Pharm Exec’s annual forecast of the key issues facing biopharma leaders in the year ahead taps experts from several areas to uncover the seven new-decade trends to watch-from finance and policy to talent and technology, and more.

Gene Therapy Manufacturing: A Deeper Dive

Why it’s important for biopharma to consider alternative ways to expand their business in an ever-changing landscape

	 “No man is an island,” John Donne wrote in 1624. Though society has changed much over the past four centuries, the quote remains relevant, especially when it comes to drug companies trying to grow their business. In the complicated landscape of pharma and biotechs looking for support in their drug development, the two entities are linked not just to each other but to the market at large. As a result, understanding market dynamics, preparing for the unexpected, figuring out where funding is available, and thinking outside the box have become necessary.

	Since emerging in the mid-1980s, biotechs have become a major source of new drug development, bolstered by pharma’s weak productivity in R&D more recently. Though some biotechs might tackle regulatory, manufacturing, and sales functions, most still look to forge a relationship with pharma at some point to get their product to market. This might mean securing a partnership or licensing agreement, or getting acquired. Although partnering with a pharma company offers important business and financial benefits, a biotech might alternately look to the stock market (IPOs and secondary offerings) and venture capital firms for funding.

	There is a strong relationship between M&As, IPOs, and funding. If the IPO market dries up and venture investments slow down, biotechs depend more on partnerships and exiting via a sale of the company. On the other hand, if the IPO market is robust and venture capitalists are investing generously, biotechs don’t have to look to pharma as aggressively.

	Overall, the IPO market has been strong for many years. Young & Partners recently reported that during the first three quarters of 2019, 38 IPOs were completed worth $4.3 billion, compared with 50 IPOs worth $4.9 billion in the first three quarters of 2018 (see chart).

	“We’ve also had a period where venture capitalists were very interested in biotech,” says Peter Young, CEO and president of Young & Partners, and 

c Editorial Advisory Board member. “That allows the biotechs to wait a little longer before they have to either sell or partner.”

	The number of acquisitions also declined in 2019 for biotechs. After a modest surge in 2018, the volume dropped from $35 billion to $14 billion in the first three quarters of 2019, and there was only $5 billion in deals announced but not closed as of Sept. 30, 2019 (see chart below). The strength of partnering activity and access to venture and public equity funding contributed to this decline.

	Acquisitions of pharma companies follow a different drumbeat as companies acquire for strategic, geographic, and revenue-preservation reasons. Young & Partners indicated that the number of M&A deals for pharma through the first three quarters of 2019 were lower than 2018. The volume of pharma deals, however, was much greater-$26 billion in 2018 vs. $80 billion for the same time period. This demonstrated a pickup after years of decline. However, $62 billion of the $80 billion was Takeda’s acquisition of Shire. This transaction may portend more mega deals, with Bristol-Myers Squibb’s acquisition of Celgene ($99.6 billion) and AbbVie’s purchase of Allergan ($86 billion) announced but not closed as of Sept. 30.

	Another change in the biotech-pharma relationship that’s worth noting is the shift toward orphan drugs. These drugs require a much smaller salesforce and shorter approval process, and, therefore, much less funding, reducing a biotech’s need for pharma companies.

	“[These elements are] a positive for the biotechs and a negative for the pharma companies, in relative power,” says Young. “But there are signs of some weakening in the IPO markets, which will tip the scales again. That will obviously have a negative impact on venture investing.”

	As these overlapping elements create an ever-changing environment, it’s best for companies to be prepared on many fronts when deciding how to grow.

	“I think it’s impossible to just have one plan and stay with it because there are so many things you cannot control or predetermine what the outcomes will be,” says Young. “There’s no way to know [how long] the IPO market is going to be strong. You can’t have a plan that says, ‘Our only plan…is to do an IPO in two years,’ because that would be foolish.”

	Young also says to beware of fads. “Everyone got really excited about CRISPR, and then there were safety issues and some negative press, and all of a sudden it went out-now maybe it’s coming back. Those are the things you can’t tell.”

	Jigar Raythatha, CEO of Constellation Pharmaceuticals, learned the importance of having a plan B the hard way. In a 

, Raythatha explained how his biotech was blindsided when its one-and-only plan to partner fell through. After Genentech struck a deal with Constellation, it shifted its strategy and didn’t follow through on the acquisition.

	“You can probably, in retrospect, call it a mistake,” says Raythatha. “[Constellation] had developed the company in a way to kind of hand over the rein. Unfortunately, lesson learned, the company didn’t have a plan B.” It took Constellation about a year to regroup and develop a new plan.

	“It’s important to contingency plan and not necessarily to the same level of planning in each scenario, but thinking through what do you do if your key assumptions don’t pan out,” says Raythatha. “To have the ability to move into a new direction without having to completely reinvent the wheel, I think is quite important.”

Raythatha believes key stakeholders should be in alignment on major decision points. They should consider market shifts and discuss the company’s possible responses to those scenarios. Once that basis is established, the company should be adaptable to quickly flesh out a new plan of action, if needed.

	Internal issues, such as toxicity, safety, or manufacturing problems, also can derail a plan. Millendo Therapeutics sustained two clinical setbacks that forced the company to adapt. (For details, listen to 

	“Ever since our first major corporate pivot, our overall goal is to have a pipeline of treatments in endocrine disease, such that if one drug failed, we didn’t have to start from scratch,” says Millendo co-founder and CEO Julia Owens.

	When negative results emerged once again in a separate drug trial, Millendo was already in conversations with Alizé Pharma, and with the right team, money, and skills in place, Millendo was prepared to merge.

	“We did two complex mergers and two financings in under 12 months,” says Owens. “That’s really hard to pull off. But we’ve always made sure we have plans B, C, and D in our back pocket in case we need them.”

	Owens’ business development background has been helpful in navigating Millendo’s deals. For companies that lack such insight, hiring an alliance manager can add value. Lucinda Warren, vice president of business development, neuroscience, Janssen Business Development at Johnson & Johnson Innovation, spoke at the Association of Strategic Alliance Professionals’ European Alliance Summit this past November. She described an alliance manager as the “conductor of the orchestra.”

	The position, whether in-house or outsourced, can provide big-picture oversight and targeted expertise in creating a plan, being proactive, and providing follow-through.

	It’s important to include a mix of partnering pathways in a company’s master plan, not just traditional alliance routes. Sebastian Guth, president of pharmaceuticals in the Americas Region for Bayer, shares his long-term goals in a 

. Though partnering with academic institutions and collaborating with biotechs might sound typical, Guth’s overall vision is driven by innovation, evident in Leaps by Bayer, a division that invests in breakthrough ideas.

	“We are at an inflection point where breakthrough science is transforming care almost daily,” says Guth. “Bayer had to make a clear choice between pushing the boundaries of science, investing in the big bets, or staying in the here and now. And we’ve made our choice and are convinced that science and innovation are the way to go. In many ways, the decisions that we have made are already being reflected in our portfolio and pipeline today.”

	With an open-minded outlook such as this and keeping a pulse on the everchanging ecosystem in which biotech and pharma exist, companies can forge ahead with confidence to grow their business. 

	For another look at biotech runway/financial options read a recent executive Q&A 

As spending and costs soar, breakthrough promise remains

	While oncology drug pipeline activity and innovation have been consistently on the radar for a number of years, could the field be bordering on saturation? Let’s consider these numbers from the IQVIA Institute for Human Data Science’s Global Oncology Trends 2019 

		There are more than 700 life sciences companies with cancer drugs in late-stage clinical development and 463 of these are emerging biopharmaceutical organizations.

		Of the 33 large pharma companies with global pharmaceutical sales over $5 billion in 2018, 28 have large and active oncology pipelines.

		Biomarkers that stratify patients likely to respond to therapy are now included in 39% of oncology trials, up from 25% in 2010.

		The pipeline of drugs in late-stage development expanded 19% in 2018, mostly due to a large increase in the number of targeted biologics, which now represent just over 90% of the total oncology pipeline for the first time.

		There are 98 next-generation biotherapeutics-defined as cell, gene, and nucleotide therapies–in the midst of clinical investigation in cancer. These pipeline products leverage 18 different treatment approaches.

	On the clinical trial side of the oncology pipeline, the number of trials initiated in 2018 increased 27% over the prior year, to 1,170, and is up 68% over the past five years. But the composite success rate of oncology trials fell from 11.7% in 2017 to 8% in 2018. Clinical trial duration is also highest in cancer, but it has declined over the past five years in each phase.

	For more on how industry is advancing clinical trial designs, such as basket trials and adaptive trials, watch this recent 

	Once commercialized, as noted earlier, the majority of companies with over $5 billion in sales in 2018 have large and active oncology pipelines. And spending on all medicines used in treating cancer patients reached nearly $150 billion in 2018, up 12.9%, marking the fifth consecutive year of double-digit growth. New oncology brands in the US include some therapies with prices above $100,000 per year.

	The median annual cost for new brand launches in 2018 was approximately $148,800, a drop from $162,150 in 2017. To date, however, payers continue to cover oncology therapies. Total spending on cancer-targeted treatments was up 17.5% in 2019 (12 months ending June 30, 2019), reaching $135 billion.

	While many policies are being floated to address high drug costs overall, (see 

), Murray Aitken, executive director of the IQVIA Institute, stated at the recent 

 Editorial Advisory Board meeting, “We shouldn’t be single-mindedly focused on looking for policy changes to impact the pricing environment. We do have competitive market dynamics that will have at least as much impact, especially when so many companies are heavily invested in succeeding in oncology.”

	Aitken elaborated that while the spending pie continues to increase, the pace likely won’t be fast enough for all companies’ products to provide an economic return on investment. “It’s a perfect storm of surging innovation, [with] the rest of the healthcare systems struggling to keep up,” he said. “Every large pharma company over-invested [in  oncology], hundreds of emerging biopharma with VC funding and so on, pursuing this area.”

, many large pharmas have re-engineered their pipelines through acquisition to bolster their oncology offerings. Others, like Novo Nordisk, have made the choice not to invest because of the reasons stated earlier.

Recruiting and cultivating the new breed of pharma leader

	As the pharma industry evolves and fractures into a new landscape of healthcare giants and specialist operators, the “war for talent” continues to exert pressure on hiring processes. To attract and retain a new breed of pharma leader, more flexible recruitment strategies and retention policies are now the order of the day. As posited by the “Transformation and Talent Strategies” session at the FT Global Pharmaceutical and Biotechnology Conference in London, in November, pharma companies’ success “will depend on their ability to attract, develop, and retain high-performance talent from across a wide range of industries, develop new operational and organizational models, and break down the silos inhibiting innovation.”

	Among the challenges raised at the FT conference, the transition of leadership talent from pharma to biotech was one that resonated with the executive recruitment experts that spoke to 

 recently. Chris Smith, director at Hays Life Sciences, says that in the last few months he’s seen more specialist biotechs “entering a phase of scientific recruitment and building out beyond their core talent than in previous years,” and that this “proliferation of innovators is grabbing talent at a pace.”

	Rebecca H. New, managing director and head of RSR Partners’ Human Capital and Healthcare & Life Sciences Practices, told 

 that within startup companies, “venture capitalists are acting more like private equity holders-investing in and helping owners keep the drugs longer.” As such, “they need commercial business leaders-people who don’t just know how to sell, but who also understand market dynamics, the supply chain, how to launch drugs, etc.,” she says.

	With many companies building their own factories to avoid long lead times with third-party manufacturers, New adds, “there’s a need for people to run them-specifically, people with knowledge of how to drive and ensure quality, containment, engineering, and manufacturing production knowledge.”

	Such skills “are in high demand and short supply,” New says. However, as startups and growing small and mid-size enterprises are more “nimble and agile” than large pharma companies, they can have the edge when it comes to securing these skills, according to Smith. “Smaller companies can be leaner in their processes and quicker in their actions, and their internal equity conversations can be a little bit easier,” he says. Not least, “they can offer the potential for quick grosses and share options and potentially lucrative payouts.”

	Whether a small startup or a large multinational, pharma companies need to tailor their offerings to a new generation of employee, namely, the millennial. The FT talent session highlighted the importance of creating “a value proposition that will attract millennials.” New says that “in many ways, millennials are voicing what all of us have probably wanted, which is to feel engaged, to feel a part of something bigger.” She adds that they are more assertive about things like work-life balance than previous generations, and as a result, “companies are starting to think differently around their compensation models and labor pools. They’re offering more 

flexibility, for example, for individuals who may want to be part-time or part of a consulting team instead of a full-time employee.”

	Millennial attitudes are also diminishing the need for relocation. Smith notes that while top-level executives have long been given scope to travel, there is now more of a demand for remote working at the mid-tier and senior management level. Companies are becoming more amenable to this “when trying to attract people with very specific skill sets.”

	Moreover, today’s candidates want “more understanding of their ability to make an impact,” adds New. “What is their role in terms of leadership decisions? What’s their accountability?” she says. “Whether they’re in business-unit leader or COO roles, one thing I see is more and more individuals wanting to have a greater involvement in the product side. Not in terms of the development of the products, but in being able to help shape insights around utilization and customer analytics to help define other applications.”

Articles

Features

Pharm Exec’s annual forecast of the key issues facing biopharma leaders in the year ahead taps experts from several areas to uncover the seven new-decade trends to watch.

Pharm Exec’s 2020 Industry Outlook

Editorial Advisory Board met in mid-November to discuss the current trends, industry issues, and market dynamics that keep biopharma executives on their toes (see group photo at bottom). This month's issue, heralding a new year, as well as a new decade, features the 

 that came out of our expert meeting. We all expect pharma pricing to remain the topic coming out of mainstream media.

	As we wrapped up 2019, headlines centered around H.R.3, the bill that passed unanimously in the House to address Medicare negotiations of drug costs. It would allow the HHS secretary to negotiate the prices of as many as 250 drugs annually, penalize companies that do not negotiate with HHS with a fine starting at 65% of a drug’s gross sales from the prior year, and caps out-of-pocket prescription drugs costs for those covered by Medicare Part D to $2,000 annually, among other details.

	Also up for pharma attention at the end of 2019 was the removal of the biologics exclusivity provision from the signed US, Mexico, and Canada (USMCA) trade agreement, which would have extended the exclusivity of biologics in Canada and Mexico. Both PhRMA and BIO took a stand against USMCA because of the potential IP issues.

	And December also saw the Trump administration’s plan for drug importation, alluded to in July, which includes a 75-day comment rule. Initial reports of the plan, which allows states and drug companies to import certain prescription medicines from Canada and elsewhere to lower costs, were unfavorable. Both PhRMA and BIO stated that importing drugs from other countries was a potential safety risk, and the Canadian government itself said it would unlikely be able to fulfill the import demand from the US.

acknowledges that pricing concerns are always a trend, we didn’t include it this year in our top trends as a specific topic because of the consistently shifting-and hard to predict-landscape. From 2016 to last year, 

’s trends related to pricing included, in descending order, gene therapy pricing; the push for drug pricing policies from individual states; the global pricing stage; and the stirrings of the value vs. price discussion.

	Our top trends list for this year, in no particular order, is: the many financial runways for biotech; the oncology pipeline; talent in pharma; smart voice technology; the cell and gene cascade continues; ownership of patient data; and the emerging pharma markets of Mexico, Indonesia, South Korea, and Turkey, or MIST countries. For other Trends and Predictions articles from external stakeholders, please check out the section on the home page at 

	We are also happy to share that 2020 will bring an updated look to the magazine, which will debut late Q1/early Q2. And another staple of 

, the Emerging Pharma Leaders (EPLs), on hiatus in 2019, will be announced at the April eyeforpharma event in Philadelphia, and featured in our May issue. As we look forward to both of these important milestones, we welcome comments about our redesign and hope to see your nominations for Emerging Pharma Leaders that deserve recognition. The nominations will open Jan. 24, so please check 

From the Editor

While drug pricing remains a top topic in the media at large and worthy of continuous exploration, we shift away in our latest pharma trends report, instead spotlighting seven key themes that we think are a bit less unpredictable in the months ahead.

Sharing the Pricing Stage in 2020

Led in part by its new head of the Americas business, Sebastian Guth, Bayer went all in in 2019 on expanding pursuits in science and discovery, striking deals with 11 digital health startups and raising investment in disease-detection programs and patient engagement and education 

	Last year, Bayer made several  announcements supporting its larger and long-term strategic vision for the pharmaceutical giant. “We are at an inflection point where breakthrough science is transforming care almost daily,” Sebastian Guth, Bayer’s president of pharmaceuticals, Americas region, told 

 in a recent interview marking his first year in the position. “Bayer had to make a clear choice between pushing the boundaries of science, investing in the big bets, or staying in the here and now. And we’ve made our choice and 

are convinced that science and innovation are the way to go. In many ways, the decisions that we have made are already being reflected in our portfolio and pipeline today.”

	In the fall of 2019, Bayer secured collaboration agreements with 11 digital health startups aimed at longer-term development of specific digital solutions to improve patients’ health in the fields of cardiovascular diseases, oncology, ophthalmology, pulmonology, and radiology, as well as digital therapeutics. The startups were selected from 750 applications from 65 countries.

	Another funding source for treatment innovation has come from Leaps by Bayer, established in 2015. This initiative is the vehicle with which Bayer invests in breakthrough ideas across all businesses. In August, Bayer announced that it would acquire the remaining 59.2% stake in BlueRock Therapeutics, the biotech in which its Leaps by Bayer division had originally invested in 2016. BlueRock, which specializes in engineered cell therapies in neurology, cardiology, and immunology, was purchased for about $240 million up front, with an additional $360 million payment based on certain development achievements.

	Additionally, in mid-October, Bayer launched LifeHub UK to accelerate and optimize disease detection and data-driven drug discovery by developing artificial intelligence (AI)-enabled imaging solutions. The new hub is the seventh pillar of Bayer’s global network of LifeHubs and will build on radiology and the company’s knowledge and expertise in the medical imaging field.

	For pharmaceutical therapies, Guth says one of his objectives is to support transformational ideas that are focused on cures. This is illustrated with recent investments made in the Leaps division with BlueRock, as well as Bayer’s investment in cell therapy company Century Therapeutics, which Guth says complements the activities of BlueRock in the oncology space. Others include Pyxis Oncology’s tumor microenvironment-based technology to identify immuno-oncology targets and Khloris Biosciences, which is using induced pluripotent stem cells (iPSCs) to trigger a robust immune-response involving innate and adaptive immune cells toward anti-cancer vaccines. “These are examples of big dreams and big ideas that really push the boundaries of science,” says Guth. “Leaps makes significant investments, and, frankly, it’s just amazing science and bold moves that we’re supporting.”

	With so many biotechs and early stage discoveries out there, Guth says the decisions around which to invest in ultimately connect back to the people driving these efforts. “It’s fundamentally a human pursuit and it’s the people that we look at very carefully when deciding where to invest and where not to invest,” he says. “It’s their

 expertise and their capabilities. It’s the experience they’ve gained in a particular space over the years, and it’s also the composition of the teams and it’s the culture that we see at work at those companies.”

	Whether large or small, the partnering capability of those companies-the sense of how Bayer will be able to work with the respective teams to bring ideas forward-is part of the due diligence conducted prior to investing, according to Garth. “Culture is critical,” he says. “We have a lot of experience in collaborating. When you speak to folks outside of Bayer, we’re recognized as a company that has a track record of strong partnerships. And it’s part of the due diligence we do before we decide whether we can build one of these strong partnerships.”

	The concept of patient centricity and being what Guth refers to as “customer obsessed” is something the executive has been passionate about for a while. But he says it was his experience with his father’s passing from lung cancer more than two years ago that “struck a greater chord” with him. “Going through that experience of loss-not as a pharmaceutical executive, but as a son, as a family-reinforced the necessity to put emphasis on [patient centricity],” he says.

	Guth believes the language that the pharma industry uses is difficult “for patients to really understand what it is that we talk about and to translate that into words that make sense.” He adds: “It’s an area that matters to me and something that I believe is important in our corporate strategy.”

	Bayer’s Patient Insights and Engagement (PIE) network helps Guth channel his patient-centric vision; he is one of the executive sponsors of the work that comes out of the network. PIE is a group of people embedded across 

the different functional areas of Bayer, including but not limited to research and development, medical affairs, market access, and commercial. “In many ways, [PIE] is the voice of patients in what we do in those functional areas,” says Guth.

	PIE is built on four pillars: listening, understanding, acting, and responding. The network has established a patient advocacy and advisory council, which integrates patients into Bayer’s development process. They physically sit down with researchers to ensure that their point of views and relevant endpoints are incorporated into Bayer clinical trials. “Overall, we’re seeing a significantly greater focus and the importance of patient-reported outcomes in the clinical trial work that we do,” says Guth.

	In a similar effort, Bayer recently established a national joint partnership with the National Kidney Foundation to build the first patient network in chronic kidney disease. The objective is to collect patient data to better design patient educational resources and more targeted patient-centered trials.

	Another example is Bayer’s significant investment in precision oncology, particularly around patient education and activation. Guth says Bayer  invested $70 million alone in 2019 in activities that focus on driving the uptake of genomic testing in cancer. Bayer’s 

 campaign, launched in May, features patient stories and educational materials, including a brochure, patient-doctor discussion guide, and fact sheet describing what occurs during a genomic cancer test.

	Bayer also holds sessions each quarter where teams engage one-on-one with patients. “It’s amazing how much I learn every time I sit down with patients,” says Guth.

	He recounts one particular example: a patient named Keith, who had late-stage salivary gland cancer, and was basically told by his physician that he had three weeks to live. Keith was then initiated on Bayer’s Vitrakvi therapy, which is indicated for the treatment of adult and pediatric patients with solid tumors that have a neurotrophic receptor tyrosine kinase (NTRK) gene fusion. “This was three years ago, and he described how the tumors melted away and how he knew when he went for his first scan after the therapy had been initiated that it would look so much better because he could feel the tumor mass shrinking,” says Guth. “It’s those conversations that ground us in what it is that we do.”

	Guth believes that it’s not only the scientific breakthroughs that will improve patient health and outcomes, but also technological innovations. “I honestly believe that AI has tremendous value in patient conversations, particularly in identifying the right medicine at the right time and, frankly, much faster to the appropriate patient,” says Guth. “In the US, postmortem research is suggesting that about 10% of all patient deaths are attributable to a late or wrong diagnosis. That’s a massive problem.”

	Guth contends that the purpose of deep learning technologies and AI at large is to help physicians diagnose significantly earlier and, at times, more appropriately, with initiation of the right treatment. He noted the work Bayer is doing in chronic thromboembolic pulmonary hypertension (CTEPH) and building an algorithm deploying deep learning technologies to help physicians identify this disease earlier. In  late 2018, FDA granted breakthrough device designation to the AI software for CTEPH pattern recognition, which Bayer is currently developing jointly with MSD (the trade name for Merck & Co. outside of the US and Canada). CTEPH affects an estimated eight to 40 people per million globally, and is difficult to diagnose because it’s rare. Its symptoms are similar to those of other lung diseases and physicians may not always recognize it. As such, radiologists usually have the first opportunity to identify CTEPH in patients; therefore, it is vital that they recognize CTEPH indicators on images.

	“In our mind, we are well-positioned to do that successfully because we understand the biology and are also growth market leaders in diagnostic imaging in radiology, in contrast agents specifically, and in fluid delivery systems and technology in the radiology space,” says Guth. “We have access to aid with expertise in imaging and access to a vast amount of images. So we’re able to construct training data sets.”

	Having accomplished a great deal in his first year leading Bayer’s pharmaceutical business in the Americas region, Guth has additional goals for the future. They include:

		Continue to identify the best academic institutions, and partner with them for the longer term, not just on a transactional basis.

		Continue to identify the hot biotechs in relatively early stages, and collaborate with them in the right way and form.

		Identify later-stage opportunities that complement Bayer’s existing areas of focus, including oncology, women’s healthcare, radiology, hemophilia, and multiple sclerosis; and building out an increasing presence in the cardiovascular space, in pulmonary arterial hypertension and chronic thromboembolic pulmonary hypertension, and in the cardio-renal arena.

	Guth joined Bayer through its acquisition of Schering AG in 2006, where, at the time, he was head of strategy in business development and pricing for Schering in Europe. After the acquisition, Guth was appointed CEO of Bayer Turk, Istanbul.

“At that time, I was fortunate to not only spearhead the pharmaceutical business, but was also given the opportunity to lead Bayer’s business at large and across both the health and nutrition space, as the most senior Bayer representative in Turkey,” he says. “That was a tremendous opportunity. It helped me understand relatively quickly the breadth of Bayer and the incredible work we were doing, both in pharmaceuticals but also outside of pharmaceuticals.”

	Guth believes these growth opportunities reinforced two core approaches that remain critically important to him as a leader today-the willingness to listen and learn and to not fall into the trap of judging too quickly. “As I go back to that period, it was when we laid the foundation for what the company is today,” says Guth. “If you look at simply, for example, the sheer size of our company today and the size at that time, it’s vastly different. We’ve grown considerably, both culturally and in terms of our portfolio.”

	Another leadership model that Guth follows is that experiences shape a person’s beliefs, which drive behaviors

 and helps people achieve results. “We may wonder why we’re not creating different results, but it may be because we need to create new experiences that allow for new beliefs,” he notes.

	To that end, in the area of culture, Guth says he tries to create different experiences within his team that support a change in beliefs and behavior toward results. “I put a lot of my emphasis over the last 12 months on building a culture that supports the drive and the results we want to see,” he says.

’s Editor-in-Chief. She can be reached at 

Led in part by its new head of the Americas business, Sebastian Guth, Bayer went all in in 2019 on expanding pursuits in science and discovery, striking deals with 11 digital health startups and upping investment in disease-detection programs and patient engagement and education.   

Paving Bayer’s Future Path

	Despite the recent investment boom in biopharma companies, and industry’s continued success in discovering new cutting-edge genomic and cellular therapies, the political environment in Washington will cast a cloud over the prospects for robust R&D and innovative regulatory policies in the coming months. With national elections looming in November, and a host of Democrats vying for the White House, health policy and pharmaceutical

 coverage and costs will remain leading issues for the candidates. Politicians on all sides, moreover, will continue to hammer on the role of pharma marketing in fomenting the nation’s devastating opioid epidemic and teen vaping of e-cigarettes, plus the disruptions caused by ongoing shortages of critical medicines.

	The future of the Obama administration’s Affordable Care Act hangs in the balance of the debate over federal and state healthcare and drug reimbursement. Pharma will strongly oppose legislation authorizing drug importing and international reference pricing as threats to critical innovation, while also working with plans and payers to devise more value-based payment approaches. But the discovery of additional costly life-saving therapies, including important treatments for more widespread conditions such as sickle cell disease, will require new strategies for ensuring patient access to affordable medicines, along with continued investment in novel science.

	Important challenges await new FDA Commissioner Dr. Stephen Hahn, who will find it difficult to promote innovative regulatory and policy positions amidst the ongoing opioid and vaping crises. There’s pressure on the agency to clarify its rules for cannabidiol products, particularly dietary supplements promoting health benefits, and to police the rising number of operators claiming cures from untested stem cell and other biological treatments that raise safety as well as legal issues.

	Concern about persistent antibiotic resistance also will raise the call for more research on new treatments to combat dangerous infectious diseases.

	FDA will continue initiatives for approving more new breakthrough products, including cellular and gene therapies, and to engage with industry R&D programs developing dozens more. Additional agency guidance documents will support these efforts, as will patient advocates that provide important voices for shaping risk-benefit equations for promising treatments. All parties will be watching closely to detect any safety problems or signs of limited effectiveness in new therapies that could raise concerns about long-term benefits and value.

	Meanwhile, the public outcry over drug prices will further FDA efforts to streamline and accelerate the approval of more generic drugs and biosimilars as alternatives to expensive brand therapies. While most of the biosimilars approved so far have been slow to reach the market due to complex patent issues as well as innovator efforts to discourage prescribing and coverage of follow-on therapies, analysts predict that a steady rise in new product approvals will begin to have more visible effects on prices. FDA will continue to support ready access to comparators needed for bioequivalence testing, and all parties look to similar versions of insulin products to have a major impact. But the issues are complex, and hurdles will remain in bringing competitive therapies to patients.

	A major source of concern for Congress and healthcare providers will continue to be ongoing shortages of many critical treatments. Increased reliance on drug ingredients imported from China, India, and other countries will continue to put pressure on FDA to better police foreign producers. At the same time, manufacturers will move to boost investment in modern systems able to produce quality, cutting-edge products more reliably and efficiently to assure access to needed drugs.

	Global harmonization of standards for drug production and for preclinical and clinical testing will remain an important goal. Innovative agreements between FDA and other regulatory authorities promote sharing and 

accepting reports on plant inspections, on certain testing programs, and more recently on information in market applications to achieve simultaneous drug approval decisions in multiple regions. A main theme for the coming year is to reduce extraneous requirements and promote more streamlined, risk-based approaches to drug development and production around the world.

	Congress may do more to support these and other R&D initiatives by launching efforts to further policies and programs authorized by the 21st  Century Cures Act five years ago. This time the legislators indicate an interest in promoting wider utilization of digital health technologies to improve access to new products and health services; on modernizing coverage policies for innovative, life-saving drugs; and on utilizing real-world evidence more broadly in drug development. The realization of such goals, however, may be caught up in the continuing hostilities in Washington, as the full ramifications of election-year politicking remain to be seen.

’s Washington Correspondent. She can be reached at 

Columns

Challenges will mount to established models for researching, developing, and marketing new therapies.

Politics & Pricing to Shape Pharma Prospects in 2020

	After three and a half years of volatile discussions and debates around Brexit, the UK is finally set to leave the European Union, 10 months after the originally mooted date of March 29, 2019. Prime Minister Boris Johnson’s decisive win at the polls in December (on the back of a simplified “Get Brexit Done” manifesto) put paid to the longstanding efforts of political rivals and pressure groups to further delay the Brexit process (or indeed to cancel it altogether). Johnson’s Conservative Party now sits in Parliament with an 80-seat majority, clearing the way for the new leave date of Jan. 31.

	While UK pharma has been generally resistant to Brexit, the Conservatives’ pro-industry election pledges were broadly welcomed. The Tories have promised to increase public research spending to 2.4% of GDP; continue to collaborate with the EU on scientific research; invest £3 billion into a National Skills Fund; and make the UK “the leading global hub for life sciences.” They have also pledged to revamp the Cancer Drugs Fund as the Innovative Medicines Fund-setting aside £500 million of the medicines budget to give patients quicker access to cutting-edge medicines for cancer, rare diseases, and autoimmune diseases-and establish a “Dementia Moonshot,” doubling the existing levels of dementia research funding and increasing the number of researchers in innovative techniques, such as advanced therapeutics and neuro-technologies.

	Mike Thompson, chief executive of the Association of the British Pharmaceutical Industry (ABPI), praised the manifesto for putting forward “an ambitious agenda to strengthen our position and make sure NHS patients can get breakthrough medicines faster.”

	What did not feature in the Tory manifesto, however, was drug pricing, and this subject caused a mini-storm in the run-up to the election when Labour Party leader Jeremy Corbyn sensationally announced to the press that he’d received 451 pages of leaked, unredacted minutes relating to official UK–US trade talks, which showed that the NHS would be “up for sale” in any post-Brexit trade deal between the two countries.

	Closer examination of the documents revealed that most of the issues covered in the trade talks (which took place over a two-year period between July 2017 and July 2019) did not relate to healthcare, but they did point to US negotiators “pushing hard” for longer patent periods for US-produced drugs and angling for “full market access” for their drugs at “market-derived” or “competitive” prices.

pulled no punches in reporting that “US pharmaceutical interests want the British government to dismantle the safeguards that protect the NHS from paying high prices for drugs.” It added that full market access for US drugs would “greatly limit” the ability of the National Institute for Health and Care Excellence 

(NICE) to decide “which medicines patients can receive” and lead to the organization “being marginalized.” Johnson and his team responded by strenuously denying that the NHS would ever be “on the table.” Even President Trump tried to assuage concerns by saying, in his incomparable way, that the US wouldn’t be interested in buying the NHS if “it was handed to us on a silver platter.”

	The trade-deal controversy seemed to blow over, in the mainstream media at least, in a couple of days. This might be quite remarkable at any other time, but such was the unpredictable and unprecedented nature of British politics in 2019. Since the election, however, Johnson seems to be sticking to his healthcare and pharma promises. The government has proposed enshrining in law a commitment to boost spending on NHS, which has gone some way to soothing concerns about opening it up to the US market. The government has also announced plans to fast-track new drugs, adopting a “streamlined, internationally competitive” process for drug approval.

	These are early days, of course. Upon leaving the EU at the end of January, the UK enters a “transition period” that sees its existing relationship with the bloc continue until Dec. 31, 2020. This promises to be another intense period of negotiation, with healthcare never far from the top of the agenda.

 European and Online Editor. He can be reached at 

The path for UK life sciences to factor prominently in transition-period maneuvering.

Pharma’s Brexit Route

	The commercial pharmaceutical market of the 1990s has all but disappeared: Low-priced drugs designed to treat large-market diseases like depression and high cholesterol are making way for higher-priced specialty drugs designed to treat small, targeted patient populations. With this shift, emerging biopharmaceutical companies are not only developing an increasing number of novel drugs, but increasingly launching those assets.

	As 2020 and the start of a  new decade begins, we see three major trends taking shape as more of these companies prepare to launch: an increase in the number of originator products and US approval filings, an uptick in expedited approvals and self-commercialization, and greater presence in markets outside the US.

	Here’s our look ahead at these market-shaping launch trends.

A growing number of emerging biopharma originator products and 

	As growth in the total number of new FDA approvals per year has slowed to a 4% year-over- year average, small and emerging biopharma companies are increasingly leading both in product origination as well as filings for approval (see Figure 1 below for growth rates through 2018).

	ZS analysis and data published by FDA and the contract research organization IQVIA shows a 35% decrease in the share of assets originated by large-cap pharma companies and a 42% increase of share of assets filed by emerging biopharma companies.

	This trend signals a fundamental shift in the industry’s innovation model away from large R&D organizations toward focused teams that are often using lean and virtual or outsourced models for development. To be sure, emerging biopharma companies are more likely than big pharma to focus on orphan indications and specialty markets with lower commercialization costs.

	This trend also suggests that big pharma may need to reevaluate its portfolio allocation to business development and M&A efforts versus R&D.

	A recent announcement by Eli Lilly that the former executive team from recently acquired Loxo Oncology will be assuming oncology R&D leadership overall for Lilly provides another example of innovative emerging biopharma contributing not just novel assets that may be acquired by big pharma, but also a source of potential talent for large pharma organizations seeking to reenergize their own innovation engines.

Increase in expedited approvals and self-commercialization

	Emerging biopharma companies are increasingly commercializing products themselves, either solo or via a co-promotion, particularly in the US market. According to ZS analysis of the US drug approval market, expedited drug approvals are at an all-time high and the number of annual first launches of novel products increased from previous years to a high of 14 in 2018 and was followed by the second highest with 10 in 2019, after a five-year trend in the mid-single digits (see Figure 2).

	With a healthy pipeline of late-stage products in key therapeutic areas, such as oncology, combined with a robust ecosystem supporting investment and financing of commercialization, we expect this trend to continue. A recent string of multibillion-dollar post-launch deals (including GlaxoSmithKline’s $5 billion acquisition of Tesaro, Lilly’s $8 billion purchase of Loxo Oncology, and Pfizer’s $10.6 billion acquisition of Array BioPharma in the last year) may further incentivize emerging biopharma company investors and executive teams to consider co-promotion or solo launches in the US, as well as raise the bar for pre-launch transactions.

	Our analysis of publicly held novel first launches in the US oncology segment provides some useful insights into the costs of launching. We found that for these companies, selling, general and administrative (SG&A) expenses range from $19 million to $60 million for the year ending 12 months prior to launch and growing to $50 million to $176 million for the year ending 12 months post-launch.

Expanded ‘first-launch’ options beyond the US

	More emerging biopharma companies are considering commercializing themselves or co-promoting in markets outside the US, particularly in Europe, Japan, and China, often as a parallel-path commercialization option to out-licensing. The general feelings of not wanting to leave anything on the table and to maximize and retain value are pervasive.

	Having follow-on assets in the pipeline can drive investment choices ex-US with a longer-term view as initial launches may provide a foundation for future launches.

	At the same time, striking the right balance between maintaining the appropriate focus in the US-typically the most valuable market-while also capturing opportunities offered from global markets, can be a challenging task.    

	With an increasing number of rare disease launches, even smaller organizations are often able to effectively commercialize across a broader set of markets. In Europe, for example, the majority of first launches have been in rare disease, and many of these have been by privately held companies. Of the 56 novel first launches that occurred in the US between 2011 and 2019, 86% were “go-it-alone” launches and 14% encompassed co-promotion launches, based on ZS analysis of a variety of sources, including company 

filings, EvaluatePharma data, and FDA approvals.

	About half of those products (24) subsequently launched in Europe, and of those, 42% launched solo, 8% via co-promotion, and 50% were out-licensed to partners for commercialization in Europe.

	When it comes to market opportunities in Asia, organizations large and small are increasingly focused on assessing their assets’ commercial potential and value, particularly in China. In Asia, nearly all emerging biopharma companies choose to partner, although we anticipate more companies will consider a parallel path that includes launching or co-promoting in these geographies. Launching in China or Japan requires deep knowledge of the market along with relationships with key regulatory, distribution, access, and decision-making bodies or stakeholders.

	With few exceptions, emerging biopharma firms haven’t begun launching on their own in Asia, but they’re increasingly bringing their assets to these key global markets by partnering with regional or global manufacturers earlier in development.

	The partnership between Five Prime Therapeutics and Shanghai-based Zai Lab is one example of two companies teaming up early to support both the development and launch of a product in China. The alliance focuses on Five Prime treatment candidate bemarituzumab (FPA144), a targeted immunotherapy for tumors overexpressing FGFR2b, including in gastric cancer, where there is a high incidence rate in Asia. This alliance, in which Zai will manage Phase III trials for bemarituzumab in China and eventually commercialize there, increases Five Prime’s chances of global success.

	Emerging biopharma companies account for an increasing share of innovation in the industry and have shown that they are willing to launch independently or in co-promotion. While established pharma companies may have infrastructure in place to leverage for the launch of a new product, emerging biopharmas preparing for a first launch must build their program from the ground up.

	Launch go-to-market strategy and planning work often begins in earnest 21 to 27 months pre-launch (often six to 12 months prior to confirmatory trial results) and involves many interrelated work streams, from strategy and planning to organization build for headquarters and field teams, including sales and marketing and operations, insights and analytics, market access and medical, and data and technology, among others.

	Strong leadership and launch experience, particularly in the emerging biopharma context, are critical to building a strong capability and ensuring longevity in this segment of the industry.

 are Principals at ZS Associates and leaders of ZS’ Pipeline and Launch Strategy practice

Three product launch trends driven by emerging biopharma.

Is the Tail Wagging the Dog in Drug Market Entry?

	The changing of the guard at the head of the European Union has not gone smoothly, but most of the pieces were in place before the end of 2019, and for anyone with an interest in health or patients or pharmaceuticals in Europe, 2020 could turn out to be a happy new year. But no promises.

	The new European Commission swept-or, more accurately, trailed-belatedly into office at the beginning of December, behind its new boss, Ursula von der Leyen, herself a last-minute choice, and until only weeks ago Germany’s minister of defense. This at least relieved the new European Parliament of the burden of repeating its cumbersome approval process for the candidates for the top Commission jobs, and permitted it at last to turn to its own affairs for the first time since it was elected in May. The European Council, too, managed to appoint a new full-time president on schedule, with Belgium’s former prime minister Charles Michel taking over the organization of EU summits and strategy from Poland’s former prime minister Donald Tusk.

	So much for the top management-which shouldn’t need adjusting now for another five years. What does it mean for health and for patients and for pharmaceuticals? For a start, it means the possibility of some consistent policymaking with a longer-term vision, instead of the haphazard and short-term responses that have characterized much of the EU’s approach to health until now. And within each of the principal EU institutions, there is some evidence of greater attention being paid to health issues.

	The new Commission has identified health as an important policy area, and Stella Kyriakides, the new health commissioner, a Cypriot psychologist, has been tasked with implementing an ambitious agenda. Drug firm executives have been gratified to see that the first item is to “ensure Europe has the supply of affordable medicines to meet its needs,” and to “support the European pharmaceutical industry to ensure that it remains an innovator and world leader.”

	Other main tasks include “effective implementation of the new regulatory framework on medical devices,” making the most of “the potential of e-health to provide high-quality healthcare” and the creation of a “European Health Data Space,” which is intended to promote health-data exchange and support research, covering “treatments, medicines, medical devices, and outcomes.” The health commissioner will also be in charge of setting up “Europe’s Beating Cancer Plan” to improve cancer prevention and care-and with a close link to the research mission on cancer envisioned for the EU’s seven-year, €80-billion Horizon Europe R&D program now under development.

	“Europeans expect the peace of mind that comes with access to healthcare and protection against epidemics and diseases,” said Kyriakides. And she recognized that this requires, among other things, investment in new technologies.

	The parliament, freed from seemingly endless debates over who was sufficiently qualified to become a member of the new Commission, has picked up its work on health matters energetically. The health committee- now 

one of the largest of the parliament’s dozen or so panels-has been engaged in developing a “strategic approach to pharmaceuticals in the environment,” in asserting its control over the management of the European Medicines Agency (EMA), and reviewing the EU’s legislation on blood, tissues, and cells. And late at night in the parliament’s last plenary session of 2019, MEPs sealed their approach to an optimistic resolution on “enabling the digital transformation of health and care.”

	Meanwhile in the Council, work will resume in the light of a widely supported initiative to bring an integrated approach to health policy. Finland’s strenuous efforts in the second half of 2019, during its stint in the rotating presidency chair, led to the adoption of a strategy entitled “the economy of well-being.” Its chief architect described this as a plan which would, among other things, allow digitalization and new technologies to “create the ground for innovations and growing businesses, which will help to promote public health and the availability of new medicines.” At the beginning of this month, Croatia took over chairship of EU’s health council. As a small and new member state, it will be less ambitious than its predecessor, but it has, nonetheless, already identified “promoting lifelong healthcare” as one of the priorities it will pursue.

	Over at the EMA itself, which moves into its new permanent home in Amsterdam this month, there is palpable relief that despite the immense Brexit-induced disruption of being abruptly uprooted from its London home, it has been possible to maintain something like business as usual on the agencies core activities. And there is a reasonable expectation that many of its other activities, suspended over the last two years as a result of strained resources, can gradually resume as staff numbers return to normal and the agency settles back into routine.

	But despite these favorable winds, the voyage into the future may not be entirely smooth sailing. A major strategic challenge was highlighted at the December meeting of the health council, by Margaritis Schinas, the commission vice president, whom von der Leyen has put in charge of “promoting our European way of life,” and who will be Kyriakides’ direct superior. The EU, he remarked, accounts for only 8% of the world’s population and only 20% of its GDP-but it currently accounts for 50% of the entire spending around the world on social security. This was a reality that the EU would have to take into consideration as it developed its strategy for continued access to health and social services, he indicated, underlining its significance for developing policies that maximized prevention.

	The broad support for Finland’s efforts to create an integrated EU health policy have already been subjected to some conditionality over the details by many member countries’ governments, who have insisted on the immovable primacy of national sovereignty on health. The logjam persists in the Council over plans for closer cooperation among national and regional health technology assessment bodies. Drug shortages have shot to the top of the news agenda and the subject is now gaining priority as a policy issue-with the link frequently made, irrespective of the logic, with the ever-incendiary topic of drug prices.

	Health ministers have given their backing to the concept of a new structure to seek solutions-and these range from simpler mechanisms such as improved sharing of information to elaborate discussions of repatriating active ingredient manufacture to Europe. All the time, a steady background drum beat of concern over balancing innovative medicine provision with healthcare budgets threatens to burst into a cacophony of outrage, with patients and health payers chorusing their disappointments. AIM, one of Europe’s most influential mutual insurance organizations, has recently intensified its attacks on industry practice, leveling accusations of “opacity” over “astronomical” drug prices at a meeting in the European Parliament in December.

	The concerns over what are seen as unjustified drug prices are also leaking into competition policy-where the EU has much stronger powers than in health. As a minor reminder of the breadth of the EU’s continuing reach into healthcare, the European Commission-in its role as the EU’s competition authority-approved just before the holiday break the takeover by Danaher of the biopharma business of General Electric’s Healthcare Life Sciences division. Margrethe Vestager of Denmark, who is back in the new Commission in charge not only of competition policy but also of digital strategy, had expressed her concerns that the deal could lead to  reductions in competition and innovation, and increases in prices and product shortages.

	Her anxiety was assuaged only by Danaher’s commitment to divest itself of some of its activities in molecular characterization, microcarriers, and chromatography resins and hardware in China, the US, France, and the UK. This will, she said, “preserve effective competition in the supply of inputs to the bioprocessing industry-to the benefit of patients.”

	But her services have indicated that the Commission is prepared to deploy its formidable powers more widely, and specifically in relation to drug prices if there is suspicion of anticompetitive agreements or abuses of dominance related to pharmaceuticals.

Reflector is Pharmaceutical Executive’s correspondent in Brussels

What to make of new momentum in advancing health agenda.

A Happy New Year for European Pharma Policy?

In the following Q&A, Hari Pujar, PhD, chief technology officer, Spark Therapeutics, discusses the unique manufacturing and scale-up challenges involved with cell and gene therapy production. Pujar leads Spark’s technology development, technical operations, and quality assurance organizations. Prior to Spark, Pujar was most recently vice president, technical development and manufacturing, at Moderna Therapeutics.

For those who may not be familiar with the gene therapy manufacturing process, could you please provide a brief explanation of the process?

	With the first gene therapy for a genetic disease approved in 2017, and FDA expecting more than 200 investigational new drug (IND) applications each year starting in 2020, we are in the midst of rapid progress. 

Yet one of the biggest challenges that we face is keeping pace with the advancement and, more specifically, innovating our manufacturing and commercialization processes to meet the growing demand

	Up until now, gene therapy companies have been focused on discovering and manufacturing therapies for ultra-rare diseases that affect very small patient populations. But today, as the science is evolving, developers are focused on therapies to treat larger patient populations with more complex diseases involving multiple genetic mutations. This will require advancements in manufacturing that enable companies to create new modes of administration, at a greater scale, and as efficiently as possible.

	One of the most unique aspects of gene therapy manufacturing is the production of the viral vectors that are used to transport the new genes into a patient’s cells. To produce these vectors, the two commonly used methods are roller bottle cell culture (with adherent cell lines) and suspension cell culture (with suspension-adapted cell lines). Since the first days of biotechnology, we have manufactured medicines with roller bottles, or the adherent approach. In the adherent approach, cells need the surface area of a roller bottle to attach to. While effective, this can be a labor-intensive process and inefficient in producing viral vectors at a scale needed for large patient populations.

	A newer approach that is more scalable and efficient is the suspension process. Within this process, bioreactors, or vessels, grow the cells in liquid-all without the additional surface area required in scaling up the adherent approach. Once cells grow to the right density, another unique part of the gene therapy manufacturing process can take place, which is called transient transfection. During this process, cells are treated with agents to make their membranes porous enough to allow for the introduction of plasmid DNA, which can then be delivered into cells. Plasmid DNA has to be manufactured or sourced independently. Further advances to this process include the use of stable transfection (in contrast to transient transfection).

	While both of these upstream processes-whether by adherent or suspension cell culture-produce the virus, the virus needs to be purified to an appropriate quality by way of downstream purification. It is important for this process to purify the virus from both cellular impurities and process additives, while keeping the biological activity of the virus intact. Unit operations are analogous to those used for protein biologics such as chromatography and filtration. Finally, the virus needs to be formulated in an appropriate buffer that maintains the biological activity while enabling long-term storage in appropriate containers.

There has been much discussion about challenges associated with manufacturing gene therapy for scalable production. What do you see as some of the greatest challenges today?

	The three biggest challenges and opportunities I see today are:

Making our processes more efficient to scale up quickly and meet growing demand, while not compromising quality

. This includes the previously described shift to the suspension process to produce a larger yield of viral vectors. This shift to a more efficient process can be done in smaller facilities, which are more easily instituted and scaled-up by gene therapy companies. Higher yielding processes are critical for the industry to reach its full potential, as large quantities of virus will be needed as more complex diseases

Hari Pujar, chief technology officer of Spark Therapeutics, discusses the unique manufacturing and scale-up challenges involved with cell and gene therapy production.

Pharmaceutical Executive-01-01-2020