Mission Critical: Assessing Pharma's Drivers of Change - Pharmaceutical Executive


Mission Critical: Assessing Pharma's Drivers of Change

Pharmaceutical Executive

PE: What does the group feel about the pace of this change? Will the next five years bring still more rapid transitions or are these transitions likely to occur at a slower rate?

Truitt: Achillion is active in the HCV space. I can say I have never worked in a segment that has innovated at such a furious pace. Three years ago, the science to treat this condition had given us a single direct acting antiviral, pegylated interferon, and ribavirin that provided cure rates of approximately 70%. Today, we have combination therapies for hepatitis C that have demonstrated cure rates near 100%, at a high level of safety and tolerability.

Progress in the science has been rapid and we anticipate continued change and improvement. What counts is building a nimble organization that can move quickly to seize opportunities as the science evolves.

PE: The implication of these new therapies is you may be obliterating a chronic disease in the course of a single 12-week course of treatment. The traditional paradigm of financial success in biopharma is selling a drug that patients must take as maintenance therapy, for years or even a lifetime. As you cure these patients, won't the financial opportunity go away?

Truitt: My experience is that with every new treatment that advances the standard of care, we underestimate the prevalence of the condition. We think hepatitis C is under-diagnosed. And you also have to factor in the time it takes to get all those patients into treatment. Our forecast models at Achillion project a multi-billion dollar market for this next generation of hepatitis C products extending well into the next decade, in the US alone. This doesn't include additional markets with large patient populations like China, Japan, and other parts of Asia.

PE: Will the business model of the future move us further toward the "virtual company" concept in which efficiency depends on outsourcing many key activities and functions to a third party?

DiPiano: The virtual or extensively outsourced company model has great appeal among investors and shareholders, and I don't see that changing, particularly in small companies like my own. Infrastructure is expensive. Investors like the idea of being flexible and to cut SG&A expenses when things don't work out. Pivot is the word that comes to mind: it's easier for a CEO to shift course if you don't have 5,000 people working for you.

PE: Another benefit of being virtual is the ability to access a huge talent pool of people who have left industry jobs, for one reason or another. Consultancies filled with ex-industry people can be retained on a project basis, avoiding the high fixed costs of employment. It's a great model, as the client also benefits from the varied background of these people rather than keeping people who might only know how to do one thing.

Bourret: At many small companies, major internal functions are outsourced, such as sampling, benefits, payroll, etc. In addition, sales representatives and managed care managers can work on a contract basis. The focus is on building a strong in-house management team with the mindset and flexibility to multi-task. People have to be prepared to rise to the occasion. The largest companies are often preoccupied by strategic issues at the top of the decision chain and thus can devote less attention to the troops on the ground—the field force. This is an omission that small players make at their peril.

PE: A larger question shaping the future is the origin of those new drug pipelines that promise so many breakthrough products. Licensed-in products seem to be in the ascendant. Can licensing replace the productivity flaws that seem to inhibit traditional in-house R&D?

Truitt: It makes sense to spread your opportunities—you can't invent everything in-house. The key is deciding when and how to transition assets into your portfolio. It's a decision that must be taken on a case-by-case basis.

DiPiano: A good licensing program requires management to root out "the not-invented-here" syndrome. The big multinational company I worked for prior to launching my current business had a reputation as a bad partner. It needed to own every part of the deal, which was always scrutinized first for its tax implications. Such ground rules made it very difficult for any smaller partner to ink a transaction that is remunerative and sustainable.

Furey: Companies able to build "win-win" partnerships will secure a competitive advantage against those that choose to stay solo. The issue is managing the adjacencies: a licensing deal has to make sense to your core market mission or there is the danger the business will get too broad too quickly so that you lose focus. It's worth recalling the aim of any deal must be to do something good for patients. That's the ultimate test of market relevance and it usually takes five or six years for the partners to confirm that their joint efforts paid off.

PE: Your emphasis on the business being centered on the patient has been very consistent today. Is the industry taking heed, in your view?

Furey: Progress has been made, but there is much still to be done. One example is market access, which has emerged as a new, high-profile function in big Pharma organizations. In many cases, this integrative, more holistic approach to addressing the customer has not worked out well. Why? I believe it's because the overall mindset in marketing and commercial operations continues to neglect the patient—market access is not designed to be patient centric. Such programs were created in reaction to the rise of the payer. It is a company centric response. We don't think consistently and strategically about where the patient fits in this equation – what does he or she get, beyond our own specific needs?

DiPiano: I agree, but there are other factors at work, beyond this rigid commercial mindset. We are afraid to speak to the end-user of our products – the patient – because the law says our main interlocutor has to be the regulatory agencies. Yet consider the fact that all the top leadership of the FDA is active on Twitter. It is ironic that the regulators can interact directly with patients but we – the regulated – cannot. When real dialogue depends on the intervention of a third party, it's harder to put the patient in the center.

William Looney is Pharmaceutical Executive's Editor-in-Chief. He can be reached at


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