Popular views of the biopharma business model suggest an industry uniquely dominant in its own space. Patents confer a 20-year
monopoly that limits affordable access, companies are the sole beneficiaries of confiscatory prices, and innovative drug discoveries
are captured from academic and government research, negating any investment in development and commercialization. In short,
pharma's "license to operate" is little more than a lucrative contract to print money.
But perceptions are not fact. Despite the stumbling industry record in explaining its mission, informed observers know that
the biopharma business has always been competitive. What is missing is an awareness of just how competitive it is (and will
become) as the-future-that-has-already-happened kicks in. On June 21, with market research firm Ipsos Health serving as host,
Pharm Exec convened a group of seven industry experts for its first Roundtable to help industry define what's next in the struggle to
master these competitive forces and secure a predictable future, in the face of unprecedented pressures on the bottom line.
The group was highly diverse, including two of the largest players, Pfizer and Merck; along with a leading Japanese multinational,
Takeda; and two mid-cap biotechs, Onyx and NicOx. Competition consultant and Pharm Exec Editorial Advisory Board member Stan Bernard rounded out the group with support from Ipsos Healthcare Research Officer Paul
Snyderman, who also presented a survey conducted by Ipsos on the current state of industry competition [see sidebar].
What follows are highlights of the group's discussion. The approach was deliberately "out of the box," best framed by this
overarching thesis: As the scope of external threats and opportunities morph in a host of new directions, how do you chart
a course that is feasible internally but revolutionary enough to keep your rivals up at night?
WILLIAM LOONEY: Competition is the lifeblood of a market system. In biopharmaceuticals, that market has changed radically in the past decade.
How has this shaped the level and intensity of competition and the way companies respond?
Marjorie NORMAN, Pfizer: The biggest change is that our competitive environment is global. Threats and opportunities can come from any geography. The
capacity to identify, internalize, and act on information across countries and regions is a critical skill set—it's a precondition
for commercial leadership.
Daniel PASCHELES, Merck: Another factor is more competition within therapeutic classes. Consider that the average period of exclusivity a newly patented
product can expect once it is launched is now less than one year, compared to upwards of five years in the 1990s. This trend
is compounded by greater transparency in the science and in the availability of information. That impact can be expressed
instantly, in real time, and across markets. It determines how companies compete because in this environment the only real
advantage is being able to differentiate your product from others in the same class.
Stan BERNARD, Bernard Associates: Looking back 20 years at how you play the game, we have moved from a gentleman's round of golf to full-contact football.
Signs of the increasing intensity of competition are rampant. For example, we have over 100 medicines approved to treat hypertension.
Multiple products in a class give increasingly sophisticated payers more power to control market access and product pricing.
Crowded therapeutic classes also open the door to generic commoditization; nearly three-quarters of all scrips in the US are
now written for generics. What is behind all this is that the pharma industry in the US and Europe has transitioned into the
"competitive" stage of the industry life cycle.
Rich DALY, Takeda: Timing of the introduction of a new product has enormous consequences. If you fail to get in and quickly differentiate your
offering from current standard of care, then the payer will do it for you—and your product may never recover. One aspect of
payer clout is that rebates effectively limit access for new products. In many cases, rebates are now so large that managed
care providers simply can't walk away from them, even when a new entry exhibits a clinically superior profile and is more
cost-effective. This explains why the uptake of breakthrough innovations is falling short of the expectations of the investor
community—it's taking much longer to build to that billion-dollar blockbuster status, adding to the cost of drug development
and a sharply attenuated product life cycle.