The Learning Curve - Pharmaceutical Executive


The Learning Curve

Pharmaceutical Executive

Power of small

Looney: Are there special issues that confront the smaller players in the industry?

Bill Trombetta
Christopher Jarmuz, Eclipse Pharmaceuticals: It is hard for small companies to go it alone. "Venture capital" is an oxymoron for biotech start-ups because there is less and less desire to venture when there is so much risk and no predictable ROI. Finding capital to expand is not easy, while up-front costs continue to mount. Legal and regulatory requirements are the same regardless of whether a company is small or large. Compliance is a heavier burden today than it was only five years ago. A small start-up cannot push these obligations under a rug; they must be financed and accounted for. Moreover, given these challenges, smaller companies will need to consider risk mitigation strategies that include "virtual commercial models" when it comes to the deployment of sales and marketing as well as such areas as medical, legal, regulatory, and other front office operations.

Joseph Truitt, Achillion Pharmaceuticals: Success for a smaller company requires a singular focus on products that fill an unmet medical need. When you have that, things tend to fall together. Investors are more interested, which is critical because access to capital is a precondition for growth. Physicians and patients align with your interests because the consequence of failure is serious. Regulators will provide the feedback to ensure your application is fairly reviewed. Achillion is presently committed to one disease: hepatitis C, a global condition for which there is no available cure. We have carved ourselves a niche, enlisted the right stakeholders, created a dedicated team of scientists and developed a compelling story. We are small enough to be flexible. We are able to take a molecule from lab synthesis to test in patients in 11 months. That is less likely to happen in Big Pharma because, in my view, process tends to discourage timely execution.

Of course, scale and resources are important. It is common wisdom today that branding and value metrics must begin at the pre-clinical stage. And those metrics have to be built around a global platform, which requires deep knowledge of issues like pricing considerations in emerging markets, or identifying the IP and the generic space for competition. At Achillion, there are only two of us that comprise the commercial development, but we work each day to further the interests of the company to patients, investors, and fellow employees.

Looney: Is Big Pharma getting better at partnering? Is the burden and risk of commercialization being adequately shared?

Truitt: All the big companies recognize the potential in a business relationship with smaller companies that have niche expertise in particular areas of science. The challenge remains keeping the contacts on keel, because the big players tend to move people around too much. When I hear that a deal is under "strategic review," I interpret that as "see you in six months." There is no malice; it's just that the process gets in the way of action.

Eric Floyd, Lundbeck: This industry no longer has the luxury of building castles internally. My current employer, Lundbeck, has excellent science and a specialty focus on developing innovative medicines in the challenging field of CNS. However, due to the high development costs required to commercialize these therapies we cannot accomplish this alone; we have no choice but to partner with companies with a bigger global footprint. I also spent years at Hospira and at Merck, and both are having to radically adjust their business models: Hospira, a generics company, has concluded it cannot survive on a diet of ANDAs and injectables alone and is shifting more to devices and biosimilars; Merck has frankly been humbled to the point where it had to abandon its fortress-like stance which said "if we can't invent it here, we don't want it." It is streamlining its R&D bureaucracy and working hard to network as a "partner of choice."

Truitt: What we should expect to see are more models like the deal a few years ago between Pfizer and GSK to consolidate their HIV franchises in a spin-off company, ViV. It was a way to get out from under a burden where neither company could maintain the relentless focus necessary to succeed in HIV.

Flaiz: Partnering is not just working with outside contacts. Internal partnering across functions is just as important, and actually the connections can be more elusive. We have all heard about scientists who have trouble working with the marketers, but there is also a lack of collaboration among scientists across the industry. I fear that bad science is going to be repeated because, among other things, drug developers are still holding IP pretty close to the vest, preventing others from learning from what has failed.


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