MAY/JUNE 2012 ISSN 1746-174X
VOLUME 8 NUMBER 3
Outsourcing Contract Pitfalls
Streamlining Pharma Portfolios
The global magazine for the pharmaceutical and biopharmaceutical industry
Coding & Marking Item-Level Serialization
Trends and Techniques
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CONTENTS FOCUS TOPIC
Intellectual Property: Best Exploiting IP Advisers in a Time of Pharmaceutical Collaboration
Chris Goddard — Dehns Patent and Trade Mark Attorneys
How small pharma companies can use their existing IP advisors to help formulate a suitable patenting strategy.
Contributing Companies: UCB, BioStorage
Technologies, Spinnovation Analytical, University of Southampton and University of Texas.
Industry experts discuss a variety of themes and trends shaping the sector.
FEATURES Coding & Marking: Item-Level Serialization — Why There’s No Cause for Complacency
Alexandra Pygall and Rob Jacob — Stephenson Harwood
Making the right IP protection choices can ensure the road from idea to commercialization remains a lucrative venture.
Craig Stobie — Domino Printing Sciences
What action can you take now before the FMD becomes mandatory?
Business: The Cost of Pharma Divorce
The status quo is unsustainable and huge opportunities remain for organizations that adapt to the ever changing environment in pharmaceutical science.
Green Pharma: A Prescription for Lower Carbon Medicine
In their haste to obtain the decree absolute, demerging businesses could be threatening their long-term viability.
David Irving and Phil Walton — Mundays LLP
Forming a new business partnership could do more harm than good without a solid contractual agreement.
Using Cloud28 Outsourcing: Based Services to Secure Actionable Data Efficiency Gary Palgon — Liaison Technologies
Outsourcing IT services through the cloud can reduce capital expenditure and free IT staff to better use their expertise.
Supply Chain: Streamlining Pharmaceutical Portfolios — Cutting the Gordian Knot
Wes Siegal and Evan Smith — Schaffer Consulting
Overcoming organizational complexity and product proliferation.
Management: Bridging the Implementation Gap
Simon Dennis — Moorhouse
If the predominant ‘inside out’ operating model to programme and project delivery is no longer appropriate, what, then, is the solution? MAY/JUNE 2012
Personalized Medicine: The Future of Drugs
Clive Page — Verona
Brian McGilligan — Cognizant
Outsourcing: Avoiding Business Contract Pitfalls
Patents: The IP Conundrum
Paul Taylor — Carbon Trust
Forward thinking pharma companies can differentiate their brand from the competition by reducing the carbon impact of their products.
From the Editor: Joking Aside ...
Corrine Lawrence — Via Communications Ltd
A small tale about a friend, his dog, a vet and a pharmacist.
Comment: A New Commercial Model
Miachel Ackermann — Quintiles
Biopharma should consider adopting multichannel marketing approaches to stakeholders as an alternative to the traditional salesforce-based model.
Nostrapharmus: Would Globally Harmonized Pharmacovigilance Regulations Help Patient Safety?
The standardization of drug safety information is inevitable, but not necessarily the global harmonization on the interpretation of this information.
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Editorial Advisory Board
The Editorial Advisory Board of Pharma comprises a distinguished panel of experts from various parts of the pharmaceutical industry. They review technical manuscripts, suggest topics for inclusion, recommend subject matter and potential authors, and act as the quality control department for the magazine’s editorial content and direction.
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Alan Lahaise Key Account Executive Patheon
Ray Rowe Chief Scientist/Prof of Industrial Pharmaceutics Intelligensys/Uni of Bradford
Carlos Lopez Relationship Director Healthcare & Pharmaceuticals Lloyds TSB Corporate Markets
Harald Stahl Senior Pharmaceutical Technologist GEA Pharma Systems Kurt Speckhals Gino Martini Senior Director, Director, Strategic Technologies Supply Chain Pfizer Inc. GSK (UK) Jim McKiernan Chief Executive Officer McKiernan Associates GmbH
Geoff Tovey Visiting Professor Dept of Pharmacy King’s College
Maireadh Pedersen Head of Business Development Quay Pharma
Wes Wheeler President, WPWheeler LLC
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FROM THE EDITOR
JOKING ASIDE ...
man walks into a pharmacy and orders five packets of Piriton (branded OTC antihistamine) tablets … for his dog. Sounds like a joke, right? Wrong. Allow me to expand. The tale, which began with a lively debate between fellow ‘Facebookers,’ involves a friend (I’ll call him Dave), a dog, a vet and a pharmacist. Dave owns a dog with an ongoing ear problem. The vet advises that it’s best treated with pain relief and anti inflammatories; but, as each prescription costs £25, he recommends a cheaper alternative — Piriton tablets. Dave duly visits his local pharmacy every week for 12 months until one day he discovers the tablets are on special offer. Seizing the opportunity to stock up, Dave requests five packets. The assistant advises that the pharmacist has to approve any bulk buying of medicines. Dave repeats his request to the pharmacist who asks him why he wants five packets. Dave explains about his dog, the vet’s advice and the long-term treatment. The pharmacist refuses to sell any tablets because they are “licensed for human use only.” Feeling extremely frustrated — until now buying a packet of tablets for his dog had been easy — Dave asks the pharmacist: “Are you joking?” The pharmacist is not joking … and Dave storms out of the store empty handed and files a complaint with head office.
Dave shares his experience online and receives much advice and sympathy from his friends: “To be treated that way is disgusting,” “The pharmacy can’t sell you Piriton for your dog because of a clause in their insurance policy,” “I’ll visit the pharmacy and buy some for you,” “Don’t worry, antihistamines only work in about 10% of dogs” and “You need to take a vet’s prescription into the pharmacy.” The following day, Dave walks into the same pharmacy and asks a different assistant for two boxes of Piriton. “Certainly sir,” says the assistant. The pharmacist, in the background, comes forward, glares at Dave and asks: “Who are they for?” Dave, with a smile upon his face, replies “My wife.” Dave knows the pharmacist doesn’t believe him and watches the pharmacist dither with the professional dilemma: does she call him a liar and risk a further complaint being sent to head office, or does she relent, knowing Dave’s lying? The pharmacist sells Dave the tablets, but makes her point with “only one box.” Dave leaves the pharmacy with a cheery “Same time tomorrow.” This scenario raises many questions and finds me arguing from many angles; but what would your advice have been? In the meantime, I’m off to the vet’s … to buy myself some worming tablets!
Corrine Lawrence Editor, Pharma email@example.com
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A NEW COMMERCIAL MODEL FOR A CHANGING HEALTHCARE LANDSCAPE
When planning product commercialization, biopharma companies need to develop data that demonstrate the product’s value to each of the main stakeholder groups — including patients, physicians, payers and policy‑makers — and communicate this data to the stakeholders. Future commercialization models will incorporate comprehensive health solutions, including patient‑centric combinations of therapies and services that drive enhanced outcomes or health system savings.
For more information
Michael Ackermann, PhD Senior Vice President Global Commercial Strategy and Alliance Global Commercial Solutions Quintiles www.quintiles.com
iopharma market challenges continue to put pressure on companies to make the best use of limited resources when planning the commercialization of their products. Companies need to consider tailoring data to reflect the varying perceptions of value of key stakeholders at the earliest possible point in product development. Once the data demonstrating value are in hand, biopharma companies should decide how best to communicate to stakeholders. Historically, the sales force model of commercialization has been predominant; today, a multichannel approach is often best, supplementing the personal interactions between sales representatives and physicians. Such multichannel efforts need to be based on a clear, stakeholder‑focused strategy, and should use the most appropriate technology platforms to deliver essential information. The channel used plays a secondary role to the audience and the messaging. Central to developing this value-based messaging is information on the product’s ‘real world’ performance, including comparative effectiveness research (CER), which reflects the fact that clinical trial results will not necessarily be replicated under actual conditions of use. Inevitably, some patient subpopulations will respond better than others, and it is helpful to identify these at the earliest possible stage in development. There are new segmentation approaches using psychosocial and motivational parameters that can further unlock the mysteries of patient behaviour. This segmented marketing approach increases the chance of early, positive experiences post‑launch for physicians and patients, and lays the groundwork for good patient outcomes and early evidence of product value in the targeted treatment paradigm. Combining good patient segmentation with knowledge of how those patients journey through the healthcare system can help to identify effective points of interventions and the appropriate tools to develop the optimal experience for the patient, and the fulfillment of the promise of the medication. For payers, CER studies showing the value of a new product in comparison to existing therapies may be required. For patients, the most important factors may be the product’s risk/benefit profile or its convenience.
For physicians, the role of a product in the overall treatment paradigm, or potential long‑term side‑effects, may be paramount.
A Hybrid ‘e-Detailing’ Model Technology has advanced significantly allowing physicians to receive information electronically (e‑details) — either passively via websites, flash promotions, or actively through call centres. The problem is that many pilots are driven by the technology rather than by a product or stakeholder strategy. One model that should be considered is a hybrid e‑detailing model whereby the same sales reps can supplement face‑to‑face visits by contacting physicians on a remote live basis. The hybrid model builds on an existing relationship between the rep and physician whilst resolving key obstacles to traditional sales calls. Pilot studies have shown that a web‑based detailing session can last for as long as 15–20 min compared with the typical 2–3 min in a doctor’s office. In addition, this technology allows participation of field or marketing management via remote dial‑in, and can be taped for analysis by marketing, which allows instantaneous assessment of the effectiveness of the detail materials via a feedback mechanism. Alternative uses of new technology include ‘locking’ detailing material into tablet computers — an approach that also allows companies to control what information is presented.
Conclusion Biopharma should consider adopting multichannel marketing approaches to stakeholders as a promising alternative to the traditional salesforce‑based model, which, despite the widespread downsizing of sales forces, still accounts for as much as 50% of industry commercial spend. Building on promising multichannel approaches, future commercialization models are likely to encompass comprehensive health solutions, including patient‑centric combinations of therapies and services that drive enhanced outcomes or health system savings. Increased uptake of advanced analytics will be key to maximizing the market potential of new products, and will enable companies to track and optimize the effectiveness and return of investment of these various promotional efforts.
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MOVING FROM A BROKEN TO A SUSTAINABLE PHARMACEUTICAL INDUSTRY
The current pharmaceutical model isn’t sustainable. Hence the successful, sustainable pharmaceutical company of the 21st century will not be the owner of the whole drug discovery to product process, but the innovator of therapeutic solutions sitting at the centre of a network of biological and clinical experts.
The pharmaceutical industry model is broken” is a commonly heard phrase from regulators, financial analysts and from within the industry, and the numbers also seem to support this view. For years, the pharmaceutical industry has said that it takes about $1 billion to bring a drug to market based on an estimate from the Tufts Center for the Study of Drug Development.1 Following an update by the US trade group PhRMA (formerly Pharmaceutical Research and Manufacturer’s Association) that estimate rose to $1.3 billion.2 But writing in Forbes , Matthew Herper and his colleague, Scott DeCarlo, place that figure considerably higher.3 Herper and DeCarlo counted the number of approved drugs per company and then checked the R&D spending for each Big Pharma using a Thompson Reuters database via FactSet Research Systems (Table I). The results show the cost of developing a single drug ranged from $3.7 billion to $11.7 billion. Although the methodology is perhaps simplistic, it demonstrates the level of R&D investment needed by the large pharmaceutical companies to produce new drugs. This level of investment is clearly
Table I: Research spending per new drug (Adapted from Forbes, “The Truly Staggering Cost Of Inventing New Drugs.” Sources: InnoThink Center For Research In Biomedical Innovation; Thomson Reuters Fundamentals. via FactSet Research Systems).
unsustainable, but how did we get here and, more importantly, what does a sustainable future look like?
Failure of Industrialization
The late 1970s and 1980s provided a range of innovative medicines based on solid pharmacological and biological knowledge. The industry worked on 100–200 targets with a good evidence base and the challenge was often finding the right chemical. The 1990s brought together technologies that could industrialize drug discovery: expressed sequence tags (EST) databases and the whole genome project combined with high throughput screening offered the potential to create a drug discovery factory … or so many people in the industry believed. The number of targets worked on increased, the number of compounds going into development increased and yet the number of new drugs per year stubbornly refused to increase! The notion that all targets were equal and that by increasing the number of candidates going into development, drugs would surely follow was embraced by the whole industry. With hindsight it is perhaps easy to see how quantity seduced us and made us forgot about quality — it has distracted us for 10 years. The demand Table I for increasing candidates was met by Total R&D Number R&D spend spending either making whole families of back‑up Company of drugs per drug ($ 1997–2011 ($ approved million) compounds, often of a very similar chemical million) AstraZeneca 5 11,790.93 58,955 series, or by taking the next set of chemically tractable targets despite the diminishing GlaxoSmithKline 10 8,170.81 81,708 biological plausibility (Figure 1). Sanofi 8 7,909.26 63,274 The consequences of this movement Roche 11 7,803.77 85,841 towards less biologically validated targets Pfizer 14 7,727.03 108,178 and stacking of candidates with the same Eli Lilly & Co 11 4,577.04 50,347 mechanism of action were higher costs and Abbott 8 4,496.21 35,970 insignificant change in the number of new drugs approvals per year. The initial responses Merck & Co 16 4,209.99 67,360 to this in 2005–2010 were to reduce the core BMS 11 4,152.26 45,675 disease areas and cut overall project numbers, Novartis 21 3,983.13 83,646 although often not within each disease or Amgen 9 3,692.14 33,229 therapeutic area. This retreat from difficult Research Spending Per New Drug (Adapted from Forbes, “The disease areas is leading to the development of Truly Staggering Cost Of Inventing New Drugs”. Sources: large orphan areas; for example, psychiatry. InnoThink Center For Research In Biomedical Innovation; Thomson Reuters Fundamentals. via FactSet Research At the same time, the increasing focus in Systems) other areas, such as metabolic disease, may MAY/JUNE 2012
BIOTECHNOLOGY Figure 1
Responding to demands for more scale
Figure 1: Seduced by quantity when we should have been focussing on biological quality, the demand for increasing candidates was met by either making whole families of back up compounds often of a very similar chemical series or by taking the next set of chemically tractable targets.
Preferred direction of travel
well not result in significant increases in new drug applications and almost certainly will not drive step changes in patient benefit as many of these areas are reasonably well served already (for example, diabetes). We are now seeing a second revolution starting to occur — the reduction of these core areas and a switch from ‘research and development’ to ‘search and development.’ This is resulting in reductions in in‑house programmes and driving up the costs of in‑licensing based on a supply and demand model rather than a value‑based model. There is little evidence to provide confidence that these strategies, which have some significant holes in the logic supporting them, actually work. Despite the challenges and the questionable strategic direction of several companies, there is ample room for optimism. We are entering an era of unparalleled opportunity. Although the first decade of the 21st century might be considered a time of tremendous data generation, 2010 onward offers the conversion of this into knowledge. When this is combined with the advances in therapeutic technology, including antibodies, stem cells, peptides, RNA‑based approaches, the possibilities are vast. The third pillar in this opportunity is the will of commercial, academic and government stakeholders to drive the benefits of innovation through to patients. No longer should we hear the comment that we cannot develop this drug because the 5‑year net present value is less than a billion. The question has changed from ‘can we develop it with a return on investment?’ to ‘how do we create the partnership and network to get the therapy to the patient?’
Focus on Biology and Networks
To move from a broken to a sustainable pharma industry, we need to bring the focus back to biology MAY/JUNE 2012
and accept that this understanding of biology is more likely to exist outside your company than within. Spending much more time on the biology and target validation is fundamental to reducing attrition rates, as well as increasing the number of new drugs approved each year. Although the underlying biology probably exists beyond your company, the ability to generate research tools and ultimately therapeutics must be a core competency to a successful R&D company. This still only brings together two of the necessary factors and additional expertise will be required to drive a successful project. Alongside the basic biology, and research and therapeutics, expertise in translatable animal and/or in vitro models, access to patient tissues, diagnostics and access to patients will be required. Moving from a philosophy of owning all parts of drug discovery and development to owning the expertise around therapeutic production, development and commercialization will be a significant challenge for many companies, let alone the notion of sharing the rewards! Yet, the likely successful and sustainable company of the future will be the one at the middle of a network of partners driving the exploitation of compelling biology into therapeutics delivering real benefits to patients (Figure 2). The network will consist of academic, government and private partners, and will deliver the flexibility to generate, develop and commercialize therapeutics in any disease indication, ranging from orphan drugs to blockbusters.
The Recipe for Success
Personalized healthcare and biomarkers have been lauded as strategies to deliver a step change in productivity and a paradigm shift in the current business model. They are fundamental strategies supporting the successful development of new therapeutics, de‑risking compounds early in development and identifying populations with maximum benefit risk. PHARMA-MAG.COM
BIOTECHNOLOGY Figure 2
Figure 2: A successful and sustainable company of the future will be the one at the middle of a network of partners driving the exploitation of compelling biology into therapeutics delivering real benefits to patients.
1. www.genengnews.com/ gen-news-highlights/ new-estimate-sharply-raisesprojected-cost-of-developing-anew-drug/81246357 2. http://social.eyeforpharma. com/marketing/understandingpharma’s-drug-developmentcosts 3. www.forbes.com/sites/ matthewherper/2012/02/10/ the-truly-staggering-cost-ofinventing-new-drugs
For more information
Duncan McHale Vice President Global Exploratory Development UCB www.ucbpharma.com
Innovative pharma company
Disease area exper1se
Such strategies arise, however, through a natural consequence of understanding the biology more fully rather than a distinct plan of approach in themselves. Comprehensive understanding of disease biology will lead to a logical approach to the development of the therapeutic de‑risking the programme with the use of intermediate biomarkers reflecting the changes to the biological system. Similarly, the
biological understanding will lead to rational disease classification and disease subpopulations with optimal benefit risk profiles driving real benefit to patients. The successful, sustainable pharmaceutical company of the 21st century will not be the owner of the whole drug discovery to product process, but the innovator of therapeutic solutions sitting at the centre of a network of biological and clinical experts. Driving, facilitating and enabling networks, whilst maintaining a focus on delivering innovative therapeutic solutions to patients, will be the core expertise of successful companies. An inability to move from a scale‑based isolationism to network enabler will be the end of many previously great companies.
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A STRATEGIC APPROACH TO COMPREHENSIVE SAMPLE MANAGEMENT IN BIOPHARMACEUTICAL DEVELOPMENT
Long-term handling and storage of biomaterials is an increasingly important aspect of the drug development process. Good storage practice (GSP) that includes protocols for sample handling and management, robust information systems and compliant processes are critical to maximizing the value of clinical research.
uman biological samples generated during clinical research are invaluable scientific assets that are foundational to the discovery of new medicines and therapies. These materials (that is, tissue, whole blood, DNA and so on) are used to predict the effectiveness of a potential new medicine and to identify possible adverse effects. They are, therefore, vital to the drug discovery process by enabling earlier and better predictions about the effectiveness and safety of a new compound. Given the intrinsic value of these research materials, preserving samples to the highest of standards is critical from an operational and scientific perspective, as well as from a regulatory and financial standpoint. As a result, it has become essential for biotechnology and pharmaceutical companies of all sizes to have a profound understanding of sample management strategies and biorepository operations that help to ensure the long‑term preservation of biospecimen samples.
Developing A Comprehensive Sample Management Plan
For more information
Catherine Michael Senior Director of Comprehensive Solutions BioStorage Technologies Tel. +1 317 268 5500 cathy.michael@Biostorage.com
Despite the intrinsic value of properly preserved samples, research organizations often fail to develop a comprehensive strategy for proficient and cost‑effective management of these materials. Taking a strategic approach to sample management, whereas considerations for sample collection, sample transport and storage and sample data are carefully planned, can contribute to budget savings, cost avoidance and process efficiencies that can reduce development cycles. A thorough sample management plan provides detail on where and who will manage samples, as well as what resources will be required. Of equal importance are the processes that will be used to manage samples and the technologies that can be leveraged to improve access to these assets. The development of a good plan requires insight into the ultimate strategy of sample use, which can be obtained by conducting a current, desired and future state analysis of sample management within an organization.
GSP for Long-Term Sample Management
To ensure samples are properly handled, transported and stored, companies should adhere to GSP guidelines. Although GSP is not a regulatory mandated requirement, the International Society of Biological and Environmental Repositories and governmental organizations such as the US National Cancer Institute have established specific
GSP guidelines. The guiding principles of GSP mandates standardization of sample handling and management processes to ensure materials are prepared and stored in consistent conditions. Factors that should be considered in defining sound storage practices include • Secure, modern and scalable facilities strategically located to reduce environmental risks and other external threats. • Current and scalable inventory management technology systems. • A wide range of storage temperature capabilities, from controlled‑room temperature to vapour phase liquid nitrogen (–190 °C). • Reliable, state-of-the-art storage and temperature‑monitoring equipment. • A robust, scalable operational and storage infrastructure. • Expert, highly trained staff. • Thorough, consistently applied standard operating procedures (SOPs). • Regulatory compliant processes, systems and technologies.
Cold Chain Logistics and Management
Cold chain management defines how temperature‑sensitive materials, such as samples, study drugs and APIs, are packaged, transported and stored throughout the R&D process. Weakness or failure at any point in the chain can compromise product integrity, breach security, delay shipments and ultimately result in financial loss or liability. As such, the importance of training site personnel in correct shipping and receiving processes for temperature‑sensitive materials cannot be overstated. Set‑up and handling are common causes of temperature deviations; it is crucial that all cold chain partners are properly qualified and have been adequately instructed in handling these materials. In fact, the International Air Transport Association requires organizations and individuals that ship or receive biological materials to be trained properly in packaging, labeling, documentation, declaration, hazard assessment and emergency response. This is of the utmost importance, as lack of compliance can delay shipments at inspection points. This bottleneck can delay studies, thereby reducing a potential drug candidate’s time on the market. To ensure compliance and to optimize the biomaterial cold chain, organizations should take a holistic approach to cold chain management in which processes are an integrated component of the organization’s overall best practices. MAY/JUNE 2012
BIOTECHNOLOGY Information and Data Management Proper storage and transportation are critical, but samples are useless unless they can be quickly located with their associated data. In the past, researchers applied ad hoc tracking systems, such as spreadsheets, to track and plot information associated with biospecimens. Today, the complexity of clinical trial research has rendered these outdated archaic systems inefficient to handle expanding biospecimen inventories. The ideal system should offer tracking and reporting processes through all stages of a sample’s shipping, handling and storage life cycle. Because pharmaceutical and biotech laboratories typically implement a wide range of information systems, sample management systems should seamlessly interface with other systems, provide global data integration and access, and be highly configurable to easily integrate with a variety of laboratory workflow models. The integration of sample storage information annotated with consent authorization and clinical result data is another area of expansion occurring as a result of the advent of new technology warehouse systems. Connecting information on sample storage location, temperature and pre‑testing evaluation with the resulting data from a clinical study, can enable researchers to improve their selection of samples for biomarker testing whilst shortening development timelines.
Outsourcing Sample Management
The exponential amount of samples generated during clinical research and the complexity of handling and transporting these temperature‑sensitive materials across international borders has spurred organizations to outsource their sample management to specialized providers. These services are well suited for outsourcing because their required capital investments in equipment, facilities, trained personnel, technology, security, and transportation infrastructure. In addition, companies are increasingly establishing hybrid approaches to onsite sample management where inventories are stored onsite, but are dictated by SOPs and technology provided by an outsourced provider. This allows for the appropriate tracking, assigning and processing of individual samples across multiple studies on a routine basis. Furthermore, it leads to more efficient lab processes, given that most services that require automation are assigned to specimens across studies.
All samples must be prepared and stored in optimal conditions to protect the integrity of samples for future use. This is particularly true as personalized medicine, biomarker research and genomic‑based discovery become the focus of many research initiatives. As such, drug developers are becoming increasingly cognizant of the value of their sample inventories. Today, centralized, well‑annotated, consented sample collections are critical intellectual property assets to research organizations.
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NMR: A NEW APPROACH TO BIOPROCESS OPTIMIZATION
By extending NMR methods it is possible to look into the ‘heart’ of any culture and rapidly report on its status from an accurate concentration profile of multiple components.
P Advantages of NMR Monitoring
• Provides access to accurate absolute concentration data. • Identifies media components, including nutrients (for example, saccharides, amino acids) and metabolites that may not have been previously defined. • Rapidly screens culture medium and provides profiling and validation in combination with existing chemometric tools. • Analyses more than 50 components simultaneously, making it suitable for batch‑to‑batch multiplex monitoring. • Analyses multiple components, regardless of nature (that is, polar, nonpolar, volatile and nonvolatile). • Has a good level of detection from 1 to 10 µm with linearity across a broad concentration range. • Rapidly delivers component concentration profiles across multiple samples. • Provides detailed consumption profiles from parallel batches (straight, fed batches or perfusion batches) to identify variations and deliver hypotheses for improvements in process development. • Deliver robust and reproducible quantitative analysis of complex media. • Deliver hypothesis for source of performance variability.
roducing biologics at a commercial scale is demanding, and requires accurate and perceptive methods of monitoring/analysis of the cell culture to achieve the highest quality and yield of a therapeutic product. Two of the most important aims of bioprocess optimization are the development of a stable high yielding and scalable production process, and the optimisation of cell viability/density to ensure a high quality, safe product. It is essential to fully understand and control cell growth conditions as early as possible, ideally during cell‑line development when a culture process is being planned. At this stage it is a huge advantage to be able to rapidly understand and monitor the factors that are most influential to cell growth and the eventual production of the recombinant product. Although traditionally this is the remit of high pressure liquid chromatography (HPLC) or NOVA profiler bioanalysis methods, there is now a newly established approach — based on nuclear magnetic resonance spectroscopy (NMR) — to analysing culture media that can rapidly provide a reliable concentration profile of all of its components at a given time of the process.
The Rationale for NMR in Culture Media Analysis FDA regulations are driving the biotech industry toward using more chemically defined media, increasing their level of control and monitoring in bioprocess using complex fermentation media. This leads to an increased need for improved or innovative methodologies to monitor the concentration and identity of media components during process development and biomanufacturing. Traditionally, many bioprocesses were based on undefined cell culture media containing plasma, serum and/or embryo extracts (animal products), which bring nutrients and growth factors. Many other processes also include nonanimal complex media based on vegetal source protein hydrolysates. Undefined media are not optimized for specific cell lines and may be inadvertently contaminated by prions or other unwanted biologics, especially animal source media. Consequently, there has been pressure to
move towards defined serum‑free culture media for bioprocessing, containing optimized concentrations of the required nutrients and growth factors. Media that have been customized for a specific cell line and biologic product will reduce batch‑to‑batch variability and fulfil modern product safety requirements. Although HPLC methods are widely used with dedicated applications focusing on the profiling of some specific media components such as amino acids, they often remain limited when profiling different nutrient classes or metabolites, and may suffer from a limited throughput. New developments in NMR‑based technology are addressing those issues. By extending NMR methods, which were first developed to analyse bodily fluids to support metabolomic applications, a new and useful tool has been provided for the biologics industry, allowing the rapid, broad and accurate analysis of culture media at any stage of the process. This powerful technique provides the ability to look into the ‘heart’ of any culture and rapidly report on its status from an accurate concentration profile of multiple components (for example, sugars, amino acids and metabolites). The concentration profiles obtained can then be used in several different ways including • Designing the basal media. • Profiling and qualifying raw material. • Understanding cell‑line nutrient requirements and feeding strategies in the bioreactor. • Troubleshooting issues regarding the culture media composition. • Optimizing the media to reach optimal yields and reduce batch‑to‑batch variability.
NMR, Quality by Design and FDA In 2009, the Office of Biotechnology Products (OBP) at FDA began the long task of updating their review process for biologics manufacture and implementing Quality by Design (QbD) — a high‑end manufacturing concept that requires a thorough understanding of the product and the process of manufacture. Every aspect of a process needs to be understood; this requires a significant upfront investment in time and resources in addition to the traditional discovery and development of a product. For successful QbD, the product and process knowledge base should critically include MAY/JUNE 2012
BIOTECHNOLOGY • A thorough understanding of variability in raw materials. • The relationship between the cell-line and the production process. • The product’s critical quality attributes (CQAs). • The relationship between CQAs and the clinical properties of the product. QbD concepts need to be incorporated around the design of the product and the design of the process, to manufacture the product. They need to be incorporated around other activities associated with the product’s life cycle, such as upstream and downstream processing. The complexity of biologic products makes QbD a difficult process, but considering an NMR method with its capability to analyse a large range (>50) of media components simultaneously and provide comprehensive data at chosen times during a process, NMR‑based approaches are uniquely suited to support part of the QbD effort and requirements. Raw material and media samples can be analysed at set times to provide a profile of how component concentrations change during the process and detect those critical to the process. NMR‑based approaches applied to the optimization of upstream processing or even cell-line development is in line with QbD requirements, which will increase understanding, efficiency and control along the development process.
NMR Monitoring for Manufacture of Biologics and Biosimilars NMR could change the face of bioprocess development and monitoring because it provides access to component identity, plus absolute concentration data rapidly and easily from a single sample. With limited sample preparation from culture Figure 1
media samples, NMR spectra are automatically recorded to provide absolute concentration data. Small amounts of sample culture media can be taken across the required timeline along the process, and screened to identify and quantify metabolites, feed components or eventual contaminants in the media. Complex calibration is unnecessary and even unknown compounds can be rapidly identified from their NMR signals. A single analysis can detect and quantify more than 50 components and provide a comprehensive report on the sample constituents. It is thus possible to gain an in‑depth understanding of the processes occurring in the culture, by using NMR to monitor feed components consumption and metabolite production to rapidly develop, optimize and monitor processes. The technique’s utility, versatility and multiplex nature makes it highly suitable for batch‑to‑batch monitoring and allows comparison of results across a whole research project; even from site to site, as the data generated reflect absolute concentration. NMR can handle a broad concentration range with linear concentration response and has excellent limits of detection from 1 to 10 µm. When combined with chemometric methods, it is the ultimate tool to tackle lot‑to‑lot variability in cell culture process, optimizing the efficiency and consistency of large‑scale biotherapeutics production. With the adoption of QbD by regulatory agencies, there is increased pressure to achieve best product and process quality, pushing biopharmaceuticals companies to increase their level of design and control in bioprocessing activities. Stimulated by this, but also by more recently released FDA guidance for the characterization of biologics and biosimilars, NMR is making a come back, and may start entering the lab of companies more used to polymerase chain reactions (PCRs), petri dishes and HPLC.
Case Studies NMR methods can be applied to a wide range of cell culture and fermentation types. From stem cell culture, to the production of biologics by Chinese Hamster Ovarian (CHO) cells, every cell line will have its own
Figure 1: The NMR determined concentration profiles of amino acids in a CHO culture during an 8‑day period allowed the media to be fine‑tuned for better cell viability and production. MAY/JUNE 2012
BIOTECHNOLOGY Figure 2 Figure 2: NMR was used to monitor the concentration of components in both defined and undefined media in a cell culture to rapidly design a replacement medium chemically defined.
feed and nutrient requirements. NMR can rationalize the definition of these requirements, allowing rapid culture medium design and thereby reducing timeline and costs. The culture media required for propagating animal cells are much more complex and require more fineâ€‘tuning than the minimal media sufficient to support the growth of bacteria and yeasts, and it is here that NMR can help the most. Furthermore, in case of culture performance variability and biomanufacturing failure, which is costly and rather common, NMR can provide a
chemical composition snapshot of the culture and help to determine the influencing factors affecting the process. The best way to examine the utility of NMR methods is by looking at some case studies and understanding how this method has worked for others. CHO Cell Culture Process Development and Medium Stability A rapid degradation of the amino acid asparagine produced toxic quantities of ammonia in a CHO cell culture, which was detrimental to the cells producing
Figure 3 Figure 3: NMR enabled to troubleshoot upstream processing issue of a cell line from shaker into bioreactor.
BIOTECHNOLOGY the biologic product. The NMR technology was able to monitor the asparagine concentration, which rapidly decreased and released aspartate and ammonia (FigureÂ 1). Moving from Chemically Undefined to a Defined Medium NMR was used to monitor how the concentration of numerous media components changed during the course of the culture in the undefined medium and two candidate defined media. In this way, excess and missing nutrient materials could be recognized and their concentrations adjusted to rapidly provide a suitable replacement chemically defined medium (FigureÂ 2). Supporting Upstream Processing from Shaker to Bioreactor NMR gave the concentration profiles of numerous compounds (~40), enabling the comparison of how cells used nutrients and produced metabolites in the shaker and in the bioreactor. Here, we observed the complete depletion of glucose in the last days of culture, which was not completely compensated by the feeding strategy and not properly monitored
by the glucose detector in place. This led to slight change in metabolism and caused lower yield to protein production (FigureÂ 3).
Conclusion NMR is a particularly robust and flexible analytical technique that has proven to be highly capable of analysing complex culture media, providing a valuable new tool for the biologics industry. With the application of more sophisticated automation and analytical support technologies, the contribution that NMR can make to the development and manufacturing of biologics is expanding and it deserves serious consideration. NMR can now be used across a range of different production platforms and cell systems (for example, CHO, stem cell, hybridoma) to provide rapid insight into the culture process and support upstream process development. Results provide the information necessary to optimize cell culture media making selection and design processes more rapid and cost effective. NMR has a bright future as a tool for the biologics industry.
Dr F.C. Girard
For more information
Dr F.C. Girard CEO Spinnovation Analytical Tel. +31 24 240 3400 email@example.com www.spinnovation-biologics.com
MORE EFFICIENT BIOTECHNOLOGY — ONLY ONE CLICK AWAY?
New research could enable useful DNA and RNA structures to be produced more efficiently and on a larger scale than is possible using current enzyme‑based technologies.
nzymes are the workhorses of biology, tirelessly catalysing reactions throughout the natural world. They are also integral to almost every important process in biotechnology … but they are fickle. Millions of years of evolution has tailored enzymes to work fantastically well in the cell, but only under specific conditions. Often this means that they are ill suited to industrial processes because they do not work well at high temperatures or on a large scale, which presents a serious barrier to taking biotechnology beyond the lab. One such biotechnology bottleneck faces researchers who want to join DNA or RNA strands together via a process called ligation. The ability to produce large amounts of normal and chemically modified DNA and RNA is critical for bioscience research, and for a range of clinical and industrial applications. But this ability is dependent on ligation enzymes and thus is constrained by their limitations. Our team from the Universities of Southampton and Oxford is hoping to overcome this problem by developing a synthetic biology approach that does away with the need for enzymes altogether. We are working with Andrew Turberfield and his colleagues in Oxford to develop and exploit a new technique called ‘click ligation,’ which aims to apply the tools of click chemistry to the synthesis of long and complex DNA and RNA molecules. Click chemistry shares a similar philosophy to synthetic biology in that reactions are designed to generate substances quickly, selectively and reliably by joining small subunits together — similar to a modular approach to engineering. The Biotechnology and Biological Sciences Research Council (BBSRC) has identified synthetic biology and industrial biotechnology as strategically important areas for driving the growth of the bioeconomy. Our project has the potential both to make DNA and RNA production quicker and more efficient and to deliver a wide range of useful new clinical and commercial molecules. To fulfil the promise of click ligation we have recently been awarded £4 million of funding from BBSRC in the form of a Longer and Larger (sLoLa) grant. These grants aim to provide
For more information
Tom Brown Professor of Chemical Biology University of Southampton www.browngroupnucleicacidsresearch.org.uk
internationally leading research teams with the time and resources to conduct multidisciplinary research to address major global challenges. The chemical linkages we have developed are stronger and less choosy than those formed by enzymes, and can be produced in large amounts for industrial‑scale applications. This could make standard and modified nucleic acid molecules much easier to manufacture, as well as opening up the possibility of producing new nucleic acid structures decorated with a variety of useful chemical modifications. For example, click chemistry can be used to create DNA strands that retain their methylation pattern — something that is particularly difficult using current techniques. The ability to produce long methylated strands of DNA could facilitate new research approaches to understand development and epigenetics. In a clinical setting, click ligation could be used to develop DNA‑based medicines to treat a whole range of diseases, including cancer and HIV. We know that people who possess certain genes are more susceptible to these diseases so by using DNA to turn off the appropriate gene we might be able to help combat these diseases. One problem hampering this approach is that long strands of DNA are more effective at turning off genes than shorter ones, but are less readily taken up by the cells in our bodies. With click chemistry it might be possible to send in a series of short strands that then self‑assemble in the cell and turn off the disease gene. Although click ligation has many advantages compared with an enzyme‑based approach it relies on an artificial linkage that has not had the luxury of millions of years of evolution. As such, it is crucial that this artificial link is biocompatible and isn’t rejected by the cellular machinery. Importantly, we have recently demonstrated that a bacterial cell can copy and read a strand of DNA that has been ‘clicked’ together, and enzymes can also use it to make RNA. Remarkably, it seems that cells don’t notice the unusual linkages so they process the click‑linked DNA normally. The funding will give us the time and resources to really push on with the development of click ligation. This new technology will hopefully become an important addition to researchers’ toolbox of molecular techniques, helping them both to explore how biological systems function and to develop useful new molecular machines. MAY/JUNE 2012
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of laminar-flow monitoring, they measure flows from as low as 0.05 m/s (standard velocity wN of air, based on standard conditions of 20°C and 1013.25 hPa). Due to the optional high-precision calibration, the measuring accuracies are within ±1% of the measured value. The users can choose between the thermopile and ‘dumbbell head’ sensor models. The thermopile sensor of the SS 20.415 simultaneously offers the option of detecting the direction of flow. Thermopile sensors are distinguished in particular by their mechanical sturdiness and extremely quick response time of 10 ms. The aerodynamically optimized dumbbell head sensors of the SS 20.515 are particularly easy to clean, even when switched on. A coated design also allows their use in aggressive media. Both sensors are suitable for disinfection with alcohols such as isopropanol and with H2O2. For simple mounting of both sensors, 5 different quick mounting versions to choose from are available to the user. They also offer quick replacement during calibration.
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OPENING THE QA/QC MICROBE BOTTLENECK WITH FAST, ADVANCED CULTURE
An advanced Petri culture technology that returns results for Salmonella, E. coli and other bacteria on average 400% faster than conventional methods.
Dr Jonathan Faro
1. www.pharmaqbd.com/fda_ strategic_plan_regulatory_ science
For more information
Dr Jonathan Faro Assistant Professor University of Texas Health Science Center Jonathan.P.Faro@uth.tmc.edu
ast summer, FDA released its strategic plan for the Advancement of Regulatory Science, in which the Agency emphasizes four areas to reduce the risk of microbial contamination in various manufacturing industries. Among its recommendations is the development of “sensitive, rapid, high‑throughput methods to detect, identify, and enumerate microbial contaminants and validate their utility in assessing product sterility.”1 For the pharmaceutical industry, this is a call to decrease the time required for microbial quality assurance (QA) associated with clean room validation, in‑process testing and final sterile product release.
screening PCR may only detect the presence of DNA and cannot rapidly deliver viable results of bacteria growth. As such, PCR is typically followed up with PCR separation steps or a culture sample to verify whether active‑threat micro‑organisms are present. The main disadvantage of flow cytometry is a low throughput rate that cannot handle large numbers of samples efficiently. This prolongs results and defeats the purpose of a rapid microbe detection system. Finally, both PCR and flow cytometry are expensive; they require costly equipment that must be maintained and personnel must be specially trained to operate these devices.
Manufacturing Encumbrances from the Microbe’s Timetable
Moving Beyond PCR for QA/QC
During sterile product manufacturing, whether by aseptic processing or sterilization, sterility assurance verification is often necessary after key steps such as solution preparation, bulk transfer, filtration and vial filling. If multiple hold times are required for in‑process microbiological testing, manufacturing can be extended for days, thus complicating the efficient utilization of equipment and personnel. In-process microbial testing with alternative technologies that are quicker than culturing, such as polymerase‑chain reaction (PCR) and flow cytometry (discussed below) can be employed, but these generally lack the ability to provide expedient viable results — PCR assays can require an 18‑h overnight enrichment. This may not sound long, but these in‑process hold times have serious implications to the pharmaceutical industry. Throughout manufacturing, tests are conducted at various stages of processing and their associated time accumulates and lengthens the manufacturing timeline to finished product. In addition, such long wait times quarantine materials and prevent them from entering the next production stage. Pharmaceutical companies can lose a competitive edge because of extended production times, as efficient supply chain logistics resulting in lower cost‑of‑goods is the lifeblood of the industry.
Without an ability to make micro‑organisms grow any faster, pharmaceutical companies look towards more complex and sophisticated equipment to receive microbial tests results slightly faster than traditional culture methods. PCR has proven to deliver results within minutes, but only after assays have undergone an 18‑h overnight enrichment process. In addition,
Pharmaceutical companies have been slow in adopting new methods that are faster than PCR and culturing. That said, several companies are emerging to offer alternative solutions, including, for example, NanoLogix, a US biotechnology company based in Hubbard, Ohio. The technology employs an advanced‑culture method to shorten wait times for Listeria spp and E.coli from 18–24+ h to just 5 h and Salmonella down to 4 h. Depending on the bacteria, results can be 4–12x faster compared with PCR or traditional culturing techniques. Other systems use bioluminescence, molecular DNA typing and endotoxin tests to detect and identify microbes to the specie level. The majority of these systems are easy to use, are more cost‑effective than PCR, deliver accurate and quicker results than traditional culturing methods and shorten the time needed for detecting microbe contamination in all stages of pharmaceutical manufacturing. Most of these systems are on the horizon, either under development or waiting FDA approval. Many, however, are available today for the QA/QC process of self‑certifying organizations, such as pharmaceutical companies, and well suited for parallel development and validation, along with traditional Petri culture methods, during pharmaceutical R&D. Such rapid microbe detection can shorten the time needed for production by decreasing in‑process hold times. The inexpensive, reliable, and rapid sample turnaround of these methods enables testing to be implemented at any stage of production. Issues of contamination can be better addressed, as faster results mean the more efficient use of manufacturing clean rooms, equipment, and personnel, which leads to greater efficiency and a lower cost‑of‑goods. MAY/JUNE 2012
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CODING & MARKING
ITEM-LEVEL SERIALIZATION — WHY THERE’S NO CAUSE FOR COMPLACENCY
Although the finer points of the EU’s Falsified Medicines Directive (FMD) are still to be decided, the author examines what action companies can take now before the Directive becomes mandatory in 2016.
or observers of developments in global action to increase security in the pharmaceutical supply chain, 2011 has been an important year. The highlight was the EU’s adoption in July of the FMD, recently amended to 2011/62/ EU, which incorporates a series of initiatives to help safeguard the supply chain and protect patients. Of particular significance for pharmaceutical manufacturers is the requirement to apply sophisticated identification and authenticity features on the outer packaging of medicines, including item‑level serialization in the form of a unique, nonpredictive number. Manufacturers have until 2016 to comply with the Directive’s requirements, which appears to be plenty of time. Decisions are still pending, however, on vital components of the compliance infrastructure — including the form the identification and authenticity features will take. Although this is likely to be the EC200 2D data matrix code, other barcode types and even RFID have been mentioned. Much of the industry seems relaxed about the lack of clarity, which is surprising given the scale of the technological demands the FMD makes. Based on conversations with customers and reading reports in the media, it seems to stem from the belief that, thanks to the regulatory regimes recently introduced in countries such as France (CIP 13) and Turkey (ITS), the industry has ‘cracked’ the technological issue on which any secure system is founded — namely, true item‑level serialization and all that it encompasses. This is not quite the case. Take France first: CIP 13 code, introduced at the beginning of this year, does not incorporate item‑level serialization. The combination of a 13‑digit number, human‑readable data and a 2D data matrix barcode identifies the product, the manufacturer, the batch number and the expiry date — but does not allocate a unique code to individual
“A serialization trial by one pharmaceutical manufacturer, on a single product in a few plants, created the largest database in the organization within a year.”
carton. So, for example, every carton in a 20,000 batch will carry identical information. As for Turkey, although its ITS system does include a degree of serialization, it is a simple, nonrandom, sequential — and hence predictive — form of serialization.
Different Countries, Different Solutions
The situation, therefore, is not clear-cut … not just in Europe, but worldwide, with different solutions either already in place or about to be implemented in the US, Italy, China, India, Brazil, Belgium and South Korea. What is clear, however, is that serialization is crucial to whatever solution you choose, and applying the unique, nonpredictive numbers to individual medicines is just the beginning … you then have to authenticate them, which involves a whole raft of coding, vision and data management issues. For example, consider what serialization under the FMD will involve compared with its French CIP 13 and Turkish ITS predecessors. Under CIP 13, every unit in a batch has the same 2D data matrix barcode, so
CODING & MARKING
during production you don’t need a ‘smart’ camera to authenticate these barcodes — pattern matching is sufficient. Nor do you need data management. ITS adds a unique number, so the barcode changes each time and the camera technology has to be more intelligent. You also need to manage additional data; the unique numbers, however, are sequential and nonrandom, so the data management is relatively simple.
The random serialization demanded by the FMD calls for a quantum leap, because each unit must be printed with a different barcode and different human‑readable data. Not only does this call for highly sophisticated imaging technology, the associated data management is of another order of magnitude — something the industry is now beginning to grasp. For example, a serialization trial by one pharmaceutical manufacturer, on a single product in a few plants, created the largest database in the organization within a year. And consider the amount of data generated by the ‘chain of provenance’ — an approach the US favours: the requirement to document every change of ownership may provide better supply‑chain security, but there are concerns at
the amount of work (and people) it will demand from smaller distributors, particularly when some products can change hands more than 20 times as they pass through the supply chain! We know that whatever approach is adopted, future pharmaceutical manufacture will not just be about making products, it will also be about managing data and sharing it with dispensers and consumers in a way that is controlled and secure. What we don’t know are the details. What form will the data carrier take? Will it be 2D data matrix barcode, a 2D linear barcode (as in China), RFID or maybe a quick response code? Will the random code format be predictive or nonpredictive? And once you have the unique identifier on the pack, how will you authenticate it? In the coming months, many of these questions will begin to be answered, particularly as the timetable for implementing the FMD counts down. Serialization is only the start, and it brings significant technological challenges. With the right effort, these are eminently solvable, so long as we don’t hold the misguided belief that established schemes have already cracked serialization. CIP 13 has shown is that you can print 2D data matrix at batch level; ITS has shown that simple serialization is possible. There is still all to play for, and the stakes are high.
For more information Craig Stobie Life Sciences Sector Manager Domino Printing Sciences Tel. +44 1954 782 551
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THE COST OF PHARMA DIVORCE
Corporate spin-offs are on the rise across the pharmaceutical sector, but at what cost to shareholders? Brian McGilligan, AVP, Life Sciences Program Management Consulting Lead at Cognizant argues that in their haste to obtain the decree absolute, demerging businesses could be threatening their long‑term viability.
emergers are in fashion again. After years of rampant merger and acquisition (M&A) activity, reality has come home to roost with the global economy and to a certain extent the European Union’s (EU’s) competition committee forcing the break‑up of European businesses. Add to this, the increasing competition from generic drug manufacturers and the expiry of drug patents, which are fuelling large pharma companies to re‑appraise the low margin parts of the business, spinning them away from the core business to maximize shareholder value. Cash sales to private equity firms and others are enabling pharma companies to focus on higher margin drug development. Pfizer’s CEO told the Financial Times recently that the company hoped to divest its animal health and infant nutrition businesses to gain cash to finance new bolt‑on acquisitions and return money to shareholders.1 And Pfizer is not alone in hitting the divestment trail … many of its peers and competitors — Roche, Novartis, Eli Lilly and sanofi‑aventis — have divested parts of their business to invest in biotech. Divestments as noted can be excellent news for shareholders; the process, however, should not be undertaken lightly.
Divorce is Rarely Pretty …
The trouble with corporate divorce is that it’s rarely pretty. Usually, the dominant party wants to sell off an unwanted or underperforming division, strip out the best bits and set it adrift to fend for itself in the real world. Those left abandoned inevitably want to fight for the spin‑off business, their shareholding and their futures. ‘Unpredictability’ makes demergers particularly challenging. Each case is different and, therefore, there is no standard one‑size‑fits‑all process. For the majority of CEOs (and their boards) this tends to be new territory; they may have been through a few M&As and witnessed first‑hand the complicated
integration of departments, technologies and personnel, but demerging is very different. In addition, demergers may damage the key driver of the pharma industry’s growth — research productivity. Industry analysis indicates that operational processes undertaken to ‘merge’ pharma firms place significant pressure on resources allocated to R&D activities. After significant industry mergers and integration of research functions between firms, further damage is likely as organizations divest elements of their business, essentially reverse engineering their merger strategies. As a result, the advantages created through integration are at risk of being lost as knowledge seeps out of the organization and affects the ability of the firm to deliver new entities to the market. So what can businesses do to ensure that any plans to demerge are not left to run wild and end up costing billions of pounds in lost revenue and stock value? When, for whatever reason, businesses decide to split, to sell off a division or demerge, openness and amicability are rare, largely because of a wide range of vested interests. There are also compliance and regulatory issues to consider, which vary both by industry and country, even within the EU. Consideration must also be given to the impact on customers and clients, as well as the management, structure and transition of business assets. It’s essential to understand the implications for the balance sheet, and the need to manage external communications to shareholders and the public. In short, it’s a minefield. The requirement for an interim state — which can last from 2 months to more than 2 years — is an often misunderstood element of demerging. During this state, the divested company is still tethered to the parent company, but starts to operate as an independent business. This can only happen when all the various bits of unravelling have been completed, tested and the new business is on a secure footing to make its own way. MAY/JUNE 2012
The speed at which this happens can have huge effects on staff morale and motivation; if it takes too long, key personnel may leave out of frustration. As long as the new, divested company is in the interim state, change is undesirable, although the risk of losing staff at this juncture is real … but it can be managed. Ultimately, a quick and professionally driven demerger project will ensure the interim state is well‑designed and ready to cope with all eventualities. The better the interim state is designed, the more quickly the new business will emerge from the shadows of its parent, reducing the risk of internal angst in the process. The need for impartiality and professionalism in designing, managing and completing a demerger is obvious, although the temptation to appoint internal project teams is not unheard of. The role of emotion in any business split (or even in M&As for that matter) increases the risk, and is usually underestimated leading to poor planning and decision making, which ultimately will cost more and affect shareholder value greater.
The problem is that internal appointments will not result in the best team being in place. Top executives and managers are needed to manage the business, to keep it working and plan for the future. By default, it will be a less skilled, less motivated team, uncertain of their future, making decisions about which they would have limited experience, even if they are accomplished internal project managers. When faced with the complications of governance, setting up interdependent external and internal communications processes, managing regulatory demands and designing complex stages of demerger activity, there is no substitute for experience. A good deal for the business that is well‑brokered and strategically sound will invariably net the executive team an appropriate level of appreciation from shareholders for a job well done. The reality is, however, that the job is only half done at this stage. Those who lead the company in to the deal need to ensure they’ve equipped it with right the team and tools to deliver. Only then can they be sure of fulfilling those promises that won the plaudits.
For more information
Brian McGilligan AVP, Life Sciences Program Management Consulting Lead Cognizant Tel. +44 207 297 7800 Brian.McGilligan@Cognizant.com www.cognizant.com/life-sciences
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AVOIDING BUSINESS CONTRACT PITFALLS
When entering into a contract with a new business partner, beware; the process of signing a new contract contains many pitfalls, which are difficult to get out of if slipped into. Arming yourself with a basic checklist of issues, all representing good commercial sense, will ensure you avoid the hidden hazards.
ow much do you really know about your prospective business partner? Knowing the company with whom you intend to sign a business contract may sound obvious, but many businesses fail to spend enough time on due diligence. So what does constitute ‘good’ research? First, identify their past and present business partners; this will enable you to obtain references, which are vitals tools for validating the partner’s credibility. This evaluation can be aided by running a credit check and a review of their statutory accounts, as they can indicate creditworthiness and the potential financial risk of dealing with them. It is also prudent to obtain details of their corporate structure and ensure you are dealing with the main trading company in the structure. David Irving
For more information
David Irving Partner Mundays LLP firstname.lastname@example.org Phil Walton Partner Mundays LLP Tel. +44 1932 590 577 email@example.com www.mundays.co.uk
Once the research is complete, a nondisclosure agreement (NDA) or confidentiality agreement (CA) is (usually) signed. An NDA/CA can be mutual whereby both parties are restricted in their use of information exchanged, or one way, which restricts one of the two businesses. Each party needs to ensure that the information provided is used for a specific purpose, cannot be passed to or used by a third party and remains confidential whether or not the deal proceeds. When transferring information, regardless of how watertight your NDA or CA is, never disclose any more than you have to and certainly do not put yourself in a position that results in giving away your ‘future inheritance’ — such as sensitive commercial information — in your contracts. By way of example, the other party to the contract, particularly in a situation where you are providing the know how and the other party the finance, will ask you to prove what you providing by disclosing key confidential information in advance of signing the main agreement. As impractical as this seems, this should be resisted at all costs until at the very least the main contract is in agreed form and preferably signed. Undue pressure may be levied on you by the party with the financial strength to coax you into early disclosure of confidential information that is not necessary until a later date, when the other
side has also proven their mettle, perhaps by making an initial investment. This theme of when and how to share confidential information is one that will be developed throughout the life of the contract. This theme can be easily demonstrated and is usually felt most keenly in joint ventures — the parties start with the best of intentions to pool expertise, know how, risk and maybe even intellectual property (IP), to create a structure or project that will enhance the success and, therefore, profitability to both parties. Unfortunately, these good intentions can disintegrate when key information needs to be shared; there is a legitimate concern that one party’s confidential information, know how and, most importantly, IP is used by the other party for purposes unconnected with the joint venture. Regulatory hurdles aside (for example, Data Protection Act), ‘trust’ lies at the heart of information sharing, hence the importance of due diligence and understanding one another’s philosophies and methods of doing business. Once the NDA has been signed and due diligence is underway (that is, not too soon in the process, but not too late either so that the disclosing party feels most vulnerable when the other party has not instructed lawyers to draft anything), it is up to the parties and their advisors to draft a sensible contract that provides the business relationship the best possible chance of success. If a contract is silent as to precise methods and timeframes for sharing information, unless it is there with a “to be discussed” tag attached, this should be regarded as a potential red flag. Contracts should not just be in ‘standard form;’ the parties are free to negotiate bespoke terms that will offer realistic targets, timescales and methods of delivery. Keeping it simple is still the best policy: set achievable milestones (perhaps staged investments) whereupon additional key information can be disclosed between the parties. The parties will, therefore, know that after certain periods of time, they have had the proper opportunity to investigate each other, the viability of what they are trying to achieve, and will, perhaps, have achieved some short term successes that demonstrate the long term potential. MAY/JUNE 2012
OUTSOURCING Obligations and Expectations
KPIs and SLAs Frequently, the parties fail to really understand what their respective obligations are to each other and what is expected of them. It its, therefore, advisable — and more beneficial in the long run — for both parties to fully detail these in the agreement. Contracts should include Key Performance Indicators (KPIs) and Service Level Agreements (SLAs) as these force the parties to consider what exactly is required, agree the service level standards (often by reference to time) to which they will work. This process will highlight issues that might otherwise have been omitted, or flush out any misunderstandings that could become a problem at a later stage. Significant protection should also be built in to the contract in case a party fails to perform in accordance with expectations; there needs to be more than just good will driving the business relationship! Payment Terms Clear provisions regarding payment terms need to be set out detailing how much is due and when. The payer should be legally bound to pay contractual payments due when required, and the payee must have the security of knowing it will receive the agreed amount on a certain date. The contract must also contain details regarding the auditing of the payer’s financial statements, any interest added to the required amount if a late payment occurs and, where possible, a guarantor who can pay the required sum if the business partner is unable to. If working with an overseas company, remember to consider the currency for payment and whether there’s an associated currency risk, which should be hedged. Term of Contract The term or length of the contract must be clearly stated in the agreement and understood by both parties, as this recognizes the commitment that the business partners have to each other. When setting the term bear in mind the length of time it might take to recover your set up costs; an agreement will have termination provisions, which could inevitably leave you exposed, particularly if there is a termination for convenience clause included. Consider also the exclusivity of the contractual arrangements to ensure that you have all the business in question. Such a request, however, is likely to be met with a demand for strict performance criteria on your side. Termination The termination provisions usually concentrate on circumstances that will automatically terminate the agreement; for example, if one party goes into liquidation. There are, however, more subtle termination processes, such as when a party fails to meet a sales target or is in breach of another term of the agreement and fails to remedy it. The circumstances in which you want terminate the agreement must be MAY/JUNE 2012
made clear, especially if you need to appoint a third party to replace your business partner. The termination provisions should also consider the consequences of termination — the liabilities — and how they may be limited. Disputes In practice, parties should be able to resolve disputes by talking to each other, but this isn’t always the case. It can be useful, therefore, to have an escalation provision within the agreement setting out how disputes will be dealt with, starting with, for example, two senior representatives of each party meeting to try to resolve the issue. Many people consider court as a last resort for resolving commercial disputes, and so recommend mediation as an alternative. The provisions of such terms need to be carefully set out and in particular address whether the outcome of such discussions will be binding on the parties. You need to set out the law that will govern the terms of the contract and which court or mediation process will deal with any dispute in the event that the resolution provisions have not been successful.
Contracts between businesses keep the commercial world spinning; they are also potential minefields for both parties. Forming a new business partnership may be beneficial, but, without a solid and specific contractual agreement from the beginning, it could do more harm than good.
MAXIMIZING IT RESOURCES USING CLOUD-BASED SERVICES TO SECURE ACTIONABLE DATA EFFICIENTLY
Pharmaceutical and biotech companies do not ask their IT departments to develop new drugs or devices; the job doesn’t fit their expertise, so it would be a waste of valuable staff resources. Similarly, companies should evaluate whether tasking their IT departments with integration and data management responsibilities is the most efficient use of their IT talent. On closer inspection, they are likely to find that outsourcing these services through the cloud not only reduces capital expenditure, but also frees IT staff to better use their expertise creating mission‑critical applications.
s science and research advance, the pharmaceutical and biotech industries are being inundated with increasing amounts and types of data. For example, genomic information: until relatively recently it did not even exist; now, it is nearly ubiquitous. Clinical trials can be considered in a similar light. Not all that long ago, running 10 or 12 clinical trials concurrently might have been enough for a company
to keep abreast of developing market trends; that number is probably closer to 70. Furthermore, the majority of today’s trials are outsourced, which only increases the likelihood that critical data are being collected in disparate formats via different IT systems. The sheer volume of data is growing faster than the ability of most pharmaceutical companies to integrate, harmonize and use the data. As the volume
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expands, its management is becoming increasingly complex, often creating a bottleneck that slows the process of getting drugs to market. With much at stake, the pressure on internal IT staff to integrate and manage data has grown exponentially. Trying to do this work in‑house may be a less viable solution than taking advantage of cloud‑based technology to outsource it.
Why Integration Outsourcing Makes Sense
Within most large pharmaceutical organizations, the IT department comprises a small group of people historically tasked with integrating IT systems within corporate walls. As collaborative opportunities have grown, the same IT resources have been asked to expand integration activities beyond corporate walls to include partners in research, supply chain, sales and marketing, and government organizations. Yet the core expertise of most IT professionals in the pharmaceutical industry is not systems integration or data management; it is not connecting the physical ‘plumbing’ that carries raw data from one source to another. Instead, their forte is interpreting, understanding and applying data to the process of bringing drugs and devices to market.
The real value these professionals bring to their organizations is their ability to analyse information to help reduce time‑to‑market. By removing the burden of integration and data management from internal IT staff, therefore, they are free to work on activities more directly related to market differentiation. As integration grows in complexity, it becomes less advantageous to devote internal IT resources to it. Companies generally lack the immense infrastructure and expertise necessary to amass diverse data and achieve meaning from it. Historically, developing these systems internally has required extensive investment in technology and resources, but advances in cloud‑based technology now present a unique solution.
Cloud-Based Integration as a Service: How it Works
The challenge with every new partnership or outsourcing opportunity is how quickly and efficiently a pharmaceutical company can analyse the data coming from different sources to make key business decisions. Meeting the challenge requires data management platforms that can connect, integrate, aggregate, harmonize and monetize information. Cloud-based technology is well-suited to these requirements because it offers leverage, scalability and
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1. www.forbes.com/sites/ matthewherper/2012/02/10/ the-truly-staggering-cost-ofinventing-new-drugs
For more information
Gary Palgon Vice President Healthcare Solutions and Product Strategy Liaison Technologies Tel. +1 866 336 7378 www.liaisonhealthcare.com
flexibility that cannot be obtained through traditional software models. Cloud‑based solutions support more than basic infrastructure needs; services offered through the cloud can be used to solve the business problems pharmaceutical companies face. Integration as a Service, for instance, is an integration specialty focused on performing complex data integration in the cloud. It operates on top of a company’s existing IT systems and allows large amounts of data to be transported and analysed quickly, easily and intelligently. With fewer dedicated internal resources than traditional methods, outsourced Integration as a Service provides the ability to • Connect: This capability joins disparate information technologies so they can send and receive information. It involves linking the physical IT plumbing. There is a wide variety of methods for doing this — including FTP, HTTP, SSH and others — but common protocols enable connectivity. • Integrate: Instead of linking the physical IT plumbing, integration links the data themself to ensure different interfaces, information and formats work together seamlessly. • Aggregate: This is the process of assembling data from a multitude of sources. It is how pharmaceutical companies begin to support large volumes of information, often in real time. • Harmonize: This is the most important step in creating actionable data. It involves: transforming data into a common, useable format; ‘normalizing’ it to minimize redundancy and dependency; and ‘translating’ it to equate semantic definitions. Through this process, for instance, you would know that a data field tagged as ‘last name’ and another tagged as ‘surname’ both contain information that mean the same thing. True harmonization reconciles the similarities and differences in data sets so that even with large amounts of diverse data, actionable information is revealed. • Monetize: Monetizing data is the process of using actionable, intelligent data to drive business activity. Translating complex data and transforming it to obtain significant insight allows pharmaceutical and biotech companies to get drugs and devices to market faster. Cloud‑based integration can turn vast amounts of data from clinical trials, point of service and point of sale into information that supports business decisions quickly and accurately.
Reducing Capital Expenditure
Most pharmaceutical companies are familiar with enterprise application integration (EAI) systems and the fact that many are becoming outdated. Faced with the prospect of upgrading or buying new software, it is prudent to consider the possibility of moving these
costs from the capital budget to the operational budget by purchasing integration and data management services in the cloud. Across the board, large enterprises have invested heavily in EAI solutions during the last 15 years or so, but a significant number of them are now are legacy systems. Many organizations have not upgraded their EAI solutions to a modern architecture (for example, SOA) to support their growing business needs. Usually, the cost to upgrade these systems is now equivalent to buying an entirely new system, which, on average, costs $2 million to $5.5 million after spending an average $500,000 for software, plus 3–10 times that for implementation. Cloud-based solutions, therefore, can be a good option given that they support modern architecture and are an operational expense instead of a new capital expenditure. The set‑up and management of Integration as a Service should be a simple, seamless experience that requires limited investment in infrastructure.
Pharmaceutical and biotech companies need faster access to more and better clinical trial and usage data. They need the infrastructure and the expertise to better connect, integrate, aggregate and harmonize data to leverage it to speed new drugs and technologies to market. Other industries — such as banking, finance and supply chain — have taken advantage of cloud‑based integration and data management services for years. There is no need for pharmaceutical and biotech companies to reinvent the wheel; some already are beginning to leverage the infrastructure and expertise of cloud‑based services vendors. One global pharmaceutical company, for instance, has used cloud‑based services to • accelerate data flow • increase the capacity to handle large, concurrent clinical trials • reduce costs • enable scalability • speed drugs to market • position itself to assimilate new business. Bringing a new drug to market costs an estimated $3.7 billion to $11.7 billion.1 In most cases, a company has merely 5 years to recoup that cost and turn a profit. Having actionable data that helps accelerate time‑to‑market, therefore, is crucial to the bottom line. Actionable data is the key to achieving peak business results in the highly competitive pharmaceutical industry. Outsourcing integration and data management responsibilities through the cloud not only provides a cost‑effective solution for securing meaningful business intelligence, it gives internal IT staff the power to do what they do best: use that information to help their companies thrive. MAY/JUNE 2012
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STREAMLINING PHARMACEUTICAL PORTFOLIOS CUTTING THE GORDIAN KNOT
In global pharma companies, organizational complexity and product proliferation are a mutually reinforcing Gordian knot that manufacturing and commercial leaders struggle to cut. Leaders can overcome these challenges by emphasizing speed and decisiveness whilst resolutely demanding that stakeholders deliver portfolio rationalization results.
he verdict is in: industry experts and executives widely acknowledge that the big pharmaceutical industry model must change. Government and private payers have become unable to support historical revenues, and the scientific paradigm has shifted away from mass‑market drugs. Industry consolidation has left a few big players; many of them with similar products in key therapeutic areas, reducing exclusivity advantages. Generics manufacturers have improved product quality and availability, resulting in dramatic losses of market share after patent expiry. These forces spell the end of the blockbuster era … and the business model supporting it.
The Layers of Complexity
Large pharmaceutical companies have responded with a few major strategies: trying to extend the life of the blockbuster model with increasing investments in emerging markets, driving scale with
acquisitions, and exploring contracted research and other disaggregations. But these responses have created complexity, particularly in the supply chain. Executives are finding that their global companies host a proliferation of products and stock keeping units. Figure 1 shows that many of these products generate tiny proportions of revenues and profits, incur disproportionate production, marketing, sales and regulatory costs, and, to make matters worse, carry far more than their fair share of production, quality and supply challenges. Pharmaceutical leaders can improve their portfolios, but only through adapting their leadership stance as they face significant waves of resistance along the way. Product proliferation generates structural complexity in a big pharmaceutical’s commercial, manufacturing, supply and regulatory organizations. These multiple work groups acquire dozens of process variations and unaligned management decisions as portfolios grow. It is this ‘knot’ of complexity
Summary: Lessons for Leaders
Leaders who want to help their organizations streamline portfolios and create dynamic, value‑adding product management processes will quickly find themselves confronting the Gordian knot of complexity. Figure 2 lists the common waves of resistance that they will be likely to encounter — and suggests productive responses to each wave. To stimulate a rapid results approach to product deletion, leaders should Set the Context — Repeatedly Leaders of these efforts must make co‑ordinated and persistent demands for radical progress across silos, including their commercial, manufacturing and regulatory organizations. Although many pharmaceutical companies’ cultures and habits may make it easy for senior leaders to fall prey to endless data collection, analysis and confirmation before they feel comfortable making these demands, a simple initial analysis can demonstrate the need for change and reveal the products that should be scrutinized more carefully. Leaders need to be bold enough to make demands for product deletion results, without knowing ahead of time exactly which products will be deleted or how. Work Differently and Move Quickly Leaders can shatter the status quo by demanding action on a rapid timeline and refusing to take ‘no’ for an answer. In our experience, demands for significant, tangible outcomes in periods of 100 days or fewer will galvanize attention and action. Executives who action this principle issue a clear business challenge to a carefully chosen core team and require them to set dramatic breakthrough goals in response. They encourage the team to make decisions quickly — with imperfect data if necessary — and they close the ‘escape hatches’ that managers with narrower agendas rely upon to question deletion decisions and delay their implementation.
that can make it so difficult to delete products from the system. A product deletion effort will encounter many layers of entrenched structure, process and habit — and resistance will keep arising from different quarters as the process unfolds. One recent major pharmaceutical client had tried several times, without success, to streamline its portfolio. Each time, market managers exercised veto power over products identified for deletion, or even the criteria used to identify them. The cost and time required to resolve these disagreements ultimately became less important than execution of day‑to‑day work, and the issue of portfolio review continued as a persistent distraction, year after year.
How to Cut the ‘Gordian Knot’
Recently, the same company took a fresh look at its pipeline again and found that in the aggregate, hundreds of products were contributing less than 1% of total revenues. With a significant integration already doubling supply chain complexity, commercial and manufacturing executives agreed that this imbalance between product Create a Structure that Helps the Broader Organization Respond variations and revenues had become Composition of the core team is a key to success. Strong intolerable. They resolved to launch a champions are leaders with broad business perspective, and successful effort to remove low‑value significant formal and informal influence. The right team members will bring new thinking and new approaches in products from the system; but they addition to subject matter expertise. And, because the team faced the same challenges that they will be requesting support from people who may be more had previously, including fragmented concerned with day‑to‑day performance objectives than the special effort of pruning the portfolio, senior leaders will sales, cost, inventory and quality want to give the effort the proper airtime and attention at information about its products. The formal initiative reviews and elsewhere. effort would require collaboration from a wide range of stakeholder‑managers, many with personal agendas for individual products. The commercial and manufacturing executives were determined to overcome the resistance. To succeed, Figure 1: Typical revenue contribution of products in the pharmaceutical portfolio. Figure 1
they brought an unyielding ‘rapid results’ mindset to the effort. Their story demonstrates several important lessons about how today’s pharmaceutical leaders can streamline portfolios and make their businesses more competitive in the emerging pharmaceutical environment. Making the Demand for Performance To get started, the executives asked a leader of diversified products to conduct a rough analysis of revenue contributions from all products and develop a business case for product rationalization. This quick overview helped the affected functions and businesses to better understand the critical financial and operational opportunity that they faced. The business case was neither perfect nor fully comprehensive, which itself conveyed the idea that the executives expected quicker, bolder action than before (Figure 1). Addressing the Structural Barriers The executives asked this product leader to ‘champion’ the effort, because his career experience had earned him credibility and clout in commercial and production environments. He commissioned a core product rationalization team, including representatives of groups that sell and market products, work with regulators and medical communities, and manage the supply chain. The champion challenged this team to help the organization reach decisions about a first wave of product deletions from the lowest quartile of products within 60 days. Inspired by the champion’s bold leadership, the team further committed that in the 3 months following this decision they would develop concrete plans to ensure the products were removed from all company operations within 3 years. These aggressive time frames helped to shape some of the criteria used in selecting candidates for deletion. Comparing Apples with Apples The core team proceeded to set the stage for a deeper look at products in the revenue quartile. This included • Collecting and summarizing normalized measures of product contribution and cost. • Setting hurdle-rate criteria to identify a first round of deletion candidates. • Identifying the markets where those products were distributed. • Engaging representatives of these markets to quantify the revenue, customer and regulatory effects of removing these products. It was during this analysis that the team encountered its first major wave of resistance. Managers from across the organization tried to avoid or undermine the initiative as they confronted the huge bolus of work involved in changing the portfolio. The executives and the champion responded to this resistance with consistent messages and an unyielding demand for results. In reviews and other communications, they maintained the expectation MAY/JUNE 2012
of rapid progress and held people accountable to timelines. They also challenged people to meet these deadlines by relying on directionally correct interpretations of existing data, rather than conducting new, exhaustive, time‑consuming and energy‑sapping analyses. Moving From Lists To Co-ordinated Action Plans The team reviewed the deletion impact assessment and revised its criteria to make allowances for special situations, such as the absence of alternative therapies in a market. This yielded a refined list, which provoked a second wave of resistance from commercial leaders, as they confronted the now real possibility of withdrawing revenue generators from their markets. The executive sponsors responded to this challenge by affirming the original business case and specifying a few discrete ways that leaders could legitimately appeal specific products on the refined deletion list. For every product now identified as a deletion candidate, the team engaged various groups to review the time horizons and product volumes needed to fulfil regulatory notification commitments and accommodate customers whilst they switched to alternate therapies. During this period, the rationalization team also tested its original business case, quantifying expected costs and benefits to ensure its results would be consistent with original expectations. Ruthlessly Managing Execution At this point, the sponsors transferred accountability for executing deletions to the affected functions and market leaders. The core team monitored execution until the identified products were fully deleted — from the corporate enterprise resource planning master catalogue to the markets’ field distribution systems. This period was marked by a final wave of resistance, as execution lagged and affected managers attempted to delay or even overturn deletion decisions. The sponsors responded with empathetic, persistent and unyielding commitment, affirming their intent to streamline the portfolio and their support for the teams doing the work. Regular 30‑day reviews throughout the process helped
The Cost to Remove a Product is Greater than its Value?
To delete products cost-effectively, commercial and manufacturing functions should work together synchronously to confirm that as much work‑in‑process inventory can work through the system as possible, and that the product supply remains sufficient to satisfy market- and patient‑demand through the commitment period. Assuming good ‘execution discipline’ around these factors, the costs to remove an underperforming product from a market will usually be offset in a relatively short time. Cost‑recovery opportunities include eliminating recurring regulatory support and maintenance for deleted products, as well as eliminating any costs generated by quality or stability issues that small‑volume products may experience. In addition, companies experience both complexity reduction and productivity benefits from streamlining to a more focused product portfolio. These factors make the elimination of many low‑performing products a distinctly net‑positive value proposition. MAY/JUNE 2012
them to maintain this accountability for execution and to intervene when obstacles were delaying progress. Both the core team and representatives of the groups implementing the deletion plan were empowered to ask the sponsors to make immediate decisions about how to move forward at these reviews. The reviews also kept the various functions engaged in the work and allowed everyone involved to work from a common base of current thinking, decisions and direction. Making Portfolio Pruning a Core Capability This rapid results approach to product deletions broke through the barriers that had frustrated prior efforts. Ultimately, 20% of the portfolio was identified for deletion, with preliminary cost savings significantly offsetting lost revenue … and cost savings are ultimately expected to be even greater as supply chain operations are consolidated to take advantage of the reduced complexity. During this first successful pass through the process, with its myriad challenges, the team designed a home‑grown process for making deletion decisions and executing them. The sponsors asked the team to capture this learning along the way and to structure the steps into the company’s planning cycle to build an annual product deletion process. This systemization of the team’s experience ensured maximum leverage from the truly difficult work involved in the first and most significant round of product deletions (Figure 2).
Figure 2: Successful leadership responses to the waves of resistance encountered in product deletion.
Conclusion The proliferation of unprofitable products is a major problem for pharmaceutical executives to address as they help their organizations pivot from the blockbuster business model. Leaders who want to make their organizations more competitive in the new global pharmaceutical ecosystem can start by declaring the targeted simplification of their product portfolios to be a strategic priority … and cutting decisively through the value‑destroying knot of complexity.
For more information Wes Siegal Senior Partner Schaffer Consulting
Evan Smith Senior Partner Schaffer Consulting www.SchafferResults.com PHARMA-MAG.COM
BRIDGING THE IMPLEMENTATION GAP
Applying excellence in programme management to help Big Pharma to bridge the ‘implementation gap’ between a customer‑centric strategy and execution.
f we did not know it already, the blockbuster drug era is gone for good — a fact that was highlighted at the recent Economist Pharma Summit.1 The life sciences industry has finally realized it needs to ‘treat the patient not the disease’ by becoming more customer‑centric, which explains the shift in recent years from strategies focusing on operational efficiency to those addressing more customer‑focused challenges. Companies are now considering, for example, how they can better understand patient demographics and behaviours in emerging markets, and how they should tap in to the digitally enabled ‘informed patient.’ But if Big Pharma thinks it understands today’s challenges, why then the frequent failure to successfully implement these customer strategies, and what solutions does project and programme management (PPM) have to offer?
‘Inside Out’ and Back to Front
The industry has long enjoyed a large, profitable and relatively stable ‘Western, white pill’ customer base, but this has led to the entrenching of a functionally dominant operating model, lacking in diversity. To generalize, this prevailing ‘Inside Out’ organizing construct has meant that projects and programmes with the potential to deliver enduring business change have been managed in functional silos. Too often, a customer‑centric business case and an ambition to drive benefits across organizational boundaries have been absent. The incremental operation improvements in response to the scale of change sweeping the industry — manifested in shrinking drug pipelines and margins — have, to date, proven to be insufficient. Instead, organizations that have embraced genuine transformational change — placing the customer right at the heart of the business model, ensuring the patient is represented at all stages from strategy translation through to product execution, and promoting a truly customer‑centric organizational culture and mindset — will realize long‑term value (Figure 1).
A Customer-Oriented Operating Model Now more than ever, competitive advantage will be derived from better understanding and serving customers’ unmet needs — be it in precision medicine or consumer healthcare. The operating model must, therefore, generate insight from customers — via frontline sales staff, and local partners and clinicians — and exploit this ‘outside in’ understanding through effective analytics and customer segmentation. Companies such as GSK and J&J with significant consumer divisions have a head start here, but more can be done across the board to replicate fast moving consumer goods (FMCG) business characteristics and realize synergies in pharma operations. Focusing on fewer core activities (those that create competitive advantage) and executing these flawlessly is key to successful customer differentiation. For example, the persistently high cost of drug development has led to the increasing trend in outsourcing early‑stage R&D to biotech companies or partnering with academia, which is freeing up pharma companies to focus on their core strengths. Similarly, more companies are releasing more repeatable processes in the drug development cycle to specialist providers. It is also essential that companies break down functional ‘walls’ so that information and knowledge flow freely across the organization — insight and focus are useless if knowledge is retained in organizational silos! Companies that utilize collaboration systems effectively and whose matrix management structures harness the right combination of functional, therapeutic (category) and regional market expertise will be the most successful at precisely forecasting unmet demand and targeting products to customer needs.
Strategic Portfolio Management With investment budgets squeezed, managers must focus on selecting programmes and projects they believe will deliver the greatest return for shareholders. It is surprising, then, that still relatively few of the large UK‑based MAY/JUNE 2012
Programme management enablers
pharmaceuticals have embraced portfolio management practices across the enterprise. When this approach is implemented well, it provides a consistent framework, processes and systems that support decision‑makers to optimize spend on programmes with the best return on investments (ROI) and strategic alignment (back to the customer again), and balance delivery risk across the holistic portfolio. Getting this right is not straightforward, as AstraZeneca among others have found. It relies on consistent data capture, smart aggregation and sophisticated analysis to generate the right information for decision‑makers. But the potential rewards are huge, not least in eroding behaviours that champion ‘pet projects’ without a transparent benefits case and instilling greater discipline at stopping planned or in‑flight projects that will not deliver value to patients. Closely guarded budgets held at a business unit or functional level encourage parochial behaviours and often lead to duplication across organizational boundaries. Hence ‘pooled’ investment — with risk exposure balanced against customer value across the whole portfolio — tends to result in the biggest bang for buck for the organization.
Product, Project and Programme Execution Perhaps the most obvious critical success factor is ensuring that projects based on new product development (NPD) actually have a patient problem to solve. Pharma companies are home to many of science’s MAY/JUNE 2012
Organizational culture and mindset
great innovators — yet innovation alone does not create customer demand for an idea. The ‘voice of the patient’ must be represented throughout the NPD cycle and validated at each Stage Gate. Patient demographics and behaviours vary significantly between regions, so involvement of target market teams throughout the process is also vital to maintaining product commitment. Yet, innovative projects and ideas must not be stifled or constrained by unnecessarily bureaucratic control systems. Governance processes are essential to manage cost and exposure in the pipeline; but these must be tailored to the respective risk profile: light‑touch and highly scalable for low risk initiatives (to increase delivery speed), with greater rigour and scrutiny applied to higher‑risk endeavours (to increase delivery accuracy). ‘One‑size,’ heavy‑handed governance processes have contributed to risk‑aversive product development that has prevented pharmaceuticals companies taking bigger, potentially more lucrative bets. A further pitfall — this one being at the end of the project life cycle — is failing to retain accountability after project completion (in the case of NPD projects this is product launch). The tendency to handover projects too hastily to ‘business as usual’ limits an organization’s ability to learn from success and failure. Just as product performance should be continually evaluated against expected patient take‑up postlaunch, so should organizations retain an unyielding focus on driving out all envisaged benefits from major projects and programmes beyond their nominal closeout.
Figure 1: Critical Success Factors for customer-centric pharmaceutical programme delivery: Moorhouse best practice model.
Critical success factors for change from a programme management perspective • Development of an ‘outside in’ operating model to harness customer insight. • Use of a strategic portfolio management approach to drive decisions based on customer value. • Focus on the customer benefits throughout the product, project and programme life cycle. A customer‑centric organizational culture and mindset must underpin all of these endeavours. PHARMA-MAG.COM
MANAGEMENT Overcoming Barriers to Change Sensible as this advice may seem, the peculiarities of the pharma industry regarding change cannot be ignored. Responding to patient signals and listening to the ‘voice of the customer’ is difficult when diffused by the complex dynamics of the drug payer model. Added to this, time‑to‑market agility — a key differentiator for FMCG companies — can be significantly hampered by regulatory approval timescales for new treatments. Third, it is unfortunate that the industry’s realization of the change imperative has coincided with the current economic downturn. Price cuts and payer debt to the industry have placed further restriction on Big Pharma’s ability to invest in innovation and organizational change, just when it needs to most (although this problem is less acute in the UK than elsewhere). Notwithstanding these challenges, the industry is far from starved of regenerative investment. The biggest obstacle is often a lack of willingness from pharma business leaders in to commit to seeing through the right change programmes that transform the organization’s ability to execute, with the customer at the centre. This is the untapped opportunity for many of the big players.
1. Economist Conferences, The Pharma Summit 2012 (London, UK, 9 February 2012).
For more information
Simon Dennis Principal Moorhouse Tel. +44 203 004 4482 simondennis@ moorhouseconsulting.com www.moorhouseconsulting.com
The scale of change in the pharma industry dictates that the predominant ‘inside out’ operating model and siloed approach to programme and project delivery are no longer fit for purpose. Transformational change is required to take advantage of opportunities to respond to customers’ unmet needs in new markets and disease areas. Unfortunately, there is no quick fix — fundamental change to a long‑ingrained business model will take time. Cultural change and development of a programme management capability, which is not always the natural preserve of scientists, is a journey that requires sustained energy, investment and senior commitment. The simple truth, however, is Big Pharma cannot afford ‘not’ to take on this challenge. And with the industry’s impressive track record in responding innovatively to its changing environment, who’s to say the challenge cannot be surmounted? The good news is that there is no shortage of potential customers. As highlighted at the Pharma Summit, 86% of humanity are still ‘suffering’ and in need of interventions that the life sciences industry can provide.1 With those customers becoming progressively more prosperous and better educated, they will reward the companies who get it right.
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BEST EXPLOITING IP ADVISERS IN A TIME OF PHARMACEUTICAL COLLABORATIONS
Large pharmaceutical companies have reacted in many ways to the patent cliff; one of their stated intentions has been to buy in more leads and to use smaller pharma companies more effectively. For small pharma companies this change in tactic is significant and they need to be prepared.
he pharmaceutical industry is constantly changing, but in recent years that rate of change has accelerated. Many forces are coming together to drive changes in the industry, which are bringing more collaborations between big and small pharma companies. This offers potential opportunities for smaller companies who can use their existing intellectual property (IP) advisors to help formulate a suitable patenting strategy. In late January this year, AstraZeneca formed a Science and Technology Integration Office to foster collaborations with small and large pharmaceutical companies, biotechnology firms and academia. Although this is a recent and obvious example, it follows a general trend by the largest players in the industry away from reliance on in‑house R&D‑derived blockbusters towards a more diverse model. In the new climate, collaboration
is encouraged and income from each primary care blockbuster cannot be relied upon to fund parallel development of dozens of in‑house leads in the hope of finding a successor. Movement of these giants into less familiar areas of vaccines, secondary care and generic markets, along with the increased interest in collaborations, presents smaller firms with the opportunity to attract significant investment, providing they are ready from both a research and an IP standpoint. Ensuring that the IP portfolio is ready may, however, require keeping IP advisors abreast of both commercial and scientific developments long before any collaboration is contemplated. With approximately $90 billion of annual revenue going off‑patent during 2010–2015, a sudden drop in income to essentially all Big Pharma has been widely forecast. 1 A primary care blockbuster drug, such as Pfizer’s highest grossing product Lipitor (at $11 billion dollars a year), can expect a drop of up to 70% of revenue in the first few months after patent expiry, primarily because of the launch of generic competition causing a huge price drop and massive reduction in market share. There has, therefore, been widespread concern in the industry regarding a potential loss of $60 billion in income to innovative pharmaceutical companies, on top of a similar decrease in the 5 years up to 2010.1
Factors Necessitating Change
The Patent Cliff Patent protection has always had a finite lifetime, but until recently companies have managed to maintain a succession of blockbusters by investing in ever increasing in‑house R&D programmes. The success of this approach, however, has been its own undoing because there are only so many ‘easy’ targets and much of the low‑hanging fruit of drug development MAY/JUNE 2012
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is already taken. On its own, this would be enough to force a change in the ‘primary care blockbuster’ model that represented the core business of a multinational pharma company a few decades ago. Other factors, however, have also conspired to ensure that radical changes are required for companies hoping to stay in the game in the 21st century. Healthcare Spending The nature of healthcare spending in both mature and developing markets has helped to turn what would have been a change into a revolution. An ageing Western population and realization by politicians that healthcare budgets could spiral out of control had already exerted pressure on drug spending before the recent economic downturn made this a political priority. Increasing value analysis, price cuts and general hard‑bargaining by authorities in the developed markets of US, Europe and Japan have resulted in markets that have barely grown in the last few years. Price cuts on existing brands and greater use of generics has off‑set the launch of new products. The effects of the patent cliff are also more dramatic as prescribers are encouraged to switch to generic medicines. As major drugs go off‑patent, more of the primary care conditions with large patient populations that were the territory of branded blockbusters become open to generics. Although the healthcare market in developed countries has remained largely static, emerging healthcare markets have driven an increase in global healthcare spending. The greatest growth, and unquestionably the largest emerging market, has been in China, with Brazil, Russia and India following a fair way behind. Major growth in these countries is a positive for the industry, but it is a further move away from the branded-blockbuster model. IP protection in these emerging markets is still unreliable, with prosecution sometimes unpredictable, enforcement erratic and counterfeit or generic copies of patented drugs common or even legal for sale to certain markets — Brazil and India, for example,e are both permitted to sell generic versions of drugs to developing markets.
In view of so many factors pushing companies away from relying on branded primary care blockbusters, it is unsurprising that other models have begun to emerge. A decade or two ago, this was seen in the expansion of bought‑in research, but has now manifested as a general move to greater flexibility, with major drugs companies diversifying into vaccines, devices and even generics. Mass‑market primary care products are also being replaced by secondary care drugs where the need is more pressing, the ‘value’ perhaps more obvious and central authorities less inclined to ‘haggle’. All of these changes have spread research over a wider technical area and so a lesser proportion can be contained within in‑house departments. Thus the scope for collaborations with smaller companies becomes all the greater and the pressure to see value added by such arrangements correspondingly increases.
It is in the new environment of large pharma seeking high value collaborations that a well‑prepared small company can hope to attract considerable investment. The regulatory burden on new products is now so high that a budget of $200 million is required to bring a drug from lead optimization to the market. Few small companies can afford this type of outlay, especially when the risk of failure remains high right up to the final stages. Big Pharma, cannot, however, contain all research in‑house and in any case need to strive for the innovative, rapidly evolving approach of a small organization at the research stage. The combination of the light‑footed smaller research company with the financial muscle of the big player is, therefore, attractive.
IP Strategies and Portfolios
Some decades ago, as in-house development became too expensive to form the sole source of new leads, large companies began to turn to the smaller, more specialist, research outfits and biotech companies for new projects. These were historically good value, MAY/JUNE 2012
particularly with regard to the number reaching the market. This may have been, at least in part, a result of the level of analysis and scrutiny to which both the technology and the corresponding IP would be subjected before purchase. So a relatively large number of in‑sourced projects were successful and in many cases the company would be bought outright to avoid sharing the technology with competitors. Ten or 15 years ago, a new start‑up would often aim to become an attractive acquisition as quickly as possible; in that climate, IP strategy was relatively straightforward. A smaller company would develop an innovative technology with a small number of tested applications and would require a patent portfolio that could protect this when purchased wholesale. The relatively young nature of the venture and thus the portfolio would also mean that comparatively few strategic decisions were required. Flexibility The new environment of flexibility brings a rather different climate for a small research or biotech company looking to attract the attention and investment of the larger players. Big Pharma are being forced into a flexible approach and smaller companies will need to be ready to be just as flexible in their collaborations. There are many aspects to this, but IP is a key attraction of any potential agreement; an IP portfolio should be designed that it will be ready to protect a collaborative project without requiring that a company be bought in its entirety or give up all control over its core technology. Companies with an IP portfolio, which is essentially all companies in the pharmaceutical sector, will already have the resources available to achieve this, in the form of their patent attorneys and IP advisors, either in‑house or external. What is required, however, is the will on the part of both company management and IP professionals to ensure that patent strategy, as well as simply patent acquisition, becomes an integral part of the business. Dealing with Conflict A drug discovery company might typically be founded or spun‑out of a university on the basis of a new technique or approach that is useful in developing novel lead compounds. Unless such a company has an exceptional level of funding, it is likely that they can take development of these leads only to a certain level, perhaps to early clinical trials, before they will need to attract investment or collaboration to advance a project. Should the whole company then be acquired, possession of IP protection may well be sufficient. In a climate in which merely a licence or even the option of a licence to a single project may be what a collaborator seeks, however, the structure of a portfolio will be of much greater significance. A licensee investing heavily in the clinical development of a product will undoubtedly MAY/JUNE 2012
want to take control of the enforcement and perhaps even prosecution of the IP rights protecting that investment. If this represents only one application of the smaller company’s technology, however, there may be the prospect of other major collaborations or the desire to see more minor products to market in‑house. This can lead to considerable conflict if some thought has not previously been given to how various aspects of protection will inter‑relate. If a company has involved their IP advisors at all stages of the business development then a portfolio can be structured to take into account likely conflicts. For example, emphasis can be placed on segregating core or technology IP from product or application IP. In such a way, a small company can offer their licensee a family of product‑directed cases with full enforcement and even prosecution rights. This then places them in a much stronger position to retain control of patents protecting the core technology and other products, which can then be exploited in‑house or with other partners. It is similarly tempting for a company with a tight budget and little interest in IP for its own sake to attempt the inclusion of all prospective applications of their technology into the first product‑directed case. An IP professional acting as a strategic advisor rather than simply a tool to blindly follow a client’s bidding can, however, help to point out when this may lead to future conflict. IP professionals are to some extent in a unique position. They have an understanding of the subtleties of the IP systems in which they work, but are also necessarily scientists by training. This potentially allows them to help bridge the gap that can exist between the scientists, managers and lawyers in ensuring that not only individual applications, but also complete IP portfolios, achieve the best protection for the business. This requires, however, that they have involvement in more than simply the coal‑face IP work.
Scientists, managers, lawyers and patent attorneys are all busy, and it is easy for each to feel that their job is taxing enough without the added complication of involving the others. In an era of increasing flexibility in pharmaceutical collaboration, an equally flexible IP portfolio is a key asset to a small pharma company. This requires that all sides make an effort to ensure that those protecting the assets of the business are kept up to date with the direction of that business, its technology and its prospective products as well as simply today’s new invention.
For more information Chris Goddard Associate Dehns Patent and Trade Mark Attorneys email@example.com www.dehns.com PHARMA-MAG.COM
THE IP CONUNDRUM
What are the key IP-related issues to consider when taking a product from original concept, through to commercialization and beyond?
ntellectual property (IP) rights are of paramount importance in the pharmaceutical industry. With the average cost of bringing a new drug to market being approximately £800 million, it is essential that pharmaceutical companies devise and implement an effective IP strategy to recoup their R&D costs, and maximize the scope and duration of protection. Successful implementation can grant monopoly rights of the protected drug or chemical, effectively blocking competitor access for a limited time. Get your strategy wrong, however, and these rights can be lost forever.
to the extent permitted by local laws, with strong provisions in service contracts. These statutory provisions do not extend to independent contractors and collaborators and, therefore, decisions as to ownership must be expressly set out in the relevant agreements prior to any research being undertaken. Furthermore, it is common for national legislation to provide for additional compensation regimes (from which, typically one cannot contract out) for employees that provide a ‘substantial contribution’ to an invention. Pharmaceutical companies need to be aware of these and react accordingly.
Proof of Concept
During early stages of development, pharmaceutical companies have insufficient data to demonstrate product efficacy. Accordingly, it is neither practicable nor cost effective to apply for patent protection. Yet, if they are careless at this stage they can jeopardize their chances of obtaining protection in the future. To receive a patent the applicant must demonstrate that the invention for which protection is sought is novel; that is, it has not been made available to the public prior to the application date. In this regard, a company’s own disclosure can itself be a bar to patent protection. It is therefore vital that pharmaceutical companies ensure their research projects are kept confidential until patent protection is applied for. Pharmaceutical companies should impose strict confidentiality provisions in employment contracts and ensure that confidentiality agreements are entered into prior to engaging assistance from third party collaborators and funders. Strict contractual provisions alone are insufficient: pharmaceutical companies must implement comprehensive training programmes to ensure their employees and relevant third parties are fully aware of their confidentiality obligations and the risks associated with early disclosure. This training should also ensure that researchers keep accurate and up to date lab books and reports, which can be essential to demonstrate efficacy and resist any ownership challenge. It is essential that ownership of any IP created is clearly agreed at the outset. Ownership disputes are commonly between individuals who initially formed part of the same joint venture or research collaboration. Although legislation often favours the employer regarding IP created by employees in the course of their employment (although this is not the case in all European jurisdictions; for example, Germany) these statutory provisions should be supplemented,
In competitive research fields it is crucial for pharmaceutical companies to carefully consider the timing of its patent applications. Although it is common for pharmaceutical companies to apply for protection during the clinical trial stage of drug discovery, the UK has a ‘first to file’ patent system. This means that if a competitor makes an earlier application capturing your product then it will (subject to any ownership challenge) claim priority and your application will be refused even if you can prove that you came up with the invention first. If, however, you apply too early, your application may fail because you may have insufficient data to prove that the concept works as claimed. The patent applicant will need to demonstrate that the product is novel, involves an inventive step and is capable of industrial application. If successful, the applicant will, subject to payment of renewal fees, be granted a 20 year monopoly. Patents, however, are national rights; a UK patent, for example, only grants the owner a monopoly in the UK. Third parties are, therefore, free to manufacture and commercialize the product in any country where patent protection has not been sought. Pharmaceutical companies usually seek patent protection in each of their target markets within 12 months of making the initial application; applications made after this 12 month priority period are likely to be refused as the publication of the initial application can be used as prior art against the later application(s). Restrictions on disclosure prior to application inevitably cause tension with scientists who naturally want to disseminate their research data in scientific journals. Although journal publications are an equally important tool, pharmaceutical companies must delay publication until after patent protection has been applied for. It is possible, however, that a MAY/JUNE 2012
draft of the publication can be used as the basis for the patent application (the applicant will then have 12 months to perfect the application, as long as the overall inventive concept does not change).
Clinical Trials and Research Collaboration
Clinical trials are an intrinsic part of the commercialization process of a new medicament. If a pharmaceutical company enlists educational or hospital institutions to facilitate and manage these clinical trials (which is a common practice), there are a variety of agreements and arrangements that can be used to appropriately apportion risk and ownership of any IP that is used or created in the course of the clinical trial period. For example, confidentiality agreements are usually entered into between clinical trial staff and the pharmaceutical company to ensure secrecy of the results and strict control of any confidential information being used (particularly if patent protection is yet to be sought). Research collaboration agreements will also need to carefully consider ownership of any IP created as a result of the collaboration and licences should be entered into to ensure that the relevant collaborators can use the relevant IP. If material transfer agreements are required it is likely that the material forming the subject of such agreements will embody the IP, the access and release of any confidential information will, therefore, need to be restricted and licences will need to be granted to allow the material to be manufactured. Finally, properly executed deeds of assignment may be used to ensure ownership of the IP is transferred to the rightful owner. The 20-year monopoly period for patent protection runs from the application date; but, as it can take many years to get the product through clinical trials and regulatory approval, the actual monopoly period in which the product can be sold can be significantly reduced. With this in mind, it is possible to extend protection after expiry of the patent or publication of confidential data. First, a supplementary protection certificate (SPC) enables a patentee to extend the protection of the API in its product after the expiry of a patent. Second, the EU has implemented data exclusivity policies, which prevent generic companies from using clinical data (published by pharmaceutical companies) to obtain regulatory approval, after the underlying patent has expired as a springboard to the commercialization of their own products.
A strong distribution and manufacturing network can maximize the commercialization potential of a product, but pharmaceutical companies must ensure that any use of its IP by its distributors or MAY/JUNE 2012
manufacturers is closely controlled. Marketing and quality guidelines should be published and disseminated, and strict licences should be entered into. The protection afforded by patents will inevitably come to an end, yet strong marketing and branding during the monopoly period can assist in building a commercial advantage that can exist long after the patent has expired. Generic competitors will be prevented from using such a brand name on their products, but will not be prevented from using the underlying chemical name to describe the product being sold. Accordingly, pharmaceutical companies should resist the urge to simply name a new product after its requisite chemical name (for example, Botox originates from botulinum toxin); rather, they should create a distinctive and recognizable brand name. With consumers associating the underlying product with a strong brand name they will be more reluctant to change to a generic version. A balance must be adopted â€” it is important that the brand itself does not become generic (that is, synonymous with the product description) otherwise trademark protection may be lost forever (aspirin is such an example).
The road from idea to commercialization is long, arduous and expensive, but making the right IP protection choices can ensure that it remains a lucrative venture, meriting the expenditure and efforts undertaken. Choose the wrong path . . . and you will be left with limited IP protection and competitors inevitably waiting round the corner to exploit your efforts.
For more information Alexandra Pygall Partner Stephenson Harwood
Rob Jacob Associate Stephenson Harwood Tel. +44 207 329 4422 PHARMA-MAG.COM
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THE FUTURE OF DRUGS
As traditional drug development becomes unsustainably expensive, pharma companies are turning to small biotech outfits for early drug candidates and setting their sights on smaller patient populations. Professor Clive Page outlines how the future of pharmacology is in stratified, niche therapies, not blockbuster drugs.
he pharmaceutical and biotech industries, often working in collaboration with the academic sector, have helped bring major new medical advances to society during the last few decades, including the discovery of Herceptin for the treatment of breast cancer, the development of lipid lowering drugs such as Lipitor, and, increasingly, the discovery of drugs to treat rare and often debilitating orphan diseases; for example, Ceredase to treat Gaucher’s disease. In addition, we often take for granted the use of topically active glucocorticosteroids, which have revolutionized the treatment of a wide variety of inflammatory conditions such as asthma and hay fever, and the significant range of drugs available to control blood pressure, gastric ulcers and many types of infection.
The pharmaceutical industry is now at a crossroads. Having embraced the revolution in molecular and genomic research to find more drugs more efficiently than the tried and tested methods that gave us many of the drug classes mentioned above, the pharmaceutical industry is finally realizing that current approaches to drug discovery have failed to deliver what was promised. This dearth of new drug classes has coincided with many of the tented blockbuster drugs being legally challenged much earlier by generics companies and thus facing stiff competition to maintain the high returns on their marketed drugs. Some pharmaceutical companies have responded to this threat by buying generic companies; for example, the purchase of Hexal by Novartis. Alternatively, we are seeing more of the established (often cash rich) generic companies seeking new intellectual property (IP) to develop. Furthermore, small biotech companies are stepping into the breach with new patented drugs and technologies to be co developed or licensed by larger partners. One example is Verona Pharma, which has several new classes of drug under development for the large respiratory market, which is estimated to reach $36.2 billion by 2017. As Big Pharma continues to scale back its research activities or move these offshore to countries with a lower cost base, they are becoming predominantly development and marketing companies looking for drugs from external sources through licensing activities or creating venture funds to support early stage drug discovery companies. One major societal concern should be the distinct lack of new drug classes being discovered for treating infectious diseases at a time when there is increasing resistance to existing antibiotics for illnesses, particularly hospital acquired infections such as MRSA. Many pharmaceutical companies
have now stopped working in the discovery and development of novel antibiotics and other types of anti infective drugs … at a time when organizations such as the World Health Organisation have stated that there is a clear need for pharma (large and small) to find new approaches to treating infectious diseases as a matter of urgency. The current competitive, insular and secretive model of drug discovery and development is impeding the search for new drugs; there needs to be a marked change in how to approach discovery of new medicines for the many unmet medical (and veterinary) needs. Most importantly, the need to find out as early as possible whether drugs are going to be efficacious and safe means conducting ‘critical’ experiments earlier in the development cycle. Too many drug discovery programmes are allowed to continue way beyond the point at which they should be killed off. Open innovation models that exploit collaborative opportunities between pharma, biotech, academia and charities/patient groups to tackle problems that have significant value to society, need to be explored, including, for example, finding better predictive nonmammalian assays identifying toxic pharmacophores to reduce the failure rate in expensive preclinical toxicology; following the lead of oncology in finding useful biomarkers to allow better stratification of patient populations in clinical trials, as it becomes increasingly clear that many diseases once thought to be a single entity are in fact syndromes with subpopulations and, therefore, many patients are not responding to drugs in large clinical studies, and may actually worsen. This is reflected in the observations that in the early part of the last decade, 5–10% of new molecular entity programmes had a biomarker component; by 2007–2008, it was closer to 50%.1 There is a clear economic benefit to stratification: using suitable patients rather than nonresponders ultimately means that money and medicines are not wasted in clinical trials and the correct medicines are used on a personalized basis.
Opportunities The number of deals between pharma and diagnostic companies has been increasing during the past 6 years. These collaborations are increasingly flexible and are often set up to allow pharma to work with a network of partners, bringing different technology platforms and specialist expertise to tackle a problem and there is a growing recognition that some problems are too complex for even the largest organizations to successfully tackle alone.
Oncology According to New Medicine’s Oncology KnowledgeBASE, there are more than 725 oncology drugs in clinical MAY/JUNE 2012
development, and 300–500 in preclinical and different stages of research.2 It is expected that the cancer market will reach $80 billion by 2050 — double its current market value.2 Dako and Quintiles signed a nonexclusive alliance in November 2010 to offer integrated drug–diagnostic development services and companion diagnostics. Their first undertaking will be supporting AstraZeneca in the development of an oncology compound. Dako will develop cancer diagnostics and Quintiles will conduct tests as part of the clinical validation. It is hoped that this approach will lead to streamlined development of effective targeted therapies. Oxford Gene Technology and Abcodia signed an agreement in 2011 aimed at improving the early detection of pancreatic cancer.
Funding Charities and patient advocacy groups can provide funding for smaller, more stratified trials that may struggle to obtain funding from pharma where results are profit orientated. A good example of this is Prosensa (a company focusing on rare diseases), who found attracting investors for early stage financing considerably challenging. Investors were initially hesitant to invest, because of the increasing complexity of the therapies and technologies needed to diagnose and treat rare diseases. In addition, the limited number of patients that such orphan drugs are destined to treat was perceived as a limited commercial opportunity. To overcome this challenge, Prosensa focused on raising its initial investments from several patient advocacy groups who shared an interest in the technology and the potential of delivering a cure for Duchenne Muscular Dystrophy (DMD). On the strength of early data and the acknowledgement that the orphan drug area could offer a combination of patient benefit and commercial potential, Prosensa has been able to attract a strong syndicate of international investors. Also, philanthropists such as Bill and Melinda Gates are increasingly supporting research activities for a range of diseases that are not seen to be of economic interest to Big Pharma.
Ipilimumab, for the treatment of advanced malignant melanoma, was turned down by NICE on the basis that only 30% of people treated with the drug would have improved survival, with only 10% potentially experiencing long term benefits. Had the drug been stratified, it could have been a very different story. An estimated 68,130 new cases of melanoma were diagnosed in the US during 2010, and around 8700 people died from the disease, according to the National Cancer Institute.3 There were very few treatment options available at the time, none of which prolonged a patient’s life. At 3 years, 21% of patients enrolled on an Ipilimumab trial were still alive compared with 12% of those who had chemotherapy only. Stratification of patients could result in shorter clinical trials requiring fewer patients and more likely to succeed. Although stratifying can be costly, it is offset by the fact that companies are not spending money on drugs that are going to fail in large trials. Many of the patients enrolled on trials are not appropriate for the drug they are being given. Currently, more than 75% of drugs fail in Phase II.4 This high failure rate is unsustainable and adds significant cost to the development of medicines.
Translational Medicine The recent significant funding awarded to a number of Academic Health Science Centres throughout the UK has provided resources to allow for other types of ‘translational medicine’ — investigating new uses of off patent drugs or reformulating drugs for improved administration to select patient populations such as children or the elderly. This type of activity, alongside the significant drug discovery and development activities of a number of charities including the Wellcome Trust and Cancer UK, can help to significantly improve the use of medicines currently available, as well as providing new leads for new drug classes that Big Pharma can later take into full blown development and marketing.
There is an increased need for pharma and biotech to get drugs into relevant patient populations as quickly as possible. These companies have to be more flexible in how they do early stage clinical development — using well designed proof of concept studies in small numbers of patients and making better use of patients, where possible, rather than using healthy volunteers in Phase I trials to detect early signs of disease specific toxicity; for example, potential lung irritancy with inhaled drugs in patients with reactive airways. With regard to oncology there are good examples of this type of activity. At the same time Roche’s Zelboraf received FDA approval in 2011, Roche also launched its BRAF mutation companion diagnostic specifically for the drug. As Dr Chris Jones of the Institute of Cancer Research said following the success of Novartis’ Gleevec: “Cancers may look the same, but it is only when you get down to the genetic level that you can truly understand them and devise treatments.”
The days of a company working in isolation to find the next blockbuster are fast disappearing; we will see less of the ‘one drug fits all’ approach and more use of drugs for smaller target populations of appropriate patients, as is already occurring in the treatment of certain types of cancer. Once there is wider realization that the status quo is unsustainable and that huge opportunities remain for organizations that adapt to the ever changing environment in pharmaceutical science, then the current gloom and doom surrounding the pharmaceutical sector will turn into exciting new discoveries for healthcare.
1. GBI Research, “Respiratory Disorders Therapeutics Market to 2017 — Novel Pipeline Molecules such as VX 770 and Pirfenidone May Offset Negative Effect of Patent Expiries” (September 2011). 2. http://test.medpagetoday. com/PRDir/PressRelease. cfm?id=6305&sid=118&cid=13 3. www.fda.gov/newsevents/ newsroom/pressannouncements/ ucm1193237.htm 4. J. Arrowsmith, “Trial Watch: Phase II Failures: 2008–2010,” Nat. Rev. Drug Discov. 10(5), 328–329 May (2011). Clive Page
For more information
Professor Clive Page Co-Founder and Chairman of the Board of Directors Verona Pharma plc Joint Head of the Institute of Pharmaceutical Science Director Sackler Institute of Pulmonary Pharmacology PHARMA-MAG.COM
A PRESCRIPTION FOR LOWER CARBON MEDICINE
How pharmaceutical companies can keep up with the shifting trend towards reducing carbon emission beyond their direct organizational control.
egulation, efficiency and reputation have encouraged many organizations to consider how they can measure and reduce carbon emissions in their own businesses. The agenda, however, is now shifting towards the wider carbon impact of the organization. There is an increasing awareness that emissions outside the direct organizational control represent an opportunity to improve cost efficiencies and reduce emissions. In the pharmaceutical sector, this could apply to the carbon embodied in a particular drug, how a supplier disposes of chemical waste or the release of greenhouse gases contained in the propellant of an inhaler used by patients. This is important because the National Health Service (NHS), which represents approximately 25% of Englandâ€™s public sector emissions, estimates that 60% of the emissions can be allocated to procurement. Pharmaceutical companies recognize that significant savings could be made in their indirect emissions and there is increasing pressure for them to demonstrate this to their customers. There are, however, certain challenges to overcome.
Pharma Challenges Product Development A new drug can take significant time and resources develop, from initial R&D through to approval by regulatory bodies. It is very difficult to then change the components, packaging and delivery model of pharmaceutical products because of expensive retesting and new regulatory approval. This contrasts with the retail sector where product specifications can change within days in response to a new low carbon innovation. The challenge for pharmaceutical companies, therefore, is to understand how to design the carbon, and associated cost, out of products during the initial R&D phase.
Patent System When a pharmaceutical company is granted a patent it is important that that product reaches the market quickly to meet the needs of patients, to recover the costs involved in the R&D phase and to maximize the patent lifetime. The urgency to bring the drug to market means that it may not necessarily be manufactured as efficiently as possible. Relationship with Suppliers Companies with fast moving consumer goods and high volume sales are more able to quickly use different raw materials and suppliers to reduce emissions. In contrast, this is more difficult for pharmaceutical companies because of the specific and complex chemical processes and more limited number of API suppliers. Collaboration with these suppliers, therefore, is more important if reductions are to be achieved across the supply chain. Supply Chain Characteristics The large number of chemical components that are frequently used to produce a drug introduces another challenge for pharmaceutical companies. The supply chain becomes more complicated at the start of the supply chain, which makes it more challenging to trace detailed information. Packaging Drugs are packaged in accordance with regulations, and so may not use the most carbonâ€‘efficient design. It can be challenging, therefore, to implement innovative designs that save carbon yet adhere to regulations.
Pharma Response With these challenges in mind, how can pharmaceutical companies respond? Production Techniques The production of many drugs can be expensive
and requires complicated chemical processes that generate significant amounts of waste. Optimizing the production process to increase yield and minimize waste will undoubtedly increase profits and save carbon. Product Use Phase GlaxoSmithKline revealed in its 2010 Sustainability Report that an estimated 40% of its overall carbon footprint comes from indirect emissions resulting from the use phase of its products, such as propellants in inhalers. This highlights that the use and disposal of pharmaceutical products can significantly affect emission reductions. Collaboration The industry is looking at more collaboration to source and refine raw materials. Although individually, pharmaceutical companies may procure a chemical ingredient at a lower volume than other industries, a collective approach to encourage suppliers to adopt less carbon‑intensive processes can affect change. Collaboration might also be an effective approach to tackle the regulatory red tape encountered when changing a product to a lower carbon design. Working with the NHS The UK NHS accounts for 4% of global pharmaceutical sales and a large proportion of UK investment. New technology and processes such as RFID tagging, use of two‑dimensional barcodes and new packaging techniques can help to optimize stock control, reduce wastage and improve logistics. These developments should also have a positive impact on the environmental footprint of healthcare and pharmaceutical products, as well as generating cost savings for the NHS. Expert Help The assessment of reducing carbon across a pharmaceutical value chain can be complex. It is important that the assessment meets the business aims of the company and adds value. Pharmaceutical companies should start evaluating this area now and seek expert guidance.
BUSINESS SHOWCASE Innovative Sample Storage Technologies Thermo Fisher Scientific brings you a complete range of sample storage products to give you peace of mind. • Assured storage and superior tube tracking - Thermo Scientific Nunc Cryobank Tubes are available in 0.5, 1.0, 2.0 and 5.0 mL capacities, supplied in standard ANSI microplate footprint racks. A unique, laser etched 2D code allows superior sample tracking with sample management software. The Cryobank™ low binding surface allows maximum recovery of low concentration samples. • Perfect labels, time after time - The Thermo Scientific ID Scribe Labware Identifier permanently and legibly marks and color codes your storage tubes and general labware, preventing sample loss and misidentification from label misreads. The ID Scribe™ minimizes your sample handling time and reduces the risk of repetitive strain injuries from manual tube labeling. Visit www.thermoscientific.com/idscribe to see how Thermo Fisher Scientific can help give you peace of mind.
Measom Freer Goes Metric
Measom Freer has added 2 NEW sizes to its popular Metric bottle range, the 60ml and 1 Litre options are UK manufactured in clear PVC with other materials and colours available to order. The range now consists of 17 sizes ranging from 2.5 ml to I Litre, with Measom Freer also stocking a wide variety of caps, closures and pumps to complete the product. Whether you are looking for a dropper cap for reagents and samples, a screw cap bottle for specimen storage or a more functional gel/ spray pump for cleaning solutions , they have a huge variety of closures available from stock. Why not try our new ecommerce website where you can order direct from stock for a fast, efficient delivery. Contact their Sales Team to find out more about how these great value packaging products can enhance your brand image and shelf presence. In addition, their stock packaging has a minimum order quantity of just a single box which means minimal lead-times, optimising your cash flow and stock management. Tel +44 (0)116 2881588, Fax +44 (0)116 2813000, firstname.lastname@example.org or you can now buy online at www.measomfreer.co.uk
Conclusion The unique business model and intrinsically innovative nature of the pharmaceutical industry mean that it is a particularly complex sector for measuring, managing and reducing carbon emissions. As expectations of customers increase, however, forward‑thinking pharmaceutical companies can genuinely differentiate their brand and products from the competition by reducing the carbon impact of their products.
For more information Dr Paul Taylor Consultant Carbon Trust Advisory Tel. +44 207 832 4802 www.carbontrust.com MAY/JUNE 2012
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BUTTERWORTH LABORATORIES GROWS EUROPEAN BUSINESS BY 20% SINCE ICSE 2010 UK-based Butterworth Labs exhibited at ICSE with the aim of building its profile on the European stage … and the strategy paid off handsomely, as we learnt from John Welch, Head of Business Development. Please tell us a little about Butterworth Labs We’re a UK-based contract testing laboratory specializing in analytical chemistry. We were established in 1974, are independent and have around 45 staff. Although our clients include most of the major pharmaceutical companies, we also service smaller pharma, specials and generic manufacturers. Our primary capabilities are raw materials and stability testing, including associated method development and validation. We test with a wide variety of products to the various pharmacopeia standards including EP, USP and JP. When did you exhibit? We first exhibited in Paris 2010 and then at Frankfurt in 2011. Because ICSE is such a major show, it was quite a big decision for us to exhibit at Paris — we hadn’t exhibited before and so had to invest in banners, and promotional and display materials, which we duly upgraded for Frankfurt. We hope to be exhibiting at ICSE USA too! What were you hoping to achieve by exhibiting at ICSE? We already had a very strong presence in the UK and Ireland with an excellent reputation. Although we are known in other European countries, we felt that ICSE was the optimum route to broaden our European client base. We felt that exhibiting at ICSE would provide existing and potential clients easy access to us, which matches our philosophy of open communications and working partnerships with our clients. What kind of stand did you choose? In 2010, we chose the ‘new visitors’ stand. This helped us to increase our visibility to visitors; in
2011, we opted for a standard corner stand. ICSE operates on a ‘first come first served’ basis so we signed up for the 2012 Madrid event when we exhibited at the 2011 show. What are your thoughts on the visitors who attended? On both occasions we were pleased with the number of people who took the time to visit our stand and talk to us. We found that there was a variety of visitors, all of whom were extremely focused and knew what they wanted. We spent some time in pre-arranged meetings with clients and prospective partners, but most was spent with speaking with people who were completely new to us! How did you find the practical aspects when you exhibited — transportation, accommodation, setting up your stand, on site facilities and so on? We travelled to Paris by road to enable us to assess practicalities for future events. From this experience of setting up the stand and the general organization, we felt confident in flying to Frankfurt and couriering the display material. You can get discount hotel rates via ICSE organizers. Did you attend any of the 96 free seminars? If so, what did you think of them? We decided not to attend any of the free seminars because of the high level of interest being shown at our stand; but we are considering delivering a short presentation at Speaker’s Corner in Madrid this year. Were the other shows taking place at the same venue useful? We make a real effort to visit everything. Combining the events enhances the visitor numbers to the stand. MAY/JUNE 2012
STRAP CASE STUDY How many new leads did you gain from exhibiting? For the financial year in which we exhibited at Paris, we saw a 20% increase in revenue from Europe, which was a direct result of ICSE. That success spurred us to confirm our attendance at Frankfurt, where we had even more relevant meetings than we’d had at Paris. How important is it that you can meet with clients and potential partners face to face? Face-to-face meetings make a big difference; once you’ve met someone subsequent communication is easier. Whilst we encourage all our clients to visit our facility and review our capabilities some find the option of attending an exhibition to visit a number of their contacts a more cost effective use of time. What other benefits did you realize from attending ICSE? With our strong branding we’ve been able to raise our company profile. Meetings at ICSE have opened up new ideas and new areas of discussion with clients. ICSE 2012 visitor 210x148.5 v1.pdf
With more than 29,000 attendees and 2200 exhibitors from more than 140 countries, is there a cost benefit in meeting all your contacts under one roof? Most of our primary contacts are laboratory based and, therefore, would not normally attend these types of exhibitions. The ICSE exhibitions, however, have enabled us to make and develop further contacts with companies on our client database, often at a more senior level.
Overall, how would you evaluate your experience? It’s been an extremely positive experience. We’ve been encouraged by the level of interest in our company, from firms we probably would not have come across except at ICSE.
For more information Tel. +31 20 40 99 507 email@example.com www.icsexpo.com
www.icsexpo.com olutions ourcing Sd ts u O a rm Find Pha ICSE the dedicate t en at ervice Ev Contract S
What our visitors say: 94%
agree it is the meeting place for the Pharma industry
satisfied with ICSE for meeting Pharma contacts
say that ICSE is the perfect event to source products and services from the global market
ICSE connects the pharmaceutical community with outsourcing solution providers, offering a forum for business development, networking and education. Analytical/ Lab Services Contract Manufacturing
Logistics & Supply Chain
‘’ICSE is by far the largest and most important of the exhibitions we visit.’’ Vice President of Business Development, Haupt Pharma
‘’Meetings at ICSE have opened up new ideas and new areas of discussions with clients.’’ Head of Business Development, Butterworth Laboratories Ltd.
Benefits of Attending: Attracting more than 30,000 pharmaceutical professionals from 140 countries, ICSE and it’s collocated shows are international events. This is the most cost effective way to meet existing contacts and evaluate new strategic partners on a global scale!
Co-located with CPhI for Pharma ingredients, InnoPack for Pharma packaging and P-MEC for Pharma machinery, equipment and technology,ICSE covers every sector in the value chain.
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WOULD GLOBALLY HARMONIZED PHARMACOVIGILANCE REGULATIONS HELP PATIENT SAFETY? Efforts to globally harmonize pharmacovigilance (PV) regulations have been
ongoing for more than two decades. To what extent is this realistically achievable, and ultimately, is it in the best interest of patient safety?
For more information
y some accounts, there are thousands of APIs currently on the market. Compounded with exponential population growth, the information deluge on the heels of social media and upcoming significant changes to the drug safety framework in Europe, it would seem sensible to expect that a global framework for monitoring the safety of products would allow regulators to more consistently monitor pharmaceutical product safety in the populations they are responsible for protecting. China’s SFDA has held consultations with FDA and EMA to further understand the drug safety system in the Western industrialized nations, and Japanese companies are beginning to globally integrate their PV systems, partially because of macro‑economic challenges at home. But, Nostrapharmus asks, would global harmonization of regulations really make pharmaceutical products safer for the public? Certainly, standardization of the structure of safety information, including the product name itself, would help to ensure safety information is more consistently captured, transferable and readily aggregated for analysis. By July in Europe, as part of the most significant drug safety changes in 15 years, marketing authorization holders (MAHs) will be required to submit product information to the Extended EudraVigilance Medicinal Product Dictionary (XEVMPD) using a message format designed to align with the international standard, ISO IDMP, by 2015. It is expected that individual case safety reports (ICSRs) will need to be submitted referencing this product dictionary by that time. Along with this, the ICSR itself is moving toward an ISO standard with an expectation of E2B (R3) HL7 sign‑off by the International Conference on Harmonisation (ICH) later this year. Standardization of timelines for processing safety information also makes sense; for example, 15 calendar days from first awareness for serious events — the goal being to share information as expeditiously as reasonably possible. To some degree there is already harmonization happening here at the MAH level, as some design their processes to the lowest common denominator. Enforcement
of postmarketing commitments would also seem natural, as these are conditions of the approval agreed with the regulator. But, Nostrapharmus asks, what about the interpretation of this expedited, structured data? The upcoming changes to the EU regulations governing drug safety increase the emphasis on signal detection and benefit–risk, and both FDA and EMA are exploring quantitative benefit–risk models. The question is what happens if everybody starts analysing safety data the same way? There would seem to be an inherent risk with similar analysis methodologies likely resulting in similar results. Given the natural variance in response to therapies, differing approaches to data analysis allow for multiple interpretations of the same data, which could help tease out subtleties or nuances that may gone undetected using similar analytical approaches. There are times where difference of opinion and debate is healthy for the public as long as the analyses are sound. In addition, there is the overall practicality of global harmonization of regulations. ICH puts forward guidelines for Europe, Japan and the US but, in practice, the pharmaceutical regulations for these markets can significantly differ. Looking at other industries, even in the wake of the global financial crisis of 2008, governments were unable (or lacked the desire) to globally harmonize regulations governing financial markets. Three years on, even within these economies, there are struggles to agree on legislation of risk (for example, Dodd‑Frank in the US). The airline industry has achieved a higher level of global standardization through the International Civil Aviation Organisation, but this is an agency within the United Nations. It is noted that within these industries, there is at least standardization of messaging allowing for global funds transfers and communication with air traffic towers, respectively. In short, Nostrapharmus sees the standardization of drug safety information as inevitable, but does not see that global harmonization on the interpretation of this information occurring anytime in the near future and, perhaps, it shouldn’t. MAY/JUNE 2012
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Pharma May-June 2012