Best to Market - Pharmaceutical Executive

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Best to Market


Pharmaceutical Executive


Origins

The biggest news coming out of Abbott recently is the decision to split the company into two completely separate entities: a research-based pharmaceuticals company (where Humira will reside), and a diversified medical products division. Miles White, Abbott's CEO since 1998, will preside over the diversified medical products company (which will retain the name Abbott), and Richard Gonzalez, currently executive vice president, global pharmaceuticals, will become chairman and CEO of the as-yet-unnamed pharmaceutical company. The official reason for the split, according to company statements, is that the businesses were growing in opposite directions. "The profile of the diversified group and the profile of the investor on the pharma side have really diverged," says Stewart. Others have speculated that Humira's importance in the overall valuation of Abbott, and the drug's inevitable patent loss down the road, could effectively harm other aspects of the business. Whichever motive is closest to the mark—and it's likely a combination of the two—one thing is clear: with respect to anticipating the market, White was something of a soothsayer when it came to Humira.

When Abbott announced that it would acquire BASF's pharmaceutical business, known as Knoll, in December 2000, Abbott's stated goal was to "broaden its global infrastructure, acquire late-stage and marketed products, increase its pharmaceutical R&D spending significantly, and access leading monoclonal antibody technologies," according to the issued press release at the time. The last goal was the crucial one; Knoll's monoclonal antibody, called D2E7, came in with the purchase. In the release, White said the acquisition would help to build Abbott's footprint in Europe and Japan, adding that, "Importantly, the acquisition will also bring leading monoclonal antibody technology, and a strong research presence in immunology with a high-potential product, D2E7 for rheumatoid arthritis." High potential indeed, considering Abbott paid $6.9 billion for BASF/Knoll, and Humira earned almost $8 billion last year. Synthroid, a thyroid hormone already on the market, came with the acquisition too, and has earned steady profits—it cleared $500 million in the U.S. in 2011, and sales were $638 million in total, a 14 percent increase year-over-year. Sales of Synthroid have easily paid a chunk of the acquisition cost over the last 10 years. The acquisition "was a little before my time," says Stewart, but "I have to give management a lot of credit—that was excellent anticipation in terms of the changing mix between small molecules and large molecules like biologics."

The acquisition and subsequent development of Humira has had no small impact on the pharma sector and its direction, and hundreds of thousands of patients with severe autoimmune diseases have used Humira to improve their quality of life. As biologic drugs become increasingly prescribed and used, education for physicians—but especially patients—will be critical. While it's important that patients know about potential drug side effects—they need to understand occurrence rates better, through quantitative, not qualitative risk/benefit presentation—they also need to know about the risks of abstaining from medication. "My nephew has severe Crohn's, and he lost his entire intestine, but now he's on a TNF inhibitor," says Ladd. "His mother and father wouldn't put him on it until he nearly died, partly because they hear about all of the side effects of the drugs, and not the side effects of the condition. Had my sister-in-law and brother been told that their son's condition is so severe that he could end up with a life-threatening condition, or have to use a bag the rest of his life, they probably would have put him on it," she says. As biopharmaceutical companies develop the next generation of biologic drugs for autoimmune diseases and other conditions, they will need to maintain a focus on patient education; FDA could expedite this process with better risk communication guidelines.

In 2011, Humira sales grew in all of the "big three" indications, due in no small part to patient communications, says Stewart. "We were really able to talk to the consumer like never before in 2011 ... there was significant push in disease awareness, mass-media campaigns, and branded Humira commercials." Given the low penetration rates, it makes sense to reach out to patients with educational messaging. "I'm very proud of the way we've handled that, and I think it has aided both patients and the performance of the brand," he said.


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