44 George Henderson, Navigator Consulting Services 54 Rebecca Vangenechten and Sivarama Nalluri, Siemens 70 Jim Preuninger, Management Dynamics 88 James Drinkwater, Bioquell
EXECUTIVE INTERVIEWS 56 Ali S. Faqi, MPI Research 64 Dave Shanahan, IDA Ireland 67 David Radspinner, Thermo Fisher Scientific 76 Mike Butler, Xceleron 84 Jeffrey L. Mooney, Corning Life Sciences 104 Chris Nikum, IMS Management Consulting
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As President Obama’s efforts to ramp-up the nation’s healthcare system continue, we thought it would be fitting to take a retrospective look back at the big players who helped the cause and changed the playing field for the pharma world.
The senior US Senator from Montana, and a devout member of the Democratic Party, is widely acknowledged as a key driver of the President’s healthcare reform plans. Whilst not a household name or indeed face, Baucus’ chairmanship of the Finance Committee has made him an ally as well as a potential problem for the White House, where his former top aide, Jim Messina, is deputy chief of staff. At the time, early sceptics were surprised by Baucus’ effective deal making with elements of the business community and his focus on getting a workable deal. Critics from the left also questioned his commitment to broad-based reform and wondered if he was too focused on trying to win the backing of his GOP colleagues; a notion that was further highlighted when he led himself into a “delicate tango” with majority leader Harry Reid over how much to push and compromise for the sake of bipartisanship. Any guesses if he’s still dancing? Turn to Page 32 to ﬁnd out.
Charles Grassley The ranking Republican on the Finance Committee, Grassley was not (and still isn’t) thought of as an intellectual, dealmaker or someone dedicated to expanding healthcare to every American. But, having built a reputation as a ﬁscal conservative and watchdog over the Executive Branch, Grassley managed to swing into talks with Baucus and other Democrats in an attempt to ﬁnd common ground. Time described him as “stubborn and sometimes hard to read”, which is rather vague for a politician, but nonetheless he was a key player in getting reform off the ground – despite stepping out of the reform bubble before completion.
Karen Ignagni Without doubt one of the most powerful and articulate voices in the healthcare debate, Ignagni is President and CEO of America’s Health Insurance Plans, as if you didn’t know already. Considered the top lobbyist for the nation’s health-maintenance organizations, her main focus was ﬁghting a public option and assuring that the plan includes a mandate that every American has coverage. Indeed, The New York Times wrote of her in 1999: “In a city teeming with healthcare lobbyists, Ms. Ignagni is widely considered one of the most effective. She blends a detailed knowledge of health policy with an intuitive feel for politics and continues to do just that.”
Peter Orszag Director of the Ofﬁce of Management and Budget, Orszag is also Vice Chairman of Global Banking at Citigroup. A classic “Washington wonk” as Time calls him, Orszag has a total command of healthcare
statistics with plenty of key constituents: Congress, the healthcare industry, the media – and, of course, the President. His reputation as a well-meaning technocrat appealed to the right during crunch time, while his long-standing sway with the left gave the Administration cover as it sought a negotiated settlement. One thing is for sure, there’s no doubting that he would have been in the room as the ﬁnal plans were being ﬂoated around. To say he has his head screwed on the right way would be a massive understatement.
Harry Waxman Ask anyone and they’ll tell you the same thing: Waxman is one of the toughest and most skilled legislators on Capitol Hill. The Californian Democrat has helped the likes of the Clean Air Act and various consumer-laws become a reality. Today, Waxman’s legislative priorities are based around health and the environment; from health insurance to pesticides, Waxman is relentless in pursuing what he needs to get what he wants. Like Orszag, you can bet your bottom dollar that he was a focal point at the table on the day of the reform passing.
Nancy-Ann DeParle The only one in the list to hold a newly created job in the Obama White House, DeParle sits as the White House’s Health Czar. A former head of the Tennessee Department of Human Services, she moved to Washington to work in the Clinton White House. From 1997 to 2000 she headed what has now been renamed the Centers for Medicare & Medicaid Services – responsible for administering both the huge programs. Since taking the new job, DeParle has been instrumental in winning commitments from key industry players to hold down their costs voluntarily. However, between government stints, DeParle has drawn scrutiny and criticism over her lucrative posts on health industry boards.
Another former member of the Clinton White House, Emanuel was chosen as Chief of Staff over other contenders in part for this very kind of moment. Famous for using the proverbial stick to get his way, Emanuel is underrated in his well-timed deployment of carrots as well. He orchestrated the Administration’s largely hands-off-approach in public, but behind the scenes he monitored every jot and swerve, offering helpful advice and the occasional characteristic threat. Of course, unless you’re not a news fan, you’ll know that Emanuel resigned ofﬁce in October 2010 to pursue a campaign to run for Mayor of Chicago. Regardless, he was pivotal in the health reform – and indeed for Obama himself.
BRAIN DEVELOPMENT: IT’S A GUT FEELING team of scientist from across the globe have found that gut bacteria may inﬂuence mammalian brain development and adult behavior. Dr. Martin Hibberd from the Genome Institute of Singapore (GIS), in collaboration with Dr. Sven Petterssons and Dr. Rochellys Diaz-Heitjz from the Karonlina Institutet (KI), compared behavior and gene expression in two groups of mice – those raised with normal microorganisms and those raised in the absence of microorganisms (or germ-free mice). The observations highlighted that adult GF mice displayed different behavior from those raised with normal microorganisms, suggesting that gut bacteria may have a signiﬁcant effect on the development of the brain in mammals. Furthermore, they also observed that GF mice were more active and engaged in more ‘risky’ behavior than mice raised with normal microorganisms. When the GF mice were exposed to normal microorganisms early on in their lives, as adults they developed the behavioural characteristics of those exposed to microorganisms from birth. In contrast, colonizing adult GF mice with bac“The data suggests that teria did not inﬂuence their there is a critical period early in behavior. life when gut microorganisms “These studies are the affect the brain and change the results from a systematic gebehavior in later life,” furthered nomic approach to understand Dr. Diaz-Heijtz. Pettersson host-microbe interactions that added: “Not only are signal subwas initiated several years ago stances like serotonin and doand supported by the GIS and pamine subject to regulation by its director, Dr Edison Liu. It bacteria, synapse function also is an illustration of how this appears to be regulated by colodata-driven approach can gennizing bacteria. Our ﬁndings are erate unexpected results and the result of a long-standing and lead you to new directions, ongoing collaboration with KI with very novel ﬁndings,” and the GIS in Singapore, aimed noted Pettersson, co-ordinaat exploring host-microbe intertor of the international study actions in a systematic manner.” based in Singapore.
In the sands of success
arina Bay Sands will kick off 2011 with a series of highly anticipated openings and upcoming events include new trade shows such as Dye + Chem Asia International Expo 2010 and 2012, and Offshore Asia 2011. Other marquee events include Pavilion of Art & Design 2011 (PAD Singapore 2011), which aims to replicate the success of its sister shows PAD Paris and PAD London, both must-sees in the international art diary. Marina Bay Sands is also the venue of Cruise Shipping Asia 2011 – another new show for Singapore. The fair is organized by UBM Asia, whose parent company is behind the annual Cruise Shipping Miami, the world’s largest international trade show for the cruise industry. Mr. Michael Duck, Senior Vice President of UBM Asia, said: “It has been over 10 years since we last organized a cruise event in Singapore. We ﬁrmly $13M believe that the Asian market is now primed for tremendous growth. Marina Bay Sands’ under-one-roof concept and waterfront location near the new Cruise Terminal provides the perfect venue for us to return to Singapore to debut this event.” Exhibition organizer IIR Exhibitions has given a vote of conﬁdence by choosing Marina Bay Sands for three events – Hospital Build Asia 2010, Aesthetics Asia 2010 and PSA/HVAC Asia 2010. “Our established life sciences fairs this year are going to be held at Marina Bay Sands. This decision has been made after considering the capabilities of Sands Expo and Convention Center, and the after-work leisure options available in this amazing new destination. Marina Bay Sands is a prestigious new venue and one that we think our delegates from all around the world will look forward to,” said Mr. Andrew Keable, Divisional Director, Life Sciences, IIR Asia Paciﬁc.
NEWS IN BRIEF 22
NEWS IN BRIEF
ovartis is expanding its reach into personalized medicine with the acquisition of US cancer diagnostics specialist
enoptix. According to the terms of the agreement, the Swiss ﬁrm is offering $25 per share in cash, or $470 million in total – representing a premium of 27 percent over Genoptix’ closing price on January 21. Based in California, Genoptix operates in diagnosing cancers in bone marrow, blood and lymph nodes. In 2009, it posted sales of $184 million, with revenues reaching $148 million for the ﬁrst nine months of last year. For the 500 people that Genoptix employs, all will head into Novartis’ Molecular Diagnostics department. Joe Jimenez, CEO for Novartis, said that the acquisition will “serve as a strong foundation for our individualized treatment programs,” calling the ﬁrm’s new partner “an innovative company with a talented team of people who share our commitment to transforming the way medicine is practiced”.
merican biopharma services company Quintiles has ofﬁcially opened up its Phase I research facility at Apollo Health City in India, after announcing in 2009 that it had formed a partnership with Apollo Hospitals Group – the largest private hospital company in India. With the combined investment expected to be
around US$6 million, the eventual total investment came out at around US$8.9 million, with a 60:40 split in favor of Quintiles. The 86-bed facility will be used to evaluate compounds developed both in India and other countries. “With this new, state-of-the-art, Phase I facility in Hyderabad, India, we will be better able to ally with customers by providing access to large numbers of healthy volunteers for simple studies, in parallel to more complex studies conducted by scientiﬁc experts in Europe and the US,” said Eddie Caffrey, SVP and Head of Quintiles Phase I worldwide.
Kathleen Sebelius, Health and Human Services Secretary, told Congress on January 25 that a new drug development center run by government is scheduled to be up and running by October 1. The new National Center for Advancing Translational Sciences (NCATS) currently being set up within the National Institues of Health (NIH) will “establish a focused, integrated and systematic approach for building new bridges to link basic discovery research with therapeutics development and clinical care,” says the NIH, which hopes that Congress will provide at least US$1 billion in annual funding for the Center. Furthermore, as stated by NIH Director Francis Collins, “the hope would be that any project that reaches the point of commercial appeal would be moved out of the academic support line and into the private sector”.
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BREAKING the bad news
9. Novartis Layoffs: 1400 After much concern that Novartis would release Rocheesque layoffs, the company ended 2009 announcing 1400 cuts from the sales department, all of which would be effective starting January 1 2010. The layoffs came primarily from the company’s General Medicines sales force, as it prepared for the effects of numerous patent expirations. Instead, the company will focus its sales efforts on specialty drugs, according to a statement. Novartis is still assessing its efﬁciency in sales, marketing and manufacturing, which could lead to more extensive job cuts in the coming years.
8. Takeda TOP 10
Layoffs: 1400 As Takeda prepares for diabetes drug Actos’ patent expiration, it announced 1400 jobs cut within the US. “The business environment for the pharmaceutical industry is changing dramatically,” the company said in a statement, “with the pharmaceutical industry as a whole facing barriers to technological innovation that have halted progress in breakthrough novel drugs, stricter approval processes for new drugs in advanced nations, and radical upheaval in healthcare systems.” The cuts came primarily from Takeda’s US headquarters in Deerﬁeld, IL and the Takeda Global Research and Development Center.
Top 10 pharma layoffs of 2010 10. Bristol-Myers Squibb Layoffs: 840 After cutting out 7000 employees in 2009, BMS only just made this year’s cut with its September layoffs. The company continues to prepare for the Plavix patent cliff, as generic counterparts take over a larger portion of the market. BMS was posting higher-than-expected proﬁts when the layoffs occurred. But although the company’s other drugs, including the antipsychotic Abilify, continue to do well, Plavix’s US$6.5 billion is hard to replace. As Edward Jones analyst Linda Bannister says: “With the patent cliff all these companies are facing, they need to reduce costs as quickly as possible to navigate what is going to be a very challenging couple of years for the industry.”
Layoffs: 2500 The cuts included shuttering its Great Valley, PA facility and shaving 400 from its sales force, but the largest cuts came in October. The company cut out 25 percent of its Pharmaceutical Operations division, more sales reps and eliminated 300 more from its Bridgewater, NJ facility. “Given the serious challenges facing our organisation and the healthcare industry, it is important to act decisively now so that our organisation has greater stability moving forward and that our resources are allocated to our strategic growth priorities,” says Gregory Irace, CEO of Sanoﬁ-Aventis US/ Canada Pharmaceutical Operations. Recently, sources told Pharmalot that Sanoﬁ sales reps would ﬁnd out their fate via conference calls: one for those retained and one for those laid off. According to the company, the latest layoffs will keep the sales force at a manageable size until 2013.
6. Abbott Labs Layoffs: 3000 After purchasing Solvay Pharmaceuticals, Abbott found the need to eliminate 3000 jobs, the largest layoff in the company’s history, with the majority of those hitting its European operations. “The restructuring will streamline our operations and improve efﬁciencies across the pharma business as we said we’d look to do at the time we announced the acquisition,” Abbott spokeswoman
markets, particularly in Asia and South America, and is transferring much of its muster into those areas with numerous deals. But beyond layoffs, Witty looked at other failing strategies, including spending $4.8 billion in nine years on research that found no new products.
Melissa Brotz said to the Wall Street Journal. As part of the restructuring, Abbott closed Solvay’s Marietta, GA ofﬁces and cut staff from Hannover, Germany and Weesp, Netherlands. But the layoffs aren’t over; PharmaTimes expects more layoffs over the next two years as the company continues the Solvay integration.
5. Bayer Layoffs: 4500 Bayer’s layoffs came with the company’s new strategy to focus on emerging markets. While 4500 will lose their jobs, the company plans to create another 2500, particularly in Asia. Emerging markets have been a determining factor in many companies’ layoffs as they search for new lines of revenue in an increasingly difﬁcult economy. For Bayer, it’s the price of doing business. “To ﬁnance the expansion of our growth activities,” CEO Marijn Dekkers said in the statement, “we therefore need to redirect resources, improve efﬁciencies and cut costs.”
4. Roche Layoffs: 4800 Roche came back in force, laying off 4800 workers in one fell swoop last November. Those cuts will take place over the next two years, along with another 800 transfers in-company and 700 to third parties. According to the company’s release, 2650 of those cuts will come from sales and marketing. The company cited poor results as one of the factors in the layoffs. “This is a comprehensive, focused initiative to reinforce Roche’s long-term innovation capability in the face of increased price pressures and a more challenging market environment. We will continue to drive our highly promising product pipeline to help seriously ill patients and contribute to more efﬁcient healthcare systems,” Roche CEO Severin Schwan said in a statement. The cuts should save Roche $2.7 billion through 2012, and another $2.4 billion after 2012.
Layoffs: 8480 Pﬁzer has dropped to number two with over 10,000 fewer job cuts announced last year. It announced the total 8480 layoffs in relatively smaller batches: 1080 in two January announcements, and 7400 in separate May releases. After merging with Wyeth, the company found redundancies as it assimilated Wyeth’s three dozen sites into the fold with its previous 40. “We have a complex network of manufacturing plants,” said President of Manufacturing Nat Ricciardi, “with excess capacity that is not good for costs.” And Pﬁzer found places to cut in New Jersey, Pennsylvania, New York, Puerto Rico, Ireland, the UK and Germany. The process isn’t nearly completed yet; the layoffs will take effect over the next ﬁve years.
1. AstraZeneca Layoffs: 8550 AstraZeneca started off the new year with 8000 job cuts announced on top of the 15,000 from 2009. The company wasn’t shy; it reduced staff in virtually every area of the company, from chain operation to R&D, sales, marketing and admin. And a month later, it cut another 550, shutting its doors in Wilmington, DE as well as UK and Swedish facilities. AstraZeneca has been cost cutting since 2007, originally planning on eliminating 7400 positions by 2013. Three years later and the total is up to 23,550.
3. GlaxoSmithKline Layoffs: 5201 CEO Andrew Witty spent the year ﬁnding cost-saving options for the company, including laying off workers in Europe and the US, 700 from the sales and marketing division. GSK believes the future is in emerging
One giant leap Novartis’ Gilenya is one step closer to European Approval following a thumbs up from regulatory advisors, making it more than likely that the drug will become the ﬁrst MS pill available in the region. The European Medicines Agency’s (EMA) Committee for Medicinal Products for Human Use has recommended that of the drug 0.5mg daily be approved as a second-line therapy in patients with highly active relapsing-remitting MS. Based on a colossal clinical trial, which showed that it reduced the rate of disease relapse by 54 percent compared to placebo and cut disability progression by a third, Gilenya is the only pill proven to be twice as effective at improving relapse rates as a standard intramuscular injection.
Breaking boundaries Canadian harmony? According to a report published by the Canadian Center for Policy Alternatives (CCPA), efforts by Health Canada to harmonize standards for prescription drugs have, so far, been putting private proﬁt ahead of public health. The report, claims that the agency has been “deliberately ignoring” harmonization efforts that would raise standards while working with the drug industry to lower drug safety standards and speed new drugs to market. Amongst other examples, the agency has been explicitly rejecting developing standards for the length of time it takes between receiving a report of an adverse drug reaction and when that report has been analyzed and posted on its website. Regulatory harmonization, as stated by the study’s author Joel Lexchin, “needs to be undertaken in the interests of public health, not private proﬁt.”
Abbott Laboratories, Johnson & Johnson and Pﬁzer are among the ﬁrst US drugmakers to sign up for a new public/ private sector partnership in healthcare agreed between China and the US. Organized around the US healthcare industry’s strengths and government capabilities to foster long-term cooperation with China in the areas of research, training, regulation and the adoption of an environment that will increase accessibility to healthcare services in China, the Healthcare Partnership Program will provide China with “an important private sector resource to draw from to help with key development issues, while also identifying for US companies projects that have been designated priority development projects by China,” according to Leocadia Zak, Director of the US Trade and Development Agency.
Not so hungry Go with the ﬂow The UK’s National Health Service (NHS) “must embrace value-based competition if it is to meet the future needs of the public it serves” said Health Secretary Andrew Lansley on the subject of the government’s plans to modernize the NHS. As it stands, GPs are now expected to control their budget under the belief that they are better placed to direct resources where they are needed and less likely to waste them. Lansley reckons that in embracing change, providers that deliver excellence will beneﬁt from more patients choosing their service, while those that do not will have a strong incentive to change and improve. “Our plans to modernize the NHS will ﬁnally bring the power of competition to healthcare. Not a free-for-all race to the bottom, but a race for quality, for excellence and for efﬁciency,” he said.
Hungary’s program of economic reform, to be announced this month, could include cuts totalling around 30 percent to the national drug reimbursement bill, according to the government. Gyorgy Matolcsy, the Minister for National Economy, said savings of as much as $490 million are possible on spending by the national health insurance fund (OEP), whose drugs bill was over $1.7 billion in 2010, ﬁve percent more than planned for the year. However, Analysts at HIS Global Insight point out that “a fairly signiﬁcant number” of innovative drugs are reimbursed in Hungary, and the possibility that reimbursement of these could be either reduced or cut completely would represent “a very negative prospect” for pharmaceutical companies operating in the country.
Out in the open The controversy surrounding Servier’s withdrawn diabetes drug Mediator and its possible link to up to 2000 deaths, a story that has engulfed France in the past few months, is blazing on. The trouble began in November when the French health agency CNAM said that Mediator, which was withdrawn in France a year earlier, had caused 500 deaths in the 30-odd years it had been on the market. However, a government agency is now saying that the drug, linked to heart damage, was the cause of up to 2000 deaths and should have been pulled from the market 10 years ago, when several EU countries and the US had withdrawn the treatment. The privately owned group have indeed acknowledged that Mediator was associated with a “true risk”. The battle continues.
ﬁzer has entered into a deﬁnitive agreement to purchase Ferrosan’s consumer healthcare business, which includes dietary supplements and lifestyle products, from Altor 2003 Fund GP Limited. Based in Copenhagen, Ferrosan is an innovative and long-established consumer healthcare company in the Nordic region with a portfolio of leading brands. “Ferrosan is an excellent strategic ﬁt that strengthens our presence in dietary supplements with a new set of compelling brands and product pipeline. The transaction will mark an important step towards expanding Ferrosan’s brands through Pﬁzer’s global footprint. As an immediate result of this acquisition, we will gain greater distribution and scale for Pﬁzer’s well-known brands such as Centrum and Caltrate in Ferrosan’s regions,” said Paul Sturman, President of Pﬁzer Consumer Healthcare. Conﬂating that, Ola Erici, President of Ferrosan, said: “We are very pleased that Ferrosan’s innovative portfolio of leading brands will be joining Pﬁzer. We expect that, as part of the Pﬁzer portfolio, our products will build on their industry-leading positions and become available in more countries around the world.” The transaction is expected to close during the second quarter of 2011.
Top 10 websites driving consumers to ask for prescriptions
harmaceutical market research ﬁrm Manhattan Research recently released ﬁgures exploring the online behaviors of ePharma Consumers in the US. Whilst they found that 74 percent of all consumers then went on to conduct a productrelated action afterward, we thought the top 10 products searched provided a much more concise picture of what’s really consuming consumers. 1. Levitra: Erectile dysfunction: GSK, Bayer and SP 2. Chantix: Smoking addiction: Pﬁzer 3. Cialis: Erectile dysfunction: Lilly ICOS 4. Nexium: Proton pump inhibitor: AstraZeneca 5. Yaz: Birth control: Bayer 6. Lyrica: Neurpathic pain and partial seizures: Pﬁzer 7. NuvaRing: Contraceptive: Merck 8. Symbicort: Asthma and COPD: AstraZeneca 9. Viagra: Erectile dysfunction: Pﬁzer 10. Lunesta: Sedative: Sepracor
COMPANY INDEX Q1 2011 Companies in this issue are indexed to the first page of the article in which each is mentioned. Accenture Amgen Bioquell Brass and Ivory Capgemini Corning Life Sciences Dividella Dr. Reddys Eli Lilly ERT Escort Data Loggers Finesse Frost & Sullivan GE Healthcare Grace Headshift.com Hufﬁngton Post IDA Ireland IMS Health Johnson & Johnson Kinome Scan Management Dynamics Marina Bay Sands Singapore Medici Global Medidate Solutions Worldwide Merck Serono MPI Research Navigator Consulting Services New Orleans CVB Norwich Clinical Research Associates Novartis Nycomed Pﬁzer PhRMA Private Access Roche Siemens Siemens AG Taconic The Missouri Partnership Thermo Scientiﬁc Total Flow Ubichem Waters Xceleron
68 59 88, 89 100 43 84, 85 36, 37 15 100 72, 73 75 46, 51 78 86, 87 IFC 100 32 6, 64 104, 105 48 4 70, 71 20, 21 61 13, 63 90 10, 56, 57 44, 45 112, 113 23 38, 100 65 32, 100 32 100 100 54, 55 96, 97 98, 99 120, IBC 8, 67 94 2, 52 81, 82, OBC 76
Don’t Miss… Maik Klasen mapping out the second wave of emerging markets on p. 78
The CFO: more than just ﬁnance Why the CFO role is increasingly seen as a career destination in its own right, not just a staging post to the role of CEO.
Financial crisis elevates role Over 60 percent of CFOs have seen their standing within the organization elevated in the past three years. In part this is due to CFOs aligning the ﬁnance function closer to the business but also because the ﬁnancial crisis has resulted in an unprecedented demand for the unique perspective and discipline of senior ﬁnance professionals to guide the business. The report also highlights a shift in the perception of the ﬁnance function from outmoded “business prevention units” to an enabling partner to the business. For many CFOs, the acid test is the extent to which business managers consult them for advice on key aspects of strategy. Just over half of those CFOs surveyed agree that this now takes place routinely. CFOs are also ﬁnding that they are taking on more operational responsibilities, mainly in the IT and property functions, which is natural given their ﬁnancial discipline and management strengths. However, Les Clifford,
Strategy co-pilot The report updates the now clichéd story of the CFO’s migration from ‘scorekeeper’ to ‘strategic advisor’, by seeking to clarify exactly what strategic contribution means for the CFO: 35 percent of the CFOs questioned believe they make an active contribution to developing and deﬁning the overall strategy for their company. But the majority of respondents say their contribution focuses on providing insight and analysis to support the CEO and ensuring that business decisions across the business are grounded in sound ﬁnancial criteria. “CFOs see their role as going beyond being an ‘information provider’ or ‘aggregator-presenter’,” says Clifford. “Their commercial understanding and analytical skills mean that this element of their role is a vital part of understanding how different decisions will lead to certain outcomes.” But while CFOs are reveling in their newly elevated role, they are also coming up against the challenge of carefully balancing the development of company strategy with the renewed focus on fundamentals brought about by the ﬁnancial crisis. CFOs identiﬁed cost management, risk management and cash ﬂow as their top three business priorities in the wake of the ﬁnancial crisis. For almost four in 10 CFOs, this means they are not spending as much time on strategy as they would like. In addition, CFOs are under greater pressure to be the public face of their company but recognize the need for investment in building stronger connections with a number of their key external stakeholders. Less than half of respondents say that their relationship with investors is good or excellent, while just 21 percent say the same for their relationships with governments and 25 percent for their relationships with the media. Asked where they needed to enhance their skills and knowledge, respondents pointed to communication and inﬂuencing as the most important area for improvement.
new report by Ernst & Young, The DNA of the CFO, challenges the assumption that all chief ﬁnancial ofﬁcers are aspiring chief executive ofﬁcers and instead ﬁnds that the majority see their role as a vocation of its own. Of 669 CFOs interviewed by the Economist Intelligence Unit for Ernst & Young, 73 percent saw their role as a career destination of its own with just 10 percent aspiring to be the CEO. The study also highlights a broadening of the CFO role beyond ﬁnance fundamentals, with the potential to inﬂuence corporate strategy and drive business change to such an extent that most enjoy a high level of career satisfaction. Almost two-thirds of respondents said they now act as the face of their company on all ﬁnancial matters and performance, with a similar number agreeing that since the ﬁnancial crisis, the CFO’s key priority is to increase ﬁnancial trust in their business.
Chairman of the Ernst & Young CFO Program, warns that for some CFOs, this dual responsibility creates a potential conﬂict of interest. “There is deﬁnitely a delicate balance to strike between being the objective, independent voice of the business and assuming a broader responsibility for operations,” he explains. “CFOs have a duty to maintain this independence and objectivity, and sometimes the need for growth and performance in their operation role can test this to the limit.”
Breaking boundaries As responsibility for one’s health continues to lean more towards the patient, companies are beginning to grasp the true potential of personalized healthcare. Here’s just a couple to look out for this year.
PRESSURE’S ON FOR NEW IPHONE APP
s you would perhaps expect, this year’s Consumer Electronics Show (CES) unveiled a host of new iPhone apps heading to market in the near future. From next generation digital scales to pointless yet completely addictive games, there was no doubting the attractive strength of Apple and it’s now legendary, if not sometimes controversial, app store. But one surprise that made its way into the spotlight was a new app from Withings – the company best known for its connected scales – who brought to the table their completely unique and innovative iPhone-connected blood pressure monitor. The idea is simple: plug the armband into your Apple device, dial up the gratis app and start the process. All of the data is logged on the user’s secure online space, and there’s even a secure sharing feature that’ll beam your abnormally high rates right to your frightened physician. Previous to this edition, a competitor had already released a similar product, but Withings truly breaks the mould with its lightweight, portable arm strap and innovative technology. As we enter the next decade, technologies that disrupt the standard protocol of data realization are surely going to be big news. Indeed, with the future of personalized healthcare in its embryonic form, apps like Withings will not only put the responsibility of healthcare into the hands of the patient, but will start to bring together different disciplines in the life sciences sector and allow for a new interpretation to take form. As for the app itself, watch this space as GPs around the US start testing it when it comes to a room near them in the imminent future.
SEARCHING THE GOOGLE BODY
ot content with letting you spy on your neighbours with Street View or hover over far-away countries, Google has now developed a new browser that maps out the entire human body. Aptly named the Google Body Browser, the hi-tech, 3D application has been hailed as a breakthrough in the study of anatomy that could revolutionize our understanding of the human body and even fast-track medical research. Whilst the tool is yet to be ofﬁcially released, it essentially lets you explore the human body in much the same way you navigate the world on Google Earth. However, while it sounds like a positive step in the right direction, it could have potential ﬂaws. For starters, hypochondriacs are obviously going to have their paranoia raised once again when they start to invent their latest illness through the map – let alone the self-diagnoses that will lead to many thinking a trip to the doctor is now essential. Regardless, one thing is certain: it will educate. Whether you’re a teacher with a class of biology students or a lone-ranger looking to up your knowledge of the human body, Google has made sure that its avatar’s body is as interactive as possible. Users can dissect the human body to identify organs, bones and muscle groups. The body can also be turned, manipulated and stripped to the bare bones to show how each functions and connects. Google has even made sure that its body map can be used by anyone, no matter what platform they use to surf the internet. Using their WebGL-supported browsers or beta versions of Firefox and Google Chrome, the Google Body Browser is going to up the ante once again as another technology merging patients with the next generation of personalized healthcare and understanding.
s protests in Egypt’s Tahrir Square continued to heat up – changing the course of anger originally aimed at President Mubarak towards pro- and anti-change groups ﬁghting between themselves-staff at various pharma ofﬁces have been sent home and security bolstered to ensure assets in the emerging market are as protected as possible. Speaking to Medical Marketing & Media, Steven Campanini, Director of corporate media relations at Merck’s Egypt ofﬁce, said: “Our colleagues are safe and are working from home, to the extent that they can,” stating that the turmoil in Cairo hadn’t had any impact “in terms of the business.” Novartis, with several locations in Egypt – including pharmaceutical and consumer health divisions – producing 75 million medicine packets a year (and thus making it the country’s seventh largest manufacturing center), is certainly on the same train of thought as the majority of other ﬁrms, with Julie Mascow, a Novartis spokesperson stating: “To date, all Novartis associates in the country are accounted for. Most of Novartis’ premises in Egypt are closed, however, we are continuing essential operations to ensure the delivery of orders of lifesaving products.”
PHOTO FEATURE 31
As we march toward the anniversary of the signing of Obamaâ€™s US Health Reform bill, NGP takes a look at the key plays that afforded pharma its big win in the biggest possible arena.
REFORM RE-FORM Cover story.indd 32
COVER STORY 33
henever talks of the industry’s future security arise, the conversation inevitably boils down to the same topics: drying pipelines, stagnant innovation levels, increasing costs and overly stringent regulations. Of course, in a world being force fed an exponentially increasing population, largely subscribing to a disposable lifestyle fi lled with little thought for generations to come, you could be forgiven for thinking that the industry really shouldn’t be surprised about what’s happened – not that they’re at fault. And yet, it fi nds itself in a position that it saw coming but could do little about. With more complex models the only available avenues of interest, equating to longer timescales at far 32 million: The greater costs, the only way for pharma to progress is to dive estimated number head first into the melee and commence the unenviable of currently task of making a buoyant industry sail once again. uninsured And so it was, back in March 2010, that the then newAmericans who ly-elected President Obama signed the most important will receive pieces of paper the US population has held since 1960: the coverage under US Healthcare Reform bills. Largely seen as a victory for the bill pharma, at the time many analysts characterized it as a “double-edged sword” for the industry. Indeed, the new law expected to expand health insurance coverage to more than 30 million uninsured provide the industry with phenomenal growth in the pool Americans, but estimates of US customers. indicated that more than 20 Indeed, Alan Fram of The Huffington Post, just after million would still be without the announcement of the bill signing, even exclaimed: anything remotely resembling “Chalk one up for the pharmaceutical lobby” in relation the necessary, and needed, to the industry’s successful fending off of price curbs and health insurance. Regardless, other heft y restrictions. Now, depending on your perit was clear that a wealth of spective, you’ll either fundamentally agree or disagree newly insured patients would with the statements made over the following pages – but such is the nature of the beast when it comes to politics and pharmaceuticals. Either way, pharmaceutical lobbyists had managed to Republicans: win the new federal policies they coveted and set a trajecNo republicans tory for long-term industry growth. Privately, a handful voted for the bill have also stated that their biggest triumph was heading off Democrats: Democrats led by Rep. Henry Waxman, who wanted even 34 Democrats more money from the back pockets of pharma to fi nance voted against the the healthcare system’s expansion. At the time, Ramsey measure Baghdadi, a Washington health policy analyst who projected a $30 billion, 10-year net gain for the industry, said: source: CNN.com “Pharma came out of this better than anyone else. I don’t see how they could have done much better.”
Cover story.indd 33
$940 billion: The estimated cost of healthcare reform over the next 10 years
$143 billion: The estimated reduction in the deﬁcit from the bill over the next 10 years
Tanning tax. Yes, you read that correct: a tax for tanning. More precisely, a 10 percent tax on any form of indoor tanning. And if projections are to be believed, it is reckoned that by 2019, around $2.7 billion would be raised from the tax. But don’t worry – as far as we know, it’s still free to use the sun
Doughnut Hole: Under current law, Medicare stops covering drug costs after a plan and beneﬁciary have spent more than $2380 on prescription drugs. It kicks in again after an individual’s out-of-pocket expenses exceed $4550. It will close for good by 2020.
$53 billion: The portion of the $143 billion in deﬁcit reduction that comes from social security payroll taxes that eventually will be paid out in the form of retirement beneﬁts
$70 billion: The portion of the $143 billion in deﬁcit reduction that comes from premiums to be collected as part of a new government-run, long-term care program for the elderly. These premiums eventually will be paid out in the form of beneﬁts
Cover story.indd 34
$88,000: New health insurance subsidies would be provided to families of four making up to $88,000 annually, or 400 percent of the federal property level.
A solid statement for anything but a simple win. Indeed, shortly after the bill was passed, the Pharmaceutical Research and Manufacturers of America (PhRMA) gave their side of the story, saying: “The existing barriers to quality healthcare simply are not acceptable. Today’s important and historic vote in the House will help to expand healthcare coverage and service tens of millions of Americans who are uninsured and often forced to forego needed medical treatments. “Even as we support healthcare reform legislation, we continue to have concerns about a number of issues including the overly broad powers of a non-elected Independent Payment Advisory Board (IPAB), which could enact sweeping Medicare changes without actions by Congress and would not be subject to judicial or administrative review…Most importantly, we must also take steps in the years ahead to support critically needed innovation, ensuring future medical advancements and breakthroughs. Americans deserve no less. New, cutting-edge medicines have dramatically increased life expectancy rates all across our nation and allowed patients to live longer, healthier and more productive lives. We remain totally committed to seeing this progress continue, benefiting Americans for generations to come.” Of course, all focus should remain on the patients – both present and future – of America. But to understand just how important this ‘win’ truly is for the current face of pharma, perhaps it’s best to selfishly examine the advantages now enabled to an industry that has been served with continued and deepening layers of worry and hurdles to progression over the past couple of years, and contrast it against it’s nearest industry counterparts. For starter, health insurers are without fail the biggest losers in the reform. Where drug company stocks, namely Pfizer, Merck and Novartis, rose by about eight percent at the start of September 2010, UnitedHealth, Wellpoint and Aetna swung a colossal 26 percent share drop from the likes of Big Pharma. Another slap to the face of insurers across the US, the bill also now puts them in a position where they’re paying $6.7 billion a year in new taxes, distributed by their market share. But it’s not just healthcare insurers who have found themselves lugging new weight on their shoulders; the medical-device industry, perhaps worst-off relative to it’s size, has had to RSVP to a $4 billion-a-year hit. And, whilst their allies including John Kerry and Ben Nelson are likely to continue to scale back the tax somewhat, the hit certainly remains substantial. Meanwhile, back at the pharma ranch, Health Information Technology (HIT) companies got a boost from the stimulus package passed later in the year, containing about $20 billion in funding – no surprise considering the writing in of EMRs under Obama-care. Why is this important for US-based pharma? Well, EMRs equal more efficient practice and prescription on the doctor side, fundamentally meaning more efficient business and ultimately further profits for pharma in general. In the age of technology, combining healthcare and pharmaceuticals looks set to transform not just the doctor-patient
COVER STORY 35
dynamic, but also those between industries – a position pharma is pivotally well placed to exploit. But this isn’t something that sprung up on pharma firms out of the blue; they’ve know this day would come for some time and have worked hard to encourage its presence. Indeed, speaking back in February 2009, the then Chairman and CEO of Pfi zer, Jeff Kindler, said on the subject of healthcare: “We spend too much and get too little. We spend nearly $2 trillion on healthcare every year in America – the most in the world by far. Each year, we pay for 35 million hospital stays, 64 million surgeries, 900 million visits to doctors’ offices, and 3.5 billion medical prescriptions. The Congressional Budget Office says total US health spending could reach 25 percent of GDP about 15 years from now. That’s up from 16 percent of GDP today and less than nine percent in 1980. “In a strange way, there is good news here,” he continues. “The system has gotten so bad and the need for reform so clear, that we just might have a unique opportunity to fi x it. In fact, for the first time in decades, there is broad agreement across the political spectrum and the private sector on many elements of reform and on the urgency to act.” What Kindler was referring to is what many pharma heads and industry experts have leant towards calling a “transition from sick-care to health-care”. In this context, it’s not just in terms of fi nances where karma seems to have touched upon the industry – it might just have helped its public image too. Whilst most in the industry are aware of it, it’s not largely a talked about subject for obvious reasons – but public perception hasn’t been one of trust in years gone by, as theorists and anti-corporate activists have done well to entice people to continue to assume that pharma relies solely on keeping people sick in order to maintain profits. Now, with Obama’s health reform, the public – as a generalization – are beginning to see that it’s not about that. It’s about progressing the right medicines in the right context at the right time – and for the right prices. For the strap-line of “sick-care to health-care”, pharma has once again found itself in a position to turn adversity into advantage. But to ensure that it maintains its position, it’ll have to realize that the health reform is a long-term blessing. Tijana Ignjatovic, a healthcare analyst with the global market analysis company Datamonitor, noted some serious clouds on the horizon of short-term benefits for the industry, stating that the discounts and rebates offered will raise industry fees to create a market dip; combine that with the current patent cliff worries, and potentially tens of billions of dollars could be wiped from company sales. But from 2015 onwards, according to Ignjatovic, those negative effects will likely be offset by an increase in the number of insured people, resulting in an upsurge in drug consumption. Furthermore, the health reform legislation contains a provision that creates a pathway to enable to FHA to approve biosimilars – generic versions of biologic drugs. Unlike generic small molecule drugs, the complexity of biologic drugs makes it questionable whether a generic
Cover story.indd 35
company could produce an identical biologic product. With the new healthcare law, drug makers are granted a 12-year exclusivity period on biologics before they face competition from generic alternatives – a significant win for the industry, since the administration was in favour of a seven year exclusivity period. It’s here that the seas of agreement divide into two, between generics and the rest of the industry. For the former, the health reform was largely a disappointment, as Kathleen Jaeger, President of the Generic Pharmaceutical Association, points out: “Real reform could have expanded access to affordable medicine to patients in need,” keeping “affordable biogeneric medicines from patients for decades to come.” Regardless of the cases for and against the lobbyists and their outcomes, there is no denying that the pharmaceutical industry avoided many of the large potholes it was driving towards. The new laws don’t allow government intervention or drug pricing for Medicare, importation of lower priced drugs from abroad, or give government authority to limit drug price increases. The fi nal legislation also omits language that would have ended lucrative ‘payfor-delay’ settlements in which a brand-originator pays a generic company to delay bringing a rival product containing the same active ingredient to market. It is true that the real implications of the new healthcare reform may not be realized for some time, with Obama even stating that it could be up to four years before all reforms are fully implemented, but what is pivotal for the pharmaceutical industry is that they got what they wanted: security for the future. Yes, there is plenty of backlash at the sheer amount of money being offered by the industry into the reform; yes, there are many anti-pharmaceutical heads who still believe that drug makers profits have taken precedence over other, presumably more pressing issues. But considering the potential direction the reform could have taken pharma, there’s no doubting that it’s come out as one of the top players and set the standard for its next steps towards tackling future hurdles – with a little help from corporate karma, of course.
“We spend too much and get too little. We spend nearly $2 trillion on healthcare every year in America – the most in the world by far. Each year, we pay for 35 million hospital stays, 64 million surgeries, 900 million visits to doctors’ offices, and 3.5 billion medical prescriptions”
ASK THE EXPERT
Part and parcel As drying pipelines continue to constrict ﬂow into the industry, Dividella shows how efﬁcient and innovative packaging can, quite literally, put you back in the driving seat.
T Dr. Manfred Zurkirch is Managing Director of Dividella AG, which he joined in 2006 from a leading Swiss technology group, where he was Business Unit Manager, and previously VP of Marketing and Sales. His expertise covers the capital equipment industry, and through his extensive sales activities he has an excellent knowledge of international markets.
he dynamics that we have been observing over the last few years in the pharmaceutical industry are probably greater than in most other industries. On one hand, it is the often cited patent cliff that makes pharma executives nervous. They have to manage big expectations from the market to revitalize that pipeline with new products, which they develop themselves, licence in or buy in with an acquisition. Oft en times the pipeline per se would still be all right but to get the products approved is getting more and more challenging. Drug approval agencies like the FDA have ever increasing requirements for new drugs. Either they have to be fi rst in-class for unmet needs or they should show substantial cost/benefit improvements over existing drugs. On the other hand, the pressure from governments to bring down healthcare costs will grow even more in the years to come. In the aftermath of the fi nancial crisis, most governments have no leeway at all to spend more money than absolutely necessary. In this environment pharmaceutical companies, of course, work on both their revenue as well as their cost side along the whole value chain. Naturally, this also involves production and packaging of the drugs. One obvious opportunity to generate new business and to contain costs is the move into emerging markets. Hence, many big pharmaceutical companies bought local production facilities to transfer their products from the developed world or to get immediate access to new, strongly growing markets for products addressing therapeutic areas like diabetes and cardiovascular. Such acquisitions often times also helped to diversify into areas like generics and to have a sales organization readily available. In order for this move to be as smooth as possible, the packaging solutions and the corresponding packaging equipment have to easily enable life-cycle management.
Product transfers always involve adapting production capabilities because variability generally increases when different sites or part of their production plan are consolidated. Since there are less and less big volume blockbusters, the old maxim ‘one packaging machine per product’ does not apply anymore. Ideally, the packaging concept and the equipment are ready to package a whole variety of different dosage forms. Today it is not unusual for the production department to run ampoules, vials, syringes, alcohol swabs and, of course, all kind of patient information on one single line. With such fl exibility, it is easier to do more on less equipment and to make sure capacities are utilized well. It goes without saying that swift format change over is crucial to get a good Overall Equipment Effectiveness, which in turn is the biggest cost driver in production. In state of the art packaging facilities it is today certainly the norm to change, for instance, from a presentation containing a vial, an adapter, a syringe, an alcohol swab and a booklet to a presentation containing five injectors in about 45 minutes (this does not include line cleaning). Additionally, modular and f lexible packaging equipment solutions – like those Dividella in Switzerland offers – address the uncertainties of today’s pharmaceutical market, be it in the developed or emerging markets. It is less and less predictable if a product is going to be approved by the regulators. And even if it is approved, there is no guarantee that the market will fully embrace the new product in its chosen presentation. Under these circumstances asset protection is vital. In other words, the existing equipment, which was bought for a specific product for example, should be capable of being retrofitted for other products. In recent years, we can clearly confirm this trend, since about 50 percent of all our packaging lines have been retrofitted for one reason or the other.
Setting a new course
BIG INTERVIEW 39
As the industry prepares to tack for its biggest change in course to date, new ideas and leaders will inevitably prevail – but few will match the talent of the man Novartis is counting on to take the company through the challenging waters ahead.
hen Daniel Vasella announced in January of last year that he was stepping down after 14 years as CEO of Novartis, all eyes were glued to then COO Jörg Reinhardt, who was tipped as hot favorite to ascend to the top job. Had those eyes been fi xed elsewhere, they might have noticed the company’s Pharmaceuticals Division Head, Joe Jimenez, working away in the background with his usual sagacity and passion – giving no indication he was about to take the helm of the company. For the successful former Head of Novartis Consumer Health, and former Head of North American Business for H.J. Heinz Co., life had just cranked up yet another gear. Indeed, the choice of Jimenez as CEO also cranked up Novartis shares, as analysts reacted positively to the unexpected appointment. Shares closed the eventful day 2.06 percent up on the Swiss Stock Exchange – with the board later proudly stating that they selected Jimenez on his “outstanding performance track record, broad international business experience and ability to provide direction, align and engage people”, with Vasella also quick to note that: “It’s not a decision against anybody; it is a decision for somebody”. With the rate of change crashing through pharma’s business models, Jimenez certainly has past experience on his side. “In consumer packaged goods,” he begins, “you learn early on how important it is pay attention to how your external environment is changing because it changes very rapidly. That same lesson is absolutely applicable to the healthcare industry, particularly now as the industry is going through so many changes. You need to be able to look externally and see how regulators are changing, how payers are changing and how physicians are changing the way that they practice – that is without a doubt applicable across both industries. Another area is around the importance of innovation. Innovation drives consumer packaged goods’ growth, which is true in healthcare too.” Of course, we’re all explicitly aware of the need to foster new and open innovation in the life sciences sector, so it would make sense to appoint someone who spent their younger years learning precisely how to do just that. “Healthcare is going to be a place where innovation will be critical for the next 10 years. Th is is an industry that has fundamentals that are going to lead to increased demand for healthcare,” continues Jimenez. “If you look at the ageing population and chronic illness increasing around the world – even in the emerging markets – there’s going
to be an increased demand that will require innovation to deliver on those needs.”
Branching out On the discussion of innovation in healthcare, Jimenez has an avid interest in one of the more transparent and technological innovations lapping at the shores of the life sciences sector – the infant world of telehealth. After all the debates, testing and calls for funding – especially since the beginning of health reform – the Obama administration has fi nally sat up and taken notice of its potential, pumping $795 million into broadband implementation and the progression of telehealth technologies throughout the nation. With a further $200 million coming from private investment, there’s no doubt that the rules of attraction for both healthcare providers and pharma companies will change – a point Jimenez agrees with whole-heartedly. “There are trends that are converging in healthcare today that are going to make telehealth a new growth area in the next five to 10 years,” he says. “Specifically, if you look at the increasing demand for healthcare – it has to be delivered somehow, but governments are strapped due to the fi nancial crisis. Everybody’s looking for ways to improve patient care but at the same time lower total cost, because you’ve got governments around the world that are looking for ways to reduce costs, and that’s an incentive to invest in telehealth. At the same time new technologies are emerging that are going to better enable telehealth. “When you look at some of the pilots that are starting around the world on remote patient monitoring and you see how keeping patients out of the hospital and reducing visits can lower total healthcare costs, there is no escaping that this is going to be a new growth area in the future. At Novartis, we are looking at ways that we can bring new technologies in to help lower total cost and improve patient outcomes.” One of the technologies Jimenez talks of is a new iPhone app called Vax Trak, developed to help families track routine immunizations for their children. “If you think about that in terms of helping ensure compliance with vaccination regimens,” reveals Jimenez, “that’s one way that you can use technology to help improve overall patient outcomes.” It’s clear from the interests and attitude of the new CEO that he is comfortable stepping out of his comfort zone and experimenting with the new and innovative. But it’s not only in his professional life that this rule of thumb pervades. Having moved from the US to the UK to serve as President and CEO of Heinz in Europe in 2002, and then to the Novartis HQ in Basel, Switzerland in 2007, he has had to learn the intricacies of adapting to new cultures – a seeming talent for the Californian graduate.
Adapt to change “Growing up in the US, you don’t appreciate the differences within Europe. In fact, there is no ‘Europe’. Every country is different in terms of the culture. It’s different in terms of practices, consumer behaviour and patient behaviour. One of the adjustments that my family and I
had to make was to get into the local level and understand the traditions and customs and how either business is done or how people behave. It as quite an interesting experience and I think it’s one that many Americans don’t appreciate until they live in Europe.” Of course, the same can often be said for Europeans in the context of American culture – a sentiment that Jimenez is too much of a gentleman to admit. Yet the point remains that the transition to a different culture can be a shock to the system regardless of the context – so how did he cope with ensuring a smooth transition from head of pharmaceuticals to CEO of a whole company? A calm and collected Jimenez insists that is has been “a very natural transition”. “I feel like my time running the pharmaceutical division helped me create a very clear picture of how we want to move Novartis forward,” he says. “I came into the pharmaceutical division at a time when the industry was changing very rapidly. We had to modify both our approach to developing new drugs, and also our commercial approach – that helped me get grounded in what has to happen over the next five years to enable Novartis to become the most successful and respected healthcare company in the world.” That statement alone is enough to give you a taste of where Novartis wants to go and what is expected of Jimenez. But where most would wince under the pressure, the former US collegiate swimmer takes it in his stride, drawing on the discipline he learnt through hours of laps and shaving milliseconds of his personal best at swimming meets. “All of those years of training really shaped my view of how you should run a business and how you should set a goal,” reminisces Jimenez. “Work very hard to deliver on
that goal and then celebrate the success by the time you’re done. Hard work is defi nitely part of competitive swimming and that’s carried through.” And while his days of competitive swimming have been replaced by competition in the business world, the taste for hard work and dedication to succeed certainly haven’t left him – and neither has his ability to adapt. “My management style did have to change when I moved from division head to CEO, primarily because as CEO you are implementing and executing change through the division heads as opposed to doing it yourself with your functional leaders such as marketing, sales or human resources,” he explains. “The style that I have adopted as CEO is, number one, to set the long-term vision. That includes where we are trying to take Novartis and what our strategy should be for continuing to extend our lead in innovation to drive growth and improve productivity. The question that remains is how we’re going to execute that: set the picture and then make sure that the rank and file in the organization understand that and what their role is in helping us to deliver that future; so it’s quite a different management style.” “I like to listen to a lot of our people up and down the organization, so I frequently pull together groups of managers at all different levels and we’ll undertake a session where we talk about what’s working, what’s not working and what’s on their minds. It also gives me a chance to articulate my vision for where I want to take the company and then they can go off and talk to their associates in the company and help spread the word that way.” Which is precisely what happened back in 2008 with
“The style that I have adopted as CEO is, number one, to set the long-term vision. That includes where we are trying to take Novartis and what our strategy should be for continuing to extend our lead in innovation to drive growth and improve productivity”
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Project Forward – an initiative to cut back on costs while pushing the company forward. Not only did the fi nances of the company need to shift to accommodate this, but so too did its culture and attitudes. With the success box ticked ahead of schedule for that initiative in 2008, Novartis has continued to stride forward, hitting metrics and improving the fi nancial climate for Novartis. But as Jimenez points out, it was never just about cost savings. “It was also about changing the way we operate. One of the things that I did in the pharmaceutical division was streamline decision-making to eliminate a number of committees and layers of decision-making, which helped accelerate some of the key decisions that had to be made to move the business ahead. We also changed our commercial model in a number of countries away from the old pharmaceutical model, which was mirrored field forces that called on physicians, to more of a geographical approach that was consistent with where physicians and payers wanted us to go.”
Watch and learn But as anyone with a knack for recollection can track back, 2008 was the year of regulatory bombardment: the economic downturn, further confi rmation that the pipelines were indeed drying up and the sound of purse strings being tightened all enticed an excessive amount of regulation to enter the industry. Fortunately, Jimenez reckons the upturn is on its way, with the regulatory environment taking more of a positive outlook on the industry and all it guides. “If you look at what’s happened with the FDA, Peggy Hamburg coming in as FDA Commissioner has had a significant effect on drug evaluation. It’s less of a political process than it used to be and is now more based on science and the facts. The FDA is still very tough on new drug approvals, but the rules are now clearer than they were a few years ago with the new leadership, so I’m rather encouraged by the trends that I see in the regulatory environment. It doesn’t mean that it will be easier to get new drugs approved, but it does mean that the rules of engagement are transparent – and that’s a far better environment than if the rules were not clear. Th is idea of transparency is certainly being taken on board by the pharma world at large – no doubt through necessity above all else – as innovation moves off the horizon and into the proverbial foreground, so it comes as little surprise that the FDA is taking steps to ensure it mirrors the change in environment. “I do feel that the FDA believes that innovation is key to driving the overall industry,” asserts Jimenez. “Once the patents have expired, generics play a very important role and I think the FDA has realized that. They have also realized that biosimilars are going to be an important part of the future as the biologics that are currently marketed start to lose patent protection. We’re starting to see a clearer pathway to get biosimilars approved and launched, particularly in the US. That’s extremely important for Novartis as our Sandoz division,
which is our generics division, is a leader in biosimiliars around the world.” The potential worry for the Sandoz division, however, is that the competition for the generics market is becoming far more aggressive – especially for research-based companies – forcing uncharacteristically tactical moves for some of the smaller, less competitive R&D fi rms. But for Novartis, Jimenez stands firm on how to grasp security for the long term – and as usual, it all comes back to the basics. “The key to continuing to build on innovation is to invest heavily in R&D and to fi nd the right scientists to ensure that your pipeline is strong,” offers Jimenez. “If we can deliver medicines that provide more than just a small incremental benefit, that really deliver on unmet medical need and allow us to protect those with intellectual property, that’s our best defense against generics”. It’s safe to say that Novartis has one of the strongest pipelines in the industry, but for Jimenez that doesn’t prove anything when it comes to research. “I’ve also made the commitment to keep our spending in R&D at the high end of the industry. Today, we spend about 17 percent of total sales in R&D across the whole company; if you look at just the pharma division, that number is 20 percent of sales, so we really are leaders in the industry in R&D, and that’s the way we’ll continue to innovate.” But in order to do that, the multinational company will need to keep an eye on downward pricing pressures and a change in customer base – another flashback to the environment in the 2008 market, which Jimenez believes has intensified since. “If you look at the debt crisis, governments in Europe have recently initiated significant price reductions on pharmaceuticals because they are debt strapped. They are looking for ways to lower the total healthcare burden. I continue to believe that the ‘old days’ in pharmaceuticals – where virtually everything was automatically reimbursed – are gone. “We now have to take a different approach to pricing. We have to take more of an outcomes-based approach and help governments and payers around the world to pay for those drugs and new medicines that are going to deliver on unmet medical need. Right now, we’ve entered into a number of agreements with payers that are what we describe as ‘innovative pricing mechanisms’, where the payer is starting to pay on the positive outcome as opposed to paying on the transaction of purchasing just the pill. That’s going to be one of the biggest trends over the next 10 to 20 years, so we’re making sure Novartis is ahead of it.” And for the time being, it’s a case of so far, so good. Collaborating with the Swiss Tropical and Public Health Institute, The Scripps Research Institute and the Genomics Institute of the Novartis Research Foundation, Novartis announced back in September that it had discovered a novel compound that shows significant promise as a next generation treatment for drug-resistant malaria – and that’s just the tip of the iceberg. For the new CEO, the times they are a changing; and Jimenez couldn’t be happier about it.
ASK THE EXPERT 43
Closing the loop As pharmaceutical companies are embracing the idea of closed-loop marketing, many are failing to realize its full beneﬁts. Omar Chane, a Vice President in Capgemini Consulting’s life sciences practice, examines how companies can succeed and generate value by closing the loop.
n recent years, the term ‘new commercial model’ has emerged as buzz in our industry. As pharmaceutical companies have developed their own interpretations on this theme, varying business strategies have resulted, including key account management, marketing resource management, regionalization, multi-channel digital marketing and customer centricity among others. Closed-loop marketing (CLM) is arguably one of the more concrete and tangible strategies being pursued across the industry with the potential to secure efficiency while enhancing effectiveness. As a point of defi nition, CLM refers to a company’s ability to enhance customer intimacy by adjusting its marketing tactics, messaging and/or channels in a real-time or near real-time basis, based on insights generated through every customer interaction. Most of our industry’s main players have implemented CLM-based programs. However, evidence indicates that these initiatives fall short of full CLM. Given its promise, why are so many companies failing to take full advantage of all that CLM has to offer? It begs the question: Are you really closing the loop? While there is an upward trend in the use of technology to transform the sales force, it is estimated that only a quarter of the companies implementing such programs are doing so as part of a true CLM strategy. Moreover, closing the loop has proven to be particularly challenging given the volume of data collected, while other hurdles, such as complex existing business processes and increasingly stringent copy review requirements, further complicate the realization of CLM’s benefits. An effective closed-loop marketing strategy starts with the customer or customer segment. A company needs to defi ne and optimize its channel mix based on its customers’ needs and pinpoint meaningful and relevant interactions that can bolster the company’s share of voice and share of market. Key internal business processes need to be redefi ned and redesigned.
Companies can create a comprehensive CLM Cycle with focus in five critical areas: • Collect & organize: Smart data management and intelligent reporting relies on accurate information on customer interactions across channels. • Analyze: Convert massive amounts of data into actionable, tangible customer insights through holistic analytics. • Make it real: Continuously tailor and reposition content or generate new content based on customer analytics and channel preferences. • Play by the rules: Ensure continued compliance by redefi ning review processes to meet the demands of more customized content. • Broadcast effectively: Promote using intelligent content management and distribution systems across highly integrated channels, delivering selective content to specific customers most likely to engage. A major transformation in the industry is the shift from the sales force as the primary channel to a multichannel approach focused on different customer segments. Pharmaceutical companies are gearing up to be relevant online and across social media outlets to anticipate and respond to customer feedback, questions and issues. The most crucial aspects of successful CLM execution exist at the organizational level. Every commercial function in a traditional pharmaceutical organization model would face some degree of change to enable CLM. Alignment from executive leadership and internal stakeholders, including the sales force, in support of a shared vision of CLM is required for early success and to bring it to maturity. In addition, closing the loop early on is an important first step to adopting it on a large scale. These core building blocks can lay the foundation for CLM and a new model of success through customer focus and responsiveness. Capgemini Consulting is among the world’s leading advisors to the pharmaceutical industry, offering management consulting services to drive strategy formulation and accelerate the transformation of life sciences companies.
Omar Chane leads Capgemini Consulting’s marketing transformation practice, advising global pharmaceutical and biotechnology companies in the areas of corporate strategy, franchise strategies, early commercialization and sales and marketing operations. Capgemini Consulting specializes in designing and implementing successful closed-loop marketing strategies for the pharmaceutical industry
What’s your company’s innovation quotient? As innovation in the industry evolves to become all-encompassing, Navigator’s George Henderson invites a new train of thought to realign culture and push the envelope towards the next generation of innovation success.
he pharmaceutical industry is changing. There are enormous pressures to develop new drugs, cut costs, reengineer processes and segment the value and supply chains based upon complex and sustainable customer and supplier relationships. Success in the past is no guarantee of success in the future. Considering these developments, do associates view innovation and change as a source of job security or a reason for mutiny? Innovation (as discussed here) does not refer to Research and Development. It refers to the cultural ability to align associates and draw from their diverse views to form creative concepts and solutions. It refers to those associates’ willingness to participate in and support those solutions. Th is competence can be defined and measured as a company’s Innovation Quotient (IQ). The ‘Innovation Gap’ occurs when some are making bold and necessary choices while others are protecting fiefdoms or clinging to the past. Th is cultural clash creates delays and waste, erodes value and threatens survival. An organization’s ‘IQ’ has four perspectives that can be remembered by the acronym IDEA: insight, decisionmaking, engagement and alignment. Insight refers to the company’s internal and external scanning skills. Decisionmaking speed and accuracy depends upon people’s knowledge and empowerment. Engagement and execution is best accomplished by enrolling people in their own solutions. Alignment with strategy is achieved through cascaded objectives, measures and initiatives aligning four functions of performance: strategy, fi nancial planning, business execution and operational excellence. Based on these perspectives, if we were to measure where a company fell on the spectrum of innovation, it could be described by one of four innovation profi les. Ships Adrift float on past success and are poorly positioned to respond to threats or opportunities. Cruise Ships have a few individuals setting direction and making course adjustments. The remaining are ‘intellectual passengers’. Change is presented like a destination brochure rather than a roadmap for associates to follow. Merchant Marines empower associates to effectively and efficiently deliver existing services to existing customers, having ownership and making course corrections. Navigators are those innovating new products, markets, and ways of doing business. The Innovation Gap accounts for the resistance that causes many change initiatives to fail. Closing the gap is more than a feel-good experience. When a company is changing its business model, survival can depend upon it.
Apply the Six Sigma DMAIC method to close the Innovation Gap. • Define: Defi ne the attributes of the four IDEA perspectives: insight, decision-making, engagement and execution, and alignment with strategy. • Measure: Set specific examples of each attribute that might represent the behavior expected from a Ship Adrift, a Cruise Ship, the Merchant Marine, and from Navigators. Th ink of specific examples from the four functions of performance: strategy, fi nancial planning, business execution, and operational excellence. Assess and compare senior executives, middle management, and line supervisors and their organizations. • Analyze: Compare the three groups, noting gaps and exploring root causes. Th ink in terms of the impact a specific change initiative may have and what corrective actions are appropriate. • Improve: Set objectives, measures, and performance scorecards to address and close gaps. • Control: Set acceptable standards of behavior for each of the attributes. Using working teams from strategy, fi nancial planning, business execution, and operational excellence, along with the internal customers of these groups, develop specific examples for each attribute that represents unacceptable; acceptable but average; and exemplary performance. Also, defi ne response plans for attributes that are out of control. Understanding your company’s Innovation Quotient and identifying its Innovation Gap is critical to success and growth. The process of defi ning its attributes, setting standards, and establishing controls has enormous cultural impact. Associates themselves are setting the standards and determining how they will be enforced. By identifying the affected areas before a change initiative gaps in understanding, incentives, and alignment can be isolated and corrected before the ship is in the storm.
George Henderson, Senior Partner with Navigator Consulting has helped clients save more than $150 million since 2002. He has led tough business transformations including M&A, restructuring, outsourcing, shared services, and business process reengineering. Formerly a nationally recognized rugby coach, Henderson has 25 years of experience in consulting, Activity Based Costing, Lean Six Sigma, Balanced Scorecard and change management.
LOST BATCHES – NEVERMORE: RAPPING ON THE DOOR OF SENSOR TECHNOLOGY
Although the authors’ do not have statistics or a study to show the cause of the bulk of failures in single-use bioreactors, it is their strong feeling that the largest majority are collectively due to sensor failures, contamination from leaking aseptic connectors, and overpressure in the bags. Th is feeling is a result of many conversations with bioprocess engineers and listening to their detailed ‘Poe like’ monologues and tales of woe. In order to illustrate the potential of a bio-process engineer to slowly descend into madness over measurement inaccuracy and drift , we have liberally borrowed from the ancient Greek and Roman form called elegiac paraclausithyron, and parodied a poem that the general readership shall recognize from their high school English class.
Once upon a midnight dreary, while I measured weak and weary, Over many a port and sample of pure bioprocess lore, While I plodded, nearly napping, rapidly there came a tapping, As of something loudly rapping, rapping at my filter latch. `'Tis some built up foam,' I muttered, `knocking at my filter latch Only this, and not a scratch.'
Despite these recurring issues in bioprocessing the push for testing of new technologies, let alone their adoption, is surprisingly slow. Simple issues like the use of the units of ‘% Sat’ that exist in no other industry and continually mislead operators are a mainstay. Other simple tests – like calibrating probes multiple times to understand their repeatability and consistency are rarely performed, while SOPs dictate accuracy numbers that are difﬁcult to achieve - even by NIST. It is no wonder that a lost batch often seems like a late night visit from the Raven. The only question remaining is whether the Raven is actually new sensors, and the devil in bioprocessing really the act of clinging to dogma and process tradition that has its roots in 1950’s electrochemistry? Perhaps by adopting next generation single-use sensors that are pre-sterilized and pre-calibrated, the ‘new’ poem could have more of a Walt-Disney like ending? Let’s read on and return to the rhyming scheme of the original opus.
NGP_New Poem.indd 46
Ah, distinctly I remember it was in the scale-up transfer, And each separate bioreactor had a perfect turn-down match. Good control I always treasured; vainly had I off-line measured Both pH and DO values – values from my culture batch – Had large drifts and variations that would kill my first fed-batch – And from me my titer snatch. Thus my two-point calibration with my temperature compensation Scared me – filled me with fantastic terrors never felt before; So that now, to still the beating of my heart, I stood repeating `'Tis the membrane; no, my units, or a grounding wire mismatch? Or some bubbles, oh so noisy! New DO probe I dispatch – That will save my ailing batch!' Suddenly my foam grew larger, something went wrong with my sparger, `Cells please grow and please don’t die, we’ll add some antifoam' said I, As I slowly started pumping, strong surfactants caused cell clumping, Clogged my sensors filters, tubing, even deadbands couldn’t catch, Ever-sinking DO levels, then my process met its match – Yes, I finally lost my batch. Deep into that darkness peering, long I stood there sulking, fearing, Doubting, dreaming dreams of how my sensors I could soon dispatch; Kleen-pak leaking was the reason, cells all died – it felt like treason, By the sensors I had trusted, autoclaved without a scratch. As I pondered, something murmured in my ear the word `TruFluor!' Only this and nothing more.
SENSOR TECHNOLOGY 47
Now a new bag fast inserting, all my soul within me burning, Tubing welding, media pumping, heating, gassing as before. Then I saw it squarely, surely, something in my sensor port? Black and short and tightly fitting, in my port was this TruFluor Let my heart be still a moment and this mystery explore; ‘Tis a port plug, at the fore! Then I saw a piece of paper, thought it was some kind of caper, Read this was a novel sensor, USP Class VI and more “Has no drifts, no variations, that QA calls deviations”. So I went and found the “reader” that was lying on the floor, Slid it in the black plug fitting, added cable, not a chore, Pressed the “factory cal restore”. `Prophet!’ said I, `you bedevil! Accurate with good noise level! By that Heav’n that bends above us – reading stably that I swore! Tell this soul with sorrow heavy how so fast you can be ready? Why are you immune to bubbles that other sensors abhor? Finally a DO reading that I trust and don’t ignore?’ Quoth the sensor, `Evermore.’ `Be robust in all your readings, optics rule!’ I shrieked believing `Make thy background reading zero, just like Night’s Plutonian shore! Hold you true self-calibration, post your gamma radiation. Help my process stay unbroken! – Keep my DO at twoscore! Help my cells grow strong and plenty, so I make my titers soar!’ Quoth the sensor, `Evermore.’ And the TruFluor, tightly flitting, still is sitting, still is sitting In the bag port of my vessel in the cutout at the fore; And its ‘spot’ has all the seeming of an angel’s that is dreaming, LED-light in it streaming ‘reads’ the ‘spot’ and measures sure; And my cells with DO plenty set to levels they adore Shall be happy – Evermore!
Mark Selker has worked for NASA, Coherent Laser Group, and Harmonic in commercial lasers/nonlinear optics, and analog/digital communications respectively. Prior to founding Finesse, he was a visiting scholar in near ﬁeld optics/plasmonics at Stanford University. Mark received his Sc.B. and Ph.D. in electrical engineering from Brown University in 1986 and 1990, respectively.
To date electrochemical probes in single-use bioreactors have been like the Raven to Poe’s tortured subject of the like-named poem; a source of never ending remembrance and bane of its existence. While a mainstay of bioprocessing, they are very clearly mismatched to single-use bioreactors by dint of the materials used in their construction, their method of calibration, their method of sterilization – even their principal of operation. There are actually few things more haunting to the bioprocessing professional than to return after the weekend to ﬁnd that the primary and secondary electrochemical pH probes have drifted apart and both read differently than their off-line blood gas analyzer. Subsequent study often reveals a clogged port or post-autoclave drift or even cracked or broken glass. It is for these reasons and more that well designed and ﬁeld proven single-use sensors matched to the single-use paradigm continue to make gains in the single-use marketplace.
Barb Paldus was most recently the CTO of Picarro, a company she founded in 1998, where she launched a solid-state Cyan laser product in 2003 and cavity ringdown spectroscopy products in 2004. Barb received both her Ph.D. (1998) and M.S.E.E. (1994) degrees in electrical engineering from Stanford University.
NGP_New Poem.indd 47
INNOVATION AND COLLABORATION NGP talks to Ted Torphy, Vice President and Head of External Innovation for the Research Capabilities Organization of Johnson & Johnson, about the need for greater collaboration to boost innovation in R&D.
TED TORPHY ED.indd 48
What do you consider to be the most serious hurdles that currently need to be overcome in the discovery and development sectors within the pharmaceutical industry in Europe and in the US? Ted Torphy. In many ways the EU is ahead of the US in terms of what the business climate is going to be. I think the major difference and what is changing progressively within the US is that in the EU, reimbursement is based upon outcomes. In the US, at least in the past, of course you had to have a positive outcome, but reimbursement was whatever the market would bear. I think that’s likely to change over time and the payers don’t care where the solution comes from or what the solution is, they simply want an effective outcome for the patients. What tools and technologies are Johnson & Johnson using to ensure that you’re continuing to push that envelope and stay as efﬁcient as possible? TT. To the extent that we can, we’re continuing to use biomarkers. We’re attempting to identify biomarkers that will predict outcome in the clinic, which can help in identifying subsets of patients as well as reducing the size of clinical trials. My own personal opinion is that the most important technology coming along will allow us to access and use data from electronic medical recordenabled databases. Changing a system is not something that can be achieved by grafting new technology on to old modes of thought. To what extent do you consider that to be a truth and how will the system need to change to accommodate it? TT. The most important change that we will go through is not related to technology – yet it may even be more important than the introduction of new technologies at least in the foreseeable future – is a change in the business model of R&D. By that I mean how do we leverage what we do best in large pharma? How do we use economy of scale and the breadth and depth of expertise that we have? How do we use it in the discovery and development of drugs? How do we use it to enable our external partners? How do we compliment what they don’t have and how do we use what they do have to provide that solution to the customer? You gave a speech recently at the NGP Drug Discovery summit, in which you talked about virtual integrated systems. Could you please elaborate on the concept? TT. By that I mean that there’s a competitive advantage for all of the players within an industry, that all the pieces of the value chain that are within an industry and the players that lead them, that there’s an economic advantage for them to work with each other to see to it that each other succeeds. So rather than having one company build and maintain every part of the value chain that is needed to put either the product or the service on the market, the different players within the value chain begin to focus on what is really important for them.
TED TORPHY ED.indd 49
Ted Torphy Probably the ultimate in a business model like that is what Steve Jobs has done at Apple. After all, what does Apple really make? Their hardware I’m sure is manufactured elsewhere but they own what their core competency is – the design and then partly in the distribution channels. But the hardware, the soft ware and the content is all coming from elsewhere. They wouldn’t be the company they are now if they tried to do all of that themselves. Choosing your business approach is never a simple binary choice. If a company chooses not to do that or not to take on a certain approach in terms of the business model and in three years the environment changes, great companies will fi nd their own way to move on. I think the real concern is that we don’t learn from what has happened in the past. Our real concern is that we think we’re special, that we’re different from the other – there’s something different and special about the pharmaceutical industry compared to others. It just isn’t the case. So since so many other industries, as they mature they change, and chances are since that’s almost always happened in the past it will happen with us. What are your thoughts on open collaboration? How do companies go about ensuring that they’re securing themselves while getting involved within that? TT. That’s a key question. What you need to decide, what any large pharma needs to decide is, ‘Why are we here?’ What does society need them for and what is the value they have? Then ensure that they protect that unique value. We’re going through a transition now where we used to sell ‘hardware’, and were reimbursed or paid for the outcomes. Our value is going to change somewhat in terms of the value as a whole package. It’s the patient outcome and it’s the information that we provide along with the products. You don’t pay US$4 a day for a pill because the pill costs that amount. It’s actually the package insert that costs that.
It’s the information in terms of why it works, who it works on and who it doesn’t work on and what to use it with, what not to use it with, what the side effects are, what the complications are. It’s 15 years worth of investment to get that information. If you think about that, just to give you an example, if we are not contract research organizations, if we don’t care about certain pieces of intellectual property, either know-how or patents, if it’s not our core competency but it enables what we do, if we can use that and let our partners use that too to enable what they do, by defi nition it helps us. Yet many pharma companies won’t do that and instead they say, ‘If we’re working with a partner and we decide that we are going to move out of this therapeutic area, we’re going to dissolve the relationship we had with a partner.’ Why not make part of the value equation to them and to bring partners to us to say: “If we do this we will license any of the IP we have that is related to that to you at terms that aren’t going to tie your hands behind your back. It’s hard for us to understand that and it’s hard for us from an emotional standpoint to let go of that. But in fact now we’ve just enabled them as a partner, which is good. It’s good for the ecosystem and in the long run it’s going to be good for us.” How do you feel about the pharmaceutical industry expanding into emerging markets? TT. It’s critically important that whatever we do in the emerging markets needs to be done there. The R&D needs to be done there: using the local talent to address the local problems because trying to shoehorn the solutions that we think will work in the west into a developing economy is the wrong way around. We can’t, either because they can’t afford it or because their healthcare systems are just developing. There are opportunities there that are unimaginable and don’t fit into the IP-rich environment of the way we have done things. Don’t try to force our solutions down the throats of the emerging economies. Let it emerge there.
but right now many of the stakeholders within this ecosystem: the payers and the regulators and us, we’re not necessarily aligned to the extent that we could be to discover, develop and launch drugs that really make a difference, the breakthrough drugs where there’s a lot of risk associated with them. I’m not pointing a fi nger at any of the constituencies here but it just seems like there should be an expedited pathway for lifesaving or life-changing drugs where there’s an incentive for the innovators of those drugs to focus more of their resources there rather than focusing many of their resources on incremental changes for wellunderstood therapeutic care. The example would be – and I think that the technology is getting there – that we could do it with integrated EMR-enabled databases where you can essentially follow what’s happening with patients who are receiving a therapy in real time but after a robust phase II program if it’s truly a lifesaving or a life-changing drug and you’re a pioneer in that field, how can we set things up so that we could launch it in a contained way, that we launch it after a robust phase II, but only within this system where there’s essentially daily monitoring. If we could do that, everybody wins: the regulators win because they get much more information before a drug is launched more widely, and much more information about the safety and efficacy of the drug in real patients. Not just well-controlled clinical trials but in real life, in real patients. The patients win because they’re getting therapy for a debilitating or life threatening disease. We win because we understand much more about our drug and who the drug works in and who the drug does not work in before it’s fi nally launched. So it just seems to me that the fi nancial incentives are not necessarily aligned right now to deliver truly innovative drugs.
“The most important change that we will go through is not related to technology – yet it may even be more important than the introduction of new technologies at least in the foreseeable future – is a change in the business model of R&D”
How did the global economic downturn affect Johnson & Johnson in terms of your productivity and security within the discovery and development sectors? TT. We manage for the long term in a comprehensive and proactive way. While there are certain choices that we have to make as the top line gets squeezed and the margins get squeezed and the bottom line gets squeezed, it really hasn’t changed our view that we have to invest for the long term. Th is is a cycle and we’re going to come out of it. When and how isn’t clear but we have to hang on to one thought and that, as long as the innovators are delivering lifesaving and life-changing solutions we will be fairly compensated for that. If not, if we believe that’s not going to be the case in the future, let’s quit. If hypothetically you could click your ﬁngers and change one thing in the industry, what would it be? TT. There is one thing that comes to mind and it’s a big issue. Not absolutely clear as to how we would address it
TED TORPHY ED.indd 50
Small is beautiful â€“ the future of SMEs in pharmaceutical development How can a small European pharmaceutical service provider remain competitive and attractive in the changing Pharma landscape?
fter the credit crunch and seeing the ongoing crisis of the Big Pharma companies, it is becoming more and more obvious that the influential work of E. F. Schumacher, Small Is Beautiful â€“A Study of Economics as if People Mattered, is more relevant than ever. The world is not only suffering from the consequences of the worst fi nancial and economic crisis since the Great Depression of the 1930s, but we are also facing what seems to be an anthropogenic global warming. There are signs indicating that the world is fi nding its way out of the economic crisis, however, this does not necessarily mean that the pressure on the pharmaceutical industry will ease. The pressure remains to improve the efficacy and reduce costs. After the consistent growth of the pharmaceutical industry in the 90s, recently the block-
buster model has come under pressure as it has reached the limit of its ability to generate sufficient revenue in the long term. The patent cliff is close and that, combined with weaker pipelines, means lower revenue for pharma companies. In fact, sales at many big pharma companies were flat or down in the last quarter. Big Pharma companies responded to the situation with cost saving measures. They reduced R&D budgets and layed off thousands of researchers. Many manufacturing sites were closed, especially in the Western hemisphere. Big Pharma is turning more and more East and buys products and services en masse from Asia. More reorganizations are expected, which means more outsourcing of R&D and manufacturing operations. Another interesting trend is the sale of R&D facilities to pharmaceutical service providers. Such deals fre-
The FP7 will have over â‚Ź106 invested towards 2013
quently go with multi-year research contracts, that is most employees remain in place, work on the same or similar projects; only the employer changes. The long term utilization of such large facilities is hard to predict. The good news is that the number and volume of outsourcing projects will likely increase from Big and Medium Pharma. For the most important and time sensitive projects, flexible (which means small) custom research organizations are needed. Fast decisions, short turnaround times and good communication will be crucial in establishing a circle of these trusted service providers. Most big and medium sized pharma companies established criteria to select and sort service providers all over the world. Small and medium sized pharma companies typically have stronger pipelines. However, the lack of funding for developmental projects of small pharma companies forced many of them to focus on late stage projects and stall discovery or early stage molecules. Big Pharma wisely noticed this trend and stepped in as a fi nancier. More cooperations and investments from Big Pharma are and will fi nd their way to small biotechs. As a consequence, more outsouring projects can be expected from small pharmaceutical companies as well in the future. Regarding Asian service providers, their prices for large volume projects are very competitive, but due to the high employee fluctuation, the quality of their service fluctuates as well. Due to their price advantage, Asian CROs have been boasting double digit yearly growth for years now. However, the price advantage is decreasing, because the wages of higly qualified and experienced workforce are approaching European levels. It is worth mentioning that European CROs have a stronger tradition of and more experience in R&D. Generally speaking, their innovative approach, communication and project management skills are up to the highest customer expectations. The geographic location and the relatively small cultural differences between Europe and the USA make communication and site visits relatively easy for American customers as well. Customer research or manufacturing organizations from the former East Block offer the best of two worlds, Western style services with prices between that of the West and the East. Nevertheless, small and medium size pharmaceutical companies still prefer to work with local service providers. Unfortunately, the European Custom Research Organizations (CROs) also suffered from the change of the business environment over the last few years, and some of them faced serious problems. Thanks to their ability to adapt to the changing business, most of the Small and Medium sized Enterprises (SMEs) managed to survive and expect to see growth in 2011. The European Commission also realised the importance of SMEs regarding the future of the European economy (Th ink Small First principle) and the aim of the Enterprise European Network is to help SMEs become more successful in the European programs. The European Commission wants SMEs to be the drivers of economic activity and innovation.
For the current seventh Framework Program (FP7) more than 50 billion Euros will be invested in research and innovation till 2013. It is the responsibility of the decision makers and the actual participants to maximize the return of the invested billions and generate useful results for the benefit of the European economy. The change of the application process to the funds makes these fi nancial resources easier for SMEs to access, which hopefully will mean more research and less paperwork for them. Ubichem, as a Hungarian based medium size chemistry service provider for the pharmaceutical industrys is expecting that European companies will benefit through multiple ways from the recent changes in the business environment. Chinese entrepreneur Jack Ma of alibaba.com explained his vision regarding the way out of the crisis at the 2009 Singapore APEC SME Summit: “In the last century, big was better, but in the 21th century, I believe small is beautiful because it is not about how much equipment you have, it is about how quickly you can change yourself to meet the market”. Ubichem, as a service provider, has always been capable to adapt rapidly to the changing requirements of its customers. Our aim is always not only to deliver the ordered services, but also to think ahead about the customers’ needs after completion of the actual work, even if we have to take some risk. We believe that this proactive approach can be very beneficial as we can help to compress the timeframe of the projects and provide viable choices, thus flexibility to our customers. We can foresee more time critical development projects. For example, our American customers could even benefit from the time difference stemming from our European location. In collaboration with their research team, thanks to the daily communication and share of the development results, we managed to develop and scale-up difficult technologies within very short periods of time working in a virtual two shift system in the laboratories in the US and in Hungary. Thanks to the better fi nancial situation of the virtual and small biotech companies, we can see a growing number of active projects in their portfolios. Ubichem Research Ltd. of Hungary is well positioned to face the challenges of the changing pharmaceutical outsourcing landscape. Being a relatively small enterprise, we can make decisions fast and are willing to take risks and be proactive in trying innovative ideas. Our labs and multipurpose plant can tackle projects from late discovery till Phase III clinical trials. Our comprehensive range of services along the drug development path, on top of the usual scale-up, intermediate and clinical API manufacturing services, include safety evaluation, analytical services, radiolabelling, salt screening, crystallization and stability studies, impurity profi ling and preparation of reference standards. Additionally, being located in a relatively low cost country within the EU and with a tradition of pharmaceutical sciences Ubichem Research is a wise and beautiful choice.
Jozsef Repasi has over 20 years experience in pharmaceutical research and development. As co-founder and Managing Director of Ubichem Research Ltd., his responsibilities include managing the daily operation of Ubichem and directing the continuous development of the company.
“It is the responsibility of the decision makers and the actual participants to maximise the return of the invested billions and generate useful results for the benefit of the European economy”
Collaborative platforms key to future pharma success Bringing together the worlds of the scientist, engineer, patient and payer will be increasingly important for future pharmaceutical success, argue Siemens’ Rebecca Vangenechten and Sivarama Nalluri.
egulatory developments and technological innovation are opening up new opportunities for companies to use life cycle collaborative management to bring together parts of the value chain that have traditionally been relatively distant from each other. Collaboration will become increasingly important across the R&D/manufacturing interface and across the pharma/patient interface. Until now, these interfaces have traditionally been points of disconnection rather than connection. For example, as a product moves from the development stage to the production stage, it is more likely to be ‘thrown over the wall’ between R&D and manufacturing rather than be part of an ongoing process where knowledge gained by the scientists has already been shared collaboratively with the engineers. The US Food and Drug Administration’s ‘critical path initiative’ has paved the way for the use of process analytical technology (PAT) in manufacturing. Process understanding gained in the process development lab needs to provide the foundation for process control and optimisation that PAT enables at the manufacturing stage. Indeed, with good process understanding and control, pharmaceutical companies can have the real possibility of continuous manufacturing which avoids the need to scale up altogether, thus shrinking the time to get product to market. Information needs to flow from R&D to manufacturing but it should also be a two-way collaborative flow. Knowledge gained through manufacturing can, for example, be re-used to accelerate the product development process. The second interface – between pharma and patient – is becoming increasingly important for a number of strategic reasons. With fewer new molecules and blockbuster products left to be discovered and developed, companies have to turn more to optimising the particular effects of existing molecules for individual patients and segments of patients. In parallel with the decline of the blockbuster
drug, governments and healthcare payers are coming under immense pressure to contain costs. In the future, most medicines will be paid for on the basis of the results they deliver. Because many factors influence outcomes, pharma companies will need to have more knowledge and understanding of how and why outcomes vary at the point of use and to be able to use that insight to optimise drug characteristics to a patient’s therapeutic needs, whether that is through product formulations or delivery mechanisms, and to feed that information back into development, formulation and manufacturing. Many of the technological tools to achieve collaboration across these vital interfaces are available. Product lifecycle management (PLM) platforms have a key part to play in providing the backbone infrastructure for shared knowledge, data and work process collaboration. However, unlike other industries, their potential is relatively unexplored in pharma. PLM soft ware platforms have the ability to handle large volumes of data and to support a large number of users with diverse skill sets in globally distributed environments.
Rebecca Vangenechten is a Life Sciences Industry Consultant with Siemens. She is responsible for business development life sciences US and focuses on innovative technologies, including process analytic technology (PAT).
“Product lifecycle management is the missing piece in the pharma discovery and development jigsaw” Sivarama Nalluri, Enterprise Solution Architect, Siemens Siemens already has a strong presence in healthcare, with diagnostic devices, soft ware and other solutions, and in pharma with PAT, LIMS and other technologies. PLM soft ware, developed by UGS, is now part of the Siemens’ portfolio of solutions. By providing common access to a single repository of all molecule and product-related knowledge, data and processes, PLM can speed up the innovation and launch of successful products. PLM manages whole life cycle of the drug and enables networks of innovation and collaboration, capturing best practice and lessons learned, creating a storehouse of valuable intellectual capital for re-use. The prospect of bridging these interfaces is compelling. It offers the twin prize of being able to build the right product, using the interface with healthcare to develop a product that the patient needs, and to build the product right, using data and process understanding from R&D all the way down through manufacturing to get quality right and shrink time to market.
Sivarama Nalluri is an Enterprise Solution Architect in the Ofﬁce of Architecture and Technology, Siemens PLM Software. He has more than 20 years of experience in research, planning, architecting, developing and deploying innovative PLM and other enterprise software solutions for Fortune-500 corporations. He is responsible for translating CPG, F&B, Pharma and other consumer products customer requirements into product technology roadmaps.
REACH out for better As the industry raises the bar once again to protect human health and the environment against chemical substances, Ali S. Faqi discusses the implications of the REACH initiative for manufacturers of chemical substances.
What exactly is REACH? Ali S. Faqi. Established by the European Chemicals Agency (ECHA), the Registration, Evaluation, Authorisation, and Restriction of Chemical Substances (REACH) regulations were put into effect in June 2007 in an effort to improve the level of protection of human health and the environment through better and earlier identification of the intrinsic properties of chemical substances1. In addition to requiring companies to provide more safety information, REACH specifies a progressive substitution process for more dangerous chemicals when suitable alternatives are known. If the regulations were put into effect more than three years ago, why is a sense of urgency associated with the REACH regulations today? AF. When the REACH regulations were established, provisions were made to phase them in over an 11-year period. The deadline for registration of high-volume chemicals (those typically known as hazardous substances) was 30 November 2010. To continue manufacturing and selling these products, manufacturers and importers must document their risk according to REACH guidelines. How can I ensure that my company is meeting the REACH requirements? AF. It is essential that producers of chemical substances work with contract research organizations that are knowledgeable about the REACH requirements. For example, companies may need assistance in determining the minimum number of vertebrate animals necessary to meet REACH specifications. Guidance may also be necessary in determining the number and types of tests that should be performed. MPI Research scientists work diligently to avoid overestimation, a problem acknowledged by the European Chemicals Agency, which results primarily from lack of knowledge and improper interpretation of the regulations2. Avoiding overestimation can result in significant cost savings for MPI Research Sponsors who are working toward REACH compliance. Are there any special considerations for developmental or reproductive testing? AF. Yes. When conducting research on chemical substances, it is important that companies consider the classification scheme used by REACH to label a substance with known developmental and/or reproductive toxicity. The criterion used does not appear to be based on the exposure
level producing these effects, barring excessive generalized toxicity. Therefore, labeling these chemical substances without consideration of the effective dose level does not provide meaningful data about their actual risk. For additional details, see Anthony R. Scialli’s 2008 article, The challenge of reproductive and developmental toxicology under REACH (Scialli, A.R., The challenge of reproductive and developmental toxicology under REACH, Regul. Toxicol. Pharmacol. , doi:10,1016/j.yrtph.2008.04.008.)3
Ali S. Faqi, DVM, PhD, DABT is Senior Director of Developmental and Reproductive Toxicology at MPI Research. He received his PhD from the University of Leipzig and serves on the Editorial Board of Reproductive Toxicology and on the Board Scientiﬁc Counselors Computational Toxicology at the United States Environmental Protection Agency.
How can I get more information about the REACH regulations? AF. Manufacturers of chemical substances can get most of their questions answered about these regulations by reviewing the ECHA publication, “REACH in Brief”.4 How can I be assured that my REACH testing strategy is solid and cost-effective for my company? AF. Work with a contract research organization that has an accomplished scientific team that is knowledgeable about REACH regulations. It is important that they have a comprehensive understanding of the implications of REACH for your chemical substances. To evaluate how you can be sure of a solid and cost-effective strategy for complying with REACH, discuss the development of a customized testing strategy for your chemical substances with Dr. Faqi at 269-668-3336, ext 1618, or firstname.lastname@example.org. 1 http://ec.europa.eu/environment/chemicals/reach/reach_intro.htm 2 http://echa.europa.eu/doc/press/pr_09_11_animal
_testing_20090828.pdf 3 http://www.sciences.com/professionals/pubs/Scialli-REACH.pdf 4 http://ec.europa.eu/environment/chemicals/reach/pdf/2007_02_
iStrategy AD_B2B.indd 1
CLINICAL TRIALS 59 59 HEADING
THE NEW GOLD STANDARD Amgen has set the standard once again by producing a new Gold Standard in therapy for bone metastases from solid tumours. But what does it mean for its patients worldwide?
one metastases have been a constant and major clinical concern for the healthcare and life sciences sectors for decades. For the patient they can translate into severe pain, bone fractures, spinal cord compressions and a general, rapid degradation in quality of life; for the industry and its experts they have meant a head-scratching journey trying to assess how to push the envelope of treatment once more towards combating mortality and securing a future with next generation treatments. In an effort to do precisely that, Amgen has recently taken the torch as the owner of the fi rst bone-targeted therapy for cancer patients in nearly a decade. Approved by the US Food and Drug Administration (FDA) back in November 2010, Amgen’s Xgeva (denosumab) is the fi rst and only RANK Ligand inhibitor for the prevention of skeletal-related events in patients with bone metastases from solid tumors. And how did they achieve Xgeva?
75% of patients will experience a spread to their bones
Th rough the largest clinical program ever conducted in patients with bone metastases, with the drug being approved following a six-month priority review by the FDA – a designation usually reserved for drugs that offer major advances in treatment or provide a treatment where no adequate therapy exists. Developing Xgeva from the outset, Roy Baynes, Vice President of Global Development and lead for Denosumab in the Oncology setting for Amgen, has been pivotal in the birth and subsequent upbringing of Xgeva. “The area of bone metabolism in cancer patients has really been dominated in the past few years by the bisphosphonates,” he begins. “They’ve gone through various generations of development aimed at producing increasingly more potent molecules. The contrast between Xgeva and bisphosphonates is that the Xgeva molecule is exquisitely targeted. Basically, this is directed at RANK Ligant, which is the fi nal common pathway for the activation of the osteoclast.”
Indeed, by contrast bisphosphonates are relatively non-specific; instead being taken in by the body and absorbed into the bone. From here, the bone becomes semiimpregnated with bisphosphonate. The osteoclast – in the action of reabsorbing bone –ingests the bisphosphonate before being killed from within by a toxic effect of the bisphosphonate. So where the former therapy was a nonspecific and non-targeted mechanism, Xgeva represents the emergence of an elegant and specifically targeted mechanism to switch off the osteoclast. But whilst it’s easy to sit back and describe how the therapy works, it’s only the tip of the proverbial iceberg. As Baynes asserts, the Xgeva program is completely organic – from axis and specific target discovery through to development and the full clinical program. And, quite frankly, it represents the culmination of 15 years of cumulative work of scientists and clinicians at Amgen, proving how important innovation in the context of organic development truly is for their patients. Kevin Sharer, Chairman and CEO of Amgen, said at the initial announcement of the FDA’s approval of Xgeva: “Today’s approval illustrates what is possible when scientific innovation, commitment and investment come together to advance medicine, A diagnosis of bone metastases is a major event for patients living with cancer and the consequences can be devastating. We are pleased to offer this new advance to patients and their healthcare providers.” “The development of Xgeva, which is primarily in the cancer setting, has focused on two major opportunities,” continues Baynes off the back of Sharer’s statement. “The first was to look at patients who had boney metastases who were at risk of developing skeletal-related events. These events complicate a metastases and normally include one of four events that in turn cause morbidity and the significant impairment of patients’ quality of life: a pathologic fracture where the metastases leads to the bone breaking; surgery, which is usually required to prevent a fracture; and radiation therapy to irradiate the bone that’s had to be replaced surgically. The fi nal, and most feared complication, is an oncologic emergency, which is what happens when a metastases in a vertebrae ruptures through into the spinal canal and compresses the spinal cord, causing nerve compression that could take the form of paraplegia. “All of these are grievous and serious, so as you can imagine there’s a desire to address these. So, what we did was say ‘Okay, we’ve got a drug that’s exquisitely-targeted and we’re very impressed with its actions’. We’d done a Phase II programme, which established that we could suppress a bone turnover market, which is essentially a surrogate for the bone benefit. We also started to see a benefit in skeletal-related events, so we were confident about the molecule.” The next step for Baynes and his team was to set up a programme that compared their fi ndings with the Gold Standard of Treatment at the time – a potent bisphosphonate known as Zometa that primarily contains zoledronic acid – and study it in a head-to-head fashion in the context of various cancers, from breast to prostate, and with a
mixture of solid tumours. Using a selection of randomized patients to either receive Xgeva or Zometa on the backbone of the standard of care they were already receiving, Baynes’ team then monitored the patients for any sign of the development of skeletal-related events. According to Baynes, these were set as “non-inferiority trials” that aimed to highlight that, at the very least, Xgeva was no worse than Zometa in terms of effect. Once that had been established, Baynes and his team went on to test, in accordance with FDA guidance, whether Xgeva was superior to Zometa. “What we found,” details Baynes, “was that we were superior in the breast cancer study; we were superior in the prostate cancer study and we were very close to superior in the solitary trial. So, in those three trials we were clearly extremely favourable for Xgeva – not only for the fi rst event but also for subsequent events. In the solid tumour, it was close to superior but didn’t quite make it. When we looked at pre-specified integrated analysis of all three studies it was strikingly superior – so if you think about this for patients, we have a treatment that certainly surpasses the Gold Standard in terms of efficacy. “In terms of safety, we were very comparable. We had two major side effects that showed up: hypocalcemia and osteonecrosis of the jaw. These are both well-recognized complications of bisphosphonates. In terms of low calcium, we produced more frequently than Zometa, which speaks to the increased efficacy of the molecule because the mechanism here is on target. In other words, you’re switching off the osteoclast, which is one of the sources of calcium for the body, so the osteonecrosis jaw occurs at a similar rate with the two agents. Encouragingly, a significant number of those on Xgeva were reversible, so a very favorable risk and efficacy profi le.” Further backing this, David Henry, clinical professor of medicine and vice chair for the Department of Medicine at the University of Pennsylvania Healthcare System, said: “As many as three out of four patients with advanced prostate, lung and breast cancer will experience a spread to their bones. Despite the availability of current treatments, a significant proportion of these patients still experience bone complications or are not candidates for existing treatments. “Based on the compelling science and robust clinical evidence seen with Xgeva, I expect this new option to quickly become a mainstay of cancer care and to play an important role in reducing the incidence of debilitating bone complications in patients with advanced cancer.” But whilst Amgen, Baynes – and indeed his team’s – efforts have proved pioneering in breaking through to producing a world leading treatment, as we all know it’s far harder to stay at the top than it is to get there in the first place. So what is Baynes doing to ensure Xgeva and Amgen maintain their position as top dogs? Well, naturally they’re now focused on patients who have not yet developed boney metastases but who are at risk of doing so. More specifically, Baynes has identified two major tumour types to begin work on. “One is prostate cancer, the other is breast cancer. In the prostate cancer arena, we have conducted a randomized
control trial versus placebo where men who are at high risk of developing metastatic prostate cancer are randomized to either get a placebo of Xgeva along with whatever prostate standard of care they’re getting for their prostate cancer. These are the patients who are castrate resistant – that is to say they are no longer responding to hormone deprivation – so what we’re looking at is the time to the fi rst metastases or death: an endpoint known as Bone Metastases Free Survival. At the moment, we’re looking to see whether Xgeva will be able to delay that and improve the outcome.” To date, the trial has completed enrolment, with its subsequent data release managing to be squeezed into the tail end of 2010. In announcing the top-line results from their Phase III trial, conducted with 1432 male patients with castrate-resistant prostate cancer, Amgen concluded that: “Xgeva significantly improved median bone metastasis-free survival by 4.2 months compared to placebo (primary endpoint), and significantly improved time to fi rst occurrence of bone metastases. “Our data demonstrates that Xgeva, which antagonises the RANK Ligand axis, limits the ability of tumours to colonise bone, an important fi nding for men at risk of bone metastases and their healthcare providers. We look forward to presenting this landmark data at an upcoming medical conference.” Further confirming the importance of the prostate trial, Neal Shore, Medical Director at Carolina Urologic Research Centre, said back in 2010: “As many as 70 percent of patients with prostate cancer that have metastasized to the bone are not currently receiving therapy to prevent complications from these bone metastases. This may be secondary to urologists lacking comfort or facilities to provide infusion treatment. Xgeva could provide increased treatment care options and accessibility for urologists who treat advanced prostate cancer; as Xgeva is administered as a subcutaneous injection on a monthly basis. Also, Xgeva does not require dose adjustment for changes in renal function.” Amgen also has another large trial ongoing with women
patients with breast cancer. Known as the DK Study, women with high-risk, primary breast cancer who are getting adjuvant treatment are being randomized in very much the same way as the male trial population – being given either Xgeva or a complete placebo. Ultimately it’s the same idea, but with the prostate trial in its final stages, having started in early 2006, it’ll be some time before the data sets for the breast cancer trial are collated, analysed and released. Whilst Xgeva is a breakthrough in every sense of the word for Amgen, it’s ever more important for its customers. The total economic burden of patients with bone metastases in the US alone is already estimated to be US$12.6 billion annually. Patients who experience skeletal-related events (SRE) as a result of bone metastases incur significantly higher medical costs compared with those who don’t go through the pain of such events. Moreover, once patients experience an SRE, the risk of a subsequent SRE is increased. The costs of SREs vary by type and severity – ranging from relatively low costs for minor fractures to high cost events like spinal cord compression associated with hospitalization. When it comes to the crunch, Xgeva is more than just “an innovative therapy that significantly reduces debilitating and costly SREs”. It’s more than just a pioneering breakthrough for the Californian-based human therapeutics company. And it’s more than just years of work for Roy Baynes and his team. Xgeva is the key to changing lives for patients with bone metastases from solid tumours – not just in terms of physiological and financial improvements, but in pushing the envelope of success for future patients. For Amgen, it seems that the Gold Standard will never be enough – a sentiment that has got them to where they stand today.
Xgeva inproves bone Metastases survival by 4.2 months
Bone Metastases is estimated at US$12.6b Annually
Together standing tall Dave Shanahan shows us how a country as relatively small as Ireland continues to push the industry in every possible context – and with the biggest possible heart. What does 2011 hold in store for the pharma industry and where does Ireland ﬁt in? Dave Shanahan. It’s going to be challenging. The industry is struggling due to the lack of new chemical entities, US healthcare reform, a lack of blockbuster products, big losses in patent protected revenues and market share losses to generics. The hurdles companies have to go through today to secure marketing authorization are enormous. Many products on the market today would not pass the threshold that regulators are now imposing. Ireland’s competitiveness has greatly improved with a decrease in operating costs. Our multi-national exports are performing very strongly. Will Ireland continue to be a focus of growth and opportunity globally? DS. I believe Ireland is known for high quality production, tight regulation and good chemistry to innovate both in formulation and in the process development. Our main priority is to produce a global product at a preferential quality and cost standard. We have efficient operations focused on what the market will need for the future. It isn’t enough to produce a quality powder or tablet. One has to think about the elements required around that formulation that both regulators and payers will value while superior for patients. We recognize we need tailored value propositions for emerging markets. What are the major challenges facing the industry? DS. It’s very apparent the larger companies are not getting productivity out of R&D pipelines like they did 10 years ago. The industry’s model of scientific excellence is insufficient for healthcare systems, which are fi nancially creaking. In order to satisfy more demanding customers, innovation under every heading of operations is critical. I think companies are struggling with how to innovate quickly and efficiently in a dynamic and increasingly competitive marketplace. It is difficult to secure a price and volume that rewards the R&D investment, as in times past. How is IDA showing support for companies wishing to locate in Ireland? DS. IDA was built when the Irish government really embraced open trade. We’re a global organization with offices all over the world and we have developed strong relationships with most global companies. We focus on innovative corporations and where and how Ireland can provide these companies with competitive advantage. We work as part of a national system to provide affordable costs and
IDA IRELAND.indd 64
dedicated inputs for businesses to grow. Our R&D and innovation supports are matched by a fi rst-class workforce, access to global markets and an attractive corporate tax rate. We continue to develop those strengths – for example, the National Institute for Biopharma Training & Research (NIBRT) is meeting the skills and development needs of this critical sector with a $70 million investment from IDA, supporting manufacturing companies who locate here.
Dave Shanahan, Global Head of Life Sciences, IDA Ireland, is responsible for attracting multinational investments to Ireland in the areas of Pharma, Biopharmaceuticals, Medical Tech/ Devices, Food and Healthcare Services. His 22 years of experience in the healthcare industry includes working with Johnson&Johnson, ICI, AstraZeneca and Pﬁzer.
What are the key pharmaceutical sectors in Ireland? DS. Ireland is represented in most pharmaceutical sectors. Since the 1970s we have grown a very large pharmaceutical base over 83 sites, manufacturing six of the global blockbuster drugs. We are excited by biotech. The prediction is that by 2016, half of the global pharmaceutical revenues will come from biotech and specialty products. We are developing our biotech and specialty product capabilities. We like specialty products because they are often difficult to make or require complex supply chains. That is appealing because premium products require premium support and we compete effectively there. We have developed strong pharmaceutical support services which enable many Irish sites to operate as global hubs. Pharmaceutical companies thrive in Ireland due to the unique and talented workforce. Why is that? DS. The pharmaceutical industry in Ireland has a superb reputation. I think the difference is that in Ireland we don’t talk about drugs, we talk about medicines. Our workforce is centered on bringing confidence, competence and a can-do attitude to the industry. People really make the difference.
“We focus on innovative corporations and where and how Ireland can provide these companies with competitive advantage” The industry here can secure the brightest and best. The success of Ireland as a center for global investment is due to the exceptional collaboration between government agencies, industry, academia, education and regulatory authorities. The stakeholders work together on a national level to ensure that companies have the facilities, resources and assistance to grow their business. We consider innovative medicines, their development and manufacture a national asset.
harmaceutical companies invest extraordinary amounts of time, money and ideas into their R&D stages, so it is no surprise that their supply chains and manufacturing stages should do exactly the same. If a drug is lucky enough – which nowadays means it’s successful enough – to get through to the production stages, that ‘golden ticket’ falls into the hands of a few to efficiently see it through to its fi nal stages. Without these champions of the manufacturing leagues, many would be left literally fending for their lives, without the drugs they so desperately need. With the acceleration of technology and communications over the past two decades, pharmaceutical companies have had the luxury of utilizing an extensive knowledge base to implement supply chain and manufacturing systems that surpass anything the industry has previously witnessed. Barthold Piening, EVP of Operations at Nycomed, has a privileged perspective of what the world of pharmaceuticals is doing to deliver and progress its manufacturing expertise. “I pretty much grew up in manufacturing,” explains Piening. “I was focused on technology, construction, factory design, supply chain management and some project work launching products globally.” With so much experience already under his belt, Piening has a fi rm grasp on the challenges facing the pharmaceutical supply chain. “I’m a little bit biased from the current company perspective,” admits Piening. “In the old pharmaceutical industry we saw a move from the typical high-margin, high-volume, so-called blockbuster products that we had quite frequently seen in the industry in recent years. Today, many companies have the challenge of going into much smaller, niche-related, specialized products that are, from a manufacturing background, characterized by lower volumes and more complexity, and from a business perspective, often lower margins.
Manufacturing efﬁciency NGP ﬁnds out what Nycomed is doing to progress its manufacturing and supply chain operations.
“It’s not only in manufacturing. It affects all organizations. We see a price pressure more or less everywhere – even in emerging markets where we have seen the effects of the fi nancial crisis in the last year – and we see plenty of margin pressure. It was much easier in the past to handle a high-volume, multi-billion tablet product with efficiency than it is to manage the complexity of smaller products today. With this in mind, we started our operational excellence program in the conceptual stage roughly two years ago. Now in its implementation stage, we have been gathering some fi rst experiences of the project, which are fascinating to see.” The main advantage with projects such as operational excellence or Six Sigma is that you have the ability to involve, motivate and activate almost all of your employees. Whereas in the past, initiatives for special projects would be set up for higher-level management, these new projects affect the whole organization and provide the huge potential of improvement ideas and concepts for the organiza-
tion as a whole. The key to all of these projects is how to open employees up to contributing to the process. “We have invested a lot in the training, education and personal development of our shop floor employees,” continues Piening, “which was regarded as a major benefit for the individual employee. To give you a number, we have now touched roughly 10 percent of our workforce with education and training programs to get into operational excellence, and are fi nally starting to see the fruits and to harvest from this campaign.” However, while the human element is obviously the most important aspect in making a system as efficient as it can be, it carries the duality of also being the biggest potential obstacle during the implementation stage; resistance from employees and misunderstanding can make or break a program. “Certainly there are some barriers to overcome. I would say the major barrier is not motivating and activating the shop floor employees, it’s more to get the management support and buy-in. “People are so occupied with what they do and how they did it in the past that readiness to change is sometimes tougher to achieve in the higher management tiers rather than on the shop floor level. We have seen fantastic enthusiasm on the shop floor, where people were extremely happy to get additional training, and then to apply what they have learnt in real-life projects immediately. Th is is perceived very positively. You have to make sure that someone sees additional opportunities from a new perspective and to take up new methodologies in contrast to what they have done in the past. Many of them are convinced that what they did in the past is the only right way of doing things, so changing their minds and going into new areas is pivotal. “If we can achieve this change on the management level, it goes beyond the typical budget thinking. Normally, everyone on the top management level is thinking about our budgeting process. What we need is a change in the mental philosophy to think beyond budgets and to think that wherever we can improve, we want to improve.” With this in mind, Piening has adopted a multi-faceted approach to Nycomed’s operational excellence program.
Flexibility “In our company, we have decided to not use only one Lean methodology and to make ourselves intentionally flexible. We apply Lean Six Sigma and push the continuous improvement and 5-S quality management wherever it is feasible. We have the complexity of different types. For example, Latin America, India and Russia have different levels of technology than the centre of Europe and the US, so we said very early on that we don’t want to apply just one tool. There must be a common understanding – which we call operational excellence – that can give a variety of different tools to the teams, and whatever is appropriate, they can apply.” And while this certainly gives Nycomed, and Piening, the luxury of being slightly more flexible than other companies, they still have to share the same air when it comes to tackling increasing regulatory hurdles. “We don’t have a
problem when it comes to higher regulatory requirements coming from the FDA and we certainly comply well with the FDA guidelines. Our major challenge comes from having to operate all over the globe and comply with each and every regulatory requirement. This gets increasingly complex and could do with a harmonization between the FDA and EMA – and in the future all emerging markets that will also be conjuring up their own specific requirements. “It’s a very real challenge because it gets more difficult to have just one standardized system; instead companies have to lean towards tailor-made solutions, for example to fulfi l specific requirements for certain emerging markets, which makes things more complicated. In addition to this it is important for us to now focus much more on the typical, state-of-the-art forms of supply chain management and to catch up with other industries in order to reduce our lead time, increase our flexibility and to reduce our inventories. In former times, far more emphasis was placed on the marketing and R&D side, but since the margins are going down in general, our contribution will be much more important in terms of cost-effectiveness and working capital management.” It is here that the true contribution from supply chain management prevails. In order for a progression to be made that will affect the discipline’s future, the management of information from the market – from point of sale to the manufacturing side – needs to become more focused and efficient to allow the backbone of pharmaceuticals to develop. As Piening puts it, “this is our key vision”.
“In our company, we have decided to not use only one Lean methodology and to make ourselves intentionally flexible”
Barthold Piening is EVP of Operations at Nycomed.
EXECUTIVE INTERVIEW 67
Transforming pharmaceutical production Today more than ever, manufacturers need to increase efﬁciency, improve operating margins and maximize their return on investments. Nowhere is this more evident than in the pharmaceutical industry. David Radspinner, Director of Marketing for Cell Culture and Bioprocessing Products at Thermo Fisher Scientiﬁc, explains how his company’s single-use bioprocessing technology is helping pharmaceutical companies reduce their costs, increase productivity and bring products to market more rapidly.
“Crosscontamination continues to be a major concern in the production of vaccines and other cellculture-based drugs”
Can you explain what single-use bioprocessing technology is and how it is impacting biopharmaceutical production? David Radspinner. Single-use technology encompasses a range of disposable containers and single-use systems for cell-culture-based bioprocessing. This technology is an alternative to costly fixed equipment such as stainless steel liquid handlers that have traditionally been used by pharmaceutical companies in the production of vaccines and other protein-based drugs. Stainless steel equipment not only costs millions to install, but it also requires time-consuming cleaning and sterilization each time it is used. Thermo Fisher provides high-end, single-use alternatives that arrive sterile and are immediately available for use. These include Thermo Scientific HyClone BioProcess Containers (BPCs) for collecting, transporting and storing bioprocess f luids, and the HyClone Single-Use Bioreactor (SUB) and Single-Use Mixer (SUM), which reduce setup time, reduce costs and increase f lexibility in bioprocess production. What are the main challenges that biopharmaceutical companies are currently facing? DR. There continues to be significant pressure on biopharma companies to reduce costs while increasing productivity. It becomes a decision between expanding facilities and investing in stainless steel systems or converting into a single-use facility. The economic advantage clearly is with single-use, as the up front investment is greatly reduced, and the fast turn-around times between production cycles can save pharmaceutical companies millions of dollars every year. In addition, cross-contamination continues to be a major concern in the production of vaccines and other cell-culture-based drugs. Cross-contamination can cost a fortune due to lost product as well as significant down time. Single-use systems have been a blessing as they eliminate the danger of cross-contamination and reduce turnaround times from weeks to hours. Some of our customers have told us that they can switch from one production run to another in as little as two hours. There is no time-consuming cleaning; just empty the
BPC and replace it with a new one and start your next run. Single-use systems are completely sterile and safe. What is the state of adoption of single-use technology in the biopharmaceutical industry? DR. Single-use technology is transforming biopharmaceutical production. Since we entered this market, the pharmaceutical industry has passed the stage of early adoption and is now broadly adopting single-use technology as a lower-cost, more flexible manufacturing platform. These companies clearly understand that single-use technology provides speed to market and rapid turnaround times; lower initial capital costs and lifetime operating costs; a reduction in cross-contamination risks; and reliable, proven scalability to maximize productivity both quickly and flexibly. Where is single-use technology headed? What are the latest advancements? DR. Single-use technology began with sterile plastic containers that are used to collect, store and transport bioprocess fluids. Over the past few years, this technology has expanded with the introduction of single-use equipment for processing cell-culture based products. Thermo Fisher offers a full range of these single-use systems. In 2006, we launched the Thermo Scientific HyClone Single-Use Bioreactor (SUB), a major innovation for bioprocessing. It is a single-use, stirred-tank system that integrates wellcharacterized design criteria used in stainless steel systems but incorporates a disposable BPC. The SUB is available in multiple sizes, and based on customer demand we recently introduced a 2000 liter unit. In addition, in 2006, we launched the HyClone Single-Use Mixer (SUM), which also incorporates a disposable BPC and is available in working volumes of 25-2000 liters. The SUB and SUM lines enable customers to seamlessly and confidently scale their bioprocess production to their individual needs, quickly and flexibly. For this reason, the HyClone technology has become a market leader. David Radspinner is the Global Sales Director for Thermo Fisher Scientiﬁc’s Cell Culture and BioProcessing business, Logan, Utah. Previous to this, Radspinner spent 13 years developing, manufacturing and characterizing pharmaceuticals for other companies. He holds a PhD in Analytical Chemistry from the University of Arizona.
Supply chain analytics: pharma has to do better By Eugene Jones
he global pharma industry is currently weathering a storm of unprecedented market conditions. Accenture research has found that over the past five years, patent protection has expired on products accounting for more than US$80 billion (€60 billion) in annual sales, and in spite of steadily rising R&D costs, pipelines have failed to deliver replacements. Against this background of looming competition from generics, the industry is also holding as much as US$46 billion (€35 billion) in excess inventory, according to a recent Accenture study. In this environment, it is no surprise that
companies are hungry for opportunities to improve the efficiency of their operations, better understand their customers’ demands, and devise more creative responses to the marketplace’s challenges. Supply chain analytics provide a key means to make progress in each of these areas. Analytics, in this sense, is best understood to mean fact-based decision-making that incorporates statistical and predictive techniques to explain and forecast trends. The facts and trends in question may certainly be related to supply chain metrics, but analytics go beyond simple measurement of past performance to provide insight into what may lie in wait. Analytics are of critical importance for making and sustaining both operational and strategic improvements across the functional areas of the supply chain. Accenture’s Global Pharma Industry Supply Chain & Tech Ops study – completed in May 2010 – provides a compelling perspective on the industry’s progress and challenges with respect to supply chain analytics. Involving 25 pharma and biotech companies from around the globe and across industry segments, the study covers a wide range of topics, from supply chain strategy and organizational design to planning, fulfi llment and compliance. It offers an excellent vantage point from which to observe the impact of analytical capabilities on supply chain performance. While most study participants would agree with the statement that, “supply chain analytics are a crucial part of our strategic priorities,” their efforts are largely focused on a single dimension: developing greater visibility into supply chain performance. There is certainly room to improve in this area, but the true value of analytics goes far beyond simple performance management. Indeed, participants who indicated stronger analytical capabilities (e.g. closer integration with customers on demand forecasting) also consistently demonstrated higher margins. Even beyond these quantitative benefits, analytics offer the keys to identifying and building on competitive strengths which will become increasingly important as pharma companies are forced to operate in a less blockbuster-driven model. Data availability is the most fundamental requirement for strong analytic capabilities. Th is is an area in which the pharma industry continues to struggle. Supply chain data are typically scattered throughout a fragmented landscape of manufacturing, enterprise resource planning (ERP), and laboratory information management (LIM) systems that do not exchange information. Frequently, multiple instances or platforms for each type of system are running within the same company, further complicating the data landscape. Pharma companies’ ability to pull information from outside the organization is not much better. Few have
SUPPLY CHAIN 69
been able to develop tight links with customers, and even where these links are in place, the companies fi nd themselves challenged by the fact that their customers’ data are often of less than sterling quality.
Obstacles But having the data, while necessary, is far from sufficient to develop strong analytics. Learning where the organization can produce reliable data (or perhaps more importantly, where it cannot) is a problem that can only be solved through experience and experimentation. Companies that have advanced analytical capabilities typically developed them by focusing first on using the best data they had, and working to increase the quantity and quality of data only after building an ability to make meaningful data-based decisions. In fact, organizational factors that break the link between data and decisions are often the biggest obstacles to overcome. Too often, supply chain organizations in the pharma industry operate in disconnected functional silos, which encourage decision-making based on tradition, rather than data. Perhaps the most critical first step toward better analytics is to develop a focus on facts and a willingness to challenge assumptions. Traditional thinking, for example, might dictate a decision like the following: “We manufacture life-saving drugs. Stock-outs are intolerable, and we will work to maximize our delivery to customers’ requested dates and quantities, building inventory if necessary to ensure that all orders are fulfi lled.”
“If the challenges facing the pharma industry are large, so are the opportunities. For companies wondering how to begin building analytics capabilities, taking a closer look at working capital can be an excellent place to start” Analytical thinking might suggest a very different approach: “Pharmacies and distributors both retain some stock level of our products. Given their inventory levels and patient demand, what level of order performance must we achieve to ensure patients have the drug when they need it?” As organizational capabilities mature and data quality improves, focus will shift from using analytics to enhance the effectiveness of traditional processes to building new ways of operating. In the consumer goods industry, for instance, manufacturers are increasingly turning to point-ofsale data from their retail customers to design algorithms that allow product manufacturing and replenishment strategies to be tailored to the stages of the product lifecycle in real time.
Improvement The utility of such an approach for pharma companies facing tougher generic competition and lengthening R&D timeframes is obvious. What’s more, the industry’s current focus on improving product traceability and supply chain
security will tend to build exactly the kind of links with customers and distribution partners that can provide the data to drive more analytically oriented forecasting and replenishment. For guidance on how analytics can be best deployed in the pharma industry, it’s helpful to look at how analytics ave ve drive dri driv have driven improved performance in other industries. For iin n instance, a leading big-box retailer in the United tates ates has ha been able to leverage two decades of experience States in collecting and reporting on product data to radically democratize decision-making; pushing decisions on reorder points, product mix and discounting to a local level; and allowing store employees to custom-fit sale items to condions in tth tions the community. Forw waa w Forward-thinking internet retailers in several categoes have hav iinvested heavily in developing predictive models ries of user behaviour which allow them to direct advertising and product recommendations based on users’ likely prefrences ences aan erences and their own inventory and margin requirements. And do one of the world’s largest manufacturers of buildngg materi mate mater ing materials uses a predictive model of traffic and weather conditions that allows them to guarantee a 20-minute arrival window for perishable mixed cement, a capability that has enabled them to charge premium prices for the most basic of commodities. Several common themes emerge from these examples. One is a cultural focus on analytics; high performers have a quantitative mindset, constantly using data to challenge assumptions and separate ‘what we know’ from ‘what we think we know’. Equally important is a focus on using analytics to drive differentiation – analytics are used to seek out prospective sources of competitive advantage, rather than just measuring past performance. Finally, these companies have moved beyond internal data to draw information from the outside world where necessary. All these capabilities come together to make analytically advanced companies more customer-centric than their competitors. If the challenges facing the pharma industry are large, so are the opportunities. For companies wondering how to begin building analytics capabilities, taking a closer look at working capital can be an excellent place to start. A short, two- to four-week investigation of working capital using a strong analytics approach can provide both short-term opportunities for fi nancial benefit and insights into which areas should be prioritized to develop analytics capabilities in the long run. The recent wave of merger and acquisition activity offers especially tantalising opportunities for the consolidated companies. Improved analytics in the areas of business simulation, network optimization and risk modeling offer the potential for greatly enhanced synergies, and a quantum jump in supply chain capability. The path blazed by pioneers in other industries offers pharma companies the prospect of comparatively rapid advance toward strong analytical capabilities and the benefits that go with them. Eugene Jones is a Senior Executive at Accenture, a global management consulting, technology services and outsourcing company. He leads the supply chain practice for Accenture’s Life Sciences industry group.
Meeting global compliance challenges Improving cross-border compliance enables pharmaceutical companies to streamline global operations, lower costs and speed products to market – all while serving an increasingly segmented market.
ncreasingly pharmaceutical companies are being forced to perform a high wire act in support of competing interests: control skyrocketing research and development costs, be the first to market with innovative drugs, and meet stringent compliance and regulatory requirements. So where, if anywhere, is the next opportunity for pharmaceutical companies to simultaneously cut costs, shorten cycle times and bolster compliance? Innovative companies such as Pfizer and GlaxoSmithKline are finding it in Global Trade Management (GTM) automation. Global Trade Management involves the movement of goods across international borders. In its simplest form, GTM includes sourcing goods and materials from foreign suppliers, taking orders from and shipping goods to foreign buyers, tracking goods from country of origin to country of destination and complying with country specific trade regulations. Most in-house GTM operations are extremely inefficient. In terms of financial costs and increased compliance risk, the impact of these inefficiencies can be significant. According to a recent Aberdeen Group study, “a $1 billion company can free $10 million and $40 million in cash by better controlling its basic global trade processes.” Plus, regardless of whether a company uses a forwarder, broker or other third party to handle the physical import, the importer of record is ultimately responsible for any errors or omissions in its trade documentation. The good news is mature technologies are available today to assist companies improve their global trade operations. The results from these solutions are also well documented. As an example, one leading research-based pharmaceuticals firm reduced its import clearance times by 63 percent – from eight days to three – preventing costly disruptions
Management dynamics.indd 70
Jim Preuninger is CEO and serves on the board of directors of Management Dynamics, the leading developer of global trade management (GTM) solutions and information services that automate the global supply chain. He founded the company in 1989 and through his visionary leadership has helped deﬁne the GTM market. www. ManagementDynamics.com
and potential added fees by improving its GTM operations. The company’s diversified global health care portfolio includes human and animal biologic and small molecule medicines and vaccines, as well as nutritional products and many of the world’s best-known consumer products. Prior to automating, streamlining and unifying its import processes the company had difficulty integrating its import operations with four brokers and three forwarders, particularly as it was using several disparate systems to manage its import process. In short, the company lacked visibility into the import process and struggled with improving its import processes. In response to these issues, the company deployed a GTM solution to automate, streamline and manage the entire import process, from pre-customs through customs clearance and post-entry activities. The organization now has a consistent method for handling its import process, and has centralized its catalogue of pharmaceutical products for shared, uniform access. All parties involved in the import process have access to information and processes and can collaborate with each other via a single online location, improving data timeliness and accuracy. Plus, the company is now able to access the wealth of operational data available, driving better decisions. Users across various functions can run web-based reports or manage key metrics to improve operations, cash to cash and inventory cycle times as well as decrease costs and better manage service providers. As a result, the company now ensures compliance by managing the product classification workflow prior to entry fi ling – preventing delays, along with the associated risks and costs of non-compliance. Armed with this knowledge, users can gain insight into which products are causing delays or errors upon entry, as well as measure import clearance times and broker service level agreement compliance. The company has thus moved from a tactical decision making model using limited data to continuous process improvement based on lean principles. The lesson learned here is that good data and performance measurements are critical to effective operations management, especially in the world of trade compliance. It’s no longer possible to ignore compliance. Today’s complex global supply chains with ever-changing trade regulations demand that companies seek new ways to improve their operations to remain competitive and improve the bottom line.
ASK THE EXPERT
Monitor with clarity What is the importance of the FDA guidance document ‘Suicidality: Prospective Assessment of Occurrence in Clinical Trials’ and how can I comply?
W Michael is responsible for managing all aspects of the ePRO Solutions suite at ERT, including product development, operations and sales. Before his current position, Michael was VP for Business Development at ERT. He has over 20 years experience in the healthcare ﬁeld and holds both Bachelors and Masters Degrees in Engineering from Rensselaer Polytechnic Institute in Troy, New York.
hat is the importance of assessing suicidal ideations and behaviors in drug trials? How can we best accomplish this assessment during drug development? Is this an area of concern in therapeutic areas previously considered to have minimal psychiatric side effects, such as asthma, acne and insomnia? These are the questions that this FDA Guidance seeks to clarify. In addition, there is also a lack of conceptual clarity and well-defi ned suicidal behavior terminology that means investigator variability can occur when assessing suicidal tendencies in clinical trial participants. Th is can then lead to suicidal behaviour and ideation not being consistently or accurately identified. The need for the monitoring of suicidal ideation and behavior in clinical trials is increasingly recognized as a vital safety requirement. To ensure patients are proactively identified and treated for suicidal systems, the US Food and Drug Administration (FDA) has recently released a guidance document entitled: ‘Guidance for Industry Suicidality: Prospective Assessment of Occurrence in Clinical Trials’.
“Following the C-SSRS algorithm ensures all questions are asked in a consistent manner, resulting in reduced clinical variability”
The FDA guidance document is intended to assist sponsors in assessing the occurrence of treatment-related suicidal ideation and behavior in clinical trials or drug and biological products. The guidance highlights the increasingly recognized importance of suicidal assessment in psychiatric and non-psychiatric drug trials and provides general principles for how best to achieve effective assessment during the drug development process. In addition, the document highlights the Columbia Suicide Severity Rating Scale (C-SSRS), which comprises a detailed interview as an approved assessment instrument. The ‘prospective assessment of suicidal ideation and behavior’ recommended by the FDA Guidance involves proactively querying patients about the occurrence of suicidal thinking and behavior, instead of relying on patients to report such occurrences of their own will and the subsequent retrospective classification of these events into appropriate categories. Traditionally, it has been the investigator sites who take the responsibility of producing reliable assessments in clinical trials when new safety requirements have been introduced. Therefore, it is important pharmaceutical companies identify a reproducible suicidal monitoring method to relieve the burden on investigators and facilitate compliance.
eC-SSRS ERT’s eC-SSRS is an electronic self-rated version of the C-SSRS, which was developed in collaboration with the scale authors and provides a cost-effective method of proactively monitoring suicidal ideation and behavior for trial sponsors. The solution was designed in anticipation of the FDA recommendations. Using interactive voice-response technology validated against the C-SSRS, the eC-SSRS is a fully structured interview providing standardized questions, relevant follow-up questions, error-handling routines using Interactive Voice Responsive (IVR) and scoring conventions. Helping to facilitate the FDA requirements, the eC-SSRS solution enables timely identification of possible risks and supplies rapid feedback to study sites for evaluation and follow-up.
Industry The industry can benefit from using this approach in several ways. Following the C-SSRS algorithm ensures all questions are asked in a consistent manner, resulting in reduced clinical variability. Suicidal risks are identified with prompt feedback to study sites for timely follow up, and the investigator site burden is reduced and sponsors can save as much as 25 percent. The unique advantages of this new solution were demonstrated in a validation study sponsored by a major pharmaceutical company. The eC-SSRS was used by psychiatric inpatients and healthy control volunteers. The results demonstrated the feasibility, reliability and validity of the eC-SSRS for assessing suicidal ideation and behavior prospectively. A survey of more than 250 clinicians and study managers resulted in 99 percent of respondents agreeing that the eC-SSRS can serve as an effective approach to meeting the FDA regulatory requirements.
Summary This reliability in scalability for delivery to thousands of patients with accurate recording, storage and documentation of patient responses will allow for easy unproblematic compliance with the FDA guidance document. Using this monitoring method enables pharmaceutical companies to produce high quality research, relieve site burden, reduce costs as well as adhering to the guidelines provided by the FDA and fulfilling the ultimate aim of saving lives.
PATENT CLIFF TO DRIVE INDUSTRY CONSOLIDATION? New research conﬁrms that the pharma industry is entering a critical phase as the patent cliff looms large.
he looming patent cliff facing major pharmaceutical companies is pushing the industry into a critical phase in terms of drug innovation and consolidation, according to life sciences research from Marks & Clerk, the international intellectual property group. The fi ndings, based on a survey of 381 executives across the pharmaceutical and biotechnology sectors, shows that big pharma is becoming increasingly reliant on patent term extensions to safeguard essential blockbuster revenue ahead of a likely ‘make-or-break’ round of company acquisitions. Now that the gains from yesterday’s small molecule based drug discovery have been largely enjoyed, the picture for R&D is now far more complex, with the research predicting increased industry convergence driven principally by acquisitions. Indeed, despite the global economic outlook improving considerably over the last year, the research paints a far from optimistic picture, identifying a number of industry-specific problems. The most pressing of these is the looming patent cliff facing originator pharmaceutical companies, whereby large numbers of blockbuster drugs are set to come off-patent between now and 2014.
“While the pharma industry may have avoided a wider economic cataclysm, it is still clearly facing an internal cataclysm of its own over the next five years” The research reveals that more than eight in 10 executives (82 percent) predict that big pharma will be unable to innovate sufficiently from within to replenish dwindling drug pipelines, leading to an increase in acquisitions. 68 percent forecast substantial acquisition activity within the next two years, with almost one-fi ft h (19 percent) anticipating major activity within the next year. Almost two-thirds (65 percent) believe the improved economic situation means the industry now has the confidence to go ahead with those mergers, with 63 percent indicating that the climate for doing business and access to funding have improved in the last 12 months. Dr. Gareth Williams, Partner at Marks & Clerk, believes that while it is encouraging to see the pharmaceutical industry slowly returning to health, the research merely indicates a shift in concern from the global economic backdrop and the subsequent funding drought to more immediate industry-specific problems. “Pharmaceutical companies may now have confidence and the support of institutional investors to press ahead with acquisitions although at this stage, selecting the right acquisition targets will be critical to their future R&D success,” he says. “Th is may explain
ANAL VIEW.indd 74
the 84 percent who believe the market is now confident to plow forward with strategic collaborations – they are determined to cherry-pick the best targets, while increasing reliance on patent term extensions buys them some vital time ahead of making a move. What is being predicted is not necessarily driven so much by desire as urgency.” Resolving the problems posed by the looming patent cliff is driving the industry’s increased reliance on patent term extensions to squeeze out commercial revenue for as long as possible. 97 percent believe that the industry’s reliance on patent term extensions will continue or intensify as blockbusters near the end of their patent life. 87 percent of respondents identify that this reliance is driven largely by dwindling drug pipelines at innovator companies. “While the pharma industry may have avoided a wider economic cataclysm, it is still clearly facing an internal cataclysm of its own over the next five years, prompting some major behavioral changes,” says Dr. Williams. “In particular, patent term extensions are becoming of central strategic and commercial importance to companies, whereas they were once simply one tool among many for securing future revenue. Now, development pipelines are drying up fast and the biotechnology sector – widely regarded as the future of medicine – has started to falter due to disappointments in clinical trials and a still fragile economic climate.” In such an environment, Dr. Williams believes patent term extensions represent the industry’s greatest chance to buy itself some vital time while it redirects its energies to rebuilding drug development pipelines. However, he warns that extensions will only postpone the inevitable for so long. “It is only a matter of time until innovator companies start to look to the fledgling biotechnology sector in earnest to lay the foundations of the drug development pipelines of the future,” he concludes. “We are also likely to see considerable convergence where originator companies move into some areas of generic competition, particularly in the area of biosimilars where they identify considerable commercial opportunity and threat.”
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Don’t be fazed by phases Mike Butler explains how Xceleron is helping its clients to answer critical clinical development questions. Can you remind us what you do at Xceleron please? Mike Butler. Xceleron is a small specialized development service company playing a part in helping drug companies overcome the significant challenges they face in today’s environment. We have facilities in Europe and the US and we use a unique analytical platform called Accelerator Mass Spectrometry (AMS) to measure investigational drugs and their metabolites in drug development. We use a light label of 14C – sometimes to distinguish from nonlabeled drug and sometimes just to enhance sensitivity. Many of the clinical investigations we support would not be possible without this unique approach. What types of clinical studies do you support and where are you seeing the greatest interest? MB. Xceleron has conducted client studies in Phase 0, Phase I and Phase II/III clinical development. The question of client demand is fascinating and we’ve witnessed long-term changes, where adoption of AMS is still ongoing, and short-term, driven by clients who are comfortable with how 14C LC AMS can provide value. The trend that unfolded over the past 12 years involved movement from traditional Phase II/III AME/mass balance studies through Phase 0 microdosing and onto Phase I absolute bioavailability and metabolism. The drivers of AME/mass balance in the early days were sensitivity (conventional techniques couldn’t support the study), radio-stability of the investigative drug (the molecule wasn’t stable with a high activity 14C label), and drugs where high levels of radioactivity couldn’t be dosed for safety reasons. Phase 0 micro-dosing studies attracted great attention five years or so ago when European companies sponsored the CREAM and EUMAPP collaborative investigations and then the US FDA proposed microdosing as a component of their e-IND approach. Finally, pharmaceutical companies wishing to improve early developmental efficiency have driven interest in Phase I studies. Needless to say, we’ve consistently performed the established studies as we’ve developed new ones. The shorter-term change that we’ve witnessed is equally fascinating. Starting two years ago, we entered into a period of high demand for studies to investigate absolute bioavailability in Phase I. Th is has continued through 2010 and we’re now conducting an order of magnitude more of these studies than we did just three years ago. Th is year, we’ve witnessed more than normal levels of interest in Phase II/III AME/mass balance studies as larger companies usher assets through the later stages of
development. We think that client demand today is based more on business need than on waves of adoption as it was in the past. What are the advantages to running the types of studies that you’re seeing increased interest in? MB. Starting with AME/mass balance in Phase II/III, our customers talk about two distinct advantages of working with 14C LC AMS, irrespective of the need for sensitivity or to overcome radio-instability or safety issues. For small molecule drugs, 14C LC AMS offers significant time and cost savings because using a light 14C label precludes the need for GMP material and animal dosimetry and distribution studies. Also in Phase II/III we’re seeing significant uptake in our innovative absolute bioavailability clinical design. Time and money is saved because there is no need for IV-specific safety data, formulation effort, or
EXECUTIVE INTERVIEW 77
large-scale GMP manufacture of an IV dose. For instances where absolute bioavailability is required by the regulators, our approach provides an attractive option over the traditional crossover design. In Phase I, our customers get the benefits of knowing absolute bioavailability (should the drug proceed, what is the likely down-stream cost of goods?) generated from this study design. Often in phase I, our customers also save time because they don’t need to plan an entirely separate line of clinical investigation. For example, we’ve included light 14C doses in food-effect studies, SAD and MAD studies and have shown that we can co-administer a PET ligand and 14C and generate absolute bioavailability from an imaging study. Essentially, our customers can derive absolute bioavailability from a simple additional arm on a previously scheduled Phase I study. The value that our clients are deriving from Phase 0 varies enormously according to their objectives. To give you some insight we’ve helped determine likely efficacy by confirming compound disposition in target and non-target tissues, quantified rate of conversion of pro-drug in isolated target cells and estimated the likely pharmacokinetics prior to full development. Supporting later development, we see a couple of interesting uses. Firstly, smaller companies are able to back-fi ll required information prior to an asset sale once safety and human efficacy are confirmed. Secondly, for portfolio management, Phase 0 microdosing has a place in establishing fast follow-on candidates.
“We have demonstrated value in identifying strong lead contenders, expedited late-stage asset development and helped identify drugs that would likely fail later and more expensively without our approaches” How does Xceleron’s approach to 14C LC AMS compare to LC-MS/MS and how do you ensure regulatory compliance? MB. At Xceleron we like to think of the 14C LC AMS approach as complimentary to tried and tested platforms such as LC-MS/MS. In small molecule development, I foresee our clients using 14C LC AMS in conjunction with LC-MS/MS to enable innovative clinical study design that could not be achieved with either separately. Xceleron is very lucky to have had the benefit of time with a number of client study types to develop a balanced and robust regulatory approach. In 2010 we took steps to share and test the lessons we had learned over the years and processes we had developed. The fi rst thing we did was to collaborate with clients GlaxoSmithKline and Astra Zeneca and a respected expert in the regulated bioanalytical industry comparing 14C LC AMS with LC-MS/MS. From there, we developed a consensus toward an approach for analytical method validation, using the US FDA guideline as a benchmark. A white paper from this effort was
published last month. Later in the year we were invited to speak at the US CPSA meeting where we discussed with Celgene, GlaxoSmithKline and Bristol-Myers Squibb those same issues. We think that this kind of collaborative approach is the best way to help everyone understand how 14C LC AMS can be used productively alongside established analytical techniques and ensure we’re practicing a robust analaytical validation process.
Mike has 20 years experience in science-driven businesses in Europe, US and Asia. He has been President, Scientiﬁc Operations and Chief Scientiﬁc Ofﬁcer with Aptuit, Group Vice President at MDS-PS and Group Director of Business Development for Huntingdon Life Sciences.
Does Xceleron help pharmaceutical customers involved in biologics development? Yes. We’ve worked with mostly protein-based biologics thus far because we’ve shown that small proteins can be labeled with 14C with no apparent lost of structural integrity. Th is approach is very sensitive and provides cost-savings over ELISA testing because there is no need to generate matrix-specific methods. Thus far we’ve conducted most work with compounds in preclinical. In the clinical arena, we are in discussions with a handful of large molecule innovators around potential clinical uses. What do you think the future holds for Xceleron? MB. Considering the challenges our customers face in the pharmaceutical industry, we expect to see even more growth in each of the areas I’ve described in the very near future. We have demonstrated value in identifying strong lead contenders, expedited late-stage asset development and helped identify drugs that would likely fail later and more expensively without our approaches. If I were to gaze into the future and run the risk of being proven wrong by our customers, I’d expect to see us conducting more and more target studies that engage the platform’s ability to enable investigations beyond systemic circulation. I see great potential in following disposition and localized kinetics. We’ve already conducted a number of such studies and I expect many more as we move toward more fit-for-purpose approaches to individual asset R&D.
Riding the W wave
As the ﬁrst wave of emerging markets begin to crest, we ask Frost & Sullivan’s Maik Klasen what it all means for the second wave nestled closely behind it.
henever the topic of emerging markets crops up in pharmaceutical circles, the usual suspects always seem to emerge from the hat: Brazil, Russia, India, China and Turkey (BRICT). Undoubtedly they’re the big players in the next generation plans of the developed pharma world – with their colossal populations, low set-up costs and constantly upgrading healthcare infrastructure – and they’re sure to succeed once they fi nally emerge from the grasps of economic depression. Indeed, they’ve been on the industry’s radar for some time now, leaving little doubt that big pharma is interested and already dipping its toes into the BRICT markets. But with fi rms already establishing themselves fi rmly in these big-fish markets, what’s left for future investment? Well, fortunately for the industry, a second wave of emerging markets has recently cropped up on the radar – and if they can withstand the political and socioeconomic hurdles lying ahead, their potential is equally as significant; a notion that Maik Klasen, Senior Director of Healthcare and Life Sciences Consulting Group at Frost & Sullivan, knows all too well. “The overall objective of big pharma is to trade and make use of the current portfolio in markets that have been under-leveraged but where they see more buying power creeping up on these BRICT, first-wave emerging markets. They’re fi rst wave because they already have the capital expenditure and per-capita income,
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“If you’re trying to understand your local demands and local needs it will obviously come down to give-and-take to support the local infrastructure for overall healthcare”
where economists believe that the general public – at a certain income level – have got the buying power to be able to afford certain drugs,” says Klasen. Furthermore, the strategy of the fi rst wave when it comes to brand generics is simple – extend their lifespan outside their core markets and push further profits where possible. While it’s glaringly obvious that these profits will never reach the heights of their core market counterparts, the opportunity to flaunt some highly aggressive marketing in the BRICT markets is too easy to turn down. In return, the first wave has witnessed an upgrade in its healthcare infrastructure, an increase in spending when it comes to its healthcare and an increase in per-capita income – leaving the vast majority with the belief that there is now an established mass market for generics. So, where does the second wave come into play? Well, according to Klasen, it’s a case of people asking, “Who’s next?” “If you think about geographic expansion as a strategy then you have to look beyond the BRICT countries and ask what kind of countries could be the next target for the same strategy – and that’s where the second wave comes in. What I reported on during the recent NGP conference [in Vienna] was countries who show the fi rst signs of economic wealth as well as certain signs of per-capita spending on healthcare – as well as the capability of producing products within their country for easier distribution later on – that’s basically where the second wave comes in. “These are smaller countries, and it’s probably extremely early, I would say, in terms of the development there, so timing is crucial. The main question that hasn’t been answered yet is how these countries will develop in terms of their economic wealth, but they’re showing the first signs just like the first wave did 15 years ago.” But for many outsiders looking inwards to the industry, the second wave still lies in a grey area when it comes to realizing what their true position is in the context of market interest. Is it a case of merely keeping a watchful eye on how the second wave markets evolve? Not according to Klasen. Instead, he offers the probability that fi rms are looking to implement distribution channels within the
As it stands… Pharma sales in the second wave markets are notching up according to a recent keynote from Thomson Reuters. (TOTAL SALES IN MILLIONS IN US$)
Indonesia: 3112 Thailand: 2975 Taiwan: 3597 Vietnam: 1000 Venezuela: 4700 Argentina: 3829 Chile: 1200
Compared to the BRIC… China: 23535 Brazil: 14900
Russia: 9401 India: 9385
second wave markets, with low-cost manufacturing and regional distribution already in place in some of the central and neighboring countries. With that in mind, what are the biggest challenges facing companies looking to establish themselves in the second wave markets – and are they really worlds apart from those faced by the fi rst wave? “In general, I believe the challenges to be a little bit tougher with the second wave than they were originally with the first wave. The countries we’re talking about right now are countries that are still in a space but quite underdeveloped, meaning there’s far less capital and money available in general for the healthcare industry to grow rapidly. Again, depending on the country you’re looking at, it might be more or less challenging – but overall the socioeconomic environment is just developing, so these problems are beginning to come to the forefront.” For the likes of Thailand, Vietnam and Cambodia to name just a few, political instability and a lack of sufficient healthcare infrastructure could cause problems for countries looking to attract pharma fi rms and get to the front of the second wave queue. When it comes down to it, no matter how seductive a market could potentially be – companies are unlikely to move in if there are no secure grounds to build foundations on. Fortunately, the large majority of countries are already looking into addressing the ongoing issue of stability – a notion that Klasen views as a big step in the right direction. “The problem is that the overall economic environment, if you take Argentina for example, has a history of amassinglarge inflation rates and then recovering again. As a nation, Argentina actually has very well educated workforce and decent infrastructure, but its socioeconomic and political infrastructure is just not stable enough. So, they go through these huge ups and downs all the time, and that makes it hard to develop a sustainable, long-term business in the pharma world, as you always have to deal with income levels that continue to fluctuate too much. “If you take Indonesia, Thailand and Taiwan, probably Taiwan and Indonesia are now clearly more stable. Thailand and Vietnam are not really on anybody’s radar yet, but they are surprisingly trying to make an effort to develop a stable environment. Taiwan, for example, already has a manufacturing base, which is quite substantial compared to others. It’s got over 16 manufacturing facilities for API. Even Singapore and the Philippines have zero, so that an interesting note. You see similar development in other countries like Jordan, Malaysia, Ecuador and Columbia too; they’re all ramping up on API manufacturing and probably trying to become the local provider for APIs.” And whilst the presumption that the fi rst step for the second wave is to begin with manufacturing bases, the reality is far more ambigous. For a country or government, the strategy would be to try to manufacture and distribute off their own back. Obviously for big pharma this is a far from ideal situation. Instead, opting to shift product into the country in question – or having one of the more central manufacturing capabilities in the region – is what big pharma looking to play will want. From here, especially
with the latter, firms can then distribute into neighboring countries. Th is becomes interesting for pharma because infrastructure for manufacturing is established in certain countries, meaning they can essentially contract out should demand rise and the wish for a regional manufacturer prevails. On the same note, the importance of working with the local knowledge and talent base plays a key part in firms looking to establish themselves within the second wave markets. “You have to have a local presence to be able to gain credibility overall,” continues Klasen. “I do believe you have to have local talent hired to understand the environment, but also to be able to effectively market and distribute in those countries. To be completely external and foreign – a good example being China – has shown that you can’t be successful if you don’t have any local presence.” And, as the success of the future of pharma rests in the balance, both sets of emerging markets will have a big role to play; failure is not an option. “One aspect of being successful nowadays is trying to make the most of your current portfolio and geographic expansion strategy. It’s not necessarily the only strategy to success, but it’s one route where you can try to drive revenue and sustain products in your portfolio where you’ve got knowledge about the product and you know how the product itself is behaving and what kind of patient populations are reacting to it very well. Obviously there’s a pricing strategy combined with that, making the product available to a certain population – so the strategy is definitely not the only one to be successful, but it’s one to squeeze out the last drop of profitability from a product.” However, squeezing those remaining profits can only be done if companies are willing to work with fundamental etiquette at the local level – if you’re not sensible about the current and local needs within those markets, the chances are that your marketing efforts will fall at the first hurdle. But it’s not just the assumption that western approaches can be applied to developing markets and nations, it’s the surprise that associated services and other solutions that pharma firms had not necessarily thought of are more than likely to be requested from nations, governments or infrastructure services that are in desperate need of anything they can get their hands on. “But that’s exactly how you become a good marketeer,” affirms Klasen. “If you’re trying to understand your local demands and local needs it will obviously come down to give-and-take to support the local infrastructure for overall healthcare. Start with fairly easily and adjustable solutions and then go from there – the most important results are to attempt to establish your presence and reputation.” As for predictions, there’s a plethora that are already on the money, including Argentina, Bangladesh, Chile, Columbia, Egypt, Indonesia, Jordan, Taiwan, Thailand, Venezuela and Vietnam. “Depending on their particular development, I would say Venezuela has a high probability of being the wildcard of the bunch,” concludes Klasen. “The Philippines is also a contender for wildcard as its income levels are extremely low, so it’s hard to really call them a secondary market, but the others are a little more stable.
“I think people haven’t paid a lot of attention to Columbia and Chile in the recent past, which is interesting. Argentina is defi nitely recovering and is on the forefront of every marketeer now, so it’s not an entirely unknown entity anymore; the same is true of Egypt. People know the country very well for its tourist attractions. Again, Indonesia is no different. Jordan, in my opinion, is the true wildcard as it’s a very small country in the overall market.” Wherever the wildcard prevails, one this is certain: the second wave will become increasingly more important in a playing field that is constantly shift ing towards the developing world. China and India have already proved their worth in the fi rst wave, with API manufacturing and generics rocketing up the charts consistently since 2009. Can the second wave function in the same way? Only time can tell, but for the immediate future all eyes are on the swell.
Taiwan has 16 more API facilities than Singaporewith none
Trends in outsourcing analytical support in pharmaceutical development With David Beyerlein of MicroConstants, Inc. and Dominic Moore of Waters Corporation
What do you see as the main trends in outsourcing of analytical and bioanalytical support for pharmaceutical development? David Beyerlein. One continuing trend is the emergence of new “one-stop shop” service providers. While these models seem attractive initially, the overhead for these organizations is often so high that you lose out on the cost savings outsourcing makes possible. Additionally, drug developers need to ensure that the bioanalytical/analytical support function is indeed the core expertise of the vendor, rather than an ancillary service, or an afterthought. Th is can be avoided by choosing a CRO that has a niche focus with strong relationships and partnerships formed with other niche CROs to provide services all along the drug development continuum. Dominic Moore. Partnerships are the key way forward to pharmaceutical outsourcing relationships. Every month we see announcements that a pharmaceutical company has partnered with an outsourcing organization to help develop their drug and this extends into the analytical arena. Numerous companies now rely on their outsourcing partners to provide the majority of their analytical and bioanalytical expertise, not just in a routine sense, but from early method development onwards. As such, the scientific presence in these providers is growing exponentially, thus the demand for state-of-the art instrumentation and data systems is growing. What are the current expectations of customers in the analytical outsourcing function? DB. Our clients are always looking for quality above anything else. While cost and timelines are important to any drug development study, if you can’t have complete confidence in the data that is produced, then money and time have been wasted. As an outsourcing provider, quality has to be the top priority. Every study needs to adhere to the latest relevant regulatory guidelines in the industry so that there is no question about the validity and accuracy of the results generated. DM. Customers are looking for quality, timeliness, and then cost. They want to know the provider can generate good quality scientific data, using high quality, state-ofthe-art instrumentation and data systems which are used in an efficient and compliant manner which allows the customer to accelerate their drug development plans. What are the main challenges the CRO industry has to face with regards to outsourced analytical and bioanalytical work? DB. Today every CRO faces challenges with competition, both from foreign markets and with the internal resources of drug developers. But one of the biggest challenges is with some of the compounds CROs are asked to develop methods for. Increasingly, bioanalytical service providers are awarded projects for compounds in which the methods can be extremely difficult to develop. However, service providers
with the most experienced and talented method developers will embrace these challenges and view them as opportunities to be scientifically creative to achieve success. DM. To remain competitive, CROs need to remain flexible to all of their clients’ demands, be able to work efficiently, and have the most productive systems and processes available. In order to do this, they need to invest in the latest rapid and sensitive analytical solutions, and ensure that processes are geared around getting the highest level of productivity from these investments at all stages of the cycle. How do you see the analytical outsourcing model changing over the next 10 years? DB. One of the biggest changes recently in the pharmaceutical industry has been the decreased focus of big pharma’s internal R&D functions. Th is change in in-house capabilities is going to have a huge impact on the outsourcing model over the next 10 years. It has already led to an increase in virtual drug development and outsourcing models which will eventually increase the role CROs play in the drug development process. DM. The role of the CRO will increase to a point where they lead the strategic and development efforts for the pharmaceutical companies rather than being a partner in the process. In order to do this, the CRO industry will continue to innovate in areas of science and operations, ensuring they have the best tools possible to maintain high levels of productivity and quality for years to come. Dominic Moore, Waters Corporation Dominic Moore is a Senior Business Manager in the Waters Pharmaceutical Business Operations team, working to deliver solutions that will positively impact customers’ laboratories and business objectives. Dominic brings several years of experience in pharmaceutical development at AstraZeneca in the UK. Prior to joining Waters, he was pivotal in growing the analytical services business at Charles River Laboratories, a global CRO, focusing on formulation support.
David Beyerlein, MicroConstants, Inc. David Beyerlein has over 11 years of experience managing laboratory operations, is an experienced analytical chemist, and is highly skilled in the use of the mass spectrometer. David co-founded MicroConstants, a bioanalytical and pharmacokinetic-specialty CRO, in 1998 with Dr. Gilbert Lam, and currently serves as Vice President of Global Operations.
Below the surface As companies continue to magnify their efforts in the realms of manufacturing, Jeffrey L. Mooney highlights the importance in utilizing sufﬁcient surface technologies. From your perspective, what are the current hurdles being faced by the surface technology and manufacturing sectors, and how can they be overcome? Jeffrey L. Mooney. With the increase in more stringent government regulations and heightened competitive pressures, gone are the days of spending hundreds of millions of dollars on state-of-the-art facilities. Pharmaceutical companies are opting to focus on manufacturing processes by, in part, identifying and utilizing scalable products and technologies that allow for smaller projects that are highly targeted. This move to more scalable technologies, such as disposable bioreactors and synthetic, non-biological cell culture surfaces, allows pharma companies to explore many different options simultaneously while minimizing costs, improving results and decreasing the effects of biological influences. Additionally, stem cell research continues to advance and is playing the role of ‘game changer.’ Furthermore, the use of Contract Manufacturing Organizations (CMO) to meet economic cost targets is also playing a role and shaping the industry. The question becomes whether pharma and biotech companies will continually move to CMOs or if the final solution will be a CMO with all forms of scale-up handled in-house. That answer is still being determined. With the industry looking to streamline its manufacturing processes to become more cost-effective, what technologies do you have in your armoury to ensure you continue to remain competitive as the industry evolves? JM. Corning Life Sciences places an emphasis on investment in R&D, product and technology innovation, and meeting customer needs. Our business brings to pharma companies a unique combination of core capabilities in materials, surfaces and biophotonics to deliver high value products for both research and drug discovery and development including, cell culture/cell scale- up technologies and high throughput label free detection and screening. Most recently, Corning introduced the Corning Synthemax Surface, for Xeno-free growth of both primary cells and stem cells. Corning also provides pharmas with a wide range of cell biology products, which allows for ‘cells to assays’ solutions – enabling growth and scale-up of cells for assays and protein expression. Corning has commercialized numerous technologies for scale-up and production including HYPERFlask Vessels, CellSTACK Culture Chambers and CellCube Systems. Corning also offers a full line of 96, 384, and 1536 well microplates for assays, storage, drug transport and protein crystallography. Additionally, its Epic technology provides pharmas with a leading high throughput label free detection system. Corn-
ing continues to advance its position in label free detection by providing protocols for biochemical and cell based assays as well as providing enabling methodologies for drug repositioning and early toxicology profi ling. As pharma ﬁrms look to head into more complex compounds dealing with higher levels of unmet medical need, how does the dynamic change between yourselves and your clients – especially considering the need for open collaboration within the industry? JM. With the rapid changes taking place today, specifically regarding the complexity of research to meet advanced medical needs, a one-size-fits-all approach will not work. The key will be close working relationships between pharmas and vendors based upon open and frequent dialogue that breaks down silos and drives product and technology innovation to meet researchers’ needs and maximize results. Where do you see the world of surface technology manufacturing heading in the next few years? JM. The future of surface technologies and manufacturing is moving more and more towards surfaces that enable close in vivo cell environments, synthetic surfaces that are scalable in formats, and Xeno-free surfaces. Additionally, because research and the technologies that support it are progressing so rapidly, a solid understanding of both current technology and new technologies will be paramount – further emphasizing the need for open relationships to ensure emerging needs and the rate of innovation are in lock-step.
Dr. Jeffrey L. Mooney is the commercial technology director at Corning Life Sciences and is responsible for assessing and developing product concepts and technologies for genomics, proteomics, and advanced life sciences. Mooney has Bachelors and Masters degrees in biology from Gettysburg College and Villanova University respectively and a Master of Arts Doctorate in biology from Temple University. He has more than 50 patents and 15 publications relating to genes essential for growth, microarrays, high throughput cDNA cloning and sequencing.
Corning Life_AD.indd 1
NEXT BIG THING
Asset management for the long term At a time where the industry is treading water trying to work out its next route to future success, asset management is proving itself to be a pivotal player in keeping it aﬂoat.
diminishing pipeline, imminent patent expiries and global recession are all contributing to the fi nancial pressures facing life science businesses today. Consolidation through mergers and acquisitions is providing some cost efficiency, and CFOs are examining every aspect of the business to identify savings opportunities to further trim budgets in the longer term. As a response to these pressures, asset management in the R&D environment has emerged as an opportunity to achieve productivity gains. Effective asset management programs not only control costs, they also emphasize innovation by minimizing the amount of effort scientists spend on administrative tasks, allowing them to focus on research. The pioneering asset management program providers are moving toward quantitative measures of capacity and output in the lab, enabling companies to use data to optimize capital and operating expenditures. As a fi rst step in improving asset management, service providers offer pharmaceutical and biotech companies accuracy and control over basic inventory activities. Keeping track of tens of thousands of instruments across multiple labs can be daunting, especially when managed manually and often with different operating systems. A robust IT system tracking the location and ownership of instruments offers many advantages and, when properly managed, provides access to inventory records ondemand and always up to date.
“Effective asset management programs not only control costs, they also emphasize innovation” Many asset management programs also include a multi-vendor service component, of which a common element is managed services, or a single contact that coordinates all instrument service needs. Th is simplifies administration, shift ing the burden away from scientists and technical staff, releasing them for more valuable research work. Additionally, consolidating servicing activity usually reveals inconsistencies in pricing and opportunities to adjust service levels, generating cost savings without sacrificing quality. In addition to managed services, some programs offer on-site service support, a model in which a dedicated team of engineers responds to service requests. When
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properly staffed and executed, such programs can reduce issue resolution from days to hours, whilst also generating cost efficiencies. The vast volume and variation in the installed base of equipment at R&D sites make these programs difficult to execute, but the payoff is huge when managed effectively. It is important to recognize that only so much can be achieved via consolidation, before service delivery or quality is compromised. Investment must be made to maintain an instrument in a condition to produce a reliable and repeatable result. While savings are desirable, companies should resist the temptation to maximize short-term gains to such an extent that availability and reliability of instruments is jeopardized. Many early adopters have now progressed from the ‘quick wins’ of securing multi-vendor maintenance contracts, to demanding a deeper understanding of their asset utilization. Merging inventory and maintenance data with insight into utilization and deployment of instruments is the next frontier of opportunity for achieving the optimal balance of creativity and productivity in the R&D lab. Looking ahead, innovation in asset management must move beyond simply managing and maintaining the asset base more efficiently, to reliably generating measurements that can be used to adjust the capacity and workflow of the R&D facility to match the current and anticipated demand. Asset management offerings will need to report not only where instruments are, but how and when they are being used, to provide data that can be analyzed to reveal opportunities for reducing the asset base to match the workload. Growing M&A activity has highlighted the poor understanding most companies have of their total asset base and even worse lack of assessment of the equipment utilization in their labs. A solution that provides a true program measure will deliver the critical information required to redeploy or liquidate unnecessary equipment, offsetting capital expenditures for new equipment and operating costs such as bench space, power consumption, reagents and maintenance costs. The depth of asset visibility that market-leading asset management service providers can deliver through inventory taking, asset management, and ultimately asset optimization could revolutionize the way companies conduct their business. When making decisions about how to implement and optimize such programs, companies must keep the long term in mind.
Mike Benevento leads the Services organization for GE Healthcare’s Life Sciences business - providing maintenance and validation support for GE instruments, as well as multi-vendor support/asset management services. His extensive background in the pharmaceutical industry includes serving as an industry specialist at PricewaterhouseCooper. Since joining GE, Benevento has served in leadership roles in six-sigma, operations management and marketing.
Environmental monitoring and contamination control Improving efﬁciency in bio-contamination control and risk mitigation using hydrogen peroxide (H2O2) decontamination processes. By James Drinkwater. Bio-decontamination efﬁcacy and material/ process compatibility
here is a need to improve efficiency in the pharmaceutical industry to meet new challenges of globalisation, competitiveness and the increasing diversity of products. The risk of biological contamination is increasing and, unchecked, is a risk factor for production processes and product quality, with potential damaging consequences on business performance and risks to patient health. This article considers environmental monitoring and contamination control strategies using the benchmark gaseous bio-decontamination process, hydrogen peroxide vapour (HPV).
Bio-contamination control and monitoring Quality Risk Management (QRM) needs to consider the inefficiencies in microbiological monitoring. The forthcoming revisions to the ISO14698 standard on bio-contamination in cleanrooms and controlled areas and the USP<1116> microbiological control and monitoring of aseptic processing environment chapter, will place more emphasis on ‘contamination rates’.
Improving bio-decontamination assurance As monitoring technology improves, the detection of ‘actual’ contamination will present new challenges. Improvements in monitoring need to be complemented by improvements in bio-decontamination control. Alongside this, ‘decontamination assurance’ will need to be demonstrated through log reductions in the biological contamination to pre-defined target levels. Vaporized hydrogen peroxide can be validated with Geobacillus stearothermophilus biological indicators1 to routinely achieve 6-log sporicidal reduction at room scale. Biological indicators are an industry standard method used to validate steam sterilizers/autoclaves. The gaseous vapour phase decontamination process4 using hydrogen peroxide under specified conditions, has been accepted by international regulators as a method of achieving ‘surface sterilization’.
Most importantly the H2O2 process is not wet - compared with manual disinfection. In the optimized process2 vaporized hydrogen peroxide molecules are only delivered to surfaces past dew point3, at a sub-visible and effective level (2-6μm thickness). Controlled removal - leaves surfaces ‘residue free’. The contact time of the active HPV (at sub-visible 2-6μm), and the residue-free nature following the aeration cycle, separates the process from a ‘wet’ condition. HPV also exhibits broad material compatibility and can be successfully used in areas containing sensitive electronics.
Potential efﬁciency savings using a vaporized H2O2 bio-decontamination process Using the gaseous vapour phase decontamination process, filling lines can be gassed-in-place (GIP) including indirect product contact parts. Such a strategy presents significant efficiency savings and risk mitigation4. Following commissioning, or re-qualification, with facility shutdowns, cleanrooms can be returned to ‘microbiological control’ state quickly by deploying a HPV process that can be verified using a biological challenge. Such a process can be deployed as a room bio-decontamination service without the need for capital expenditure. At the restart of a HVAC set back in a cleanroom facility following a quiet or non-operational period, a validated HPV decontamination process can provide evidence for compliance to enable the room to be returned quickly into production. Traditional ‘spray and wipe’ disinfection transfers for materials entering cleanrooms are now under challenge, as the process is difficult to comprehensively validate. This has led to significant growth in efficient HPV gassed transfer chamber products which provides a more effective and fully validatable bio-decontamination process.
James Drinkwater is currently the Process and Compliance Director for Bioquell UK bio-contamination control and contamination risk mitigation solutions in life sciences, together with being the Chairman of the Pharmaceutical and Healthcare Sciences Society. After 10 years in the pharmaceutical industry, his current specialization is in aseptic processing and infection control.
Discussion The HPV process provides a more ‘complete’ bio-decontamination. When a high efficacy, automated bio-decontamination process is used (including in-process critical control point monitoring), significantly less microbiological monitoring is justified, limiting sample sites to worst case and high risk locations. The reduction in monitoring reduces the cost and extent of monitoring required in addition to reducing the risk of false positives. By improving the ‘decontamination assurance’ using a scientifically validated HPV process then there is inherent improvement in ‘sterility assurance’.
For references associated with this article, please see www. ngpharma.eu.com
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OPERATIONAL EXCELLENCE 91
T With the industry searching in all directions for ways to cut costs and improve efﬁciency, one pharma ﬁrm has found what it’s looking for – and now it’s all under one roof.
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hey say that solid foundations build a trusted house – and when your vision is to become ‘Best Pharma’, you better hope that those foundations are more than just solid. Fortunately for Merck Serono, which resides under the Merck KGaA umbrella in Darmstadt, Germany, its foundations are built on over 300 years of industry knowledge and expertise, boasting over 40,000 employees in 64 countries. And with Merck Serono, the division responsible for innovative prescription pharmaceuticals on behalf of Merck, investing in roughly 17,000 employees worldwide, there’s no doubting that it’s also a trusted house. But a trusted house doesn’t necessarily mean an efficient house, which is exactly why back in autumn 2005, Dr. Hanns-Eberhard Erle, Executive Vice President of Technical Operations, took it upon himself to put Merck Serono’s ‘Best Pharma’ mantra to the test, setting it off down a path towards the fi rm’s next level of excellence. His mission: to achieve Operational Excellence (OPEX). But with an initial rummage through the proverbial toolbox of approaches to achieving OPEX, it became quite clear that the standard practices of Six Sigma, Lean, Kaizen and Kanban were being under-utilized on a case-by-case basis. What Erle soon realized was that if OPEX was to be achieved, it needed a new approach. “My approach was to create something through understanding our system that drew upon an holistic approach and that could create a cultural change,” begins Erle. “Within technical operations this meant manufacturing, supply chain, quality and a process and formulations development department.” With this in mind, Erle defi ned a House of Operations with Aviveon, a small consulting company consisting of down-to-earth consultants. “The House of Operations is called that because we built it with a foundation in which we asked, ‘What do we do in our business?’ and ‘How can we describe it?’ Eventually we built our house with several rooms. The bottom room, or foundation, deals with managing people. Building up from that, we also have to manage production, technology and supply, but also change, performance and reporting. These ‘rooms’ are built out of what we call bricks.” The bricks are specific topics that belong to the room. For example, in the room of managing people you’ll fi nd talent management, reward and recognition, hiring process and other relevant bricks. “So to take talent management, a team of experts has described in our OPEX handbook exactly what we understand that to mean. Then, after we’ve described what it is, we make a description and a questionnaire with a maximum of 15 questions to describe and assess the level of excellence that we have in this brick.” As Erle explains, for each brick there is a questionnaire containing yes/no answers. Do this for all 33 bricks that build each of the 23 site houses and you’ve got yourself an overall score. What Erle and his dedicated team then did was to translate that score into an overall color code from red through to yellow, and ultimately green to denote the highest level of excellence, reflecting the current success of any given brick. In conducting the self-assessment, Erle was able to then mock up a literal picture of the success under the roof of the house. “It started three years ago with a pretty reddish-orange color, so we had a vast amount to do to improve the majority of our rooms. The most important thing to do next, after establishing both the House and OPEX handbook, is to identify gaps highlighted by the self-assessment.” By combining with the management team, Erle used the identification to assess gaps that were common in all sites, before focusing on fi xing them as a matter of urgency.
“For example, we wanted to improve Six Sigma as it’s a tool that helps us generate cash, so we made it clear to all the sites that we were going to work immediately on improving that brick. So next year they need to deliver better in that cycle. Out of the same gap analysis we also gave control to each site to choose two or three other bricks they wanted to improve on before developing an action plan. Th is action plan was then implemented taking into account implementation stops, which are mandatory in our system for best practice sharing (BPS). So when you scan across all our 23 sites and look at the relevant bricks, you can see which sites function better than your own. Best practice sharing is the most effective way to get easy, fast information about what you can do better through what has been proven.” The idea of starting an action implementation by harvesting the good of others proved extremely fruitful for Erle and his team – and indeed for their sidekick-consulting fi rm Aviveon. But its success came down to the simplest of facts: those who wrote the OPEX handbook had already lived it. The 120 people chosen to get involved were already extremely closely linked with the process – because they were also doing the self-assessments. With this team behind him, Erle had cleverly lent on the experience and subsequent input of these 120 staff to “convince everybody that this is a part of our way of living.” As Erle puts it: “Everyone needed to understand that in Merck Serono’s technical operations, this was understood as the wave of the future. That means continuous improvement is not something I start and stop when I have fi xed the issue. Instead, I explained that continuous improvement is akin to moving up a helix and not a spiral, as in the industry at the moment we’re seeing cost containment and healthcare systems giving discounts and so on. It’s no easy feat obtaining cost increases, let alone launching new products or forcing margin pressures. The approach had to be holistic, an idea I tried to convey from the beginning to my management team and then to the sites. I was going to each site and educating myself on what it rated. You have to truly sell it and make that sales pitch for it to work.”
Merck Serono ‘House of Operations’ 2007
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Yet for all the selling that needed to be done, there was one facet that sold itself: Merck Serono’s BPS award. Awarded to one site every year, the BPS award gives just over $27,000 to the winning site so they can celebrate, with at least 10 percent being donated to a community project of the site’s choice. “Th is best practice-sharing award is a prestigious one,” exclaims a proud Erle. “The sites submit their best practice, then we assess and evaluate it through our system, before the shortlist goes on the company’s intranet. Sites can also score when they implement, so it’s designed that you don’t just win for innovation, but also implementation.” Of course, changing the culture of any operation is not an overnight process, which is why Erle rolled the new house standards out to five initial sites – who were also partly volunteers in the program – as a pilot run to test its potential. After harvesting the necessary feedback from the pilot sites, he was then able to adjust where applicable and roll the slightly revised version out to the remaining 18. But surely, in acquiring Serono in 2007, the then newly formed Merck Serono would encounter some pretty big hurdles in introducing a completely new limb to the House of Operations? Well, apparently not. According to Erle, “it was actually very exciting”. “When we started in Merck with the pilot, we had to first experience that the pilot worked successfully. Then we acquired Serono and had to integrate their sites with ours. Th is House of Operations – our version of operational excellence – was an extremely powerful tool to get all the sites speaking the same language, despite their differences in terms of technology used and products manufactured, i.e. tablets versus biologics.” Ultimately, and contrary to popular presumptions, Erle and Aviveon’s House of Operations enabled Merck to not only bring Serono up to speed with their operations, but functioned to integrate the new sites into the existing scheme of things. “After three years, you can go wherever you want, and when you speak to others they’ll explain the House exactly the same as I’ve explained it. As I’ve already said, it’s become a way of living for us at Merck Serono. People know this down to the shop floor.” And for Erle, having complete integration and comprehension from the shop floor up was what it was always about. Without it, the House of Operations would most likely have looked more like a top-floor penthouse apartment affair, with a select few controlling a program understood by even fewer – a sentiment also shared by the fi rm, which explicitly states that its BPS produced “…a drastic change. In the time before the OPEX program, only site managers and a few engineers would travel and visit other sites. Now there is company-wide contact on all levels: quality managers, Black Belts, Overall Equipment Effectiveness (OEE) experts, engineering, local brick-owners, and so forth. Every contact is a nucleus for the sharing of best practices.” “There’s a network between the site focal point and our global function that drives what we do,” affirms Erle. “Every year they review the bricks in our handbook – not that we totally discard everything to invent it again, but if we have to adapt something then it will be done so in common agreement where ev-
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erybody is aligned with the new version and on the same page’. Intertwined with this are Merck Serono’s ‘global brick owners’, consisting of global experts, members of management and vice presidents, who stand as quasi-supervisors to the review process. “It’s always good to keep a high-level supervision in place to ensure that we are continuing to stay state-of-the-art and not going in the wrong direction,” commits Erle. But it’s not just for revisions that the global brick owners combine with the wider scheme at Merck Serono – they’re also pivotal in progressing the OPEX program and building on the success of their House of Operations for the future of the company. And, at a time where the industry is witnessing everything but security, ensuring future paths to success are an obvious top priority; something Erle is all too aware of. “We noticed after our fi rst cycle that the system works, but we’ve also noticed that it’s getting more and more difficult to achieve new targets that we set each year for each site, which come from the top levels. We look at their proposals and assess whether it’s reasonable; if it’s not then we’ll challenge it. We also set targets of how much we want to improve every year. But, as the sites are already confidently good – as natural as it is – it’s getting far more resourceintensive and difficult to improve.” As sites will not be able to sustain the same progress, as measured with the same metric, the challenge for the team was then to fi nd the appropriate means to set targets and to measure progress in the future.
Merck Serono ‘House of Operations’ 2009
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As a result, Erle has made a point in highlighting that the importance shouldn’t now just rest on reaching a specific overall percentage improvement every year, instead focusing on improving bricks that will in turn deliver more profitable and efficient cash initiatives. They do this by giving a specified target set for improvement, referred to as an Operational Excellence index. Th is offers the sites the freedom to choose from the index which targets what they want to concentrate on, depending on their individual situations. As for the future, Erle notes not just an increased focus on fi nancial contributions, but the need to integrate the shop floor more across the board now that certain standards in the House of Operations have been attained. “Th is means we will probably have more Kaizen projects, which are usually managed on the shop floor, as we don’t want the perception that this is just a program run solely at site level; I want this going down to the teams more than it is today.” For Erle and his team, the House of Operations is merely a starting point for the future of Operational Excellence. And, having already noted between eight and 13 percent productivity improvement, not to mention the five percent cost improvements year-on-year since 2007, they’re doing more than just heading in the right direction. They are the right direction. As their mantra goes, “Learning from each other makes all the difference”. And considering the direction the industry needs to take at the moment, Merck Serono could prove exemplary in setting the pace for next generation Operational Excellence.
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Same team: Different behavior. Different result? Instead of going down the same road as almost any other pharma ﬁrm when it comes to manufacturing practices to improve efﬁciency and performance levels, Chris Ellins offers an attractive alternative: transform the team’s behavior instead.
THE SYSTEM DEPLOYMENT ROADMAP
ROLLING SUFFICIENCY PLANNING
ROBUST STANDARDIZED WORK
ZONING SQCDME AND SIM
or the past 24 months we have been working with one of the world’s largest healthcare manufacturers to create a standard deployment methodology that has enabled each of its 47 plants worldwide to engage their operating teams, transform day to day behaviour and enjoy new levels of sustainable performance. Our client’s ambition was not to deploy lean manufacturing or Six Sigma per se, but instead to establish a code of common behaviours that would enable every factory team around the world to own, standardize and then improve day-to-day performance meaningfully. Plants were located in North and South America, Europe, Africa, Middle East, the Far East and China.
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Our challenge has been to design an action learning based program that can be embraced by any facility worldwide, is sophisticated enough to accommodate differences in plants, peoples and process but is sufficiently generic to enable meaningful benchmarking and the emergence of a global way of working. The methodology that has emerged requires nine months to bring a plant of any maturity up to a common standard and 24 months to achieve world-class levels of operational performance. This deployment system is made up of seven standard components: Five Year Vision, Deployment Roadmap, Zoning, SQCDME/SIM, PSG, Standard Work and Rolling Sufficiency Planning.
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Component one: Five-Year Vision: Kicks off with a review of market trends, the business unit strategy, in country industrial plans and the requirements for the individual site. From the review, the opportunities and threats to the plants are highlighted and within this context the factories current strengths and weaknesses identified. Working together with the regional leadership team, the local operating team then translate each opportunity into a set of operational requirements and enabling investments and consider the merits and challenges of each. Having made their choices and celebrated their decision, the Operations Team then decide how performance in such a plant will be measured. By exploring safety, quality, cost, delivery, moral and the environment the teams get the opportunity to imagine and then define how they want their future plant to be, how performance will be measured, how people will behave and the level of performance required to enable the business needs to be realized. Once the vision of the plant’s performance has been established, the next challenge for the operations team is to create a vision for the enabling structures of their future state bottom up. What will the operator of five years’ time looks like? What technical skills and knowledge will operators need to master and maintain? What processes will be required and who in the organization will execute them? In what way will operating teams be supported and how ought that support be organized? How should the performance of the teams and the supporting organization be measured and what transitory organisations will be necessary to develop and execute the improvement of people, plant, product and process? By the end of this process teams have created clarity and shared ownership. Powerful paradigms that have lain out of sight are revealed and consciously abandon. Component two: The System Deployment Roadmap: Having invested a few days in the creation of five year plans it is essential that the site team climb into the detail of deploying zoning, SQCDME, SIM, PSG and standard work. This process is fast and practical, and provides an immediate method of bringing the first year of a site’s five year plan to life. A detailed one-year activity and resource plan takes a few days to pull together, ensuring no more than a week has elapsed before the first zoning activity commences. Component three: Zoning: Enables every area of an organization to be owned and zoned. Zones are geographic areas of a business, within which all activities, standards and levels of performance are owned by the zone leader and the zone team. The process of identifying zones enables an organization to consider where zonal boundaries are best drawn, which activities should be retained and which are redundant, how zones should be synchronized and how work, the work place and performance within each should be standardized and visualized. By starting with each operating team and radiating outward every aspect of a business can be examined and standardized within 12 to 16 weeks. Th is process can be achieved in the absence of a five year vision, but combined the effect is often dramatic.
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Component four: SQCDME and SIM: The next challenge is to enable each zone to establish and master Short Interval Management (SIM). SIM is the key enabler to the creation of superior performance and is the capability that most organizations have either never heard of, or have neglected. SIM is made up of four elements. SIM One enables every operator, every hour, to identify and correct abnormality, or when this is not possible, to call upon additional support in real time. SIM Two enables a zone leader to support each operator throughout their shift to return at least 80 percent of all non-standard conditions back to standard before the shift end. SIM Th ree enables the supporting functions every day to identify abnormality beyond the zone teams capability to recognize or address and then synchronizes the actions necessary to minimize loss and risk across all supporting teams. SIM Four enables the identification of repetitive or persistent abnormalities and ensures appropriate resource is assigned to the identification and permanent elimination of root causes. Deployed correctly SIM enables agility, aligning operating teams and their supporting functions to common goals and priorities. Component five: Problem-solving Groups: Enable zone teams to acquire the rigor and support to remove systemic obstacles to improvement. PSG’s are launched on a one-in-one-out basis and are essential vehicles for teams to master robust Plan-Do-Check-Act cycles and to break the habit of Plan-Do-Re do. Component six: Robust Standardized Work: Goes far beyond the traditional scope of a visual SOP or OPL. A program of standard work deployment generates learning pathways for each and every employee and enables appropriate skills, knowledge and behaviour to be profi led, trained in the classroom, coached in the work place, eventually mastered and ultimately certified only when performed On Time To Standard (OTTS). Operating, cleaning, changing over, maintaining, quality assurance, SIM, and PSG’s, all require executing with mastery if operational standards are to be maintained and improved sustainably. Component seven: Rolling Sufficiency Planning: Enables operating teams to assure the sufficiency of their improvement plans, the sufficiency of their project execution and the sufficiency of their results. It is a simple yet powerful process of linking activity to outcomes and assures operating teams undertake just the right amount of work at just the right time to meet their budgets and their five year plans. Learning & reflections: The adoption of the zone as the scalable unit has enabled large and small plants to embrace the system successfully. Cultural sensitivities have proven irrelevant in those sites where the plant director has led from the front. Twelve percent per annum productivity improvement seems the norm with quality losses and accidents dropping to near zero. The system is not yet perfect but improving on an improvement is our raison d’être.
“By starting with each operating team and radiating outward every aspect of a business can be examined and standardised within 12 to 16 weeks”
Chris Ellins and Total Flow, the organization he founded in 2005, are regarded as innovators in the world of lean enterprise. Chris is regarded as an expert in customer value creation, end-to-end value streams, the elimination of systemic waste and the realization of waste free production systems.
Counteract the counterfeit As the market for generic opens up, the industry faces a new backlash of counterfeit products. Hans Bijl outlines how considering the right inﬂuences could lead to a solution – and confront the very nature of counterfeit goods.
harmaceutical and life science industries are facing serious challenges in their fight against counterfeited products. The life and health of the patients must be protected and the damage to reputation and fi nancial detriment related to brand image, product recalls, lawsuits etc. shall be avoided. Implementation of serialization, and tracking and tracing solutions in the packaging line is the answer. But what aspects influence the solution and need to be considered to come to the right decision?
Hans Bijl is Sr. Business Development Manager at Siemens Industrial Automation Competence Centre Life Science. Over the last decade, he has been working in the Life Science area. Since 2008, his assignments have included the the corporate initiative around Pharmaceutical Anti-Counterfeiting measures and Supply Chain security, including serialization.
Different regulations apply for different regions The way regulations are being implemented in one certain region can differ enormously from other regions. Th ink of a company that runs packaging sites in all affected parts of the world. They need to keep up with the regulatory specifics of each country in combination with often rather volatile timelines. One of the most obvious examples here is Brazil, where after a number of earlier announcements, 2011 now seems to become crucial. But until now with a system of serial number handling and application based on government supplied labels, that is a true challenge for any producer serving the Brazilian market. Process- and technical requirements As the first rounds of investment were driven by the need of straightforward ‘serialization’ (or even less, think of French Coding), the upcoming regulations often involve more complex data-handling requirements like aggregation of different levels of packaging, but also the incorporation of specific serialization functionality into new or existing processing of work orders and batches. Different packaging line types, with different levels of automation Whereas in the western world often secondary facilities have been automated to the latest standards available, including sophisticated MES functionality and/or line integration, in emerging countries like China the level of automation could be anything from non-existing to exactly that same level of sophistication as in Europe or the US. Levels of ERP: Different systems, or none at all, will affect the global standardization of ERP integration – and in the end the future integration into one single, global ePedigree topology. Not all products and/or regions are affected: A facility where different products are being handled, or from which
different countries are being served. Th is will certainly affect the required line and site flexibility. Effect on overall equipment effectiveness (OEE) and plant downtimes As already mentioned, implementing a serialization solution in a packaging site could affect the line of site key indicators, from the perspective of the actual implementation – e.g. the time to retrofit the line or replace existing ones, or by influencing the required production capacity (e.g. items/min). But it does not necessary have to, if innovative designs are used.
“Skilled staffing, executed at the same time and presented in all of the relevant regions will be the key decisive factor to the success of a company’s serialization roll out” Timeline The often short-term issuing of local regulations mean that time pressures on implementation can be severe – putting a strain on all stakeholders involved. Resources Perhaps one of the most critical issues – although not the one most obvious: If the massive wave of regional serialization legislation truly comes up, with its maximum expected to be reached around 2014/2015 when both the US as well as the EU implement their set of regulations, the demand for qualified staffi ng will be huge – putting another strain on a company’s ability to handle the legislation. As a result, the industry is looking more and more for strategic partnerships with suppliers that are actually able to handle this globe-spanning demand in an adequate way. The actual solution a supplier offers should be able to deal with all the technical challenges mentioned. Preferably build in a modular, scalable way around existing industry standards, the ideal solution is robust, open, and available on a global scale, around the globe. Perhaps more important than the actual technical solution is the way a supplier is able to handle the variety of different local and company requirements. Skilled staffi ng, executed at the same time and presented in all of the relevant regions will be the key decisive factor to the success of a company’s serialization roll out.
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Translational ADME-Tox models What are the strategies for reducing drug attrition rates in the clinic through the application of transgenic ADME-Tox rodent models? By Nico Scheer, PhD
nly a small fraction of compounds entering clinical Phase I studies obtain market approval. A major reason for failure is that current preclinical models are often poorly predictive of efficacy, pharmacokinetics and clinical safety in man. Specifically, the predictability of current preclinical animal models is limited by profound interspecies differences in drug metabolism and disposition. In response, a number of academic and commercial groups including Taconic have developed humanized mouse models. The transADMET TM portfolio is the result of a joint development program between Taconic and its partner CXR Biosciences Ltd to deliver novel mouse models that are more predictive for the absorption, distribution, metabolism, excretion and toxicity (ADMET) of a pharmaceutical or chemical compound in humans. The transADMET TM models are a series of mouse lines that are humanized or annulled for key proteins involved in drug metabolism and disposition. These models have the potential to significantly improve the in vivo safety and efficacy evaluation of new drugs and chemical compounds by reducing the impact of species differences and thus allowing more informative decisions in the selection of the most promising candidates to take further in development. Due to this improved selection process in the preclinical development phase, it is anticipated that the transADMET TM models will contribute to increase the currently poor success rate of getting clinical compounds into the market. The models are categorized in three panels representing critical pathways in drug metabolism and disposition: Xenoreceptor Panel, Cytochrome P450 Panel and Drug Transporter Panel. In each of these panels key murine genes have been exchanged for their human counterparts and the corresponding knockout controls have been generated as well. In addition to the single modified mouse lines, multiple humanized and knockout models were developed. Specifically, humanized mice can potentially be used to more accurately predict human metabolism and drugdrug interactions compared with existing in vivo models. For example, mice humanized for cytochrome P450s can be used to screen for human-unique or human-disproportionate metabolites prior to entering the clinic. Or mice humanized for both nuclear receptors (such as PXR and CAR) and cytochrome P450s could potentially be used to predict the impact of novel inducers on recommended victim substrates such as triazolam.
The impact of drug transporters on parameters such as biodistribution and drug-drug interactions is increasingly recognized, and may be subject to guidelines from the FDA. The use of mice humanized for key transporter proteins such as MDR1, MRP2, BCRP, OATPs etc. is generating considerable interest in the pharmaceutical industry, and Taconic has facilitated the formation of an expert panel (TEP) bringing together experts from eight major companies to help progress the validation of these models. The transADMET TM portfolio fits extremely well with the overall Taconic mission, â€œto provide our customers with in vivo translational products and services to increase the efficiency of life sciences, drug discovery research and safety evaluationâ€?. ď Ž Nico Scheer is Head of the transADMET TM portfolio at Taconic. He is the lead molecular biologist in creating these models and directs the team (including Chairing the TEP) towards their further development and commercialization.
The eye of the social
As the social media revolution continues its surge of success in the realms of digital marketing and communications, NGP takes a look at why sailing into the eye of its storm could be the best tactic for the pharma industry.
here was a time when your identity was defi ned by little more than your physical actions and statements. First impressions, demeanour and social astuteness counted for everything in a world that functioned on varying levels of networking, trust and smoke screens. For the social chameleons of both business and pleasure, this meant unbounded opportunities to succeed in almost every context – and for the most part that’s exactly what they did. But then came the internet, and with it ventured the complexity of multiple identities. If you were character-savvy, the chances were you could slip under the radar of being caught out as a master of identity juggling; anything less and your online profi le was likely to be cast out and fed to the wolves of binary as a fake. Either way, the world of social media had arrived and brought with it a third dimension of social interaction. No longer did
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people need to leave their houses to speak to friends or peers; no more was your ‘real life’ considered as relevant in a world that functioned on a placebo of online associates helping you carve out who you always wanted to be. Companies could reach new audiences with such relentless immediacy and clarity that it was a wonder how they’d coped in the days pre-web. Fortunately for consumers and industries alike, social media has evolved exponentially since the beginning of its internet inception – and for all its subjective misgivings, it’s allowed the entire human spectrum to communicate on a level platform previously deemed unfathomable. From individuals to Fortune 500 companies, social media has enabled the world’s population to be heard en masse and on par, picking up armies of devout followers that can, quite literally, turn you from zero to hero in a matter of hours. Moreover, its levels of transparency have only served to
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up the ante once again as the business world enters its age of new media and digital marketing. But for all those who have taken that step, many are left wondering why it’s taken pharma so long to grab onto the coattails of the phenomenon and join almost every other industry in the online revolution. Well, to put it simply, the pharma industry has – traditionally, at least – contained almost every attribute that goes against the grain of stepping foot into the world of social media. With extremely expensive sales and marketing departments, an intense regulatory environment and companies being overly protective of their intellectual property (IP), the notion that the industry should enter an arena that would perceivably only work to further complicate matters was deemed ridiculous – until now. In 2008, Novartis stood tall as the only Top 10 company flying the flag for the pharma industry in the world’s second largest social media site, Twitter. Fast forward to 2010 and, without fail, you’ll fi nd every one of the Top 10 on Twitter – from Pfi zer to Johnson & Johnson, Bayer to Merck – all have jumped on the bandwagon in an attempt to open up their online profi le to the watching world.
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Amongst them, Pfizer has ventured down the right avenue by teaming up with Private Access – a fi rm committed to developing platforms that permit internet searches for private information – to create their own social networking site intended to bring together patients and clinical trial researchers. Patients have the opportunity to confidentially post personal health information that will only be available to researchers studying their particular condition, in turn offering a reciprocal relationship in which tailored information is currency establishing deeper bonds. And with just over 10,500 followers currently on Twitter, Pfi zer seems to be leading the way. But it’s not just on Twitter that they’ve taken the lead, with Facebook, YouTube and LinkedIn all also getting the Pfi zer treatment. So good job well done then? Well, not quite. For the problem with Pfi zer – as well as the industry as a generalisation – is that whilst they have ticked the social media boxes in terms of presence, they still haven’t understood that in this new world of marketing and social representation, content is king. Indeed, instead of focusing on customer communications on the most basic of levels, many firms – including Pfi zer – use their new-found social
platforms for little more than distributing press releases; hardly the most innovative tool for securing better customer relations and inducing engaging debate. In fact, the only company that seems to have its fi nger on the Twitter pulse is Eli Lilly, who prides itself on “An official Twitter feed of Eli Lilly & Co.,” where “Any O’connor, Greg Lueterman and Rob Smith tweet on public policy, life at Lilly and corporate responsibility.” What Lilly has very astutely realised is that people make connections with people using social media – the company name remains more of a beacon to those looking for the mouth of that company. That’s not to say that the company doesn’t matter, as after all that’s the sole reason they’re online, but by putting people at the forefront of their Twitter feed, talking about what they and their company do in real time, they’ve successfully lifted the veil on a traditionally closed industry. Unfortunately for pharma firms worldwide, let alone in the European market, this is about the best they’ll get until the overly intense regulatory environment currently being employed loosens its grip around the industry. Anything above implementing staff to update fluff y pieces with PR-related statements is a serious no-go area, as bodies like the FDA and EMEA continue to patrol the hardest hurdle to social media implementation for pharma: Adverse Event (AE) reactions. Officially defi ned as “any adverse change in health or side effect that occurs in a person who participates in a clinical trial while the patient is receiving treatment, or within a pre-specified period of time after their treatment has been completed,” companies looking to sink their teeth into product-centric social media will have to contend with incessant reports back to the FDA and EMEA every time a self-identified patient tweets/ blogs/comments about an AE – even if the AE isn’t published online. In this context, pharma’s obligation to its regulatory bodies has, without doubt, stifled its progression into the nucleus of social media. In the ongoing debate about who owns what when it comes to information and the passing on of AEs in the online social realm, a patient – in discussing the merits of a recent and prominent case – put forward the main crux of the problem for pharma companies. He said: “As a patient, I can choose to disclose my medical records or history to anyone, essentially setting aside the HIPPA security rights that providers and payers must follow. Why can’t I similarly, as a patient, waive my right to have a pharma company comply with AE rules before posting to a public pharma sponsored social network? It surely still requires some judgement by patients to understand that wisdom of non-medical crowds gathering regarding pharma issues may be wrong more often than right.” And while in an ideal world, the above statement would reign true – the reality of the retort proves that it’s anything but. In essence, the problems stem from two overlapping areas. First off is understanding who owns the responsibility to report an AE. Any pharma company, in getting permission to market an Rx drug, incurs the responsibility to keep its information reasonably up to date. It therefore makes it irrelevant whether a patient wants to “waive” the responsibility to report an AE – as much as it would be beneficial for both patient and company alike. Thus, it’s understandably not best business practice to invite casual, anonymous complaints that will only lead to vast amounts of man-hours being spent on researching potential updates on a product gripe. The bottom line: the benefit of social media has to outweigh the expense. Conflating this is the bigger picture of marketing practices pertaining to labelling. Posts of comments in any blog or twitter feed that end up having a product mentioned or discussed causes that blog, or at least that post, to be a form of labelling for the product. And, as a form of labelling, it means that all content has to pass through a medical, legal and regulatory review before dissemination.
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Furthermore, promotional labelling and advertising must be submitted to the FDA and EMEA on a “2253 form…at the time of initial dissemination”. Th is requirement alone makes it nigh on impossible for companies to do any real-time social blogging relating to any of their products. As if that wasn’t already enough, pharma companies have to maintain processes to ensure that the content is submitted to the necessary regulatory body at least simultaneously with the posting, if not before. But it’s not just within the confi nes of regulation that pharma faces problems with its social media anxiety. In having to adhere to the FDA and EMEA, expectations have to be set with relative audiences that are sure to disappoint. Patients and readers will both want to engage in discussions – such as asking for medical advice or making outlandish statements about a product – that simply cannot be upheld in the context of a pharma blog or Twitter feed. Even if patients are considering doing something good for the product in question, such as submitting positive testaments on the product, the regulatory bodies could construe that as an unsubstantiated claim – resulting in a warning letter. Hardly an easy sail for pharma fi rms floating themselves out of port and into the open ocean that is social media. When it comes to the crunch, there’s no doubting that big pharma is attempting to break free from its regulatory shackles – ‘attempting’ being the operative word. For all that pharma is currently doing, there’s no doubt from both marketing and social media experts that the industry has only taken a few baby steps towards where it needs to be. Daniel Siddle, writing for headshift.com back in early 2010, said: “When the industry is still fearful of adverse event reporting, which should be a simple automated process, they’ll fi nd it very tough to deal with any of the much bigger issues: the breakdown of organisational silos to enable sales and marketing to be something the whole company can do; the decisions around intellectual property and what is more valuable inside the company versus outside; and how to deal with the privacy and protection of
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Setting standards Roche has recently upped the pharma social media standards by publishing its ‘7 Social Media Principles’ to all relevant employees. In doing so, it’s facilitated an environment in which employees explicitly understand the do’s and dont’s of social media, from both a professional and personal perspective. With such a simple yet effective framework in place to minimise risks for both the company and individuals, it’s surely only a matter of time before the rest of the industry follows suit. Seven rules for personal online activities speaking ‘about’ Roche: • Be conscious about mixing your personal and business lives • You are responsible for your actions • Follow the Roche Group Code of Conduct • Mind the global audience • Be careful if talking about Roche. Only share publicly available information • Be transparent about your afﬁliation with Roche and that opinions raised are your own • Be a “scout” for sentiment and critical issues.
their employees in the new era. These are all logarithmically more difficult to solve than AE reporting.” What Siddle highlights is the importance of looking beyond social media merely as a tool to boost product sales. Instead, view it as a forum to interact, for the fi rst time, with patients and end-users. Use it as a free marketing tool. Employ it to do the groundwork in fi nding out how products are really being received. Whether it’s brand sponsored or not, build a patient community. Build a healthcare community. Go viral and intrigue a new generation of consumers. The possibilities outside the realms of regulatory burden are practically endless. Whatever the end goal, one thing is certain: a one-size-fits-all approach is not the answer the industry is looking for. Lisa Emrich, from the well-respected Multiple Sclerosis (MS) blog site Brass and Ivory, describes the MS social media community as: “…Like blood cells which flow through the human body. If we all congregated around one hand within the body…the rest of the body would die. And if we isolate ourselves and never venture back to the lungs where we fi nd personal nourishment and rest, we would individually die off. Although my travels online may never take me to the left foot, I am comforted to know that others feed that community and it thrives.” While to some this may seem like an overly self-indulgent and unnecessary metaphor, Brass’ underlying message reigns true for all healthcare social media and networking initiatives: depending on the communities being engaged, activities could be welcomed or rejected by the communities “anti-bodies”. Thus, the industry as a whole has to be very clear which parts of the ‘body’ it wants to engage with, how it should engage with them and on which topics. But for all the inherent risks needing to be taken, having a social network that functions as a real-time, open network will serve to expand and integrate the social media approach that the industry has been yearning for.
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Seven rules for professional online activities speaking ‘on behalf of’ Roche: • Follow the Roche Group Code of Conduct and Communications Policy • Follow approval processes for publications and communication • Mind copyrights and give credit to the owners • Use special care if talking about Roche products or ﬁnancial data • Identify yourself as a representative of Roche • Monitor your relevant social media channels • Know and follow Record Management Practices Source: Roche
And, in relation to the groundwork that has already been done by the industry, social media is revealing some interesting truths to pharma companies both already involved and waiting in the proverbial wings. For starters, process designs need to be radically reviewed and rebuilt as traditional communications continue to lose their value. Secondly, social media and networking sites have proven time and time again that people are far more willing to share their stories now than they were a decade ago. Finally, and perhaps most glaringly obvious, – regulatory promulgations need a complete overhaul to allow companies to begin ticking the above boxes. In spite of all the realities of today’s communicative mediums, it’s more important than ever for pharmaceutical organisations to develop their internal framework if they are to become remarkable externally. Having better ways for life scientists, biologists, nurses, doctors and engineers to network and research will go a long way in creating the pipelines of products needed to sustain the industry. The social media storm has been brewing on the horizon for a while now, and for the pharma industry sailing around it isn’t an option. The only way to fully understand how important social media is for the industry is to sail directly into the eye of its storm. Only then will potential routes towards a safe harbour for the industry be realised and mapped out accordingly. That is, after all, what makes the best captains.
Balancing act: Aligning competing strategic objectives in turbulent times IMS’ Chris Nikum offers insight to new commercial model and launch excellence initiatives. IMS says pharma’s coming challenges will change the way products are commercialized. What are you seeing here? Chris Nikum. Pharma executives have a complex agenda for 2011. At the top of the list is a common objective to develop new commercial models (NCM) that offer greater effectiveness, as well as increased efficiency in promotional spend and strategies. Many are also balancing sometimes competitive strategic objectives, the most common of which are: achieving launch excellence ensuring that what is in the pipeline is optimally launched in new market realties and managed to commercial return; securing the right exposure to the pharmerging markets (aligning the organization’s current and future strategy across new markets while addressing major markets that are flat to declining in opportunity) and identifying solid sources of growth (positioning the organization so that, as the market returns to growth after the patent cliff, commercial, R&D and investment decisions today are properly aligned to future needs). What are the key challenges? CN. For companies addressing both NCM needs and launch requirements for their portfolio, a key challenge is that organizations are generally not considering both initiatives simultaneously. Th is can result in one of the initiatives overshadowing the other, or for both to be dilutive to the company’s overall success. Common implications of this disconnect include launches that are constrained and less effective, as the commercial model is in flux or can no longer support the brand strategy; misappropriated launch investments, requiring the company to build or buy essential services that internal resources can no longer support, driving up overall expenses; and an NCM effort that is delayed or derailed within a company due to a short-sighted focus on critical launches. What are IMS’s best practices for NCM development? Five key building blocks are: CN. Landscape assessments: Understand the market realities of the future. Companies that have not yet fully determined their future direction should develop a common point of view on how the healthcare environment will change over the short- and long-term. Essential to this is recognizing how power will shift among the stakeholders for a given therapeutic class in a given geography. Strategic planning: Articulate the implications for the business. Companies that have already established the
commercial context in which they will operate need to assess the timing and importance of various trends and events. The ideal method of devising a commercial strategy is to hold a series of organized and integrated planning sessions with representatives from all disciplines across the commercial organization. Capability assessment: Support the new strategy. Depending on the types of changes implemented, companies may need to build or amend their marketing, technical,
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motivational, knowledge repository, reporting, and analytical capabilities, among others. A well-structured commercial blueprint with logical priorities, coupled with a roadmap to the future and proper key performance indicators (KPIs), is at the core of successful initiatives. Organizational design and development: Organize to support the strategy. In order to support the implementation of the new strategy, companies must consider the structural implications (the organization, roles, and responsibilities) as well as non-structural implications (processes, tools, skills, and knowledge). IMS sees companies make the most progress planning their new organization and supporting processes when they bring together people from geographical management, brand leadership (sometimes with emerging P&L responsibilities), and those in charge of new service strategies. Execution and performance management: Make changes and track progress. IMS recommends that companies implement and support a thoughtful, changemanagement program not only for the macro transformation, but for the smaller components as well; rely on change agents at the regional and local level; follow the overarching plan (but do not be afraid to move slowly when needed); assess progress often, as managing expectations is critical while pilots and other implementation aspects take place; and realize that there is no such thing as ‘over communicating’, as communication is a primary tool for ensuring alignment and inspiring acceptance throughout the organization.
ing the right balance between regulatory requirements for trials versus payer expectations from trials, as well as trial investment (for the same label) pre- and post-launch. Th ird is effective and efficient stakeholder engagement. Stakeholder power shift s are acknowledged and earlier engagement is growing, but new models must address the ability to influence widespread product usage. Among companies with major launches during the period 2005-2008, earlier stakeholder engagement has become increasingly common. In some cases, successful organizations have driven earlier country-level stakeholder engagement and examples exist where this has been vital to launch performance in that country.
What are IMS’s best practices for launch excellence? CN. IMS research has identified three recurring themes that are common to every excellent launch and which the company believes will be the key to future launch success First is an aligned and prepared organization. Misalignment can occur at the functional as well as the geographic levels and can turn a potential winner into an also-ran. Common goals, shared incentives, and earlier launch preparation are essential. The importance of organizational alignment has been central to the fi ndings of IMS Launch Excellence studies, underscoring its pivotal role as a driver of success. At its simplest level, alignment means that the various functional and geographic elements of a company are working together in harmony, with common goals, on the launch. Th is may seem obvious and straightforward. Yet, both our quantitative analysis and our qualitative research suggest that lack of real alignment for launches is very common and achieving it is very difficult. Second is a powerful and pertinent value proposition. Successful launches are powered by compelling demonstrations of value, drawn from evidence generated that addresses disparate stakeholder needs. Gaining advocacy, approval and market access requires a powerful and pertinent value proposition that appeals to both regulators and payers. Th is increasingly means meeting disparate – and possibly contradictory – needs. Our research suggests that companies are facing the growing dilemma of fi nd-
How can companies harmonize their NCM and launch excellence initiatives? CN. Internal harmonization efforts across NCM and launch excellence initiatives are the key to long-term success. Aligning the organization includes collaboratively setting objectives and timelines of both NCM and key launch; communicating launch strategies early and then often (milestones) to those in charge of NCM activities to ensure both efforts are complimentary and not competitive; taking steps to ensure that running both initiatives, simultaneously, does not cause confusion to stakeholders outside, and inside, the company; considering geographical priorities across both initiatives as to not overload local affi liates; ensuring commercial models, both in their current and future state, effectively engage and support communication of value to various stakeholders, and can be supported by transitional infrastructures; ensuring proper focus of people involved in both initiatives, as not to lose focus on one of the initiatives, or both. Companies with sometimes competing internal efforts across new commercial models and launches will set their own destiny. Those that do not address the space between the two initiatives will ultimately dull the success of the new launch or hamper movement to new commercial models. However, those that create synergies between the two initiatives will create competitive advantage in the marketplace, and quite possibly even discover new commercialization strategies as an output of their harmonization efforts.
What are the ﬁve drivers of uptake? CN. The five drivers of uptake that critically build market share are: One, achieving brand advocacy among regulators, payers, key opinion leaders, prescribers, patients and other stakeholders, with an early focus on creating the right value proposition. Two, gaining brand approval at a regulatory level with optimal positioning and label for the right patients to maximize brand success. Three, securing market access on the right terms with national and local payers. Four, attaining brand adoption for the optimal patient segments with a focus on working with prescribers and providers to achieve early strong positioning in the dynamic market (new, switch, and, if relevant, add-on patients). And five, ensuring brand adherence by retaining patients as loyal repeaters for as long as is clinically appropriate.
Chris Nikum, VP and Global Practice Leader of Commercial Effectiveness for IMS Management Consulting, has 20 years consulting to the pharma industry with eight of those being with IMS. Nikum also has prior experience in all aspects of commercial strategy and execution, including geographic, promotion and product launch expertise and consultation.
Social media W anxiety order Phil Baumann outlines why the pharma industry needs to submerge itself into the binary world of social media.
ith a multitude of industry-altering challenges already in the pipeline, pharmaceutical companies also now have to contend with breaking the world of social media. Phil Baumann outlines how – and why – companies should be doing precisely that. There’s been an ongoing discussion about how the life sciences industry can face and integrate recently evolving media, which the web has been and continues to sprout. Remarkable as they are, the discussions are endless and most loop back into themselves without generating sufficient voltage to power an army of macrophages. Pharmaceutical companies, beset by a myriad of constraints, are anxious about flipping on social connection switches which the web furiously creates every day. We could say that pharma has a ‘social media anxiety disorder’. The question is – how can it be remedied? The answer isn’t in social media. It’s not in what the US-focused FDA or its European equivalent decides to do. It’s not in echo chambers found within Twitter, blogs or conferences. It lies in simple, basic economic truths. It lies in radical acceptance and in brave recreation. It lies beneath the proverbial nose of obviousness. It lies far beyond any discussion about the meanings, promises and purposes of new media on the web. Pharma’s social media anxiety disorder is merely a peripheral symptom of deeper pathologies – so it’s about time someone assessed the patient.
Deep concerns and peripheral risks Social media is nothing – an oxymoron at best: media are simply media, incapable of being at all social. People are social. Information isn’t social either – but it is everything. With that in mind, it’s important to talk about information and why it matters to the life sciences’ media challenges and wider business fundamentals. Nobody doubts that the ultimate concern surrounding the development, production and marketing of molecules and medical devices is their safety, efficacy and effectiveness. From production and marketing to administration and application, every step of the way involves risks. Tiny flaws in R&D methodologies; overlooked nuances of human physiological processes; genetic mechanisms and anatomical structures; manufacturing and engineering oversights; misinforming marketing messages (unintended or otherwise); and administration error (provider or patient related) all contribute to this cauldron of risk. At the core of all these risks lies information, which is the coherence of relevant data that helps to make decisions in light of risks. Any information indicating danger during any point of the entire pipeline can retard or terminate production, marketing or dispensation of a product. Furthermore, the media through which information conveys its meaning determines its interpretation. Therefore, any discussion concerning the proper delivery of product information must base itself upon the most complete understanding of media possible. Few media are alike in properties, possibilities, limits and pliancy of re-purposing. Not all media can be used for the same purposes as other
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media. Twitter may help Dunkin’ Donuts move sales, but that doesn’t mean it will work for the world of pharma. The order of complexity that arises out of the tasks involved in creating and cultivating safe and engaging environments for patients, doctors, pharmacists, employees and all other publics grows with every added layer of interaction. It’s one thing to say ‘let’s start a blog, tweet like sparrows, set up Facebook pages and create forums’. It’s quite another to do so remarkably without addressing both the deeper nuances of human communication, social interaction, individual psychological responses and their peripheral risks. It sounds hopeless – in fact it’s anxiety provoking. But it isn’t hopeless and it doesn’t need to be an unstoppable source of anxiety. But the reality is this: life sciences has far too many variables and concerns to tie together to ever completely satisfy everyone and everything when it comes to social media – certainly not right out of the gate. The enterprise considerations alone are almost impossibly daunting.
Natural versus unhealthy rates of return Let’s take a quick pan-back for a moment from social media to mention something about capitalism and economic fundamentals, as it’s the central economic context in which modern pharmaceutical marketing arose. An inquiry into the economic ramifications of a fast-changing world must be the foundation for any exploration into the role of media. And this will lead us to why simplicity is pharma’s best prospect for long-term viability. Bear with me on this excursion. Why? Because if there’s no industry, who cares about social media? The rates of return for the pharmaceutical industry over the last 20 years have been quite remarkable. After the industry radically transformed itself decades ago from a primarily scientific endeavor into a marketing juggernaut, the stock prices of publicly traded life sciences companies soared. Blockbusters made careers. Fortunes bloomed. Investors beamed. We could say that co-morbid with pharma’s social media anxiety disorder is an addiction to quick hits of Blockbusters and above-average rates of return. As we know, co-morbid conditions are often the hardest to treat. But the fact is, these rates of return were not natural rates of return. A sustainable long-term rate of return for industries in their natural states is on the order of a paltry two to three percent. Why? Because the resource-inflationary pressure of high returns inevitably leads to downward pressures on sustainability. When rates of return exceed rates of regeneration, eventually capital systems collapse in on themselves. Sooner or later, pendulums swing back – the higher the summit, the more momentous the tumult. To most pharmaceutical executives, the very thought of rates of return that low could cause chuckles amongst other side-effects, but eventually pharma will face major reversals of fortune in the coming years for a number of reasons. Firstly, the disruption of traditional marketing, coupled with the infi ltration of the web into consumers’
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lives will dilute their effectiveness. Secondly, the miscoordination amongst the various international regulatory agencies and the industry will hamper innovation in customer outreach. Finally, the pool of bright, young talent will flow to technology and other sectors while flowing away from an industry whose public reputation has suffered years of traumatic wounds. Therefore, the industry must undergo a radical realisation and acceptance that their fundamentals need serious attention. A critical dissection of assumptions and traditional business thinking will need to take place. The harsh realities of the 21st century’s upending nature must be faced without fear. The marketing models that were coopted from the cereal and automotive industries will be tough to break down and replaced with fresh perspectives on the ever-shift ing ways in which people consume their information. Meanwhile, the social engineering foundation of modern marketing will continue to falter. Unless, of course, a few geniuses emerge who will discover some magical formula to mechanise social media into standard operating algorithms – as was done with traditional media. Not impossible, but it was much easier to do with unilateral oligopolies of mass communication. There are times in our lives when incredibly hard and frightening decisions must be made. The same applies to companies and industries – entire countries in fact. And it’s always those simple decisions that must be made and are most often the most difficult to execute. The pharmaceutical industry’s simple way out of its coming dark age is nothing less than the task of utterly re-vamping itself into an entirely new industry – one which will be supple, clever and ethical enough to win the attention and social capital so critically necessary to hold sway in the coming world.
The simple truth Of course, maybe it’s already too late for the large pharmaceutical companies. If that’s the case, then the smaller enterprises have an open opportunity to gun for the future – especially if they refuse to be subsumed into the juggernauts. If 20th century capitalism taught us anything, it’s this: Juggernauts often jeopardise their long-term sustainability by assuming their ways of doing business are eternally solvent. They aren’t. Technology brings forth into the world both opportunity and obsolescence. It reveals the status quo while it destroys it. If the industry is to be what it aught to be – a leading creator of technological solutions to biological problems – then it will have to abandon the now false hope of generating unnatural rates of return via outmoded mechanisms, processes, strategies and tactics. Because if it continues to believe its industry is exempt from the eternal laws of supply and demand, of resource and allocation, and of creativity and innovation, then it will perpetuate a belief system that will continue to funnel its efforts into practices that forgo richer long-term prospects. This is not only a matter of industrial health – it’s a public health urgency. A bankruptcy of novel bio-molecular advancement would be catastrophic for health care.
Returning to the web of connections, it’s not that the web doesn’t matter – far from it. But the basic economic principles outlined above are the priority for all companies curious about how to integrate web media into their enterprises. There are places for new media within life sciences but the industry needs to be very basic in its approach. For one, companies won’t get very far with ‘social marketing’ efforts until executive leadership has hands-on experience with new media and a working comprehension of their properties. The only way things will move is when middle and executive managers start using these media personally. They need to go through this process before clear-headed strategies can be well formulated. To do this, they need to imagine the re-purposing possibilities of various media and then put together small teams of champions who, with permission, can go forth and lead the way with small steps. Finally, they will have to initiate the systemdeep integration of social design into their companies – and enterprise versions of Facebook aren’t the solution. Once they understand how to use these media themselves, only then will they see the potential and pitfalls. They will realise the importance of accumulating social capital and will see more clearly what it takes to create content and communities and the safe connections that engender markets where information can be safe and effective. The economics of life science products and the realities of emerging shifts in the properties of adopted media dovetail each other over time. Perhaps not immediately, but it won’t be too long before the industry sees the need to change, which is why the previous discussion about capitalism is so important and relevant to any discussion on social technologies. The pharmaceutical industry will have to get back to fundamentals in economic design and collaborative networks. It needs to bring the life scientists back to frontand-center as pioneers of not only innovation but also creativity. It will have to develop new ways to work with doctors and nurses, patients and the public. The imperative for leaders in life sciences businesses to understand the emerging roles of emerging media has never been more important. Moreover, the enframing of these media must line up with a fresh perspective on the nature of capitalism in an age where social currencies emerge as substantive elements in the capital system at large. It’s time to get back to the science of life and the art of being a hero. Re-examine the fundamental meaning of marketing. Remember that marketing is about presence. Realise the costly long-term error in mistaking messaging for marketing. If you’re going to integrate rapidly shift ing new media into your efforts, keep things simple. Don’t aim for marketing gold – you’ll not only miss the pot, you’ll ruin your reputation forever because the Web is your last hope, even if it’s your biggest fear. It’s that simple. But like life itself, simple is rarely easy. This article was reprinted with permission from Phil Baumann. For more information, visit: www.philbaumann.com/2010/03/22/overcomingpharmas-social-media-anxiety-disorder/
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“The only way things will move is when middle dle and executive ve managers start using these media personally”
The social injection
Baumann outlines a few simple tasks that could change everything for the world of social-pharma marketing. Invest in education: Where will the next generation of molecular biologists, geneticists and engineers come from? Set up a consortium of education that extensively funds captivating educational programmes that spark the attention of a youth easily distracted by the temptations of the web by using those temptations to your advantage. Shift capital-ﬂows from over-marketing back to R&D: The future of traditional marketing is bleak. Accept the losses now. A robust portfolio of novel pipelines for products – in conjunction with re-designing public relations with valuable social propositions – will lead to healthier long-term prospects for capital accumulation. Re-design infrastructure and process from an assembly-line basis into infosocial ecosystems: As the cost of technologies shrink while their powers expand, the opportunities to more fully realise the power of ideas and experiences expand. How many more discoveries and advances in molecular genetics can be made if businesses were based upon social designs instead of mechanical rigors? Extract value from the innate experiences of human capital within the enterprise: Entrenched stiff organisational structures have buried the collective values that can be derived from the vast array of product and service ideas inherent in these collective talents. Investing in redesigning business towards info-social ecosystems will develop the platforms necessary to yield the potency of human creativity and innovation.
36 hours in New Orleans
Create to inspire
2011’s most anticipated technology
The Missouri Partnership has the last say
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110 110 DETAILS. HEADING TRAVEL
beacon of the south, New Orleans has become famous for a lot of things over the years: Voodoo, culinary excellence, the ever-fantastic Mardi Gras and, in more recent years, the devastating ﬂoods that quite literally turned the lives of its population upside down. But if there’s one thing New Orleans is never in short supply of, it’s heart. And, for the biggest city in the state of Louisiana, giving up is never an option. With that in mind, we thought it would make sense to show some love to the city that gives out so much and point you in the right direction for your next visit to New Orleans. Just make sure you actually leave…
New Orleans Hornets
If there’s one thing bigger in New Orleans than the Mardi Gras, it’s their jazz. Whether it’s in the streets, bars, restaurants, or indeed on the buses, jazz is the pulse of the city. Simply referred to as the ‘Jazz Fest’, the New Orleans Jazz & Heritage Festival is the largest music festival in the US, playing host to everything jazz from food, drink, crafts – and obviously music. And no mention of the jazz of the South would be complete without a mention of Louis Armstrong, New Orleans very own original soul-man. Armstrong paved the way for future musicians in a time of complete hardship, So much so, that the large majority of funerals of noted dignitaries also include jazz resonating throughout the streets during the procession. Wherever you go, make sure you stop, listen and connect with the music of New Orleans. And check out the memorials to their main-man Mr. Armstrong.
When I was a kid, these bad boys of b-ball were called the Charlotte Hornets. How times have changed. Fortunately, their standard of basketball hasn’t, and while the 2009-2010 season wasn’t exactly ideal for them, their ﬁrst foot forward for 2010- 2011 was anything but. First ﬁve wins to kick off the season? Okay. A further three to carry it on? Why not. Keeping their ﬁrst 10 teams down to under 100 points? You’ve got to be kidding! Well, actually we’re not. The team has struggled through thick and thin to get to where they are now – including all the problems that Hurricane Katrina spat out – and nothing shows that better than going to hear the crowd for yourself. But do it while you can, as Larry Ellison, CEO of Oracle Corporation, has noted that he is willing to buy the Hornets in the near future and move them to San Jose, California.
Mardi Gras No stop in New Orleans would be complete without stepping foot into the world of Mardi Gras. Come on, you knew we had to put it in. In contrast with what most people outside the US think, Mardi Gras actually refers to the carnival season as a whole, not one speciﬁc event. Starting on March 8 for 2011, Mardi Gras translates in French to “Fat Tuesday”, which refers to the practice of the last night of eating rich, fatty foods before the ritual fasting of Lent. And while Mardi Gras are now popping up right across the country, New Orleans has staked its claim as the original home of the colossal and colourful street party. Depending on your want to integrate, you’ll either be out in the streets covered in masks, beads and paints, or holed up in your hotel room hoping that no-one comes knocking. I know which I’d rather be doing.
Magazine Street No matter what you’re after, there’s nowhere outside the French Quarter that beats Magazine Street. A six-mile long stretch of this Garden District and Uptown thoroughfare features some of the best antique stores, art galleries, quirky little craft shops and classy boutiques to be found anywhere in the city. For generations, Magazine Street has been a mecca for bohemians and the well-heeled alike. Looking for a wood sculpture to ward of bad voodoo? Tick. Want a coffee and a ﬂick of your book? Tick. Looking for some seriously expensive jewellery? Double tick. The point is, there’s nothing like Magazine Street in New Orleans – apart from Magazine Street. So, whether you’re looking to spend money or save it, get yourself down to one of the most attractive streets in the whole of New Orleans.
Voluntourism There’s an old adage that I have always kept to: out of bad must come good. Voluntourism is a prime example of that. Ever since Katrina hit the headlines and New Orleans was cast into the dark ages, Hands On have been doing their utmost to help their community. Now, so can you. When you walk through parts of New Orleans, you’re going to ﬁnd things that you don’t like seeing. And you’re going to want to do something about it. And now you can. If you’re looking for something both rewarding the priceless to do – this is it.
Voodoo attractions Without doubt the most famous historical ﬁgure of ‘Voudou’, Marie Laveau is widely considered one of the ﬁrst-ever Voodoo priestesses. Born in the French Quarter of New Orleans in about 1794, her cures, teachings and bloodline have ensured that the Voodoo practice she left behind her continues to this day. And indeed it does. Head on over to the Saint Louis Cemetery number one to see the mausoleum where she is buried. Alternatively, go on any number of Voodoo tours that’ll tell you that she is in fact buried in another cemetery. Regardless of where you go, you’ll be picking up on New Orleans true history – one seeped in colourful tales of magic, mystery and the occult. Try hitting up Mystic Tea Leaves shop – it’ll put a spell on you.
The Big Easy just got bigger With New Orleans becoming a frontrunner in the arena of life sciences, Tara Letort unveils the city’s new biotech plans – and that’s just the start.
ew Orleans is known as many things – the Crescent City, the Big Easy, a Sportsman’s Paradise – and for decades has been loved by many for the world-renowned cuisine, authentic culture and the genuine hospitality of its people. Welcoming more than seven million visitors per year for festivals, sporting events, conferences and business events of all sizes, New Orleans is now emerging as a new hub of the global biotechnology industry, joining the medical race with other major metropolitan areas by building a state-of-the-art Biomedical District, constructed through strong partnerships and maintained by a commitment to research. Several key projects underway include the $47 million New Orleans BioInnovation Center, which will open its doors in March to a new generation of innovators. Situated between the medical district and the downtown business district, the Center offers 66,000 square feet of state-of-the-art wet-lab, ofﬁce and conference space. The facility boasts a ﬂexible 100-person conferencing center with state-of-the-art audiovisual equipment; a 2000-square-foot retail/ food service area; and an interior atrium facing the courtyard, with public break areas at each level. The only LEED certiﬁed facility in New Orleans with a ‘gold’ rating, the building will be protected by operable sunscreens to limit energy costs, create comfortable lighting and provide storm protection. New Orleans has four major research universities (LSU Health Sciences Center, Tulane, Xavier and UNO) and is partnering with three major health science centers in this endeavor. The researchers are working together on key areas (cancer, vaccines, infectious diseases, etc.) and the Center is working with each on bringing these technologies out to the marketplace. “In New Orleans, we do things differently than they do in other cities,” says Aaron Miscenich, President of New Orleans BioInnovation Center, Inc. “And, in this case, it means creating partnerships to bring the New Orleans spirit of entrepreneurship to the life science community. New Orleans has the ability to bring technology from bench to bedside in a variety of research areas, joining some of the ﬁnest minds to do their best work.”
Adding another element of quality healthcare to the growing biosciences district, the new $100 million Louisiana Cancer Research Center (LCRC) is currently under construction in downtown New Orleans, thus serving as the teaching epicenter for the next generation of doctors and researchers. The collaborative cancer research and education program will optimize discovery and development of innovative cancer therapies, provide clinical treatment programs for early detection, treatment and prevention of cancer, and contribute to regional economic growth. Joining only 66 other facilities across the country, the LCRC is in the process of pursuing the National Cancer Institution (NCI) designation. This designation recognizes cancer programs that are national leaders in research, treatment and education and is considered the gold standard, given only to institutions doing signiﬁcant research to ﬁght the war on cancer. “This gold standard designation not only adds funding sources to our growing healthcare system, but it also helps re-brand the image of New Orleans as being the bio-innovative mecca of the South,” says Steve Moye, President of the LCRC. “The entire project speaks volumes in terms of collaborative efforts and by partnering together, it will help advance us quicker and smarter.” The ﬁnal component of the emerging biosciences industry in New Orleans, the Southeast Louisiana Veterans Health Care System Replacement Medical Center Project, is underway and will create an environment that honors Veterans and their families. Located on an approximately 30-acre site, the facility will serve as a model for healthcare of the future by setting standards for patient-centered care, ﬂexibility and sustainability. Construction is expected to be completed in late 2013 and will serve more than 70,000 enrolled Veterans. There’s no better place than New Orleans to pioneer this type of research, where pharmaceutical companies can introduce their new products into New Orleans’ diverse community, entrepreneurs can discover a city that fosters growth and success, and sustainable conferences and medical conventions can continue to choose the city for gatherings of all size.
Tara Letort joined the New Orleans Convention & Visitors Bureau in July of 2007 as the Director of Group Public Relations and Communications. She works closely with meeting planners, the marketing and PR directors as well as local committee members to customize marketing plans to help promote the city and upcoming meetings. Letort has been in the advertising/ marketing industry for the past 10 years, after graduating from the University of Alabama in 2000.
DETAILS. OFFICE SPACE
For most of us, ofﬁce space is drab, uninspiring and – nine times out of 10 – pretty beige. For a lucky few, there is another way. An increasing number of ﬁrms are embracing a range of new, creative approaches to workplace design – with fascinating results.
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DETAILS. OFFICE SPACE 115 As with so many other things, Google is, of course, at the forefront of providing a thoroughly fun environment. Although productivity and innovation are the order of the day, there is also room for repurposed ski gondolas and standalone yurts, endless swimming pools and baths full of foam blocks, as well as time-saving solutions like scooters, slides and ﬁre poles. But the Mountain View-based technology giant isn’t the only company getting in on the act. Organizations around the world are jumping on the alternative workspace bandwagon. In Portland, Oregon, for example, the Nike headquarters is set on 192 acres of lush greenery that includes 17 buildings of just over two million square feet, two Olympic-standard sports centers, a six-acre lake and natural wetlands. Nike’s college-style campus was deliberately designed to provide an informal, open community feel. Likewise, the Oakley headquarters in Foothill Ranch, California, has fully embraced the brand’s bold personality. Perched on a hill, the sunglasses manufacturer is housed in what looks like a post-apocalyptic bunker from an alien planet. The towering fortress is complete with a torpedo, tank and B52 bomber ejection seats. While the place isn’t for everyone, it certainly works as a high-tech, creative location for superior experimentation and supreme manufacturing.
Procter & Gamble Essential kit for Clay Street A. Open shelves display see-through bins full of supplies B. An abundance of Post-Its, tape, modeling clay, colorful pens and other essential creation kit C. Furniture cast on wheels provides ﬂexibility for each group D. Curtains act as partitions allowing teams to change their ‘set’ as necessary E. A planet gong aurually punctuates gatherings and sets tone for sessions F. Rugs are used to create visual boundaries for meeting areas
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Urban Outﬁtters, Bloomberg, T-Mobile USA, DreamWorks Animation, Hasbro: all are getting in on the act as ofﬁce design becomes increasingly recognized as a vital element of a successful, productive and enjoyable working environment. And rightly so. Workspace can have a tremendous impact on employees and is critical in ensuring success in today’s business world. Increased competition, globalization and the economic climate are all driving changes in the way work is managed and completed. It is becoming more complex, more collaborative and certainly more time-pressured and technologically intensive. And in line with this, the workspace is seeing more demands placed upon it; we are looking to the work environment to foster culture and to positively affect employees. Indeed, there is logic in the changing nature of work leading to a stimulating work environment, and as such the work environment is a fundamentally social place that can nurture togetherness and build a brand. This, in turn, can attract, retain and engage the best employees. And bingo: there’s your answer to why ofﬁce space has become such an important business strategy. Kursty Groves, who was working as an innovation consultant when she took a sabbatical and began trawling the most creative ofﬁce spaces in the world, agrees. “I’d be working with clients and helping improve their internal processes, their skills, their tool kits around creativity and innovation, and they’d get so inspired – before heading back to these dull, uninspiring ofﬁces. I thought, ‘this is happening time and time again, and yet there must be some companies out there doing a really great job at using space to sustain and inspire people’.” On the back of this epiphany, Groves began compiling a list of the most creative spaces before going to visit them. She asked herself two questions: are they innovative in their ﬁeld, and do they use their environment to help them express their company values or help them get more innovative products to market? “If the answer was yes, then I paid a visit.” And it’s not all about beanbags and massages. Groves explains that one of the best things she saw was at DreamWorks Animation, where the company used landscaping in between buildings to slow people down. “People would get really caught up in their own world and just wanted to get quickly from one place to another. But a meandering path made people take a breath of fresh air and slow down. It was the Art Director for How To Train Your Dragon that said, ‘It’s in those moments when you slow down that actually the problems you’ve been banging your head against a brick wall about start to ﬂoat to the surface. These moments can be really powerful.’” Groves claims that anything designed into the daily paths that people tread to make them stop, slow down and think is incredibly powerful. Indeed, using spaces to ensure people connect with each other on a level outside of formal meetings is a great way to share thoughts and ideas on-the-ﬂy and allow for much more positive and productive interactions. Groves
DETAILS. OFFICE SPACE describes how Aardman, the Academy-award winning animation studio based in Bristol, UK, has created spaces that allow people to do just that. “Just by having extra wide staircases they encourage people to actually stop and have a chat. And better still, they also designed little booths as junctions between stairways and walkways so that if you bump into somebody and the conversation grows, you can sit down and continue your conversation. It’s a really clever way of getting people to connect in a much more informal way.” Over in China, Ogilvy and Mather has long had an enviable reputation for its workspaces, with the ﬁrm’s Beijing ofﬁce awarded Ofﬁce of the Year by Media magazine in 2006. Last year the company went about revitalizing its image in southern China with its Guangzhou ofﬁce project, which aimed to grow and nurture creativity in its employees in the region. Shenan Chuang, CEO of Ogilvy and Mather Greater China, was largely credited with the ofﬁce’s success. With the core business all about sharing ideas and creativity, Chuang believed it was important to express commitment to innovation through a creative, yet professional ofﬁce space. With this in mind the company designed the ofﬁce with a “Carnival of Ideas” theme. Bright gold features predominantly within the vibrant color scheme and the design incorporates a variety of textures like velvet, wood and marble. “We installed merry-go-round style wooden horses, colorful ﬂuorescent lights and lots of mirrors,” says Chuang. “Even the meeting rooms are themed. We wanted the space to be efﬁcient, so there are surprises through the ofﬁce like lounge areas where you don’t expect them – complete with fun chairs that rock back and forth – or a sitting area that can be converted into a movie theater. These features bring a bit of whimsy and delight to the day-to-day activities of the ofﬁce.” Chuang goes on to explain that with people spending so many hours a day in the ofﬁce she wants it to be as comfortable as possible, with large open spaces ﬁlled with light and places to relax. “One of my proudest achievements at Ogilvy is establishing a dedicated art gallery space,” she says. “Located in the reception area of our Beijing ofﬁce is the O Gallery. The idea is to display the works of young and emerging Chinese artists, who don’t have a gallery to support them. Putting art to the fore helps project a funky and modern image to clients and also helps us to attract talent.” Tracy Brower, consultant to furniture design company Herman Miller, believes that work environments can certainly help drive certain behaviors, such as learning, collaboration and creativity. “It’s really about making a destination that can inspire and motivate, ensuring culture and promoting the brand,” she says before going on to explain the beneﬁts of ofﬁce design itself. “The physical environment sends important cues to employees, and the degree of openness in the environment can send messages about the degree to which collaboration is an expected behavior, or the amount of personalization
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Google is at the forefront of providing a thoroughly fun environment
Ogilvy and Mather’s Beijing ofﬁce was awarded Ofﬁce of the Year by Media magazine
that is available to people regarding what’s valued in the organization. Even the location of leadership can send a message, says Brower. “Are leaders co-located with their teams or are they separate? The amenities can send messages about the degree to which people are valued and what kinds of things are reinforced in the culture. Even the amount of windows or daylight can speak volumes about the importance of sustainability and the connection to the environment.” Pamela Meyer, author of From Workplace to Playspace, sees a direct link between the environment and a sense of engagement, productivity and participation. She believes that it sends a message of alignment throughout the company. “A big reason organizations can experience a drop in morale is when they see people saying one thing, but doing another. And that disconnect starts to just shut people down. But it also literally provides more space for collaboration, for unexpected connection, for reﬂection and stimulation. So when the workplace design, as well as the interpersonal approach, the culture and the climate of the organization support this kind of engagement, we really see a signiﬁcant difference in the organization day to day.” Meyer believes that “playspace”, is key to a thriving and sustainable, high-engagement workplace. She says that while many, if not of all, of us are socialized to understand that work and play are incompatible – that we should ﬁnd work hard and stressful and associate play with fun and freedom – it is imperative the we unlearn this association. “What I’ve seen in my own research is that organizations that are thriving have transcended this work/play dualism and so
DETAILS. OFFICE SPACE 117 their workforces are simultaneously productive and energizing,” she says. “They’re focused and fun, they’re innovative and also proﬁtable. I write about play space as space for the play of new ideas and possibilities, something that organizations are paying a lot of lip service to, but aren’t necessarily doing.” She feels that the biggest challenge is creating a balance between creativity and constraint, and claims that her work is centered on helping people understand where they can play. “People tend to use constraints as excuses to avoid being more creative or playful. In fact, we need to understand what those barriers are and then we can always ﬁnd some place to play within that and create more freedom. There is then a possibility for new things to emerge, which makes a signiﬁcant difference to the level of engagement people experience in the workplace.” So if the workplace environment can be used as an extra management tool to help sustain and inspire the workforce, what are the key things to consider before designing a new workspace for employees? First, advises Brower, look at the organization’s vision for the future. Second, the company’s strategy and business goals should always play a role in the physical environment, so ensure this is the case. Third, look at the mix of individual, team and organizational needs and balance those. “Give thought to the culture today, the culture you want and how you move from one to the other, using the physical work environment as a lever to get there,” says Brower. With new generations calling the shots in the workspace alongside some interesting trends in
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The Lego Group All white, devoid of any color, the Innovation Room is a blank canvas for stimulus and ideas A. Lightweight tables and chairs B. Flipcharts on wheels C. Low-level casual seating D. Semi-translucent partician screens suspended from the celing track
technology, there is no doubt that the working environment can and will adapt to its users. Groves predicts that as the number of people working from home rises along with people working on the move, employees will be looking to a sense of place and space with an in-built structure and other people around them. “I guess there will be gravity towards a place,” she concludes. “When it comes to organizations who have a brand or provide a service or product there will always be the need for a physical place for people to work together. It might be that simply the type of work people do when they’re together might change. Collaborative work will take place in the traditional ofﬁce space, whereas people can retreat to smaller and more secluded places to carry out more mundane tasks.” While it ultimately depends on the make-up of the functions that people have as to where they are going to work and the space they are looking to do that in, there will certainly be some interesting spaces emerging in the next decade. In the meantime, keep your eyes peeled for those beanbags.
The crystal ball We’re only half way through the ﬁrst quarter and already 2011 is shaping up to be yet another year for the technology win. Remember the iPhone 4? The iPad? How about the introduction of Android phones? Well, that’s nothing on what 2011 has in store. Have a gander at this year’s most talked about gadgetry-whispers and take your pick. Or just have them all.
BlackBerry PlayBook Having announced it a few weeks ago, this is RIM’s entrance into the world of the tablet. Admittedly, with three different models being revealed, it’s hard to tell which one will make the stretch to market but one thing is certain – running Adobe’s Flash will give them room to maneuver in a market dominated by Apple’s now standard iPad and the new rookie of the year, Samsung’s Galaxy tab. Whatever they bring out, RIM needs to get back in the game, and this could be the play to do it.
Apple’s iPhone 5
The PlayStation phone A phone. A PlayStation. Together as one. This sordid lovechild of phone and gaming console is currently ﬁled under ‘ghost’ as Sony has done everything in its power to not, well, leave it on a bar stool for someone to ﬁnd. All that we know exists in leaked photos and rumoured specs. But, we do know that Sony Ericsson is said to be working on a device, dramatically codenamed Zeus, that will apparently be part PSP and part Android Gingerbread powered smartphone. Whether it’ll be too late to market to have any real impact remains to be seen, but it’s still caused enough of a stir to get us thinking.
Nintendo 3DS What’s that? Games consoles are for kids? Look around you. It no longer matters how old you are or what job you have, plenty of people are getting onboard with escaping into their various worlds of Mario, Donkey Kong and – dare we say it – Pokemon. And, considering the work Nintendo has put into their latest release, it’s something they’ve noticed too. The portable console not only features an impressive range of software, but it’s also the ﬁrst games console to offer 3D viewing without the cumbersome glasses, making it potentially the strongest case for interactive 3D entertainment yet.
Surprisingly, Jobs’ iPhone 5 isn’t the most anticipated smartphone for 2011. With all the teething problems the iPhone 4’s release highlighted, many people continue to speculate that its big brother won’t actually change that much. But for fans of the Apple empire, don’t listen: there’s rumours of a different “form factor”, with a completely different design to any iPhone currently available on the market. There’s also further rumours that it could also employ Near Field Communication (NFC) to support more efﬁcient mobile computing, and a completely new and sleek facial recognition mechanism. Whatever the deal, you know it’s going to be lapped up by millions worldwide.
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2011 Nissan LEAF
The Verizon iPhone This is the real talk of the town. Forget all the iPhone 5 hype for a minute and focus on Verizon’s imminent release as a carrier of the iPhone 4. Why? Well, for one it’s an exclusive deal with Verizon, with no show of AT&T. Secondly, it’s conﬁrmed as having the new antenna design – attractive if you remember the fuss the antenna caused when the iPhone 4 launched back in 2010. But perhaps the biggest enticement is its new ﬁve-user WiFi hotspot functionality, allowing you to slip connections to up to ﬁve devices, as opposed to Apple’s overly stringent direct connection. Good job well done.
An ambitious ﬁve door hatchback that runs on nothing but the ﬁnest, cleanest electricity and apparently does 100 miles to every charge? Yes please. Nissan reckon their 2011 model will cost around the $32,000 mark and will come with a few tax perks. And, at less than $3 to recharge the battery, there’s no way you can argue that this car isn’t absurdly costeffective. Tempted yet?
Sony VAIO 3D laptop Yes you read that right: a laptop with 3D capabilities. You might be asking yourself what all the fuss is about over the new wave of 3D technology coming to market. And, whilst it’s a love or hate affair for most people, Sony reckons this little beauty could change opinions. Not much is known about specs, apart from the fact that it has a 16-inch, 240 Hz LCD screen – and unfortunately the bulky 3D glasses needed with it – but it’s sure to attract mobile moviebuffs looking for a new ﬁx.
And then there’s the non-starters… The ChildMinder
Obviously the makers of this overly-niche product realized their ﬂaw pretty quickly as their site is no longer live, but the idea of the ChildMinder is, or was, to act as a key-chain alarm for “when you forget your child in the car”. Something tells me that if you accidentally leave your child in the car, not having a key-chain would be the least of your problems.
You know when your thumb gets really tired of texting? No, neither do we, but apparently Awethumb, two plastic tips nestled on the ends of your thumbs for texting, “increase typing accuracy, speed and productivity”. Available in six colours, just in case you were worried about looking a fool when taking them out of their very own travel pouch, the Awethumb is available online for a supposedly reasonable $11.99.
DETAILS. FINAL WORD
The life cycle of the life science Patrick Leinert peels back the cover to reveal the true potential of Missouri in the life sciences sector.
hose who have been in the business of life science for any length of time have seen changes within the industry: more companies entering it; better and more research; newer, faster, and more accurate diagnostic tools; more preclinical trials; and new collaborations and partnerships. What others might consider backroom research has moved front and center, with advances beneﬁting animals, human health and the environment. While the life sciences sector is still fairly young, there has been tremendous growth and development in the Midwest US and, more speciﬁcally, in the state of Missouri. One example, Leinco Technologies, Inc., located in suburban St. Louis, is keen on the growth of recombinant proteins, monoclonal antibodies and the development of testing kits for academic and industrial research.
institutions across the state make Missouri rich in resources. The state’s research parks, research centers and incubators number more than 40. The Center for Emerging Technologies in St. Louis develops start-up companies in biotechnology, biomedical engineering, advanced materials and electronics. The Center of Research Technology and Entrepreneurial Exchange (CORTEX), also located in St. Louis, houses companies which have graduated from the incubator, as well as those drawn to the area for related research capabilities. Just two hours away in Columbia, the University of Missouri is home to at least five different specialized research centers. The newest of these, the Christopher S. Bond Life Sciences Center, is a state-of-the-art facility promoting interdisciplinary research in food production and quality, with an aim to improve human health, animal health and environmental quality.
Ongoing research and partners New ventures, partnering and collaboration are part of the business at Leinco. A diagnostic test currently in development here will one day help breeders of livestock determine pregnancy more quickly and accurately. With Missouri’s strong presence in the animal health and plant science sectors, Leinco is perfectly positioned to develop this research. While most of Leinco’s business is outside the state, the company does a lot of work right in its own backyard with Washington University in St. Louis. US News and World Report ranks Washington University’s School of Medicine fourth in the United States. And scientists at the Genome Sequencing Center at the university were the ﬁrst in the world to decode the complete DNA sequence of a cancer patient. The Genome Sequencing Center is one of only three such centers in the US to be funded by the National Institute of Health. Leinco shares equipment with Washington University through the Siteman Cancer Center – an international leader in cancer treatment, research and prevention.
Resources for research In addition to Washington University, research
A specialized work force
Patrick Leinert is President and Chief Executive Ofﬁcer of Leinco Technologies, Inc.; a life sciences company located in St. Louis, Missouri. The company manufactures and sells materials for academic and biotech researchers. Leinco continues to develop new products and services to meet the needs of researchers across the United States and internationally.
For a growing life science company, a qualiﬁed work force is vital. Leinco has found in Missouri wellqualiﬁed employees with technical credentials and advanced degrees. Missouri exceeds the national educational average with more than 85 percent of its population holding a high school diploma or higher. The state also boasts 128 post-secondary degree-granting institutions. Of these, 37 offer a Bachelor’s degree or higher in biological or biomedical science. Leinco hires talent from Washington University, Saint Louis University and the St. Louis Community College system.
A good value Companies often cite low taxes and low business costs as a reason for locating in Missouri. In addition, Leinco has received tax credits, low interest business loans and training dollars from the state. As a result of these incentives, the company is growing, recently making a move to a brand new 30,000-square-foot facility. Leinco joins other companies – ABC Labs, bioMerieux, Inc., and Archimica Cooperatief U.A., to name a few – in creating a strong life science presence in Missouri. All across the state, the cells appear to be multiplying.
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