Articles

The pharmaceutical industry is experiencing unprecedented late-stage setbacks, product recalls, and difficulties in generating high-quality drug candidates. The problems are not specific to any one company or research effort but rather a result of the industry's limited knowledge of biology and chemistry. (See "Depth of the Problem," page 47.) Therefore, a key challenge is the industry's ability to transition to "new biology" -- genomics and proteomics -- which  seeks to understand the causes of diseases through their biological structures and functions at the cellular level. 	

Those problems raise fundamental questions about the core of the industry's future:	

How can the industry accelerate the validation of new drug targets?

How much will it cost and can companies afford to do it alone? 

Should pharma companies shift focus and resources from small-molecule drugs to biotech products? 

How much should a company invest in R&D to remain competitive?

The pharma industry typically navigates through narrow straits defined by:				

the number of validated drug targets -- currently about 500, mostly receptors and enzymes

the number of chemical entities suitable for use as pharmaceuticals: the US Pharmacopoeia lists only about 9,500 compounds that have survived safety testing through Phase I

the economics of bringing new drugs to market. 

Despite the excitement surrounding the Human Genome Project and other recent breakthroughs, the number of validated targets has not increased significantly. Carbohydrate-like targets or phospholipid signaling systems could yield new drug targets but are beyond R&D's reach because of their complex chemistry. Companies are already using many of the simpler and well tolerated chemicals and are now faced with the challenge of using the remaining chemicals, which are structurally more complex, bigger, and not as well tolerated. Additionally, the increasing demands from physicians, consumers, managed care companies, and regulators have also raised the bar for new therapies. 	

To get out of the eye of the storm and into calmer waters, pharma companies must simultaneously improve the efficiency and effectiveness of the small-molecule R&D process, expand the scope of R&D endeavors, redistribute research expenditures, and change the organizational and financial risk-reward  model to fund a broader portfolio. They must also align investor expectations with lower productivity during the next five to ten years. 	

The industry has begun to expedite drug development and discovery through redesign and the introduction of new technologies such as interactive voice response for clinical supply chain management, remote/electronic data capture for clinical trials management, high-throughput screening, and predictive toxicology assays. Pharma companies should continue to aggressively take advantage of new technologies, but they cannot counteract the inherent limitations of the current R&D model. On the other hand, investments in biology predictive software, combinatorial chemistry, and screening technologies have the potential to extend the use of already validated targets.								

R&D labs' management processes, particularly portfolio, resource, and outsourcing, also have room for improvement. Those areas are especially ripe for change because scientists traditionally have been reluctant to try new R&D management approaches. Pharma companies can reap significant benefits from implementing reliable project-resource portfolio management tools to better forecast demand for and supply of resources, maximize throughput, and model the risk–reward profile of R&D's portfolio. (See "Running a Tight Ship," PE, February 2002.) The information collected by those systems and the portfolio modeling capabilities will be particularly valuable as pharma companies face the transition ahead. 	

Because the pharmaceutical industry is more vertically integrated than others, pharma companies often perform the vast majority of activities -- R&D, manufacturing, and marketing -- in-house. In contrast, most large companies in other major industries focus on a limited set of high value-added activities. Auto manufacturers, for example, are primarily designers and assemblers, contracting out parts manufacturing to independent suppliers. Petroleum companies focus on exploration, development, and refining and tend not to own retail gas stations. The pharma industry can create significant value by identifying the activities that are strategically important and outsourcing those that are not. (See "R&D Outsourcing That Works," PE, March 2000.) Organizations that plan to shift their focus to biology-based R&D should take a closer look at the benefits they can gain from outsourcing many traditional discovery and development activities, such as lead optimization and clinical monitoring. 	

New biology is the future of medicine and new drug therapies. The key question is: When will it be here? Its importance is twofold: as a source of new protein-based (biotech) drugs and as a source of new drug targets based on a more specific understanding of disease pathways and determination of the optimal targets for intervention. The new biology field comprises multiple approaches and technologies. 		

Given the nascent nature of many technologies and their uncertainty of success, a pharma company that plans for the long haul must establish a broad-based technology portfolio. Johnson & Johnson, with its ownership of biotech units Centocor and OrthoBiotech and drug delivery specialist Alza, is the best example of a company that is pursuing such a strategy. But even J&J will need to broaden its portfolio to include a larger number of different approaches. 	

Big Pharma's biggest challenge is that it has traditionally not been involved with target discovery/validation or protein-based drugs. Most biotech drugs were discovered and developed by then start-ups such as Genentech, Amgen, and Genzyme. Those pioneers seized the opportunity by either developing protein-based therapeutics or by developing treatments for diseases caused by the disruption of a single gene. 	

Similarly, most drug targets were discovered and validated by academic or National Institutes of Health (NIH) researchers rather than by pharma. Drug companies, many of which have their roots in the chemical industry, took those targets and found suitable chemicals to either inhibit or amplify their activity. Today, however, the industry faces a structural problem: namely, an academic sector that is too small to validate a sufficient number of new targets to sustain the level of growth that the industry and its investors have come to expect. As a result, pharma companies are forced to take greater risks by attempting to develop drugs aimed at poorly understood, unvalidated targets.	

Given their advantages in cost, convenience, and compliance, oral dosage forms have been the focus of most development efforts. But oral administration severely limits the number of chemical entities suited to become drugs. The efficient manner in which the intestines break down foreign substances means that compounds must meet a highly restrictive set of criteria, including molecule size, solubility, and polarization (Lipinski's Rule of Five). Liver toxicity is another consideration that makes many chemicals unsuitable for oral administration. 	

To expand the universe of small-molecule chemicals suitable for medical use, the industry must develop alternative delivery technologies, such as extended release injectibles, inhaled therapies, and drug-device combinations such as drug-coated stents. To improve administration of biotech drugs -- all of which are currently injectable -- the industry also needs to develop oral, viral, and liposomal drug delivery technologies for biotech products.   	

Traditional pharma companies are at a disadvantage in conducting biotech R&D, discovering and validating new drug targets, and developing new delivery technologies because of their tradition, institutional bias and aversion to risk.				

They are further hampered by a lack of skills and experience required to play in those fields. Pharma companies do not have large biology units focused on target discovery/validation or protein-based therapies. Nor do they have experience in developing and manufacturing biologic products or constructing biologics plants. 	

Some Big Pharma companies have acquired biotechs in an attempt to remedy that deficit, but the results have been mixed. Many of the acquired biotechs remain outposts that have neither become integrated into the mainstream R&D organizations nor have been able to exert influence on the direction of the overall R&D enterprise. Other pharmas have chosen to fund efforts by external discovery enterprises such as Millennium or Vertex Pharmaceuticals.	

The significant financial investments required, the uncertain payoffs, and high -- possibly, unrealistic -- investor expectations have further deterred already risk-averse pharma companies from pursuing new endeavors.  New approaches are not always successful the first time around and frequently require repeat efforts, as is the case with monoclonal antibodies-based therapies, which have experienced serious setbacks but are now beginning to show promise. Given the need to invest in several different technologies with various risk profiles, large companies with big R&D budgets may enjoy an advantage.	

The combination of those factors may be too much for a single company to overcome on its own. R&D vehicles that operate outside the confines of traditional pharma companies, but with their funding and business support, may be more successful. One such approach is the consortium model in which several companies pool their resources -- human and financial -- to discover and validate targets within a specific disease area or to develop new drug delivery technologies. 	

The SNP (single nucleotide polymorphisms) Consortium Trust is an example of a successful collaboration. Established in 1999 by ten pharma companies, leading academic medical centers, and the Wellcome Foundation, it has worked to develop and make public the map of genetic markers to enhance the understanding of disease processes. Similarly, the therapeutic area consortia would expand the knowledge of the causes of specific diseases and identify and validate new targets that the funding companies could use to develop new therapies. 	

Such consortia could also advance the tools used in drug discovery, be it combinatorial chemistry, screening methods, or biology predictive software. By adapting such an approach, the industry can take control of its own destiny rather than rely on the pace of academic research or company-specific efforts -- while limiting each participant's financial risk. Those involved must first resolve governance, financing, intellectual property rights, publishing rights, and antitrust issues before the consortium model can become reality, but it can be done.	

R&D partnerships focused on the development of new target or drug delivery technologies, funded by a single pharma company plus external financial investors, are another potential risk-sharing vehicle. Such partnerships would be similar to the R&D vehicles that innovative biotechs such as Genzyme have used to fund their research.	

To fund those initiatives, pharma companies must rethink how they set R&D budgets. Currently, most companies either set the R&D budget as a percentage of revenues or use the R&D number as a plug in the budget. What they do not do is determine R&D budgets based on a bottoms-up estimate of the resources that will be required to achieve complex, multi-year scientific objectives. To free up resources for the new consortia or R&D partnerships, pharma companies must reduce their internal R&D expenditures. 	

They must make hard choices about which activities to reduce or eliminate. Some companies may choose to stop small-molecule R&D altogether. Pharma companies can also free up resources by spinning off development groups focused on compounds with small revenue potential into independent, publicly traded companies. Aventis Pharma's recent divestiture of a discovery unit is yet another potential funding mechanism. Regardless of which option companies use, the transition will not be painless and will take several years.	

If returns from the small-molecule, oral drug approach are declining rapidly and the new technologies are not fully in place, then it follows logically that the pharma industry is in for a dry spell -- a pipeline revenue gap. The industry must invest in the exploration and development of new fields at a time when production from existing fields is waning as a result of patent expirations and generic competition. The mergers and acquisitions taking place, such as the recent Pfizer-Pharmacia marriage, seek to address the revenue gap in the short and medium terms and "buy" time until investments in new technologies bear fruit. By and large, however, the impending revenue gap is a reality that pharma companies have yet to communicate to their constituencies. Of course, the message, when companies deliver it, should be accompanied by plans articulating the strategy, the magnitude of new investments, the risks involved, and the expected returns.				

All the data point in the same direction -- the end of the traditional small-molecule, oral-formulation drug era and the emergence of therapies based on "new biology." The pharma company of the future will address unmet medical needs through a portfolio of approaches that include gene replacement and protein-based therapeutics in combination with various drug delivery systems. If past technology transitions are a reliable predictor of the future, the industry is about to sail into the perfect storm -- one in which current incumbents face poor odds of making it safely back to port. 				

The greatest hindrance to pharma executives today is timidity. Computer executives who clung to their belief that PCs could never replace mainframes offer a cautionary note about the risks of ignoring emerging technologies and holding on to existing business models. Companies that will best weather the storm are those that have visionary captains at their helm who are willing to establish broad, actively managed portfolios of novel approaches and emerging technologies. They will structure new R&D vehicles -- such as consortia and partnerships -- to manage risks and ensure that progress is made in the shortest possible time. The next ten years will be a period of significant turbulence for the pharma industry. Those who take initiatives to fashion innovative solutions to get from "here" to "there" will emerge as the leaders.	

Features

The pharmaceutical industry is experiencing unprecedented late-stage setbacks, product recalls, and difficulties in generating high-quality drug candidates. The problems are not specific to any one company or research effort but rather a result of the industry's limited knowledge of biology and chemistry.

In the Eye of the Storm

When it comes to recruiting and enrolling individuals in clinical trials, the industry's challenge is similar to the one that General Riggs cites in his call to modernize the US Army. For clinical research, the challenge is not just about using mass radio advertising or direct mail to recruit qualified study volunteers. It is to develop a system that integrates recruitment strategies with the screening and enrollment process, enabling pharma companies to:	

track trial patients from the first point of contact to the end of the study

measure the recruitment strategies' effectiveness in reaching new consumers

predict the randomization period (the time it takes to select and assign volunteers to a clinical study)

Progressive communication agencies offer services that meet some, if not all, of those objectives. Pharma companies can select offerings from various agencies and establish their own integrated system or turn to agencies that provide turnkey services. 	

This article discusses the many stumbling blocks that hinder the clinical trial process: fragmented services, the effect of negative press, the difficulty of reaching new study volunteers, and site inefficiencies. Yet a new breed of communication agencies is helping pharma sponsors to meet those challenges. 	

The call to establish an integrated system for clinical research is born of the need to accelerate drug development. CenterWatch predicts that, during the next five years, the research and development pipeline will expand by 12 percent -- almost double the growth rate of the past five years. In addition, large pharma companies are focusing their R&D efforts on similar therapeutic areas, creating a high-stakes race to be the first to market. 				

Pharmafile, an online industry resource, reports that, taken together, US pharma companies invest approximately $7 billion annually in clinical trials, with about $1.89 billion of that set aside for patient recruitment. But because of delays affecting nearly 60 percent of clinical trials, that expense is expected to increase. Setbacks translate into millions of potential dollars lost for every day a drug is delayed to market.	

Several factors hamper recruitment. One is the reliance on 20th century methods to recruit 21st century study volunteers.		

Traditionally, pharma companies have relied on clinical sites to initiate and manage marketing strategies that recruit subjects. Because many of those sites are independently run by individuals or small practice groups, they often face the following challenges:	

lack of market research on how to find potential subjects and to discover what motivates them to participate in a trial

lack of staffing to oversee marketing strategies and screening of individuals

inability to combine recruitment resources to use marketing dollars more effectively

difficulty in finding study volunteers who "fit" the  restrictive study inclusion/exclusion criteria

Many investigator sites apply simple marketing tactics, such as bulletin board announcements and one-on-one discussions with their own patient base to find study volunteers. Clinical sites with more resources may run 4x7-inch one-color ads in local papers. 	

But such strategies are painfully slow, laborious, and inconsistent, resulting in study delays of six months to two years. When clinical sites fail to meet targeted enrollment levels, sponsor companies often come to the rescue, investing more marketing dollars in recruitment. 	

A common "rescue" method is the advertising-centric model, relying on mass advertising to find volunteers. Unfortunately, that approach is no longer sufficient to reach mobile and skeptical consumers. Furthermore, staffing limitations prevent many investigator sites from quickly and efficiently screening and scheduling volunteers. Sponsors may spend millions of dollars on media campaigns that recruit hundreds of study volunteers, or "pre-screened" study patients, who often "sit" on waiting lists for several weeks before they are finally called to the clinical site. Consequently, scheduling inefficiencies at the clinical sites can add significant time and costs to any clinical trial.		

Added to that is rising pressure from regulatory bodies to increase the number of trials per NDA, creating a need for more study volunteers per trial. Augmenting recruitment strategies only increases the bottleneck if sites cannot handle the overload of volunteers.	

Further hampering the recruitment process is the dearth of patient volunteers. CenterWatch estimates that less than five percent of US residents -- four to five million -- participate in clinical trials. And many of them have already undergone a therapy from the same or a similar drug category, further decreasing the patient volunteer pool. 			

One way to increase the potential number of qualified study volunteers is by raising awareness about clinical trials in the remaining 95 percent of US consumers. (See "Getting the Word Out," page 83.) However, reaching that group requires a new approach, because their attention is constantly pulled in different directions by various media and the internet. But many -- nearly 22 percent or 143 million people, according to data presented at the United Nations Conference on Trade and Development in November 2002 -- are drawn to the internet. Results from the Stanford Institute for the Quantitative Study of Society indicate that every hour spent on the internet is one hour taken from traditional media. (See "Media Shift," page 88.) 	

Moreover, lack of positive media coverage on clinical research does little to create interest in new therapies. Rather, it fuels consumer skepticism about research, the cost of new drug development, and the pharma industry in general. At a time when competition for new study volunteers is keen, that skepticism only hinders the recruitment process.	

Individuals whom recruitment strategies have successfully reached, yet have never participated in clinical trials, are likely to ask their doctors about studies. However, most practicing physicians are as nae as their patients about clinical research occurring in their area. That is because very little effort has been made to inform physicians about new therapies under development. If both groups are uncertain about such research, it is unlikely that those patients will participate in trials.				

Fueled by consumer interest in the internet, several online patient recruitment companies now offer various approaches to facilitate patient recruitment and enrollment.  				

Some service providers strategically partner with web-based healthcare companies to link patients with clinical trials. They offer education about, and awareness of, disease states, benefits of clinical trial participation, and investigator site locations. Others offer online pre-screening as a more efficient alternative to telephone screening. 	

Although web-based recruitment offers the opportunity to communicate with a wider patient population, it is not a magic bullet. If not carefully integrated into the overall clinical trial process, it will have the disadvantages of other forms of mass advertising, such as geographic limitations -- no investigator sites nearby -- and large numbers of ineligible study volunteers. And consumers who receive information over the internet have one major concern similar to those of direct mail recipients: Has their medical information been accessed in order to reach them? 	

Companies that include web-based recruitment as part of an integrated system can apply technology to monitor the progress of trial volunteers through the entire recruitment process. Capturing study metrics in real time leverages critical recruitment information and allows companies to quickly make necessary changes in strategy or media expenditures. 	

Although relatively new, the market for patient recruitment has become a large and profitable business engaging many vendors with different services. (See "Smorgasbord of Services," page 84.) Yet all claim to offer solutions for expediting clinical trials. 				

Although many of those services may be of great value to pharma companies, they are often applied as an afterthought when a study is in trouble. In fact, the majority of clinical trials are underway before pharma companies turn to service providers for recruitment strategies. Pharma companies often keep some recruitment services in-house, or rely on clinical sites, to conserve marketing dollars. When they initiate several programs from various fronts, synergy in recruitment disappears, as do efforts to expedite clinical studies.  	

Unless pharma companies can overcome the strategic, economic, and managerial roadblocks to effective patient recruitment, they will continue to build, buy, and try disparate versions of recruitment and enrollment. Fragmentation limits their value.	

Most recruitment agencies are advertising-centric; that is, they recruit patient volunteers mainly through print and broadcast advertising. Many have done so successfully. But because the advertising-centric model no longer reaches 21st century consumers, a new class of service providers has entered the fray, offering an integrated approach to recruitment. Such service providers have demonstrated that integrated solutions to clinical trials not only accelerate the process but that they also increase its efficiency. They offer a strategic approach, partnering with pharma companies during trial protocol development rather than waiting for the implementation stage.	

Such companies have taken recruitment promotion to a new level by establishing a system that connects various recruitment strategies and measures the strategies' effectiveness from beginning to end. (See "Tracking Patient Information.") Metrics that capture patient recruitment data allow pharma companies to predict the recruitment strategy's true return on investment. (See "Predicting ROI," page 88.)	

Another key differentiator of the new breed of agencies is the ability to manage the complex relationships among the pharma company, study sites, and patient volunteers. Innovative service providers employ a communication system that allows all groups to quickly review, transfer, and discuss recruitment and enrollment data rather than wait several weeks to measure recruitment and enrollment stages. (See "Tracking Referrals," page 88.)	

Regardless of which agencies pharma companies work with, the primary measure of success is quantifiable results. Agencies that can provide data to keep study volunteers and sites on track, measure the results for future planning, and manage the complex relationship between the various groups give pharma companies their money's worth.	

Most pharma companies struggling to bring new drugs to market agree that patient recruitment is the bottleneck in the clinical development process. As the number of compounds in the R&D pipeline increases, pharma companies will continue to experience delays. Breaking the cycle requires building a comprehensive system designed to:				

decrease the reliance on investigator sites to independently manage companies' recruitment strategies 

provide the training, tools, and support that sites need to increase their recruitment and enrollment efficiencies

monitor sites' progress from the first point of contact to the last patient visit

leverage information to make cost-effective and rapid changes in recruitment plan and site performance

That system takes into account the limited patient pool and the methods needed to reach a greater number of study volunteers. An integrated patient recruitment system incorporates:	

When it comes to recruiting and enrolling individuals in clinical trials, the industry's challenge is similar to the one that General Riggs cites in his call to modernize the US Army.

Pharma WANTS YOU

The trick in understanding any contentious public debate is to figure out what's being left out of the discussion. What, for example, is the assumption that's so obvious that no one thinks to bring it up? More often than not, when you've located that assumption, you've found the secret core of the argument -- the part that everyone's really fighting over and no one can bear to mention.	

Take the current battle over drug prices. Critics say prices are too high; the industry says it needs to finance research. Critics say too much revenue from drugs is poured into profits; the industry says that without profits, there will be no innovation. Critics counter that there's already not enough innovation. You've heard it all before. But what's the part that gets left out?	

Here's one possible answer: The critique of prices is based on some powerful, but messy and ill-examined, assumptions about equality and healthcare and the structure of society. Behind the argument for lower prices, there's another argument that runs something like this:	

A society like ours needs some basic forms of equality -- equal access to education, equal access to healthcare, equal treatment under the law. In fact, we've never achieved any of those goals. The rich live longer than the poor; they're healthier; they go to better schools -- or if they go to the same schools, they get better results out of them. All of those failures in equality are disruptive to society, and the disruptions we anticipate from expensive new drugs are even worse because they make inequality so obvious and so painful. We don't want this to become an openly discussed issue, because it looks impossible to resolve. Therefore, despite our considerable commitment to free-market capitalism, we think your prices should come down to postpone the day of reckoning.	

I understand that there's more than one point of view behind the cheaper-drug movement, but it seems to me that the line of thinking I've just described truly underlies much of the criticism I've heard of big pharma in the past few months. And it shows why the argument over prices resists conventional economic analysis -- and why it's not likely to go away.	

Who should have access to expensive drugs and treatments? Anyone who could reasonably benefit by them? Anyone for whom they're a cost-effective alternative to hospitalization, long-term care, or death? Just those who can afford to pay for them? These are questions we ought to be addressing. Society can't -- or won't -- provide everything to everybody. On the other hand we need to be realistic; in the long run, we probably can't prevent people with resources from getting what they choose. The government can set price caps. It can refuse to license drugs deemed inessential -- though that will simply drive innovation overseas. As long as there's economic inequality in our society, any form of for-profit healthcare will be profoundly disruptive, pointing out the contradictions in our way of life more clearly than almost anything else can. We can ignore mansions and fine cars; but when one citizen can buy extra years of life and another can't, we notice. And why not? Mansions and cars are just a way of keeping score; extra years of life change the playing field.	

Of course, changing the playing field is what the pharma industry is about. The history of drugs is the history of inevitabilities overturned -- death averted, life extended, pain relieved. That history is far from over. There are battles to win -- and some to lose, as well. In the end though, the point is to ensure that tomorrow is better than today. That, after all, is an inequality all of us are willing to fight for.	

Columns

The trick in understanding any contentious public debate is to figure out what's being left out of the discussion. What, for example, is the assumption that's so obvious that no one thinks to bring it up? More often than not, when you've located that assumption, you've found the secret core of the argument -- the part that everyone's really fighting over and no one can bear to mention.

What They're Not Saying

As scientists' knowledge of biochemical pathways increases, so does the number of patents issued for generic treatment claims. Such claims represent methods of treating disease by modulating a particular protein in the body. They typically don't name a specific drug, and they are not linked to the use of a particular class of drugs. They are called "generic" because they cover any compound that affects the particular protein.  	

That lack of specificity leaves them open to two possible patent invalidity attacks. First, the claims may not be adequately enabled, because the patent does not "teach" the reader/manufacturer how to practice the invention. Second, the claims may be "anticipated" -- a legal term for "not novel" -- because drugs that function to modulate the particular protein are already in use. Thus, the invention is not new and cannot be patented.  	

Until now, no court has addressed those issues. This article explores an important pending case that will decide the validity of generic treatment claims.	

On June 25, 2002, the US Patent Office issued a patent representing generic treatment claims that target the nuclear factor kappa B (NFKB) protein. US Patent number 6,410,516 ('516 ) was issued to three co-owners: the president  and fellows of Harvard College, the Massachusetts Institute of Technology, and the Whitehead Institute for Biomedical Research. Inventors on the patent include Tom Maniatis, who wrote what is affectionately called "the bible" of biotechnology, a three volume treatise that teaches all of the fundamental techniques of the genetic engineering revolution. Other notables include David Baltimore, PhD, who shared the 1975 Nobel Prize for the discovery of the enzyme reverse transcriptase, and Phillip A. Sharp, PhD, co-winner of the 1993 Nobel Prize for the discovery of split genes.   				

Baltimore and a team of inventors discovered the NFKB protein in 1986 and showed that it acts to increase the expression of several other genes important in inflammation and immune responses. But the inventors didn't purify the protein, they only demonstrated its existence using a technique that indicates the presence of a protein by a change in the mobility of the DNA to which it binds. They attempted to clone and claim the gene encoding NFKB, but the sequence they obtained was not from NFKB. Instead, another group cloned the full NFKB gene in 1991.  	

On the same day that the US Patent Office issued the '516 patent, Ariad Pharmaceuticals, which has an exclusive license for it, sued Eli Lilly in a Boston federal court for infringement -- based on sales of its blockbuster drug Evista (raloxifene), with $665 million in 2002 sales and the recently approved Xigris (drotrecogin), with $22 million in sales to date for 2003.  	

The first of 203 claims in the '516 patent is typical and reads: "A method for inhibiting expression in a eukaryotic cell of a gene whose transcription is regulated by NFKB, the method comprising reducing NFKB activity in the cell such that expression of said gene is inhibited."	

Thus, the claim applies to any drug that inhibits NFKB. The patent itself fails to describe a drug that inhibits NFKB, although it does describe a single protein inhibitor of NFKB called "inhibitor of kappa B" or IKB. The claim, at least, has serious invalidity issues under both the written description and enablement requirements of the patent statute. 	

Moreover, long before the patent was filed, products existed that are now known to act by inhibiting NFKB. A well known example is ibuprofen, which has been around since 1969. Although it was not known until 1998 that ibuprofen inhibited NFKB, knowledge of that fact is not required under existing patent law principles of inherency. It is enough that the drug inhibited NFKB.  	

Other well known drugs that also inhibit NFKB include aspirin, the immunosuppressive drug gliotoxin, and the rheumatoid arthritis treatment sulfasalazine. NFKB inhibitors that people have used for thousands of years include garlic, red wine, capsaicin (the "hot" ingredient in peppers), and caffeic acid (from honeybee propolis, the material used to seal the honeycomb). Even vitamin E inhibits NFKB. 	

Ariad asserts that Lilly infringes claim 14 by the sale of Xigris and claim 69 by the sale of Evista. Those claims include some additional language about the mechanism of action. Claim 14 reads: 				

"A method for reducing bacterial lipopolysaccharide-induced expression of cytokines in mammalian cells, which method comprises reducing NFKB activity in the cells so as to reduce bacterial lipopolysaccharide-induced expression of said cytokines in the cells." 	

Consequently, Ariad asserts that claim 14 applies to Xigris because it is used to treat sepsis. Xigris is a recombinant form of human activated protein C, and Lilly discloses that the product functions by inhibiting NFKB. By doing so, it automatically reduces bacterial lipopolysaccharide-induced expression of cytokines in the cells, because that is one of NFKB's effects.  	

Claim 69 is somewhat more specific, requiring that the inhibition occur by interfering with NFKB binding. It cites "A method for diminishing induced NFKB-mediated intracellular signaling comprising reducing NFKB activity in cells such that NFKB-mediated intracellular signaling is diminished, wherein reducing NFKB activity comprises reducing binding of NFKB to NFKB recognition sites on genes which are transcriptionally regulated by NFKB."	

Ariad's lawsuit says that Evista -- a small-molecule drug that modulates the estrogen receptor and is used to treat Osteoporosis -- infringes that claim because Evista acts by inhibiting NFKB binding to its binding site.  	

Ariad has hired a seasoned New York–based litigation team from Clifford, Chance, Rogers & Wells, a law firm that represents industry notables such as Genentech, Pfizer, and Aventis. The team's biochemists have their work cut out for them. Not only do the '516 claims appear to cover many existing drugs, herbs, and neutraceuticals, but the prosecution promises to be lengthy and complex, and an in-depth understanding of biochemistry is required to follow the intricacies of what was, and was not, disclosed.  	

Lilly has not publicly commented on Ariad's challenge. But in answer to the complaint, Lilly filed a combined Motion to Dismiss under F.R.C.P. 12(b)(6) and Motion for Summary Judgment on Invalidity, based on anticipation and failure of enablement. The motions assert that the claims of the '516 patent are invalid as "anticipated" by the allegedly infringing products (Evistra and Xigris), both of which Lilly had described before the earliest possible priority date for the '516 patent. Further, Lilly asserts that the claims are invalid because they are not enabled, meaning that they affect all current NFKB-modulating drugs and any future drugs to be discovered, without "teaching" how to manufacture a single such drug.  				

Ariad replied to that challenge in a colorful opposition motion. It correctly asserted that Lilly failed to present a detailed claim analysis and thus cannot show "anticipation" of the claims. In its opposition, however, Ariad fails to even mention "inherency," let alone address Lilly's contention that Evistra and Xigris inherently function by inhibiting NFKB.  	

Ariad does make one strong point that could prove fatal to Lilly's anticipation (not novel) defense. Ariad correctly asserts that Lilly is attempting to patent the new use of Xigris in treating patients who suffer from a disease induced by NFKB. Similarly, Lilly has pending patent claims involving the use of Evista to modulate NFKB. How can Lilly's new uses be patentable if those uses render the Ariad claim invalid as anticipated?	

The issue has thus devolved to one of whether "inhibition of NFKB" qualifies as a "new use" that is patentable, or whether it is a mechanism of action that inherently occurs whenever the drug is used. It can be difficult to distinguish between a compound's patentable new use and an unpatentable, newly discovered inherent property. 				

But the Federal Circuit has already answered that question in an earlier Lilly case that held that the mechanism of action of Prozac (fluoxetine) in inhibiting serotonin uptake was a natural biological activity that occurred when the drug was administered to a human for any purpose. In other words, serotonin uptake inhibition was an inherent property of the drug after administration. Thus, the claim was not patentably distinct from an earlier Lilly claim for using Prozac to treat anxiety. 	

Similarly, the use of Evista and Xigris always results in the inhibition of NFKB, because it is one of the mechanisms of action of those drugs. Under that logic, Ariad's asserted claims are "anticipated," and Lilly should be embarrassed by its efforts to patent similar claims and for using an inconsistent argument in court. 	

Ariad's answer to Lilly's "lack of enablement" argument, in contrast, seems to miss the point. The Lilly enablement argument is based on the fact that the claims cover the use of every drug that functions to inhibit NFKB, and yet no small molecule drugs that meet those limitations were disclosed in the patent. Ariad's answer focuses on whether the claims are written in functional language and whether they are single element claims or not. Nowhere does Ariad address the substantive question of failing to disclose any drugs in its '516 patent, other than the protein IKB, that act to inhibit NFKB, yet now it asserts the claims against Evista and Xigris.  	

Lilly has filed a rebuttal and, perhaps wisely, refused to get distracted by Ariad's aspersions about Lilly's NFKB patents. Instead, Lilly is focusing on material fact issues and alleges that Ariad has failed to raise any. The facts remain: if Lilly's products infringe now, they must have also been "anticipated" because they existed and were used in patients before the Ariad patent applications were filed. Knowledge of the mechanism of action of these drugs in inhibiting NFKB is not required for "anticipation" under the established principles of inherency.  	

Oral hearings for the pending motions have been held and an answer can be expected shortly. Because of its profound importance to biotech and pharma patents, the industry and its legal partners should monitor this lawsuit closely.	

As scientists' knowledge of biochemical pathways increases, so does the number of patents issued for generic treatment claims. Such claims represent methods of treating disease by modulating a particular protein in the body.

Generic Treatment Claims: Do They Hold Water?

The competition for generics' 180-day marketing exclusivity is fierce, and Dr. Reddy's Laboratories filed the first court case calling into question FDA's methods for determining exclusivity on a patent-by-patent basis. The generics manufacturer recently filed suit against FDA challenging the agency's determination that Dr. Reddy's was not eligible for 180 days of marketing exclusivity for a generic version of AstraZeneca's brand-name proton pump inhibitor Prilosec (omeprazole). Specifically, Dr. Reddy's is challenging the FDA policy that grants eligibility to the first manufacturer that files an abbreviated new drug application (ANDA) certifying against any patent listed for the approved product. 	

Dr. Reddy's argues that a patent-by-patent approach is contrary to the exclusivity statute established by Hatch-Waxman and that exclusivity must go to the first ANDA file that certifies against all the patents listed for the brand-name drug. If the court finds that a patent-by-patent basis is valid, however, Dr. Reddy's argues that it also should be awarded "co-exclusivity" under the theory that 180-day exclusivity should be awarded to each ANDA applicant that is the first to certify against any listed patent. 	

This article contends that if FDA's position is upheld, because of the trend of innovator pharma companies to list multiple patents as covering their brand-name drug, the result could be an increase in ANDA filers certifying against a single patent listed for the approved drug and more "co- exclusivity" among generics manufacturers. Under those circumstances, innovative pharmaceutical companies must either prepare for multiple legal battles against different ANDA applicants or consider listing fewer patents for the approved drug.	

The process by which a generic version is approved and brought to market was established as part of the Drug Price Competition and Patent Term Restoration Act of 1984 -- also known as Hatch-Waxman -- which amended the Federal Food Drug and Cosmetic Act. The Hatch-Waxman amendments created the section [505(j) 21 U.S.C. 355(j)] that sets forth the ANDA process used to seek FDA approval of a generic version of a pioneer drug. In their new drug application (NDA), pioneer applicants must include information about patents covering the pioneer product. FDA then publishes that patent information as part of the Approved Drug Products with Therapeutic Equivalence Evaluations (the "Orange Book").				

An ANDA must have a patent certification, described in section 505(j)(2)(A) (vii) of the Act. The certification must make one of the following statements:	

I. no patent information on the drug that is the subject of the ANDA has been submitted to FDA

III. the date on which such patent expires

IV. that such patent is invalid or will not be infringed by the manufacture, use, or sale of the product for which the ANDA is submitted. 

Section 505(j)(5)(B)(iv) of the act provides an incentive for applicants to file Paragraph IV certifications challenging patents that may be invalid, unenforceable, or not infringed. In certain circumstances, the first ANDA applicant with a Paragraph IV certification is granted 180 days of exclusivity. The exclusivity period provides the eligible ANDA applicant with protection against market competition from similar generic versions of the same drug for a 180-day period from either the date on which the first ANDA applicant begins commercially marketing its product or from the date of a court decision. 	

As originally enacted, provision 21 CFR 314.107(c)(1) required that the "applicant submitting the first application [must have] successfully defended against a suit for patent infringement brought within 45 days of the patent owner's receipt of notice [of the Paragraph IV certification]." Thus, the regulation required that the ANDA applicant filing the Paragraph IV certification must have been sued by the NDA holder and have successfully defended its case. FDA established the "successful defense" requirement to eliminate "an incentive for frivolous claims of patent invalidity or non-infringement" (59 Federal Register 50338, 50353).											

In 1998, two appellate courts ruled that the act did not support FDA's interpretation of that section and that the requirement that an ANDA applicant be sued for patent infringement and win before it could qualify for 180-day exclusivity was invalid. (See Mova Pharmaceutical Corp. v. Shalala, 1997 and Granutec v. Shalala, 1998). The courts held that 180 days of marketing exclusivity should be granted to the first ANDA applicant that files a Paragraph IV certification, regardless of whether the applicant is subsequently sued for patent infringement. 	

Shortly after, the agency published an interim rule revoking the "successful defense" requirement. In August 1999, FDA proposed a rule for implementing 180-day exclusivity consistent with the Mova and Granutec decisions. Since then, there has been extensive litigation involving ANDA approvals and 180-day exclusivity, much of it relating to whether 180-day exclusivity begins with the first district or other court decision finding the patent invalid, unenforceable, or not infringed -- or with a final court decision from which no appeal can be taken. (See TorPharm, Inc. v. Shalala, 1997 and Mylan Pharmaceuticals, Inc. v. Shalala, 2000.)	

On November 1, 2002, in response to multiple court decisions and to comments received from various government and private parties, FDA withdrew the August 1999 rule and announced that it would regulate directly from section 505(j) of the act in awarding 180-day marketing exclusivity.	

In February 1999, Dr. Reddy's submitted an ANDA for a 40-mg generic version of Prilosec (omeprazole). Three other generic companies -- Andrx, Gen-Pharm,  and Kremers Urban Development Company -- also filed ANDAs to market generic omeprazole. When Dr. Reddy's filed its ANDA, the Orange Book listed seven patents covering Prilosec. Dr. Reddy's submitted Paragraph IV certifications for all seven patents, including the '499 patent and the '431 patent. 				

Within 45 days of receiving notice of Dr. Reddy's Paragraph IV certifications, AstraZeneca filed suit against Dr. Reddy's in the U.S. District Court for the District of New Jersey alleging infringement of all seven of the certified patents. Thus, a 30-month stay began during which FDA could not approve Dr. Reddy's ANDA application, unless a court ruled that the patents were either invalid or not infringed, in which case approval would become effective on the date of the court decision. 	

On May 31, 2001, the district court granted Dr. Reddy's motion for summary judgment that it did not infringe the '499 patent. About a month later, Dr. Reddy's received a tentative approval letter from FDA indicating that there were no additional requirements to its ANDA approval other than the resolution of the remaining patent litigation issues. The 30-month stay period subsequently expired on September 28, 2001. 	

On October 5, 2001, the '431 patent against which Dr. Reddy had been the first to file a Paragraph IV certification, expired. Shortly after, Dr. Reddy's requested final approval for its ANDA covering 40-mg generic omeprazole capsules.	

An FDA letter dated November 16, 2001, stated that Dr. Reddy's had lost its eligibility for exclusivity on the 40-mg capsule when the '431 patent expired before the drug was commercially marketed or a court had ruled that the patents were either invalid or not infringed. The letter also disclosed that Andrx was the first applicant to file a Paragraph IV certification regarding the listed patents other than the '431 and, therefore, that Andrx was entitled to 180-day generic exclusivity for the 40-mg omeprazole capsules. 	

In support of its position, FDA referenced a 1999 decision in which it determined that the first ANDA applicant to file a Paragraph IV certification for the drug cisplatin had lost its eligibility for 180-day exclusivity when the patent expired before commercial marketing or a court ruling that the patent was invalid or not infringed. 	

In the cisplatin case, FDA adopted a patent-by-patent approach in determining eligibility for 180-day exclusivity. In August, 1999, in a response to petitions filed by two ANDA applicants for exclusivity for generic cisplatin, FDA stated that eligibility would be based on whichever manufacturer was the first to file a Paragraph IV certification for any listed patent for the relevant drug. As such, multiple applicants could be eligible for periods of exclusivity for a single product.	

FDA has recognized, however, that if eligibility for exclusivity is patent-based, without regard to the facts and circumstances of each matter, then FDA could be paralyzed in approving ANDAs referencing a particular product by conflicting multiple exclusivities, because if FDA awards exclusivity to one manufacturer, it cannot approve any other ANDAs until the exclusivity period expires. 	

For example, Andrx and Genpharm both filed ANDA applications for generic 10-mg and 20-mg omeprazole capsules, and both were the first to file Paragraph IV certifications for different Prilosec patents listed in the Orange Book. When the last patent blocking approval of generic omeprazole expired on October 5, 2001, there were no longer any 30-month stays barring approval of Andrx or Genpharm's ANDAs. 	

In addressing the question of how to administer 180-day exclusivity -- under the patent-based approach -- because both Andrx and Genpharm were the first ANDA applicants to file Paragraph IV certifications for different Prilosec patents, a stand-off would result. Andrx could not be given final approval until Genpharm's exclusivity for certain patents had expired, but Genpharm could not be given final approval until Andrx's exclusivity for other patents had run out. 	

The stand-off would prevent the ANDA applicants from benefiting in any meaningful way from the 180-day exclusivity period and would substantially and indefinitely delay the availability of lower-cost drugs for consumers. Thus, Andrx and Genpharm would be hamstrung by the very provision intended to benefit them, and competition would be stifled by the provision intended to encourage it.	

On January 31, 2002, Dr. Reddy's sued FDA, arguing that exclusivity must be awarded to the first ANDA applicant to file a Paragraph IV certification against all the innovator drug's patents listed in the Orange Book.  (See Dr. Reddy's Laboratories, Inc. v. Thompson). Dr. Reddy's argues that it is entitled to exclusivity because, in addition to being the first to certify against the '431 patent (covering the omeprazole compound), the company also certified against the other six patents listed in the Orange Book for 40-mg omeprazole capsules. 				

On the other hand, if the court upholds patent-by-patent exclusivity, then Dr. Reddy's argues that it should receive "co-exclusivity" with Andrx because exclusivity should be awarded to all "applicants that were the first to file Paragraph IV certifications as to any of the applicable patents." The co-exclusivity would start "on the date that the last of the first-to-file ANDAs" are approved or the date of a final court judgment on the patents.	

Recently, FDA decided to award "shared exclusivity" to Andrx and Genpharm regarding 10-mg and 20-mg omeprazole to resolve the stand-off generated by its patent-by-patent decisions. FDA stated that the shared exclusivity approach is more consistent with both the statutory language of the 180-day exclusivity provision and the intent of the Hatch-Waxman amendments. Consequently, once FDA approved both Andrx and Genpharm's  omeprazole ANDAs, the companies shared a 180-day exclusivity period during which they were the only generics companies permitted to market 10-mg and 20-mg omeprazole products. 	

Obviously, shared exclusivity deprives any one applicant of the chance to be the sole competitor to the brand-name manufacturer. But FDA points out that exclusivity is already structured in such a way that it does not guarantee a product 180 days as the sole marketed generic drug. Thus, a court decision could trigger exclusivity before the ANDA is approved, and uncertainty over the patent could result in no marketing of the drug until the decision is affirmed by the Federal Circuit Court. 	

FDA reasons that shared exclusivity gives each first ANDA applicant some reward in return for removing one or more of the listed patents as a barrier to generic approval. According to FDA, there is also a clear benefit to consumers: multiple ANDA approvals are more likely to trigger the exclusivity period and at least one of the generic drugs will likely reach the market during that time. In support of that position, FDA noted that generics manufacturers that are the sole applicants often find it in their interest not to begin the exclusivity period.	

In the event that the court denies Dr. Reddy's claim for shared exclusivity, the company argues that its ANDA "should be approved because exclusivity has already expired." Dr. Reddy's contends that it became eligible for 180-day exclusivity after the May 31, 2001 court decision that it did not infringe the '499 patent. Because the May 31 court decision satisfies one requirement for triggering exclusivity, the complaint states, FDA's decision not to award exclusivity was arbitrary, capricious, and contrary to law. 	

Given the potential value of 180-day exclusivity to a generics drug manufacturer, FDA determinations regarding eligibility for exclusivity have undergone significant scrutiny. Dr. Reddy's case challenges the agency's approach of determining exclusivity on a patent-by-patent basis. If FDA's position is upheld, then it is likely that the agency will increasingly award more shared exclusivity because brand-name companies continue to list multiple patents in the Orange Book for their approved drugs. Under such circumstances, brand-name drug companies must consider or balance the benefits of listing multiple patents versus the cost of litigating against multiple ANDA applications filing paragraph IV certifications. 				

On the other hand, if Dr. Reddy's prevails, then to qualify for 180-day generic exclusivity an ANDA applicant would have to file a Paragraph IV certification for all patents listed. In that case, brand-name manufacturers would likely list more patents in the Orange Book as covering their approved drug, thus deterring generic companies from filing ANDAs challenging all of the listed patents.	

The competition for generics' 180-day marketing exclusivity is fierce, and Dr. Reddy's Laboratories filed the first court case calling into question FDA's methods for determining exclusivity on a patent-by-patent basis.

Generics Battle Heats Up

n hindsight, it seems Catherine Angell Sohn, PharmD, was destined to become vice-president, worldwide business development for GlaxoSmithKline Consumer Healthcare (GSKCH). Sohn, a former pharmacist, architect of three Rx blockbuster launches, and engineer of innumerable partnerships and licensing agreements, is a pivotal link between GSK's pharmaceuticals and consumer healthcare.	

HBA's 2003 Woman of the Year Catherine Sohn helps bridge the gap between GlaxoSmithKline's consumer healthcare and pharmaceuticals businesses.	

Given the environment that embraces Rx-to-OTC switches and indulges the "consumerism" of pharmaceuticals that DTC advertising generates, Sohn and her executive team have prepared CH to support the pharma side in its consumer outreach efforts-and enhance its position as a profit driver within GSK. 	

When Glaxo Wellcome and SmithKline Beecham merged to form the world's largest pharma company, Sohn helped propel GSKCH's own growth by leading and executing the $1 billion purchase of Block Drug, CH's most significant acquisition to date. Now a $5 billion business, CH represents 16 percent of GSK's overall sales and is one of the industry's most profitable consumer healthcare divisions.	

For those achievements, the Healthcare Businesswomen's Association (HBA) named Sohn its 2003 Woman of the Year. But working tirelessly to advance the health of patients, of her company, and of the industry at large, Sohn contends that the best is yet to come. 	

Sohn's varied career made her a perfect fit for the role of business development. (See "Career Profile," page 32.) "Business development relies on having worked in a lot of different line functions and both pharmaceuticals and consumer healthcare," she says. "The challenge is to identify opportunities that you can see but may not be clear to everyone yet, then show how the new opportunity fits in the business and advocate for that."		

Sohn's vision is grounded in her dedication to patients and serves as the impetus that makes her products succeed as well as advance her career. As senior manager of business and new product development, she argued that changing immigration patterns brought hepatitis B from the developing world to the United States and that a vaccine should be marketed there to protect physicians and nurses. Along with GSK's vaccine teams, she shepherded Energix-B through FDA review and then won the crucial approval of the Centers for Disease Control committee that recommends immunizations. 	

"She mentioned to me that she felt health workers, particularly those in hospitals and clinical laboratories, could benefit from Engerix-B if it were available," writes James Cavanaugh, PhD, former president of SmithKline & French US and current president of HealthCare Ventures, in his HBA Woman of the Year nomination letter. "I was impressed with the data she pulled together, which clearly demonstrated the positive impact an available vaccine would have on public health. After additional review with our medical and marketing teams, largely based on Dr. Sohn's data, the product was developed and launched in the United States." 			

After Engerix-B's success, the company launched Twinrix (a combination hepatitis A and B vaccine), which, along with other products in the hepa-titis franchise, brought in more than $400 million in 2002. 	

Sohn's commitment to patients also helped Paxil (paroxetine) reach blockbuster status and become the company's leading product, with $2.1 billion in 2002 sales. 	

"I can still recall her 1994 presentation to the SmithKline Beecham product review board on how to expand Paxil usage," recounts Diana Makie, vice-president of the switch group, CH strategic development. "Her strategy showed Paxil's effectiveness in a series of new, previously undefined indications, such as general anxiety disorder and obsessive/compulsive disorder. She dared to challenge the product strategy through segmenting consumer behaviors into many often unrecognized problems that Paxil could help. That innovative fragmentation strategy drove Paxil to its position as one of the top ten drugs in the world." 	

GSK CEO Jean-Paul Garnier credits Sohn's "marketing leadership, her education as a PharmD, and her experience in professional drug information as key to ensuring strong positioning and acceptance in a market already dominated by two strong competitors." 			

Sohn was also responsible for leading the strategic product development, commercial assessment, and worldwide marketing plans for Type 2 diabetes treatment Avandia (rosiglitazone), which generated more than $1 billion in 2002. 	

When asked about her success, Sohn quickly points out, "Those are important accomplishments, not because of the size of the products for the company, but because they improve patients' lives."	

Even with antibiotic Augmentin's (amoxicillin/clavulanate) patent already expired and Paxil's patent under challenge, investment banks report that GSK remains a buy.	

Catherine Sohn calls a "team huddle" with (from l to r) Greg Westerbeck, Govind Agrawal, and Kevin Foley, all directors of worldwide business development. 				

That's because, according to a Lehman Brothers report, "GSK, by virtue of its sheer size, is becoming more like an industrial conglomerate that just happens to operate in the pharma industry. Its product portfolio neutralizes it from a significant hit from any one product, but by the same token, new products also have little influence on growth."  	

CH is part of that stabilizing portfolio, with well known consumer brands such as Aquafresh, Sensodyne, Nicoderm CQ, Nicorette (nicotine), and Tums (calcium). "Although it can throw off double-digit profit growth, consumer is a single-digit growth industry," says CH president Jack Ziegler. "But it is very different from pharmaceuticals, which has its own set of opportunities and issues, such as the enormous impact of launches and patent expirations. Some of our businesses are more than 100 years old; there aren't any pharmaceuticals like that." (See "Brands Your Mother Knew Best," page 32.)		

The Consumer Healthcare Executive Management team rendezvous in the UK. Standing (from l to r): Jack Ziegler, John Clarke, Manfred Scheske, Ray DeRise, Keith Bradford, Bill Slivka, George Quesnelle, Rob Harvey, Ken James.Sitting (l to r): Ian McPherson, Ellie Barger, Catherine Sohn, and Tom Borger. 	

Sohn puts it another way: "We're like the bond part of your portfolio-steady Eddie, over the long term, and not as susceptible to patent expiration." 	

Sohn's cool description belies the frenetic pace she must maintain to build GSKCH's pipeline, and consequently, its future. "Now that we're a $5 billion company," she admits, "one small, new-technology licensing agreement at a time will not generate the kind of growth that we're looking for. We need additional partnerships, global acquisitions, or external Rx-to-OTC switch assets."	

For that reason, business development is more important than ever.	

"Although our internal research and development resources are important, we are more likely to harness external creativity than to spend billions of dollars developing it on our own," says Ziegler. "From that point of view, business development is a key engine to grow the business, and that's why Cathy and her team are so essential."				

HBA's 1999 Woman of the Year, Tamar Howson, then senior vice-president and director of business development for SmithKline Beecham and now senior vice-president of corporate and business development at Bristol Myers-Squibb, says Sohn has the skills necessary to excel in business development. "Cathy possesses the ability to manage complex projects, has knowledge and understanding of almost every function within the company, and she has the interpersonal skills to bring together diverse groups and align them under the same goal. She possesses all those skills to a significant degree, probably because she came to business development from a marketing background at SmithKline Beecham, where she developed good internal relationships with different functions. She moved from pharma to consumer, and that seems to have been a very successful switch."	

But Sohn believes that the secret to her success lies in the relationships she develops: "I help the company, university, or researcher feel comfortable giving their 'baby' to us. GlaxoSmith-Kline Consumer Healthcare is a midsize company and the most important message to convey is that we are big enough to have the research and development, regulatory, sales and marketing infrastructure, yet small enough to treasure each asset that is made part of the business."	

To promote its prescription asthma therapy to consumers, the Advair product team uses Consumer Health Care's best marketing practices. 	

Strategic partnerships are increasingly a means for two companies to complement each other's strengths. Sohn's enthusiasm for working with external partners is evident in the way she continues to build on and champion the relationships even after signing the deal. "Our goal is to bring important new medicines to people while driving our business growth. Working in a cooperative way with external companies benefits everyone." 	

Sohn says GSKCH's relationship with Block Drug was instrumental to the acquisition. Since it was Block's product distributor in France for ten years, Sohn understood the connections between the companies' products and corporate philosophies. She was able to gain the executive management team's consensus and submit a bid for the company in October 2000, shortly after it became available. Even more important, those relationships established trust that allowed the acquisition to move forward, despite the fact that the Glaxo Wellcome/SmithKline Beecham merger was still in progress. That $1.24 billion purchase grew the business by more than 20 percent, catapulting it to its place among the top three consumer healthcare companies in the world and to number two in oral healthcare. 					

Ziegler appointed Sohn integration co-leader-an unusual responsibility for a negotiator-because she had already gained the trust of Block Drug's owners and senior managers.	

"Cathy led her team in developing the proposition, helping me sell it to Jean-Paul Garnier and helping us sell it to the board," says Ziegler. "Once the deal was signed, she headed the team that made the objectives we promised to the board happen in terms of timing, sales, and profits."	

Integrating two companies across functions and geographies is a formidable task, but Sohn's personal philosophy and commitment-exemplified by the plaque on her desk that reads, "It can be done!"-made perseverance the only option. 	

"The most important thing in asking the board for another $1 billion for the next acquisition is making the first one work," says Sohn. "So we focused on the objectives-changing the Block Drug brands to GSK brands-rather than the problems." 				

Sohn also led the negotiation team for a development and marketing partnership with Taisho Pharmaceutical, which gave the company's smoking cessation franchise a stronghold in Japan. Although GSKCH successfully developed and commercialized Nicoderm, Niquitin, and Niquitin Lozenge in many countries and markets Nicorette gum and Commit Lozenge in the United States, the nature of the Japanese market-populated almost exclusively by local companies-made partnering a logical choice. "When we decided to bring our smoking cessation products to Japan, we knew we needed a Japanese partner that had expertise in development and regulatory and a large existing sales force to go to pharmacies in the country." 	

The timing was right to begin the long development process. The Japanese government had recently announced Healthy Japan 2010, an initiative aimed at reducing the number of adult smokers by 50 percent. "Smoking cessation in Japan is at its early stages right now, but it will grow into a very large market," says Ziegler, "particularly as government takes further steps to restrict smoking and people realize the health impact." 	

Given the recent launch of Commit Lozenge, Ziegler expects that franchise to expand. He say: "Cathy accessed that product initially from Theratech, CH developed and enhanced it through clinical trials, it went through FDA, and it went out the door in late 2002. It looks very good."	

Perhaps the greatest influence on Sohn's career was her father, a pharmacist who worked in the small town of Ukiah, California. Sohn's interest in making healthcare more accessible to patients was ignited by watching him interact with customers.				

"I grew up working Saturdays in my father's private pharmacy. He was the type of pharmacist that I thought was everywhere-he was accessible to patients, answered their questions, and recommended when they should go to the doctor. He showed me that I could make a difference in individual people's lives."	

But Sohn says that working for the pharma industry allowed her to affect many patients' lives. "One of the reasons people decide to work for big pharmaceutical corporations is because they have the capital to invest in new products that serve important unmet healthcare needs." 	

The company's size also allowed Sohn to grow, and she is now in a position to funnel her pharma expertise into the increasingly strategic consumer healthcare landscape. "I'm familiar with, and comfortable speaking to, pharmaceutical companies and educating them about how GSKCH can further develop their products and bring benefit to both companies by taking it to consumers."	

Sohn speaks confidently about CH's Rx-to-OTC switch capabilities-after all, it's based on experience. GlaxoSmithKline switched gastrointestinal drugs Tagamet (cimetidine) in 1994 and Zantac (ranitidine) in 1995. She says Nicoderm CQ and Nicorette, (switched in 1996) in particular, are testaments to the growth OTC status can bring. When launched as CH's OTC consumer products, Nicoderm CQ and Nicorette became two and four times larger, respectively, than they were as Rx products. In fact, 2002 combined sales for the smoking cessation aids exceeded $500 million.	

 "When one product in a class goes OTC, there is discussion about the implications of the formulary status for the ones that remain Rx," says Sohn. 	

"It plays out a little differently in each therapeutic area." (See "New Rx-to-OTC Environment.")	

Executive Profile

In hindsight, it seems Catherine Angell Sohn, PharmD, was destined to become vice-president, worldwide business development for GlaxoSmithKline Consumer Healthcare (GSKCH). Sohn, a former pharmacist, architect of three Rx blockbuster launches, and engineer of innumerable partnerships and licensing agreements, is a pivotal link between GSK's pharmaceuticals and consumer healthcare.

Pharmaceutical Executive-04-01-2003

Table of Contents

In the Eye of the Storm

Pharma WANTS YOU

What They're Not Saying

Generic Treatment Claims: Do They Hold Water?

Generics Battle Heats Up

HBA's 2003 Woman of the Year