After a decade of hype and expectancy, personalized medicine is still in the process of "becoming." The science is there, but it's still in the process of being perfected. With new entrants such as Pfizer's Selzentry for CCR5 trophic HIV, and the relabeling of Warfarin to include genomic-dosing data, the industry is moving beyond the mere promise of targeted therapies—and thankfully, moving the discussion beyond oncology and the overhyped Herceptin case.
New York Times columnist Olivia Judson recently asked: So why hasn't personalized medicine yet hit it big? In part, it may be a simple matter of timing. In a Spectrum report, one industry commentator estimated that "[i]n 10 years, about 20 to 25 percent of new products in the pipeline will depend to some degree on a related test."
Somewhere along the way, the pharmaceutical industry decided that the market segmentation implicit in targeted therapies necessarily translates into fewer patients and, therefore, reduced returns. But in reality, personalized medicine has far greater potential and much broader applicability than just an R&D enhancement. The industry needs to overcome the divergent business models between pharma and the diagnostic industry, and learn how to harness the marketing dynamics embedded and largely unexplored within personalized medicine.
Pharma companies can go beyond viewing personalized medicine as just an R&D productivity tool to understanding how it can reshape market dynamics, alter a drug's marketing trajectory, and drive sales—possibly even in the face of generics competition. In fact, if managed and positioned correctly, tailored therapeutics can even offer a return on investment (ROI) equal to drugs developed under the one-size-fits-all model.
Convergence: Mind the Gap
While many of the leading pharma and diagnostic companies have outwardly embraced the idea of personalized medicine, how to get such therapies translated into practice is a very different question. The two industries have developed very different business models, which are culturally, strategically, and financially distinct, and their junction during co-development and clinical decision-making is a much more difficult and complex prospect than simply working side-by-side.
The difficulty in working together is particularly exacerbated when dealing with personalized medicine, which requires the diagnostic and pharma industries to overcome not only a cultural and strategic divergence, but also a technological divergence of therapy and diagnostic. Historically, when the two industries have attempted to work together the results have been suboptimal. In one notable case, diagnostic and pharma companies agreed to co-develop and co-market a targeted therapy, but the diagnostic partner ultimately sued its pharma partner when it found out that drug reps were telling physicians that they didn't need to use the test.
To make personalized medicine a reality, the pharmaceutical and diagnostic industries must learn to work together, as interdependent partners motivated around and by the same value proposition. Other industries have showed the value of this convergence. Take, for instance, the marriage of computing and hardware manufacturers like Nokia and Motorola, which have developed mobile-based television broadcasts. Companies such as these offer a good example of how integrated thinking and development processes can lead to coordinated, market-driving products.
Within the field of healthcare, other prototypes of integrated development exist, such as drug-eluting stents for cardiovascular management and the integration of robotics and prosthetics. But these examples are not sufficient for most pharma companies. Time and again, executives and development teams brush aside analogies from other non-targeted drugs or other industries, asking, "What about other personalized medicines? How have they achieved this goal?"
The answer is that with only approximately 14 targeted therapies on the market across all disease areas, there are simply not enough examples from which to draw a roadmap sufficient enough to guide business practices and development decisions. Companies that wait for a well-traveled path built by their competitors will simply be the last to capitalize on the benefits of the new technology.
At present, the idea of developing and launching a test alongside a therapy is either resisted by the individual drug development teams or undertaken on an "if we have to" basis. One of the most common, self-limiting, and damaging ideas within drug development teams is the desire for a hands-off approach to a companion diagnostic strategy under the simple rationale that "we are not a diagnostic company."
It remains to be seen whether pharma companies will acquire their diagnostic partners or continue to try and create strategic partnerships. Whatever the model, both sides need to learn how to integrate their divergent development and business models to effectively co-develop and launch personalized medicines.
Change Your Thinking
If there's anything the industry should have learned from Vioxx, Rezulin, and other highly litigated one-size-fits-all drugs, its that pharmaceuticals developed for mass market conditions don't always serve mass markets. A drug being given to 1,000 patients that is only effective in 500 patients is not a treatment for a patient population of 1,000. It is a drug that is only appropriate for 500 patients—and while those additional 500 people may provide an early ROI, they are likely to discontinue the drug after receiving little or no benefit or, worse, experiencing an adverse event.
Personalized medicines offer companies the opportunity to shift from focusing on less precise ideas of market share to focusing on the share of patients who would actually benefit from the drug or drug class. Well-planned personalization will ensure that a drug reaches as close to 100 percent of its target patient population as possible—and more importantly, in the current era of abysmal industry reputations, only reaches the patients for whom that drug will actually be effective.
Forget the idea that segmentation results in smaller markets. Personalized medicines may actually allow a company to reach beyond those 500 patients, and potentially beyond the 1,000 treated with the one-size-fits-all drug. According to IMS Health, prescribers are more likely to use a drug that comes with a test—at a rate of 70–90 percent more than other more traditional drugs—because the test provides greater evidence of likely positive patient outcome.
Consider the case of Takeda's Actos, a PPAR agonist for the management of diabetes. In 2005, it was used to treat around 1.5 million US diabetics. According to Evaluate Pharma, the company had a 50 percent market share—putting the "hypothetical" total patient pool at three million diabetics.
However, epidemiology studies showed that there were actually almost nine million US patients with insulin-resistant diabetes at that time, a significant percentage of whom could hypothetically have benefited from Actos. Why weren't they switched to Actos? The answer, perhaps, goes back to physicians' reluctance to switch their patients' therapies, even when they're not achieving optimal results. But the additional confidence and higher degree of evidence seen through a diagnostic test may be just what the doctor ordered. Thus, by actually segmenting the market and by treating that segment more efficiently, companies have the potential to access patient numbers that are at least similar to the blockbuster model.
Market Dynamics: The Rise of SUVs ?
There aren't many examples of marketing and sales strategies that showcase how pharma should promote the "test and treat" paradigm, but the introduction of sport utility vehicle (SUV)-type vehicles does provide an analogy of how a high-capital industry with long development cycles used converging technologies and segmentation to dominate a new niche.
In the early 1980s, Ford's and Chevrolet's SUVs were fully enclosed, two-door pickup trucks used mainly by outdoorsmen. American Motors (AM) came late to the market, and didn't want to compete head-to-head against more established brands.
Instead, they saw a way to differentiate from the competition. AM designed an SUV with four doors, cargo room behind a second row of seats, and a chassis that rode high like a truck but handled like a car. Immediately, AM's Jeep Cherokee appealed to urban families. And by differentiating the product for these consumers, AM carved out a powerful new market while retaining their loyal customers, who still just wanted their standard truck or car. In 1980, SUVs held just 0.1 percent of the US automobile market. But the introduction of the Jeep Cherokee forever recreated the typical urban family vehicle, and SUVs increased their share to 3.6 percent of the market by 1989.
But differentiation can be a powerful tool, and can be used by more than one competitor. Later, Ford capitalized on AM's design changes and created an SUV with many of the same parts and the same chassis as the light pick-up truck, but used differential pricing to charge up to $10,000 more per vehicle.
The automobile industry, too, faced a lack of direct analogues on which to predict success. At first blush, it would have seemed that, given the niche market to which such vehicles would have been marketed and the increased costs of creating such vehicles (including the ad budgets required to "educate" consumers about the need for these trucks), this would have been unduly onerous—certainly not profitable.
Indeed, the industry spent a collective $9 billion on advertising SUVs from 1990–2001, as reported in Keith Bradsher's book, High and Mighty: the Dangerous Rise of the SUV. But ultimately, the investment paid off. By May 2007, the midsize SUV represented a full 11.3 percent share of the US automobile market share, according to J.D. Power and Associates.
Market Dynamics: Personalized Med
Let's break down the components of the SUV example to understand how this strategy applies to personalized medicines.
Show how it's different The pharmaceutical industry redefines markets as drugs mature, face competition, or go off-patent by using the standard "Four Horsemen" of differentiation—efficacy, safety, convenience, and cost effectiveness. This product differentiation can result in the ability to capture greater market share, charge higher prices, deflect competitive initiatives, command greater buyer loyalty, and stimulate earlier trials and referrals of products.
It is already well understood that the simple step of differentiating your product in the crowded clinical marketplace—whether through better dosing, reduced adverse effects, or greater efficacy—can greatly increase returns for comparably small input. Personalization represents the possible Fifth Horseman, and is an effective and powerful tool to segment and define clinically meaningful patient populations for whom the drug works.
Lock in patients Physicians can be fickle. Research shows that their prescribing choice is highly sensitive to drug rep visits, direct-to-consumer advertising, price, and the availability of therapies with more convenient dosing schedules. Look at Fosamax, the gold standard osteoporosis drug built to last as the market leader through a series of improvements to its dosing profile to a once-weekly dosing. Even so, it lost 15 percent of its market share within three years to Actonel, when it launched in 2000 with a more convenient once-monthly dosing.
Personalized medicines can create market security to guard against these common, competitive threats. If a therapy is targeted at a specific patient group based on a particular genetic difference, it will be very difficult to substitute products, and physician commitment and loyalty are likely to be high. First entrants are likely to capture and hold onto market share to a much greater degree than one-size-fits-all drugs. And the benefits of a "targeted" lock on patients is highly likely to confer the same market security as that bestowed in mature markets on leading brands.
Accelerate adoption Research by DiMasi shows that, historically, the average time to peak sales for drugs is 4.5 years. This adoption curve is lengthened when looking at diagnostics, which historically have slower market diffusion and adoption than drugs.
So how do you get doctors to adopt new drugs more quickly? Some say it's impossible—just as some bought the iPhone as soon as it was released and others are still waiting for a better-generation product. There will always be physicians who take a watch-and-wait approach.
But there's reason to believe that by providing the necessary evidence, more physicians will become "early adopters." Diagnostic tests help provide that evidence in the prognosis and monitoring of patients, and by eliminating skepticism on behalf of prescribers typically slower to adopt new technologies. Plus, clinical trials based on genetically stratified patient populations mean there will be less potential for adverse events, easing physicians' concern. With this, there will be a wider base of early adopters, which will speed adoption and increase usage in the rest of the physician population.
Branding the value proposition The evolution of pharmaceutical markets has now become almost standardized. First-in-class drugs set the rules. Second generation therapies are primarily differentiated relative to where in the class they are launched. As follow-on generations expand the market, they are differentiated from the first-in-class entrant by means of a different mode of action, fewer side effects, or new data on cost effectiveness. Finally, drugs will come onto the market with twice-a-day dosing or novel delivery mechanisms (e.g. nasal sprays, patches) to further differentiate new entrants from products already within the class.
But with personalized medicine, there is potential for a much richer promotional landscape than what's currently seen using the standard approach to differentiation. Diaceutics worked with a leading UK advertising agency to understand how it works. One surprising finding was that, unlike the traditional empirical paradigm, the "test and treat" protocol contributes toward building in physicians' minds the concept of a "consistent standard of care." Specifically, diagnostic tests offer the opportunity to manage genetically identified patients in the same way, every time, without letting empirical observations get in the way. Embedding a therapy-response test may appeal to the physician's desire to adhere to the highest of clinical standards long before treatment guidelines have been fully established.
The Way Forward
At day's end, the value proposition of a therapy and companion diagnostic combination is very different from that of a one-size-fits-all, standalone therapy. That personalization means the research and development model is no longer being debated; that it further enables the pharmaceutical marketing model should be debated more actively and with the bias toward change rather than retaining the status quo.
In their review of the capabilities required to enable personalized medicine, Lara and De Mesa suggest that pharmaceutical and diagnostic companies that address the lack of appropriate marketing capabilities for personalized medicines could gain a competitive advantage by enhancing relationship marketing with consumers. Similarly, newer education and sales management will also need to be adopted and the industry will need to move away from its traditional reach and frequency metrics that it depended on for the blockbuster model.
The installation of an appropriate, evidence-based method to manage the personalized medicine approach is likely to require longer but fewer details, and doctors and reps working closer together. Interestingly, this trend is already witnessed in the launch of oncology products, so it is not entirely alien to pharma's business model. Moving that approach out of specialty medicines into mainstream diseases like diabetes or cardiovascular disease may be where the greatest savings and efficiencies are evident.
Of course, change is not easy. The convergence between the pharmaceutical and diagnostic industries, with their disparate business models and cultures, brings a host of difficulties and likely errors before we reach significant signposts toward success. For this reason, the marketing power of personalization may first be pioneered in mature therapy areas where entrants previously considered fourth or fifth in class can be recast and repositioned as first in a genetically targeted subgroup.
However the life sciences community gets there ultimately, a more thorough exploration of the market-shaping benefits of personalization will increase the current momentum already building for personalized drugs within the pharmaceutical and diagnostic industries.
Peter Keeling is CEO of Diaceutics and can be reached at email@example.com
Mollie Roth is Corporate Counsel and Vice President of Business Development for Diaceutics and can be reached at firstname.lastname@example.org
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