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Pharmaceutical Executive Digital Edition - February 2010

's Brand of the Year award recognizes Roche's oncologic, Avastin, not only for the its clinical merits but for the drug's larger symbolic importance in demonstrating the sheer staying power of breakthrough innovation. The steady growth in FDA-approved indications for Avastin is salvation therapy against society's loss of faith in medical progress, expanding the innovation big tent to show that "first in class" can also mean "further to last." 

This honor goes to Avastin for its early success in establishing a new clinical paradigm for cancer treatment, bolstered by a baseline of six indications in five tumor types, including the drug's initial approval, in February 2004, for advance-stage colorectal cancer. Two of these—for relapsed glioblastoma and renal/kidney tumors—occurred in the past year. Four other potential indications, covering early stage colon/rectal cancer as well as cancers of the prostate, ovaries and gastric system, await the results of Phase III clinical trials to be presented at medical congresses over the next 12 months. 

All told, Roche has 30 separate discovery and development programs underway to capture Avastin's potential against a variety of metastatic tumors. More importantly, the drug's status as a definitive treatment advance has stimulated complementary strands of useful research, not only in government and academia but within industry itself. According to William Li of the nonprofit Angiogenesis Foundation, 10 cancer drugs modeled on Avastin's unique mechanism of action are now on the US market, and another 120 agents are in clinical trials—26 of which are in Phase III. Roche alone has funded some 450 studies to demonstrate the value of the Avastin franchise to clinicians and patients. Every Big Pharma company with a stake in oncology is focused on research seeking similarly targeted ways to render cancer dormant by undermining initial tumor growth, slowing relapse after surgery or stimulating natural immune responses to replace traditional chemotherapy that attacks healthy as well as malignant cells. Thank Avastin for that.  

Avastin is not without controversy, however. Some trials indicate only marginal benefits, particularly when balanced against side-effects that in rare instances can be fatal. But the latent promise of this new line of therapy has stretched the boundaries of what is considered an approvable drug for cancer. Advocacy around the lack of other alternatives for breast cancer patients who fail conventional therapy has persuaded the FDA to allow accelerated approvals on the basis of evidence showing a delay in the worsening of disease, as opposed to the gold standard of increased survival. While some cancer advocates see this as lowering the bar on efficacy, others contend it's a win/win. Patients get another chance to fight, while industry retains an incentive to develop the next innovation. "Even if short-term clinical benefit for a first-in-class like Avastin is modest," Temple University pharmacy Professor Albert Wertheimer told 

, "It sustains the momentum of research toward better end points linked to survival and—eventually—a cure." 

Avastin's clinical heft is plated with gold. The drug is the centerpiece of Roche's rich oncology franchise, topping the company product league charts at 5 billion Swiss francs in sales for 2009. Its value as a long term profit spinner for Roche was a factor in management's move last year to convert its 56 percent majority stake in Genentech to full ownership—some analysts forecast Avastin revenues could more than double before the drug's primary US patent expires in 2019.

Fragile Shoots:  Extending the Tree of Life for Cancer Patients    

To do that, Avastin will not only need to secure additional FDA and EMEA approvals, but also demonstrate better efficacy as an early stage inhibitor of tumor growth—a big if, according to some cancer specialists. "Validating patient benefit to drive the payer investment is at the heart of the debate here," argues Karol Sikora, a practicing oncologist and former professor of cancer medicine at London's Imperial College. "Right now, if you can afford it, Avastin is probably worth the price. But assuming continued growth through additional indications, Roche could halve the price and still double its revenues."  

Pricing is the key investment risk facing all oncology drugs today. Avastin's daunting cost and prominence as an early breakthrough in the science of tumor regression means it carries symbolic importance in the debate. The fact that Avastin has been on the market for six years and ranks consistently in the top three drugs in global oncology sales means it could be the first to confront a key question posed by regulators: Is there an expiration date on the label of innovation that confers a premium price? More directly, where is the clinical differentiation against the growing number of competing therapies with a similar mechanism of action? 

Philippe Bishop , VP, Clinical Development, Avastin  

For Roche, the answer depends on grafting broader applications to backstop Avastin's ability to score against multiple cancers. Company researchers are looking to its potential as an overall early-stage treatment, an inhibitor of post-surgery tumor relapse, a cancer maintenance therapy—even as a preventive. One little-understood aspect of Avastin is that in contrast to many cancer drugs it is well tolerated by patients, over a longer period of time. This might enhance its value as a micro-tumor growth suppressor when used in combination with drugs that target other aspects of cancer biology.  

The rationale for rewarding drug innovation starts with three metrics: time, money, and opportunity. Avastin's storyline is a long one, emerging over three decades from a heretical concept in the biology of vascular cell growth to commercial breakthrough that blocked cancer's spread through the blood supply. The journey began in 1971 with publication in

of a paper by Harvard professor Judah Folkman positing that cancer cells secrete excess amounts of a molecular substance—Vascular Endothelial Growth Factor (VEGF)—which promotes proliferation of blood vessels that feed tumors and help them metastasize. Folkman dubbed the process angiogenesis, a combination of the Greek words for "vessel" and "birth." His practical conclusion was that if VEGF could be controlled, it could beat back or even render dormant the cancerous growths whose spread depends on their ability to stimulate the formation of new blood vessels.  

The cancer community found Folkman's paper fanciful, even threatening. This was especially true for the many researchers trained in the laboratory rather than in the real world setting where Folkman worked as a surgeon, in regular contact with patients suffering from perversely healthy, blood-rich tumors. Plagued by the "not in my back yard" syndrome, Folkman found little institutional support for his conclusions, and it was left to circumstance whether others might take up the challenge of transforming his theory into medical practice.  

Enter a new company. Genentech was founded in 1976, five years after Folkman published his paper, with a commitment to commercializing the then-emerging field of biotechnology, whose novelty demanded a tolerance for diversity against the conventional wisdom of academic medicine. Genentech built a corporate culture around that necessity, and Avastin was among the first to deliver a payout.  

A key element of that culture was the freedom given to Genentech scientists to pursue their own research interests, often on company time. Napoleone Ferrara, an Italian-born physician hired by Genentech in 1988 to help develop a new pregnancy drug, took advantage of that policy to build on previous work he had conducted on cancer formation at the University of California San Francisco. Specifically, he began tests on how developing an antibody to VEGF could shut down blood vessel formation and starve cancerous tumors of the nutrients they needed to grow. His off-hours work led to a successful cloning of the VEGF gene; in 1993, in a peer-review paper published in 

, he mapped the contours of a monoclonal antibody for VEGF and presented a preclinical model that demonstrated the antibody could suppress angiogenesis and tumor growth. 

Four more years of study and testing followed, and in 1997 Genentech filed an IND for the antibody it called Avastin. Another seven years of human tests went by before the drug secured its first FDA approval in February 2004. In authorizing Avastin, then-FDA Commissioner Mark McLellan praised it as evidence of "the progress of biopharmaceutical innovation. "  

Genentech points to the years of study as the embodiment of its distinct mission to focus on new science, with a high tolerance for taking big bets around new pathways for attacking the biological roots of disease. Philippe Bishop, Roche/Genentech's vice president of clinical development for Avastin, told 

: "This work shows how individual drive and focused community support can transform a pioneering vision into a useful, life-saving drug. Folkman and Ferrara's insights into the biology of cancer growth would have lain dormant had Genentech not had the organizational courage to take this project on and persevere over the eight years it took to prepare the initial IND and create the molecular basis for an approvable drug."  

Genentech took considerable risk early on in amassing the data required to pass FDA muster. The company invested heavily in Phase II trials for Avastin, using randomized protocols to build more knowledge about the drug that could then be applied to help structure the Phase III investigations. At the time, scientists at other companies avoided this approach because poor or inconclusive results in Phase II might serve as a disincentive for management to allow promising projects to go forward. Genentech, a company run by scientists, took the opposite view—whatever the results, big investments in Phase II could help overcome the more significant hurdles likely to be encountered during Phase III, which is the essential test ground for commercialization. 

This learn-as-you-go stance also helped Genentech manage the big safety risks in conducting the trials that led to FDA authorization of Avastin against glioblastoma last year. "We knew that Avastin in combination with chemotherapy can cause hemorrhaging in a few patients, and that one intracranial bleed in our human tests for glioblastoma could shut the whole program down," Bishop says. Nevertheless, the company took the risk and leveraged hundreds of studies commissioned for other Avastin tumor types to design appropriate controls for a Phase II study (AVF3708g), the results of which found no new safety signals to limit the drug's use for this virulent form of brain cancer. The company is now conducting a larger Phase III trial to confirm and extend the findings. 

Genentech's decades-long commitment to cancer as a therapeutic target ensures that financial and human resources, other knowledge assets and internal organizational structures are all aligned to mitigate the risk in translating innovative science into commercial success. "It's vital in this increasingly crowded cancer field to have both focus and critical mass, and we have it," contends John Orwin, svp in charge of sales and marketing for the company's BioOncology group. Orwin told 

 that the company has always invested in Avastin for the long term, with a particular emphasis on funding postmarketing approval studies that carry end points meaningful to the patients who use the drug. "Good clinical data based on needs-relevant end points is our best forum for promotion," he says. 

Genentech's marketing for Avastin is geared to distinguishing the drug from "the clutter." The company runs a dedicated, technically advanced sales force for Avastin that emphasizes specialized medical education and active interpretation of study results. Commercial teams work closely with the trial investigator community, who serve as thought leaders on cancer and, as prescribers, comprise a key part of the Avastin customer base.  

Steps have also been taken to serve that portion of the Avastin market without coverage or incomes to defray the product's high cost. The company's Access Solutions program provides subsidized access to Avastin for those who need it, inclusive of clinically eligible patients with household incomes of up to $100,000 per year— a ceiling that covers 85 percent of the US population. Some 350 full-time Genentech employees administer the program. "We don't rely on subcontractors to do this for us, so the service commitment is high," Orwin says. Nevertheless, patient advocates like Sikora contend that Roche at some point has to yield to critics and build more pricing flexibility into the product, particularly as it ages. "Genentech is now a fully integrated part of a global company. Most of Avastin's sales are in the US, and price has not been the driver of access like it has been in the UK and Europe. But that is likely to change," Sikora says.  

With nearly a decade of proprietary life left in Avastin, Genentech believes the franchise is healthy, with much room to grow. But this bet depends on the data: 2010 will see the release of clinical trials to drive additional indications for a range of cancers. Executives also note that the merger with Roche will not change the commitment to Avastin as a truly transformational therapy in the evolving field of anti-angiogenesis. In fact, they contend that Roche's international scale and presence—pre-merger, Roche managed the Avastin portfolio outside the US—can only enhance the capacity to mobilize resources, expertise, and partnering behind some entirely new applications for the product 

One such area is the development of biomarkers to better predict which patients may gain most from treatment with Avastin. Some 150 potential biomarkers have been studied, but to date none have proven accurate in assessing benefit. In addition, work is underway to increase understanding of the biology behind VEGF so as to anticipate and counter the development of cancer cell resistance to the Avastin antibody. The goal is to use the natural process of angiogenesis to find ways to increase Avastin's staying power in slowing tumor progression. This could establish the drug as a maintenance therapy for patients whose cancer has been removed through surgery or is in remission.  

In addition, the company is awaiting the results of the following clinical trials:  

» GOG-218, a Phase III study evaluating a combination of Avastin, paclitaxel, and carboplatin chemotherapy to prolong the time without disease for newly diagnosed, untreated women with ovarian cancer. Two other trials on ovarian cancer are also in progress, one of which (ICON7) is testing Avastin as maintenance therapy in increasing progression free survival  

» CALGB-90401, a Phase III study to determine if Avastin combined with docetaxel chemotherapy and prednisone can extend survival time for men with prostate cancer whose previous treatment with hormone therapy had failed. The combination with Avastin will be compared against use of the two other drugs alone 

» AVANT, a Phase III trial for early-stage colorectal cancer, in which Avastin is being tested with folfox or xelox chemotherapy to determine whether it reduces the recurrence of stage II and III level cancer after surgery 

» AVAGAST, a Phase III study to see if Avastin plus xeloda and cisplatin chemotherapy can extend life for patients with previously untreated stomach cancer, compared to chemotherapy alone 

Work is also continuing on follow-up trials for breast cancer, glioblastoma and melanoma. A Phase II study (BEAM) released last September found a "statistically insignificant" change in progression free survival for patients with metastatic melanoma, but the company is continuing work because the safety profile was good and there are presently few other treatment options available to patients.  

Features

As Genentech's Avastin continues to mature and spread its branches, the company is looking for high profits on the back end.

Brand of the Year: Avastin

With the healthcare environment continuing to change, sales managers and sales representatives must understand what drives both their customers' and their own company's profitability and strategic decisions. In response to this change, many pharmaceutical companies are asking field employees to run their sales territories as a business. This requires greater appreciation of costs and the effective management of resources. Thus, there is a need to create business plans that are aligned with corporate and therapeutic area goals.   

For a sales manager to become more of a business manager and leader, the company needs to design blended learning solutions that continuously focus on improving decision making, understanding customers' business needs, resource allocation, financial analysis, and strategic thinking. All of these capabilities underscore the business planning process. Additionally, sales managers need the skills to coach and support their direct reports on how to create and execute an effective business plan.  

Most people realize that effective business planning is critical to achieving results, but implementing a consistent, disciplined process in pharma field organizations is always a challenge. For many field organizations, there is great deal of variability in business plan existence and quality. For other organizations, business planning is viewed as a "check-the-box" activity that yields little insight into opportunities with targeted initiatives.   

Another challenge is that few organizations leverage planning as an opportunity to evaluate and allocate the vast array of resources available to sales reps (e.g., samples, leave-behinds, marketing-sponsored programs, field medical time, and senior leadership involvement with key customers). Ideally, the business plan should become the roadmap for success—but often it is filed away with no additional review throughout the year. 

Even with these challenges, sales leaders are eager to develop a Business Planning and Resource Allocation Framework to support disciplined planning throughout the field organization.  Making business planning a priority: 							

» Ensures alignment with broader strategic directions and objectives

» Creates greater understanding and appreciation of the "why" behind tactical activities and day-to-day actions

»Allows for appropriate roll-up and review of plans at each level			

» Includes steps for ongoing reassessment and fosters necessary adaptation in a changing business environment

» Improves decision making by considering, applying, and deploying the entire resource mix when executing strategies and tactics

»			Evidence suggests that sales managers and reps who effectively translate broader strategic initiatives into actionable plans that reflect local market conditions typically outperform their peers. In turn, these individuals should be rewarded for the results achieved by their plans, not just overall sales numbers. 

The use of a disciplined and consistent Business Planning and Resource Allocation Framework will provide field employees with a step-by-step process that requires both top-down and bottom-up communication and alignment. To do so, employees at each level of the organization must fulfill their respective leadership roles. Senior leaders must set and communicate a clear vision and direction; sales leaders need to translate these goals and provide clear direction on strategic imperatives; sales managers need to create plans aligned with broader goals while also making appropriate adjustments for local market opportunities, customer variables, and human capital assets; and sales reps must leverage their understanding of individual customers and their unique needs to develop an aligned business plan that achieves targeted performance and business objectives. Throughout the process, everyone in the organization is responsible for ensuring alignment and providing the appropriate feedback that reflects their understanding of market conditions and customer needs.   

The framework has four phases: two that the sales manager completes and two that the sales representative completes with manager support and direction. Each phase has specific steps and questions to consider, and pharmaceutical companies could easily customize the process to incorporate specific databases and financial reports. Business plan templates are used to capture the overall assessment, outline action plans with milestones and metrics, and list resources required. These action plans become the roadmap for creating specific monthly, weekly, and even daily plans that "operationalize" the broader strategy. 

1. Align business strategies with local assessment of your business.

 During this phase, the sales manager is asked to assess sales history, and translate that into an understanding of broader business goals. By leveraging internal reports, the sales manager can evaluate what is driving sales performance and determine if the business is trending up, trending down, or staying the same.  

Additionally, the sales manager should ask questions to encourage an evidence-based analysis of what drives sales performance: Is there variation in growth across the territories? What factors contributed to the district meeting, exceeding, or falling short of performance goals? Equally important is analysis of resource allocation decisions. What type of investments yielded the greatest results?  What are the financial implications of operational decisions? How can costs be reduced to increase profitability?   

The sales manager has to not only engage in a thorough assessment of sales history, but also review both team and individual performances against business goals. Any district plan must include specific objectives related to improving representatives' knowledge, skills, and ability to achieve results. 

2. Develop a district plan with resource allocations in alignment with the business strategy.

 During this phase, sales managers identify a few critical priorities and establish district performance targets by territory or brand. This is also the time to assess how to best allocate the district's entire array of resources. A district manager's area plan should not treat all territories as equal; growth targets and resource allocation must be proportional to sales history—and, more importantly, sales opportunities. 

3. Develop territory action plans aligned with strategy and goals.

 This phase requires partnership between district managers and their direct reports. Sales representatives need to: 

» Assess territory sales history, review account performance, and identify targets

»Establish milestones and timing as appropriate for business

»Determine the necessary level of collaboration, coordination, and communication among team members to execute the plan 

» Consider, apply, and deploy the resource mix (rep involvement, sales leadership, samples, marketing sponsored programs, etc.) when developing strategies and tactics

Once again, specific questions and considerations must be provided to guide assessment and development of each representative's business plan. Such templates allow a consistent and disciplined method for recording and evaluating plans. The sales manager is expected to provide coaching and support to create the plan. More importantly, the business plan becomes the roadmap for execution throughout the year. 

4. Execute, monitor, and recalibrate plans.

 This phase shows that the process is ongoing and that a high level of interaction between the sales manager and direct reports is required to monitor established objectives. Additionally, the use of pre-scheduled business review meetings throughout the year allows for transparent assessment of what is expected and what has been achieved.  

Dialogue keeps sales managers and representatives engaged in the ongoing review of the "territory as a business."  The use of dashboard and other designated reports is critical to determining whether adjustments are needed based on marketplace forces, lessons learned, and shifting priorities. The end result is that each representative can translate broader objectives into specific monthly, weekly, and daily call plans and activities. 

A Business Planning and Resource Allocation Framework will not achieve desired results on its own. The commitment to planning must also include: 

» Assessment of the current level and quality of business planning

» Commitment from senior leaders for a Business Planning and Resource Allocation Framework

» Communication of expectations for using a consistent process

» Specific skill-building efforts to develop managers' business acumen, financial analysis, strategic thinking, and decision-making capabilities.   

» Guidance on how to leverage the CRM and reports in an evidence-based manner

» Insurance that processes are in place for monitoring, evaluating, and recalibrating plans throughout the year	

Additionally, tools need to be developed for sales managers to provide ongoing coaching to achieve execution excellence. To sustain and improve planning processes from year to year, it will be important to ask the right questions. Were plans put in place that yielded the desired results? Could the overall planning process be improved? Is there a consistent and disciplined process in place to support management review and oversight?   

Taking the time to clarify, review, and communicate a planning process can help pharma field organizations prepare for and adapt to the changing healthcare environment.  But improving business planning skills and effectiveness will require an organized rollout plan that focuses on skill development and coaching. 

 is president of WLH Consulting. She can be reached at 

Sheryl M. Unger, senior consultant for WLH Consulting, contributed to this article. 

Columns

Improving field force business planning requires managers to run each sales territory as if it is a self-contained business operation.

A Sturdy Framework

The vaccine business is booming, spurred by worldwide efforts to contain the global influenza pandemic and to halt the spread of AIDS and other infectious diseases. National health agencies ordered millions of H1N1 flu vaccine doses last year, prompting manufacturers to ramp up production along with R&D. Since 2000, the global vaccine market has almost tripled, reaching an estimated $20 billion. Yet delays in producing the huge quantities of requested flu vaccine has raised questions about continued reliance on decades-old production methods and delivery technologies. 

The good news is that a record 120 vaccines are available to meet the health needs of people all over the world, and a significant number of vaccine candidates are moving through the R&D pipeline. Over 80 new products are in late-stage clinical testing, including some 30 that target untreated diseases, according to last fall's "State of the World's Vaccines and Immunization" report published by the World Health Organization (WHO) and UNICEF. The surge in vaccine development over the past decade has produced new vaccines for meningococcal meningitis, rotavirus diarrheal disease, pneumococcal disease and cervical cancer caused by human papillomavirus (HPV). Public–private partnerships (many funded by the Bill & Melinda Gates Foundation) are developing vaccines to counter diseases such as malaria, tuberculosis, and dengue fever, which kill millions in Third World nations. 

While much of the growth in vaccine sales reflects purchases of newer, more costly products in western countries, the market expansion also supports higher immunization rates around the world. According to the WHO report, a record 106 million children were administered the traditional roster of childhood vaccines in 2008. There's also been progress on the HIV/AIDS vaccine front, despite a let-down following initial reports last year of benefits from an AIDS vaccine tested in Thailand. And the search for cancer vaccines is still going strong, supported by FDA draft guidance on how to conduct clinical trials to test new therapies designed to simulate an immune response against tumors.  

Meanwhile, this burgeoning vaccine business is attracting more Big Pharma investment. Johnson & Johnson recently linked up with Crucell NV of Holland to develop vaccines, Pfizer's acquisition of Wyeth makes it a lead player in the global vaccines business, and Abbott Laboratories aims to get in the game by purchasing Solvay's drug and vaccine business. Sanofi-Aventis is looking to double its vaccine business over five years, according to CEO Chris Viehbacher; Glaxo is investing $40 million in Nabi BioPharmaceuticals' anti-smoking vaccine; and Merck recently hired Julie Gerberding, former director of the US Centers for Disease Control and Prevention (CDC), to reinvigorate its vaccines division.  

Still, the vaccine business carries considerable risks. Pfizer has run into delays gaining Food and Drug Administration approval of its improved Prevnar 13 vaccine for pneumococcal disease in children, despite priority review status and a positive recommendation by an advisory committee last November. Merck has found it hard to sell its shingles vaccine Zostavax, largely due to Medicare reimbursement complications (See "Coverage Matters".)  

The H1N1 vaccine shortage last fall brought home the perils involved in development and production of influenza vaccines. Last July, vaccine makers were looking to produce 80 million to 120 million doses by mid-October, and public health agencies ramped up for a major vaccination drive. Everyone lost credibility when only 40 million doses were available in September while some 20 million Americans were hit by the new flu. Health and Human Services (HHS) secretary Kathleen Sebelius said she relied on industry predictions that turned out to be wildly optimistic, while manufacturers claimed they kept health officials informed of technical problems throughout the manufacturing process.  

The 2009 pandemic flu was supposed to showcase US government plans for responding to health emergencies. Speedy production of the H1N1 vaccine, however, was delayed because manufacturers first had to produce millions of doses of seasonal flu vaccine for the regular 2009 flu season. Then it took longer than expected to produce the H1N1 vaccine because the yield in each egg was much lower than with the seasonal viral strain.  

Much of the blame was directed at continued use of fertile chicken eggs to produce flu vaccine, a method established in the 1930s that's still standard because the influenza virus grows well in eggs. Manufacturers are beginning to augment egg-based vaccine production with cellular methods, but vaccine experts warn that the change is no panacea for the tricky process of quickly producing a potent and pure vaccine for a viral strain that changes every year.  

There have been cell-culture vaccines for mumps, measles, polio, rubella, and other diseases for decades, explained Jesse Goodman, FDA chief scientist, at a December 2009 seminar on advances in influenza vaccine technologies at the National Institutes of Health (NIH). But that approach has not been adopted for influenza because it can take a long time to get a good yield out of cell cultures. A change won't solve production problems, Goodman noted, but could lead to more reliable products and faster scale-up. Anthony Fauci, director of NIH's National Institute of Allergy and Infectious Diseases (NIAID), agreed that shifting to cell culture could establish a more flexible surge capacity. Making the transition from egg- to cell-based production "will take some time," said Fauci, "but eventually we will get there."  

Another issue was vaccine strength. Although it turned out that one dose of the H1N1 vaccine provided sufficient protection for adults, low potency remained a problem for vaccine makers: AstraZeneca's MedImmune had to recall nearly 5 million doses of its nasal spray vaccine in December, while Sanofi-Aventis pulled 800,000 doses for young children. By then, the flu  was ebbing, and manufacturers faced a new problem: more vaccine than anyone wanted. Last month, the French government moved to sell off millions of doses to countries in the Middle East and Latin American, and canceled sizeable orders from Sanofi, GSK, Novartis, and Baxter. Germany and other European countries made similar moves, while the US government weighed its options. The Council of Europe even considered a resolution blaming drugmakers for over-hyping the flu pandemic for economic gain.  

The real "endgame" to pandemic and seasonal flu vaccine production problems, according to Fauci, is to develop a universal flu vaccine that can be administered in childhood and last a lifetime—as with most vaccines against infectious disease. Such a discovery would reduce the need to produce 120 million to 150 million doses of a new influenza vaccine each year in the US, at a cost of $2.8 billion to $4 billion. "It is doable," Fauci said, noting that researchers already are identifying possible vaccine targets that don't change with every different influenza virus.   

Scientists also are looking for innovative manufacturing platforms that can accelerate vaccine production, such as DNA-based and microbial vector vaccines. A recombinant vaccine, which puts a flu virus gene into an insect virus, has been developed by Protein Sciences Corp., but safety concerns have delayed FDA market approval. Novavax has reported promising clinical results from Mexico for its virus-like particle vaccine.  

Increased use of adjuvants to enhance patient response also could make influenza vaccine manufacturing more efficient, as occurred in Europe last year. FDA is looking at the potential of new adjuvants to produce a more robust immune response from a vaccine, but has concerns about inflammation and autoimmune responses.  

FDA's Goodman seeks a better understanding of how adjuvants work and how they can boost the desired immune response without raising added safety issues. "We are poised for a transformation in how we produce and use influenza vaccine," Goodman commented, noting that these efforts fit the goal of FDA's leadership to strengthen the agency's scientific infrastructure to support development of novel technologies to improve public health.  

's Washington correspondent. She can be reached at 

Washington Report

R&D is surging, but new methods and data raise new manufacturing and regulatory challenges.

Vaccines and Value

As a new decade unfolds, pharmaceutical manufacturers must straddle two worlds: one that features the legacy commercial model directed to prescribers, and another that embraces a new model focused on payers and other key stakeholders. As companies experiment with ways to engage a broader set of decision makers, they're envisioning new roles and organizational structures. According to Hay Group's 19th annual Sales Force Effectiveness Study, this is still an emerging phenomenon; the industry's sales administration and compensation functions are still rooted in the legacy model that prizes reach and frequency in physician contact. 

The data in this survey paints a picture of the status quo for many study participants, but change is coming rapidly for others. But the data do not tell the whole story. The first movers have changed their selling model: Resources are being redeployed, emphasis is being given to account management, and the traditional selling and promotion model is being redesigned. These are exciting times for the life sciences industry: it is reshaping how it adds value at the commercial level, and the best players will use this transition as an opportunity to re-shape how the industry uses the selling and distribution channel. It follows that they must also develop fresh compensation plans built on different measures of performance.  

While many senior executives are making plans to revolutionize their commercial organizations, data suggest that the implications for performance measurement and compensation are being left to implementation. While senior executives are addressing the fundamental direction of their companies, a roadmap does not yet exist. This presents both an opportunity and a threat for sales and marketing.  

The painful headlines about pharmaceutical companies reducing field sales forces are no longer standard news fare. Having cut 10 to 20 percent over the past two years, companies are now leaner, and their expenses are more in line with lower growth expectations. In fact, half of the companies participating in the survey report that they've seen little or no change in the size of their sales force over the past year. A third of survey participants said that their sales force actually grew during that time frame. 

The continuing need to right-size is, however, very much tied to organization type. Large pharmaceutical companies are dramatically more likely than small or mid-sized companies to state that they still have too many sales reps. (See Figure 1.) This is a leading indicator of changes coming to how these organizations go to market. 

As companies populate new commercial models aimed at different stakeholders, the survey foresees a period of additional staffing upheaval. While the new models may not lead to a change in the absolute number of sales reps, they will most certainly elicit a call for swapping out reps with one set of skills for new hires with a different set of skills. There will still be a need for sales reps that fit today's profile (particularly in some therapeutic areas), but these will gradually become the minority. Today, the ratio of sales reps to reimbursement specialists is 80/20; we would not be surprised to see the opposite within just a couple of years.  

Several roles are emerging to correspond with three basic channels of influence in the market; among them: 

 will function as business partners to payers, be they public or private. They will be versed in health outcomes and economics research, and will be able to speak payers' language. 

 will be responsible for implementing marketing programs that increase awareness of particular diseases or whole therapeutic areas. With advanced science degrees (PharmD, MD, PhD), these consultants can provide the clinical knowledge needed to increase recognition, diagnosis, and treatment of key disease entities. 

 will manage accounts with large, national institutions that drive significant sales volume. They will need to have business-to-business sales experience and keen negotiating skills, as well as solid understanding of health economics, payer needs, and funding flows. 

» Practice and Product Support Representatives

 will resemble the current sales rep role, providing product education and practice support to physicians and nurses. However, they won't be considered front-line sales positions as they are now; they will support but not drive the commercial model of the future. 

At the moment, nearly all (91 percent) of participating organizations view other pharmaceutical companies as a prime source of sales force talent. A majority (68 percent) also regard sales reps from other industries as preferable to non-sales talent from within their organization for open sales positions. Most respondents (83 percent) weigh pharmaceutical sales experience more heavily than interpersonal skills or business acumen in the selection decision.  

However, hiring (as opposed to training) for business acumen will undoubtedly become more important for the new roles supporting business-to-business sales. As sales roles develop, there will be an increased focus on business acumen, marketing, and finance skills. A focus on interpersonal skills will not be the core competency, rather it will be how good the individual is at managing an account or a business.  

A few companies have already experimented with placing high-performing sales reps into positions within their pilot commercial models—a laudable approach from an employee-relations standpoint, but one that may suggest a lack of appreciation for how different the new roles really are. Unfortunately, attempts to fill these positions from within have met with only modest success; as few as half of the current sales leadership will be able to assume new roles as account leadership in the new model.  

Pharmaceutical manufacturers will need to look beyond their own ranks and those of their competitors as they staff their new organizations. We foresee that they will turn to their customer base for talent, as other industries have done. After all, who would know better how to address the needs of pharmacy benefit managers, managed care organizations, and large healthcare networks than the very people who've been working within those organizations?  

Two factors have converged to reduce voluntary turnover in pharma and biotech sales organizations to the lowest level since 2002: the recent downsizing of sales forces and the weak economy. (See Figure 2.) Turnover among primary care and specialty sales reps is 11 to 12 percent, and among field sales management and managed care executives it is 5 to 7 percent. As a result, the average experience level is increasing. Three-quarters of all sales reps and 80 percent of first line managers have at least two years of relevant experience to their credit. 

It would be a mistake, however, to ease up on efforts to retain high performers, as retention issues are sure to resurface when the labor market strengthens. Companies that are working to keep their best performers use a combination of career development programs, higher compensation opportunities, executive-rep status, and special recognition to retain and motivate their star performers. Indeed, a third of the surveyed companies have a formal job rotation program. In addition to assessment centers, companies should consider using manager exploration programs as a way to educate sales reps on the first level manager role.  An obvious caveat is that these exploration programs need to consider the new career options (practice support, reimbursement, and account leadership). The upside is that companies will be able to match top talent with customer-focused roles. 

Regardless of the specific course of action, it will be important to address retention. New research has suggested that there are serious issues with employee engagement and satisfaction. Coupled with the fact that other life sciences sectors are hiring, 2010 holds a potential flight risk of high performers. 

Companies participating in this year's survey continue to use their salary structure as a means to attract and retain sales talent. Eighty percent make annual adjustments to their salary scale in response to the competitive market, and increasingly pharmaceutical employers are using market data to set their pay levels. The average increase in salary structures held steady between 2008 and 2009 at 3.3 percent, while the average merit increase of 3.3 percent was slightly less than the 3.9 percent average offered in 2008. 

Surprisingly, in light of industry dynamics, base salary for sales positions continues to increase year over year. The median base salary for sales reps is $76,900, up from $74,500 in 2008. (See Figure 3.) Still, base pay as a percentage of total compensation declined very slightly from 2008. In 2009, total compensation was split 74/26 between base pay and incentive compensation.  (See Figure 4.) 

Within responding companies, most incentive compensation plans across the sales organization are based on three performance metrics.  Prescription volume, market share, and revenue attainment continue to be the primary criteria for determining incentive compensation payout, with qualitative measures most often used secondarily. (See Figure 5.) Overall, the surveyed companies apply a 90/10 ratio of quantitative and qualitative measures. 

The use of qualitative measures has increased this year, especially for account, regional, and district managers. Across all plans, the most common qualitative measure is selling skills/call quality, followed by territory management and teamwork. (See Figure 6.) Interestingly, only 19 percent of all plans factored customer focus/satisfaction into their performance measures—a situation that will likely no longer be the case in plans created for the new commercial models.  Forty percent of the surveyed companies indicated that they are planning to adopt a more customer-centric sales model. 

Once organizations are aligned to their new customers, the goal for all but traditional sales reps will shift from reach and frequency, which can be measured quantitatively, to the quality of interactions with customers. Performance measures for the account-based roles will reflect the types of discussions being conducted with key influencers, and will involve shared goals for everyone on a team. As this commercial model matures, customer and health outcomes measures will be integrated into the commercial scorecard. 

Increased use of quantitative or goal-based measures, both team and individual, are caused by two factors. The first is the more tactical problem of linking information to performance. The second is developing roles for account management responsibilities. The implication is that incentive plans that focus on target achievement versus commission is the appropriate methodology for the incentive. 

Seventy-three percent of the surveyed companies currently base their incentive compensation on individual performance, with performance against goal the most common measure. The use of rep ranking continues to decrease, with about half of responding companies using it to some degree. Around one-fifth of the plans use ranking exclusively. Despite its limitations, this trend will continue with the increased focus on overall performance.  

Interestingly, only 23 percent of respondents modify their incentive compensation framework to adjust for territories that are heavily influenced by managed care. This is another indicator of changes to come, though pharma companies have not figured out how to modify their approach in the current model. 

In a reversal of survey findings in 2008, most sales positions—hospital representatives being the exception—exceed their daily targets for number of sales calls. The average general physician rep makes nearly 13 calls per day, while the average target is 7.8. Given anecdotes of downsizing combined with reduced access, one has to wonder whether this increase is because companies have downsized their sales forces, but have not yet reduced their reliance on a reach-and-frequency selling model. 

The overall trend is clear: Pharmaceutical companies are accelerating their move to new commercial models, and it now appears that many companies will be implementing them in 2010. This clearly has significant implications for sales administration and compensation functions. We recommend that: 

Companies begin planning their new approach to performance management and compensation as soon as possible. After devising a strategy, companies should run pilots to test specific approaches prior to adopting them for the entire organization. 

Leaders involve compensation specialists in the design of the systems that they will eventually be administering. 

Consider outsourcing the maintenance of the legacy compensation system linked to the traditional reach-and-frequency sales model. This will free in-house sales administration and compensation specialists to concentrate on the challenges of executing and developing new performance measures and compensation plans. 

Grow sales roles to engage physicians, institutions, and payers beyond sales through KOLs, research, etc. Map these roles, track impact, and build capabilities to measure performance. 

Develop analytics that evidence a holistic view of performance—from job design to incentive rewards. Working with companies that only track and report data will not work, as their business model is based on the old approach. They are a good source of benchmarking and data, but these are backward-looking indicators. It is important to establish strategically oriented metrics. 

Because few, if any, companies had fully implemented their new commercial models at the time of the 2009 survey, it reflected a business-as-usual approach to compensation and retention. By this time next year, new approaches to the market will be in place, and we can expect to see corresponding changes to compensation practices. 2010 and the next year beyond will be a period of experimentation, revision, and change in sales performance management as we have never seen before.  

Carrie Fisher is Project Director, Hay Group Pharmaceutical Sales Force 

Sales compensation practices are due for an overhaul in 2010.

Tearing Up the Rule Book

This month's edition of Pharm Exec is a celebration of two little-noticed themes that characterize today's life sciences industry: diversity and promise.  We include a healthy dose of the "change management" serum that is creating a more individualistic, nuanced style of leadership behavior in the "c suite."  We also present a more quantitative analysis of how changes in the payer base are speeding the industry's transition to a customized business model for drug promotion.  Wrapping it up is a feature that upholds a much older premise: strong science and allowance for serendipity plant the seeds for future commercial success.   

Walter Armstrong's profile of Shire and its CEO Angus Russell marks an expansion of our effort to cast more light on "stealth pharma" —smaller companies that celebrate idiosyncrasy as a virtue, and where a gut reaction against the perceived excesses of Big Pharma is at the root of the business culture. Russell is explicit in warning that any move by the pharma majors to capture the company will lead to the devaluation of its best asset—people. Bromide or not, Russell is one of the rare CEO's who seem to be able to embrace change as something normal rather than an excuse for endless  restructuring shaped by consultants.   

Shire is thus worth watching for its simple strategic focus, which also has the virtue of being intensively patient-friendly.  Will being the preeminent specialty niche player—spinning big profits from small orphan drugs that find a passionate audience among patients—help position the company for a future in the major leagues?     

Our second feature is Pharm Exec's annual exclusive on the latest findings from the Hay Group's survey on Sales Force Effectiveness, now in its 19th year.  The survey data portray an industry struggling to find new ways to prove the value of its products to a different class of flesh and blood customers.  The real news is not that the absolute number of reps is declining; instead, the trend is toward a reorientation in the preferred background and skills that a rep brings to the job.  Now that the payer is driving product choices, the survey holds that P&R specialists will soon replace the traditional physician-oriented detailer as first line of contact with customers.  The implications for the latter are starkly self-evident—if you can't speak the payer's language, look for alternative employment.   

This month we also present our fourth annual choice for drug Brand of the Year. Here, the therapeutic template is cancer—a killer disease that introduced itself to 1.5 million Americans last year—and our drug of choice, Avastin, celebrates one of medical science's few early breakthroughs in understanding the biology of tumor growth. The drug is not perfect, and its cost is high, but the broader impact on science has been as prolific as cell division itself, triggering a "compete to innovate" cycle within industry and academia that may lead eventually to a re-classification of cancer  from consistent killer to persistent, chronic disease.   

Readers should see in this arrangement of features our view of what constitutes the core tactical elements of business success—consistency in management, linked to a simple, well-communicated vision of progress; initiative, as exemplified by the timely retooling of a traditional line function, so that it is "fit for purpose" in meeting new customer expectations; and passion in leveraging the industry's vast resources of human talent to address unmet medical needs. Wherever it takes you, this is an exciting time to be in the field of medical discovery.     

From the Editor

Innovation won't happen until the industry is ready to sit down and make a big change.

Pharmaceutical Executive-02-01-2010

Pharmaceutical Executive Digital Edition - February 2010

Brand of the Year: Avastin

A Sturdy Framework

Vaccines and Value

Tearing Up the Rule Book

Assets for Advantage