The 7 Habits of Highly Effective Competitors

Jan 01, 2014

In October 2013, Pharm Exec released its "12th Annual Pharmaceutical Industry Audit" ( http://www.ittybittyurl.com/Wbi/ ), which identifies how well companies advance shareholder value by evaluating eight benchmark corporate metrics. This audit ranked Novo Nordisk, Gilead Sciences, Biogen-Idec, Celgene, and Roche (in order) as the top five pharmaceutical companies. Editorial Advisory Board member Stan Bernard of Bernard Associates conducted an analysis of these five industry stalwarts to identify seven habits that drive their success. Here are his conclusions – William Looney, Editor in Chief.

Biopharma's best companies provide valuable lessons for preparing, planning, and playing to win. Here's how:

1 Commit To and Execute a Specialty Mission



In '61 President John F. Kennedy announced the aspirational goal of landing the first man on the moon and tasked NASA with this mission. While visiting NASA Space Center in 1962, he asked a janitor what he was doing. The janitor responded, "I'm helping put a man on the moon, Mr. President." While many biopharmaceutical companies focus on a specialty area, highly effective competitors ("HECs") focus on a specialty mission. Since 1923, Novo Nordisk's employees from top to bottom have fervently committed to "preventing, treating, and ultimately curing diabetes." Novo's CEO Lars Sørensen exemplifies the evangelical leadership and zeal that characterizes such companies and ensures employee alignment to and execution of this mission: "We attract people that want to work for a company that sees itself as part of a solution and are not just working for the money to reward the shareholders but to make a difference." Novo currently treats 20 million diabetics by manufacturing over 50% of the world's insulin, including generic insulin which is sold in emerging economies and extremely poor countries. Gilead Sciences, Biogen-Idec, and Roche are similarly passionate about overcoming viral diseases, multiple sclerosis, and cancer, respectively.

2 Knowingly Pursue and Develop the Best Products

HECs cleverly hunt for the best internal and external drug candidates and efficiently develop these compounds. They demonstrate ­exceptional scientific acumen, clinical judgment, and R&D leadership, the three top traits of successful R&D organizations, according to a recent BCG 10-year analysis of 842 developmental molecules. Moreover, HECs knowingly pursue compounds that their rivals might consider irrational gambles. For example, Gilead in 2011 took a seemingly huge risk by acquiring Pharmasset and its lead Hepatitis C ("HCV") antiviral compound sofosbuvir for $11 billion, the "largest deal ever for a company with no products in late stage development and valued at a 98% premium to its previous closing price," according to FirstWord Pharma. Sofosbuvir was considered a particularly risky compound since previous NS5B polymerase inhibitors for HCV had failed clinical development.

In fact, Gilead's senior leadership – including three top executives with science Ph.D.'s and over twenty years' experience at the company – made a shrewd scientific and strategic decision. The company relied on its leading anti-viral research experts and knowledge of nucleotides from its HIV research to place a huge bet that so far appears to have paid off. The FDA last month approved sofosbuvir under the brand name "Sovaldi," and FactSet Research Systems projects annual sales of the drug to reach $6.4 billion by 2017. Gilead exhibited the audit's highest "Enterprise Value Growth" measure for its unmatched operational efficiency.

Similarly, Celgene took a big strategic risk by developing a derivative of the notorious drug Thalidomide into the $4 billion blockbuster Revlimid for multiple myeloma. Not resting on its laurels, Celgene has emerged as "biotech's shrewdest, nimblest dealmaker" which is "fast building the biotech industry's best network of partnerships with innovators," comments Xconomy Biotech.

The company has acquired strategic players such as Pharmion and Abraxis Bioscience; partnered with many IPO companies such as Epizyme and Agios Pharmaceuticals; and invested in "some of the best venture-backed companies in the hottest areas of biomedicine," including epigenetics, immunotherapy, and regenerative medicine. According to Celgene's SVP Business Developmet George Golumbeski, "We tend to be looking for things that could be transformative, truly step-ahead therapies, not just incremental gains."