by Jason Brandt (@jasondmg3)
Six months ago, we read a lot of predictions about what was supposed to happen in 2011. We all know the world didnt end in May, but were all of those predictions so far off?
Now that were halfway through the year, lets check it out.
Heres one set of predictions that William Looney of PharmExec made, when he foretold on January 5 that “2011 will be a bad year for Big Pharma.
- National investment in drug R&D will continue to decrease.
- The industry will continue to struggle with corruption, especially in emerging markets.
Technology Transfer Mandates. Know-how and expertise is a tangible asset for pharma, one that should be allocated sparingly to partners who may one day be competitors. This dynamic is particularly evident in the emerging markets, where governments have emerged as formidable industrial policy negotiators in insisting that new innovations be shared with local partners as a condition for market access. When a drug multinational has to score a deal where it shares production with a local firm, transfers the necessary technology and after a fixed period hands over all remaining exclusive rights to the partner as Merck recently did in Brazil one has to ask: how really different is this from a compulsory IP license that the industry has always characterized as theft?
Conflict-of-Interest Vigilantism. Governments, academia, activists and the media all skeptical of the profit motive as driver of a built-in bias are applying conflict of interest rules to put industry on the defensive and marginalize its role in decisions on everything from publication of clinical trial results to participation in scientific panels that drive access to new medicines. This narrow view of conflict of interest, which fails to take account of the more diverse factors that motivate and often pre-determine the responses of other interest groups, is a powerful force behind the industrys eroding reputation. Yet little has been done to confront and reverse the perception that since drug companies have that simple motive to market, their input on virtually every issue cannot be trusted. Independent observers like former UN AIDS Program Executive Director Peter Piot have flagged this resistance as a key emerging issue in global health governance, which if left unresolved will limit real progress in disease outcomes.
The Margin Eaters. There is an emerging social contract that in many ways treats the industry as a quasi-public utility, with pressure to make costly commitments normally not expected of a private enterprise. These now include revenue and profit give backs that conform to fiscal targets set by government, or post-marketing surveillance activity [i.e. REMS] that can require extensive funding of work extending beyond the normal product life cycle marked by expiration of the patent term. Risk-sharing contracts and the outcomes-based company commitments unleashed by the “total health solution approaches of personalized medicines are another example. Such tools may all be positive in the abstract, but the net effect is going to be still more pressure on the bottom line in 2011 and beyond.
Breaching the Registration Firewall. The era where a marketing license was granted without consideration of cost or pricing is now a historic artifact. National registration agencies face significant political pressure to build the murky concept of “value into their scientific review procedures, even though there is no textbook available on how to do this well because in the end “value is a matter of judgment and people assess it from different perspectives. This in turn erodes confidence in the scientific certainty and legitimacy of agency decisions. It is also helping to revive interest in the “medical needs clause, where regulators can remove existing approved medicines from the market on grounds that the real-world evidence of therapeutic gains fall short of expectations, or where a newer product proves superior. Predictability through the product life cycle suffers and companies simply grow more averse to risk by shutting down promising research leads prematurely.
Wellcome Foundation ¢‚Ǩ” or WalMart? The traditional business model of Big Pharma ¢‚Ǩ” with its heavy investment in in-house innovation is being reconsidered through new approaches that emphasize the outsourcing of R&D: from research to “search, with the latter linked to external licensing and partnering.
Taken to its logical extent, the new model could transform companies from innovators to distribution platforms that rely on marketing heft, size and scale to compete rather than science. Coupled with the ruthless drive for efficiencies that have led to large-scale layoffs of once cosseted professional staff, the trend raises an important reputational question: if the industry is no longer viewed as a wellspring of science and innovation, what strategy is in play to respond to a world that perceives industry as the WalMart of pills?
Divide and Conquer Marketing. Stiff competition within therapeutic classes has created unheard of rivalries among companies that once were happy to share the same watering hole. Some marketers are investing millions in brand-bashing “anti-launch strategies to limit the uptake of newer alternative products. The question is whether everyone loses when this logic is applied against the larger patient-first perspective that regulators and the public expect from the industry.