Falling enterprise values have defined the life sciences landscape during these waning days of 2015, accompanied by a storm cloud of negative headlines on industry pricing practices. This, in turn, has fueled the ire of skeptical payers, politicians, and the public at large. Will a drug pipeline harvest full of treatments founded on strong science, supportive regulation, and unmet medical need offer solace to shareholders and the promise of a reputational rebound? Will presidential politics add to the pressures on drug pricing, with a sour coda to the old refrain, “in the US, the market decides?”

	Well before their fall leafer excursions to the deciduous tracts north of the Boston-Philadelphia life science corridor, investors were seeing red. But the harsh crimson taint adorning their company’s stock ticker isn’t bringing the same seasonal enjoyment as the red, orange, and yellow hues of the Maple, Beech, and Hickory. 

	Much as in nature, where trees that give up their foliage early are often afflicted by invasive pests, many in biopharma are looking to blame a 32-year-old, drug-hiking scrooge named Martin Shkreli and the pricing backlash he wrought. However, as the drug pricing controversy fails to clear and drugmakers and their investors continue to fear a punitive, politically motivated response, one wonders if the forest is simply seeing a correction trailing several years of growth, or if it represents the maturation of an unhealthy ecosystem primed for a more significant burn. In the latter view, that young CEO looks more like a kid playing with matches in a dry thicket.

	Nevertheless, biopharma companies continue to reach for those patches of sunlight above the canopy, counting on the potential in their pipelines and the massive markets with unmet medical needs waiting to be tapped. The argument against a bubble continues unchanged: that lofty valuations are justifiable given the stellar line of new products that have leapt into the market along with many others now saltating through company pipelines. The successes of several recent launches have produced sales figures so impressive that those who had predicted “the end of the blockbuster era” not long ago, have quietly shelved their Carnac the Magnificent hats.

	Helping the cause is a more accommodating regulatory process, to the point that some critics warn that the FDA might be too helpful to the industry. Both industry and the FDA assure critics that in comparison to the past years of friction, the evolving quality of basic science now means that drugs are coming forward with better safety and efficacy profiles. In addition, trials are better designed and better recruited. “FDA standards haven’t changed, but manufacturers are getting better at developing and supporting effective products through approvals,” noted Amy Grogg, senior vice president of strategy and commercialization, AmerisourceBergen Specialty Group.

	The fact that many approvals have been for smaller indications geared to orphan disease populations means that drugs are better targeted to tighter patient populations. In orphan drugs subject to fast-track procedures, this represents a strong move by the FDA to support R&D in therapy areas that offer immeasurable value to small patient populations while unleashing additional scientific and process innovations that can be applied across disease states, added Grogg. FDA has opened itself to dialogue with companies planning trials and submissions by encouraging regular exchanges that eliminate confusion and uncertainty. Drugmakers have been receptive, leveraging the support and heavily utilizing specialty and accelerated status designations.

	So where does that leave us as we reconnoiter this promising pipeline landscape? Yes, there are shadows in the form of access challenges, ever higher development costs, and the increasingly vocal-and articulate-denigrators of the profit motive in healthcare. But great scientific advances, some decades in the making, like the human genome project, have planted seeds of growth that are now yielding visible results in the clinic or in late clinical stages. Scientific and clinical excitement abounds for numerous disease states, especially those that have seen little progress in years. Patient groups are excited-and are more hands-on in the new drug vetting process than ever. 

	To extend our thematic metaphor, drug development in Alzheimer’s disease (AD) has shed its fair share of leaves, abscising entire branches. But research continues that could produce fruit. A few long studied compounds are hanging on for dear life while new buds are sprouting. The market potential for anything, anything that could impact AD progression substantially would be tremendous, so even the slightest sign of progress creates excitement and thus major market interest and volatility.

	For years, the industry has put its hope for a disease-modifying treatment in the amyloid hypothesis. The accumulation of plaques in the brain consisting of amyloid beta peptide has been investigated as the primary driver in the pathogenesis of the disease and the key target for a cure. The most advanced, and still with a reasonable chance of reaching the market, are two humanized monoclonal IgG1 antibodies targeting A-beta peptide, Eli Lilly’s solanezumab and Biogen’s aducanumab. The pair have been up and down, and are currently up, sort of, following trial data dumps at July’s Alzheimer’s Association International Conference in Washington, DC.

	Solanezumab had all but exited stage left after Phase III failures in 2012. But persistence could pay off for Lilly as it’s extended look study, Expedition-EXT, showed an altered slope in the decline for patients who received the drug early, compared to those who first received placebo and then got the drug, a delayed start cohort. Not everyone is impressed, but for the optimistic, a slightly slower decline into AD ranks as a positive sign in a field that clearly needs one. Lilly’s 2,100-patient Phase III Expedition 3 trial should see its last patient visit in October 2016, a release date that puts it ahead of the competition.

	Biogen’s aducanumab may benefit, or languish, from sharing the same target as solanezumab, depending on one’s level of optimism and what a second-place finish might mean. It also has recent data for which some are seeing the glass half-full; others are less excited. Optimists will point to the company’s positive results in a 166-patient Phase I trial released in March and the fact that the recent negative analysis could be about getting the right dose. Biogen is willing to wager on the pros and has started the five-year, Phase III program with 1,350 patients. Key data is expected in 2018  (Biogen reaffirmed its commitment to AD last month, announcing it was pruning its non-AD pipeline-and cutting 830 jobs in the process).

	Roche also saw setbacks, but maintains it A-beta antibody program, gantenerumab, with Phase III trials active, and estimated completion dates listed in 2019 (Roche’s website lists filing as estimated in 2017). Roche/Genentech also announced its plans to progress the Phase III antibody, crenezumab, which is a humanized monoclonal antibody designed to target all forms of A-beta discovered by AC Immune.

	Ultimately, for AD, population dynamics are on the drugmakers’ side. One widely held prediction estimates the proportion of the world’s population over 60 years of age doubling by 2050, from about 11% to 22%. The rising impact of 

AD on the healthcare system may hit the trillion-dollar mark, and a successful market launch of solanezumab could net Lilly $7.6 billion in yearly sales by 2024, according to a CNN Money report, citing an investment banker estimate. Of course, a discussion on value and analysis of the degree of benefit seen will go a long way to determine the price tag for any new AD treatment. Additionally, impacts in only patients with mild symptoms may limit the potential label of most value, while early diagnosis and a necessity to treat promptly at the first sign of AD may eventually see more patients on therapy.

	With this massive market and the potential crisis for caring for so many dependent people in the healthcare system, the number of targets will continue to grow. But only time will tell whether AD treatments evolve as a step-therapy approach, or if the field takes a more aggressive trajectory with a combinatorial drug approach. 

	A subsequent batch of AD therapies could come from the BACE inhibitor group. Leading the class, Merck & Co.’s  1,960-patient, Phase II/III trial and a 1,500-patient Phase III trial for MK-8931 are ongoing, with completion dates set for July 2017 and March 2018, respectively.

	Lilly’s first swing at BACE inhibitors saw toxicity problems, but the company remains in the field. The Phase II/III Amaranth study for LY3314814 (also known as AZD3293 via its partner, AstraZeneca’s, nomenclature) launched in December 2014 and lists a primary completion date as August 2019.

	Amgen and Novartis have also agreed to share the risk around a BACE program, announced in September 2015, with CNP520 in Phase I/IIa and other preclinical candidates on deck.

	The design of A-beta antibodies and BACE inhibitors is to strike AD at its molecular foundation, and thus has the potential to modify the course of disease. But some researchers argue that symptom alleviation is still important and, at the minimum, should be part of neurologists’ armamentarium, especially when contemplating the potential added therapeutic effect of 

cocktail regimens. Some drug developers see the singular bent to focus on disease modification as fallacious, and, hence, they believe the industry is disregarding or downplaying effective therapies that might bring value to AD sufferers and, with it, strong sales. 

	There is another gap in the research design for AD, best summarized by the question: why dissociate slowing the curve of cognitive decline from the larger effort to improve clinical outcomes? The question is posed by 30-year-old, former hedge fund wiz, Axovant’s CEO Vivek Ramaswamy, whose company brought in $315 million from venture investors in its June IPO. Axovant’s candidate, RVT-101, bought from GlaxoSmithKline for a cool $5 million, will start into a 1,150-patient, Phase III trial this fall in the US, Europe, and Japan. The Mindset study promises to be a pivotal trial, as the company will leverage previous data from GSK’s attempts with the drug. 

 is investigating RVT-101 on a stable background of 

 (donepezil) to support its cocktail thesis and on recognition that symptom alleviation without halting neurodegenerative decline can still be beneficial for patients.

	Another small firm making noise in AD and other neurodegenerative diseases is Anavex. The company’s Anavex 2-73 and Anavex Plus, a cocktail that adds donepezil, giving the therapy disease-modifying and symptom alleviation properties, is in Phase II. Early 36-day data is being presented this month, with 52-week, open-label data to follow. The company notes that by targeting sigma-1 and muscarinic receptors, believed through upstream action to reduce protein misfolding, it can alter A-beta, tau, and inflammation. The company has its sights set on Parkinson’s  (PD) disease as well.

 has received an influential vote of support from the Michael J. Fox Foundation for this PD research. Also on board with the cocktail approach is Accera, which hopes to turn a supplement/medical food into a late-stage AD pipeline candidate. AC-1204 is designed “to address the metabolic defect” of the AD brain, rather than more traditional A-beta and tau pathologies.

	Accera’s product induces mild ketosis in the body, supplying the brain with ketone bodies, which serve as “back-up fuel.” “We’ve shown that the brain can utilize ketone bodies and continue to metabolize, staving off symptoms,” said Accera CEO Charles Stacey. “It’s an increasingly well-established hypothesis,” he added.

	Accera announced that its Phase III, 480-patient study, the first of two, was 75% enrolled in July and should be full by mid-2016. The trial is due to read out in the latter part of 2016 or early 2017. Accera will also launch its second Phase III study in 2016, which will be US and ex-US, said Stacey. With a history as a medical food known as Axona, Accera is coming from a unique place, considering the product was commercially marketed and has a substantial safety record. Recognizing that the medical food route is less known, in order to reach and benefit the maximum number of patients, the company is now focusing AC-1204 on the clinical pathway. 

	An advantage for pipeline technologies that target symptoms and/or more general aspects of neural decline is that they may also be applied to treat adjacent neurodegenerative disorders. Axovant’s second indication for RVT-101 will likely be Lewy body dementia, while Anavex lists epilepsy and PD as its next targets.

	Acadia Pharmaceuticals chose to take on PD first. It’s drug, 

(pimavanserin), seeking approval for Parkinson’s disease psychosis (PDP) may also be applied to AD psychosis and schizophrenia. For now, the company has submitted its new drug application (NDA) for PDP, receiving breakthrough designation in doing so, a good sign that the FDA thinks its data is solid; it could issue a ruling in favor by May 2016.

	 Analysts believe that Acadia might need a big pharma partner to market Nuplazid if it wants to achieve peak sales that some estimate is in the $1 billion range; so far, the firm is choosing to go it alone. Reservations regarding the company’s lack of regulatory and commercial prowess were supported when the company postponed its NDA submission in March, stating the “decision to move back the planned submission is based on additional time required to complete the preparation of systems to support commercial manufacturing and supply and, in turn, to support FDA review.”

	Also late stage for a new PD symptom reliever is Cynapsus’ APL-130277, a sublingual thin film formulation of apomorphine. The company is utilizing the 505(b)(2) pathway for the unique formulation of the drug that is already approved as 

, a subcutaneous injection of the active ingredient marketed by US WorldMeds. Cynapsus initiated a Phase III safety and tolerability trial in September and intends to have data from that study, and an ongoing efficacy study, ready for NDA submission near the end of 2016. Apomorphine can help PD patients who experience “off” episodes rendering them unable to perform basic tasks like eating and getting dressed, making them increasingly reliant on assistance. 

	The company overcame significant formulation challenges to get the drug in the sublingual film, which it believes will pay off. Patients would be able to self-medicate as needed when they feel an “off” episode starting, a severe limitation of apomorphine in its current form. 

	In contrast to the frustrations and continued wait for better treatments in neurodegeneration, those in the field of cholesterol lowering are seeing a massive arrival of an extremely effective and highly controversial drug class. Big sales are expected, and payers are often portrayed as cowering in fear of the potential budget exposure. So far, however, sales are limited, negotiations are ongoing, and the perceived massive impact of the PCSK9 inhibitors has yet to be felt in full force.

	Notably, pharmacy benefit manager (PBM) giant Express Scripts announced that both Sanofi/Regeneron’s Praluent, and Amgen’s Repatha will be on its National Preferred Formulary, ensuring that the drugs will reach the specific patient set who will most benefit.

	One of the most volatile stocks in biopharma, currently hovering in the mid-$20s and with 52-week range of $18 to $120.96, is Esperion and the saga of its

 cholesterol-lowering pill ETC-1002. Esperion touts an impressive management pedigree: it’s founder and chief scientific officer is a co-discover of 

, so the team knows the molecular pathway to lower cholesterol. Additionally, ETC-1002’s data has impressed the field, convincing most that the drug, which works upstream of statins, is an effective way to lower low-density, lipoprotein cholesterol. And lastly, amidst all of the strife of pricing the PCSK9 inhibitors, not to mention delivering injections in a population that has been popping statins in pill form for a decade plus, Esperion’s candidate promises a once-daily oral option. 

	Management conceives of ETC-1002 filling the gap between statins, which are cheap and oral, and the new-age PCSK9 biologics, which will substantially increase the burden on patients by being expensive and injected. Additionally, the safety profile for ETC-1002 may allow it to be used in conjunction with statins, or even PCSK9s, to achieve maximal cholesterol lowering.

	So why all the volatility in this hot segment? One concern has been whether LDL-C is seen as a sufficient surrogate clinical endpoint for approval, which, Esperion states, the FDA agrees it is. But the elephant in Esperion’s boardroom has been whether approval could come soon or if a long-term cardiovascular outcomes trial is going to be required.

	The company said in an August press release that approval in patients with heterozygous familial hypercholesterolemia (HeFH) or clinical atherosclerotic cardiovascular disease (ASCVD) will not require the cardiovascular studies. In September, the company provided additional clarification surrounding the trials it will be undertaking. But as the company’s language changed from FDA “will not” to “could” require long studies, Wall Street has grown suspicious that the path to real revenues is going to end up being a long one.  A substantial lag to launch would give the PCSK9s more time to become entrenched in the clinical setting, damaging the prospects for the eventual launch of ETC-1002 as well.

	Regardless of whether an approval can come soon, Esperion will launch a Phase III program for ETC-1002, the specifics which it will finalize by the first half of 2016. The trials will take a dual approach, evaluating the drug separately for “patients with statin intolerance, in addition to patients who are inadequately treated despite maximally tolerated statin therapy.”

	Pfizer also plans to get in on the anti-PCSK9 market with bococizumab which is in Phase III trials. Key data could be available around mid-2016, with an approval late in 2016 or early 2017. Pfizer will have a lot of catching up to do, though some believe the antibody may gain market share if it can live up to the hype as a follow-on-but best-in-class-compound.  In this regard, Lipitor’s own history as a fifth-in-class entry is instructive. Additionally, Pfizer will try to formulate a bococizumab pill and vaccine, the latter giving the potential for once-yearly dosing. The pill formulation could begin human trials by year-end.

	Also banking on the benefits of a long-term cholesterol fix is Alnylam, with its partner The Medicine’s Company, on its Phase II-ready RNAi therapeutic, ALN-PCSsc. The collaborators presented Phase I data in September and noted “highly durable effects with LDL-C-lowering lasting over 140 days after a single injection.” With The Medicines Company taking the lead, the group plans to start Phase II for the RNAi injection this year, with Phase III starting in 2017. Jefferies recently modeled peak sales for ALN-PCSsc at $980 million, though it noted uncertainty given the early stage of the asset.

	Cholesterol lowering has seen its share of clinical trial successes, with big sales revenue projected. But this fall also saw a failure leaving one whole class of pipeline candidates in limbo. Lilly’s stock cratered on October 12 with its announcement that it was throwing in the towel on its candidate, evacetrapib, a CETP inhibitor. Other notables targeting CETP are Merck, with anacetrapib, and TA-8995, which Amgen gained by acquiring Dezima Pharma in September. That compound could be written off, too. The CETP space is littered with failures, and with the recent Lilly revelation, the industry has been reminded just how big of a risk they were to begin with. The busted Lilly trial had enrolled 12,000-plus patients, at considerable expense, having pursued studies right up to Phase III. 

	The industry’s oncology pipeline is both wide and dense, so it can be easy to lose the forest in the trees. Complicating the picture is the fact that combinations of various drugs are likely to start making headlines with solid results. Rational, time-efficient approaches to selecting which agents will complement each other is going to be invaluable as a competitive differentiator. And the pricing debate over the bill for use of two or more novel therapeutics simultaneously is destined to follow shortly thereafter. 

	Immuno-oncology assets clearly continue to draw the biggest crowd, whether you’re an oncologist at a medical conference or an investor watching the newest CAR-T company place its IPO. Merck’s

 (pembrolizumab) and Bristol-Myers Squibb’s 

(nivolumab) are duking it out for PD-1 inhibitor primacy in several cancer types, with patient subpopulations, PD-L1 as a biomarker, and label language making for compelling drama. Melanoma and lung cancer are on the books, but the pipeline includes expansion to more indications like head and neck, gastric, breast, and Hodgkin lymphoma. Analysts report that 

 could earn BMS $8.8 billion by 2020 while 

 could bring in $5.5 billion annually for Merck.

	Though projected at sales of a measly $2 billion, Roche’s PD-L1, a successor target for Roche’s atezolizumab could ultimately beat analyst expectations with 

its slightly differentiated mechanism of action. The PD-L1 inhibitor represents a massive investment for Roche given its 11 ongoing or planned Phase III studies across lung, kidney, breast, and bladder cancers.

	Merck KGaA is partnering with Pfizer for the  PD-L1 inhibitor avelumab, which is in Phase III for non-small cell lung cancer and Phase II for metastatic merkel cell carcinoma. The two pharma giants have said they will collaborate on “up to 20 high priority immuno-oncology clinical development programs with avelumab, many of which are expected to commence in 2015.”

	For BMS, adding Opdivo to Yervoy (ipilimumab) was an obvious combination of immune-oncology candidates, which predictively improved progression-free survival in tandem, versus solo treatment, while also upping side-effect risks.

	And this is where the potential for oncology pipelines really gets exciting. A simple search for combination efforts quickly becomes a complicated one with the many candidates already progressing in place. But talk to any oncology specialist and they will stress that current possibilities in immuno-oncology are just scratching the surface. The science is in its early stages, having just hit at a few checkpoint targets. But there are a lot more, and with each new target, the potential for new combination opportunities multiplies. 

	Deciphering which combos will be best for which specific tumors will be a monumental feat. Whether it will be the big pharmas throwing massive resources at the problem to decode tumors and rationally design treatments based on specific tumor types or if small, more nimble, more data-savvy firms will prove better at getting there first-it’s a contest that will be interesting to watch. 

	Back to the relatively simple pipeline concept of developing monotherapies in oncology, one potential blockbuster could come from Milllenium: The Takeda Oncology Company, with a potential approval by early 2016. In September, FDA granted priority-review status for the NDA of ixazomib to 

treat patients with relapsed and/or refractory multiple myeloma. Given the oral delivery route for its proteasome inhibitor, Takeda hopes the drug will do well amongst competitors to help replenish revenue lost for its blockbuster Velcade.

	Looking to hit the market with a label for double-refractory multiple myeloma is the Genmab and J&J partnered drug daratumumab. Janssen Biotech began a rolling submission in June 2015 based on Phase II data and marketing approval could come in 2016. Jefferies analysts project $4 billion peak sales. 

 (elotuzumab), a multiple myeloma candidate from a BMS/AbbVie partnership, has also received accelerated review and could gain approval in 2016. 

	Also taking aim at an accelerated path is CTI BioPharma, with its Phase III drug for myelofibrosis, pacritinib. The company’s September press release noted that it was requesting the approval based on a single trial, which could drastically reduce the product’s time to market. The drug, like Incyte’s 

, is an oral JAK inhibitor, but has specificity profile impacting JAK2, FLT3, IRAK1, and CSF1R, resulting in less thrombocytopenia and anemia, according to company statements. CTI BioPharma is comparing pacritinib to best available therapy in a Phase III myelofibrosis trial, but the company hopes it can gain approval sooner in patients with intermediate and high-risk myelofibrosis with low platelet counts. Analysts project global sales for pacritinib at around $750 million in myelofibrosis and other blood disorders.

Biosimilars save in cancer, among other indications

	While most oncology developments combine great science and patient potential with sticker shock for payers, it’s also necessary to point out an emerging market opportunity in the US for major cost savings. One of the key pipeline events for 2016 will be the entry of biosimilars, according to AmerisourceBergen’s Grogg. “In 2015 the FDA approved the first biosimilar, 

, and as we move into 2016 and beyond, others should follow suit.” 

	There are many factors to consider, specifically the fact that biosimilars will not have the same effect as generics. “An important consideration for manufacturers is the resources required to bring a biosimilar to market,” added Grogg. Biologic manufacturing is significantly more intensive and delicate than small-molecule generics, which are easily copied and thus able to offer immediate price reductions.

	Also, payer-mandated switching is unlikely to occur immediately when the first biosimilars come to market because of uncertainty about these new 

products. “Biosimilar manufacturers will be required to conduct many of the same pre-launch activities as branded biologic manufacturers would and provide post-launch patient services to ensure uptake by physicians, payers, and patients,” Grogg explained.

’s initial price tag has been set at a 15% discount to the innovator product, Neupogen. As more biosimilars come through the pipeline, analysts expect deeper discounts in the 30-40% range. At 30% discount, gaining the equivalent of 30% market share, one analyst pegs the biosimlar’s revenues at $300 million per year.  

	Sandoz has several biosimilars in its pipelines, including copies of pegfilgrastim, Epoetin-alfa, and outside of oncology into the biggest rheumotology moneymakers, adalimumab and etanercept, all listed as Phase III.

	Plenty of other companies are developing biosimilar pipelines as well (see chart below). Apotex could be one of the next to launch one, with its biosimilar version of Amgen’s 

 (pegfilgrastim), which it filed in December 2014. And Hospira, which is now part of  Pfizer’s established products business, hopes to market 

 via its partnership with Celltrion-a match-up that illustrates  how confusing the biosimilars market is becoming.

	Though biosimilars will be making an impact in the diseases of inflammation, clearly there is still much room for innovative products. One of the big buyouts from 2015 was Celgene’s $7.2 billion play for Receptos, gaining it the hot product ozanimod. Celgene’s announcement of the deal lists the oral, once-daily, S1P modulator as in Phase III development for ulcerative colitis (UC) and relapsing multiple sclerosis (MS). The company notes that the ongoing MS trials should have data in 2017, while data in UC could come out in 2018. Approval in MS could come in 2018. Celgene estimated peak sales for ozanimod in the range of $4 billion to $6 billion.

	Other immune/inflammatory diseases like rheumatoid arthritis (RA) and psoriasis could see their pipeline of oral alternatives to its mainstay injectables grow. Pfizer’s JAK inhibitor 

 (tofacitinib), already approved in RA, is

 striving to add indications, including UC, psoriasis, and psoriatic arthritis, where it’s currently in Phase III or under review. Pfizer did receive a complete response letter (CRL) last month for its supplemental new drug application for Xeljanz in psoriasis. The CRL is yet another snag for the drug, which has had sluggish sales since its approval in 2012; analysts believe 

could still hit projections in the $1.5 billion to $2 billion range.

	The JAK inhibitor class will see several additions in the coming years that hope to distinguish themselves with slightly different safety/efficacy profiles. Lilly and Incyte’s baricitinib could give 

 a run for its money. The companies announced that the pill beat out RA standard biologic Humira (adalimumab), though displacing TNF inhibitors in RA would be a tall order. A 2016 launch date is likely. Analysts believe it could reach sales of around $1.5 billion.

	More in question is the future of Galapagos’ JAK inhibitor filgotinib. The drug is behind baricitinib chronologically, though claims for specificity and safety had some thinking it could be best in class. Galapagos’ partner, AbbVie, was supposed to escort filgotinib into Phase III, or buy it off Galapagos outright. Instead, the company pulled out this fall, prompting many questions about the future of the

 drug. AbbVie says it is now making Phase III plans for its own JAK inhibitor, ABT-494, while Galapagos is back to finding itself a dance partner.

	Other inflammatory drama came when Amgen broke up with AZ over its IL-17 inhibitor for psoriasis, brodalumab. The drug was seen as a potential competitor to Novartis’ IL-17 inhibitor 

, which was approved for moderate-to-severe plaque psoriasis in January and could see peak sales of $4 billion to $5 billion. Suicidal thoughts in a clinical trial are never a good thing, though AZ’s CEO Pascal Soriot, during the company’s Q2 earnings call, said brodalumab was unlikely to be causally related to suicidal ideation. However, in September, the company announced it was calling it quits as well, and auctioned the drug off to Valeant for $100 million, subject to  $245 million in milestones and bonuses. 

	Developing drugs for orphan diseases is clearly not a fad. With 7,000 rare diseases and 250 new ones identified each year, there is clearly room for growth; companies are attracted to the space, where there’s generally less competition in a given disease. Additionally, earning an FDA priority review voucher for successful development in a pediatric condition is a nice added benefit.

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Pharm Exec's 2016 Pipeline Report

	Today, disruptions in both healthcare and marketing have created new risks for pharma brand leaders when they consolidate their full suite of advertising services-from media/search engine marketing (SEM), social, and digital execution to insights and strategy, analytics, and digital agency of record (AOR)-with a single network, or worse, a single network agency. To minimize the risks, many brand leaders are embracing a new agency service model called “prosolidation” that adds independent agencies into the mix, breaking the decades-old trend of agency consolidation.

	The watershed moment for agency consolidation came in 1994 when IBM consolidated $500 million in agency spending. It was the largest such shift in advertising history but, more importantly, 

. IBM cut costs and revitalized its brands with a cohesive message and strategy. Other companies joined the trend, hunting for leverage and efficiencies through consolidation. In pharma, too, advertising dollars consolidated with a holding company and its network of agencies became the 

“prescription” in the 1990s and 2000s-a basic calculation of maximizing a benefit-to-risk ratio.

	But today, that calculus is changing. Higher risks have emerged in network relationships due to three recent industry forces: the rising cost of procurement, the maturation of digital, and the growing complexity of pharmaceutical products and their marketing needs. To mitigate the risks, pharma marketers are supplementing their network relationships with specialized talent, untethered innovation, and leading-edge capabilities from out-of-network sources. The new trend may not have a watershed moment to point to, as in 1994, but now it has a name: prosolidation.

	Prosolidation is the new service model that adds independent agencies back on the roster in order to have them work in concert with network agencies. Not a return to the days of pre-consolidation, prosolidation instead optimizes the consolidation model by replacing the “cons” (risks) with “pros” (benefits). It empowers clients to build greater value around their brand by freeing them from complete dependence on a network for  AOR solutions-whether for strategy, creative, digital, media, or social. Because it has the power to drive large-scale innovation, prosolidation is the new prescription for pharma marketers today.

Looking back at consolidation: Benefits and risks

	Consolidation was basically a financially driven idea. Its chief benefits were discounts, standardized rates, and streamlined contracts. Greater efficiencies for both clients and agencies were realized by reducing the number of stakeholders, handoffs, overlaps, and other redundancies encountered with a multiple-agency model. Support services, such as finance or IT, could be centralized, and so could multiple account teams. On the client side, consolidation gave procurement greater leverage in negotiating prices and terms, enabling companies to be more aggressive in increasingly competitive markets. On the network side, consolidation enabled agencies to deliver global scale and more consistent execution. Brand experiences were made more potent and uniform by a single entity than by multiple agencies.

	But the financial and executional benefits gained from network contracts came with risks, too. According to Bob Jansen, the founder of Zensights and member of 

’s Editorial Advisory Board, “In a world of consolidated holding companies, pharma manufacturers and their sourcing departments are doing everything possible to drive down cost-without a true understanding of how the deliverable that they are negotiating for their internal clients will ultimately look.” The internal clients (the brand leaders), on the other hand, have long understood and contended with the risks:

 In order to compete at the price point negotiated in the winning contract, network agencies run the day-to-day work on an account with junior staff, who cost less than their senior counterparts. To further save expenses, agencies often stretch their staffing too thin.

With junior staffing, innovation and independent thinking, the very capital of the creative agency, can be lacking or, even worse, missing. Real expertise born from deep experience is increasingly absent on network agency brand teams.

 The sheer size of a network demands a culture of managers (who keep the machine running) versus leaders (who innovate). It reinforces the status quo.

 In an attempt to be all things to all customers, networks often end up homogenizing their capabilities and service offering. The entire industry of networks has raced itself to the middle ground and, as a result, network agencies tend to deliver virtually indistinguishable products.

 When such a large percentage of agencies are controlled by a small handful of people, there are fewer incentives for competition or innovation, and their offerings become mediocre and slow to keep pace with emerging media and other trends.

	Although pharma companies and agencies exist in a constant state of adaptation, there are three trends right now in particular that are making the risks of consolidation more serious and the benefits of prosolidation more favorable:

The financial benefits of consolidation are no longer what they used to be. Drew Sigafoos, director of strategic sourcing at Otsuka (US), asks, “Do pharma companies really get the financial benefit of networks when they have to build such large procurement or strategic sourcing groups?” At some of the largest pharma companies, Sigafoos notes, commercial procurement teams have grown to more than 60 employees, and overall procurement groups to more than 300. The financial burden of running such large procurement groups ironically diminishes or even completely negates the discounts they negotiate with networks. Negotiating with an independent agency, on the other hand, is a shorter, more straightforward process. According to Sigafoos, “You get to the line in the sand a lot quicker.”

2. The rise of digital demands greater innovation and novel capabilities. 

The evolution of digital media means that constant optimization is necessary to maximize value from marketing efforts. The network model of creating a campaign and repurposing it across channels ad nauseam is outdated; advertisers lose out on valuable opportunities for innovation and content marketing. In general, marketing, technology, and healthcare are converging. Digital capabilities transform our ways of working, and today’s digital landscape needs independent agency partners who can keep pace. Network agencies have many pools of talent to tap, but digital expertise is typically not one of them.

3. The growing complexity of marketing pharmaceutical products demands increasingly niche skills and nimble services. 

As the medical field advances, pharmaceutical products are growing in specificity and complexity. The proliferation of disease subtypes based on biomarkers, new treatment modalities, and their underlying science spell out new areas of expertise. Product promotions increasingly differ across audiences, and company pipelines show a shift to more targeted therapies in lieu of mass-market blockbuster drugs. The proliferation of disruptive trends-wearables, digitally connected health services and devices, patient empowerment, and outcome-driven incentives-all signal a growing need for diverse specialized talent. The management of talent and expertise in a network agency is often subject to misallocation, whereas independent agencies are better able to assemble purpose-built teams with the expertise to understand the implications of these new developments and cater to each brand’s needs.

The new prescription for pharma marketing

	Rhetorically, prosolidate is a clever word; conceptually, it’s an idea whose time has come. Prosolidation offers a new service model where pharma marketers can reap the benefits of both independent agencies and network agencies-a considerable advantage over the preceding consolidation model. Independent agencies offer clients greater priority and willingness to collaborate, and current trends allow marketers to build greater value around their brands by capitalizing on these distinct features.

	Without an overhead organization, independent agencies maintain ownership of their own set of priorities, which translates into direct responsiveness to client needs with nimble services and specialized skill sets. In comparison, network agencies are required to satisfy the priorities of their holding company first; they must respond to the

 pressures of the network contract and the need to “feed the machine” with volume. By their very nature, network agencies are expected to work exclusively within their holding company environment. Their willingness to work with another holding company or independent agency is superseded by their structural need to keep all services (and billings) within the network-regardless of quality. Independent agencies, on the other hand, are more willing to work collaboratively with other agencies-especially when it means higher quality products for their clients.

	As marketers look for ways to leave less money on the table, independent agencies have become critical to reducing the capability gaps and innovation blind spots created by consolidation. The benefits of prosolidation not only have the power to transform a brand, but what benefits the brand generally will benefit patients, too. Prosolidation ensures that brands can compete in the current environment and position themselves for good health in the future.

 is CEO of The Greater Than One Group. She can be reached at 

Columns

The advantages for brand teams in leveraging independent agencies in their campaigns.

The 'Prosolidate' Push: New Agency Service Mix

 at the state of the industry’s new drug pipeline. Not only is there much to please the expectant eye of Wall Street, there is more evidence to show that drugmakers commercial interests 

are better aligned with unmet medical need.  “Me-too” drugs designed to grab that extra helping of profits with no heavy lifting on the clinical side are now the exception, not the rule. 

	The latest FDA statistics on the 29 novel drug approvals so far this year provide the proof point. Fifteen of the 29 secured status under the FDA’s four review categories covering the best, most advanced science-Accelerated, Breakthrough, Priority, and Fast Track-while seven drugs won separate listing as orphan drugs for patients with rare, usually untreatable diseases. One drug, Avycaz, from Actavis, was also selected as a Qualified Infectious Disease Product (QIDP), the fifth industry-developed medicine approved to address the absence of therapies for drug-resistant, life-threatening bacterial infections. 

	Building on Senior Editor Casey McDonald’s timely synthesis of 2016’s best new fields and targets, I see four key themes driving the fast-changing environment for drug development. 

. This is due to convergence between great science; the interpretive power of information processing technologies; and rising clinician and patient expectations. R&D priorities, once focused on the open-ended metric of delivering the biggest number of “shots on goal,” now rest on a precise commitment to quality, not volume. There is significantly more risk, not to mention expense, in applying advanced tools of molecular biology to find the right target in the right patient population and to ensure the target is translatable to a human disease. This, in turn, requires data and evidence, relevant to that disease state, to prove the target can fulfill its potential as a clinically differentiated, reimbursable medicine that appeals to payers. 

	Most important, all this must be done very early in the commercialization cycle, so far forward that the original depiction of disease states may be altered beyond recognition by competitor successes or progress in the underlying science. All told, the basic activities of new drug development have morphed from simply proving, on the basis of narrowly hypothesized criteria, why a compound should be 

 to justifying, to a much larger group of stakeholders, why that compound should actually be 

	This leads to our second theme, which is 

. This can be measured in many ways, beginning with the sheer proliferation of research collaborations, which are now common among big Pharma firms that just a decade ago shunned them on competitive grounds. R&D is also being shaped by the erosion of the traditional separation between the pharmaceuticals, biotech, and generic sides of the business. Binding all is a competitive push to innovate, even in generics, where process, quality, and supply chain excellence are critical to counter increased pressure on margins. For biotech and pharma, convergence has made the search for talent more mobile and competitive, especially as smaller start-ups find it easier to staff up with exiles from the biggest R&D players. 

	And there is the direct engagement of non-profit professional and patient organizations in drug development, exemplified by the Cystic Fibrosis Foundation’s pioneering venture philanthropy model: a modest $150 million stake it took back in 2000 on a promising Vertex drug candidate, Kalydeco, paid off handsomely last year when it sold its royalty rights for $3.3 billion, instantly giving it a research budget equivalent to any mid-sized pharma. 

	While there is a solid rationale for this and other public-private partnerships, especially at the pre-competitive stage, questions remain on whether the proliferation of deals might be causing duplication that is wasteful of R&D investment and the efficient deployment of scarce human resources. We may see pressure for more international agreement before proceeding with individual programs. 

, evidenced by the continuing efforts of government, academia, and NGOs to promote “open innovation” models, dismantle IP standards, and regulate disclosure of trial results. Post-marketing study requirements-now estimated to comprise a fifth or more of overall drug-development costs-are being driven as well by the push to shed light on real-world safety, side-effects, and the overall “value“ of medicines in the clinical setting.

. While it is premature to declare the death of big Pharma’s R&D mojo, suggestions abound about ways to do it better. We can start with the low-cost “frugal innovation” embodied by China and India. Adjacent businesses like Google and Apple may never actually develop or deliver drugs, but they have a far stronger hand in leveraging big data around a preventive, consumer-friendly health and wellness agenda. This strategy poses an alternative to the disease-centric “treat and cure” model of big industry R&D organizations. 

	Measuring against these four themes is one way to chart the future course of this ever-challenging ecosystem of R&D. Prepare to be disrupted.

From the Editor

Building on our annual look at the industry's product pipeline, four key themes stand out that are driving the fast-changing environment for drug development.

Pharm Exec's Pipeline Report: Twisting the Spigot

	Rare disease advocates seem to have something to say to the industry, “Our work is important and amazing. We have made great progress, but there is so much more to do!” This, or something catchier, could easily have been the slogan for this year’s summit held by

 the National Organization for Rare Disorders (NORD) in Arlington, Virginia, in October.

	Amidst mounting industry rancor, a visit to the conference might be just what the doctor ordered for pharmaceutical executives who could use a reminder of the patient mission and how to achieve it through bold scientific research and cooperation. Given its inside the beltway locale, a day-trip for some politicians could also have been convenient and constructive. 

	Exceptional scientific breakthroughs are rife across the industry, including in many rare diseases, as this month’s pipeline report indicates. But there are four elements that were noticeably different at the NORD Summit, compared to many other pharma industry/medical conferences. 

	First, patient involvement is indispensable. It is clear that patient action, advocacy, and sacrifice is at the center of the success the industry has seen in rare diseases. Taking this as a cue, the conference organizers have plainly made patient participation fundamental. Their emotional and personal stories are one thing, but the real emphasis comes when the message resounds, that patients are essential for the entire drug development and treatment process. Success stems from years of sacrifice by patients and their supporters, who-though suffering through lifetimes of minimal relief-donated time, samples, genomes, etc., to build databases and natural histories. And don’t forget about those patients who suffered on placebo arms of trials. 

	Second, people dedicated to rare diseases exude optimism-this, in spite of their struggles and tragic accounts. There were numerous moments during the NORD event where it would have been difficult to find a dry eye in the audience. The overwhelming mentality is a sense of mission.

	Third, regulators take a front and center seat in the rare disease dialogue. Surely, companies, regulators, and patients bump heads in the rare disease space, as in others. One needs to look no further than the always-contentious debate around early access and the political setting of “right to try.” The summit gives regulators a voice, and it’s clear that their participation is collaborative and constructive. The conference’s DC-adjacent venue and the presence of multiple representatives, many garbed in formal military uniforms, confer an air of civil discourse and service that is missed elsewhere. Though it should be noted, presentations by FDA officials, whose opinions are always their own and don’t represent the agency, have a way of sapping enjoyment from a room.

	The optimism in rare diseases seems to spread to these regulators who see real opportunity for positive measures coming out of PDUFA VI and the 21st Century Cures Act. Acting FDA commissioner Stephen Ostroff noted that industry, stakeholders, and agency agree: patient engagement should be central in PDUFA VI negotiations. Granting companies with additional periods of exclusivity for repurposing existing drugs to rare disease indications and recycling the pediatric rare disease voucher program were quite unanimously advocated. 

	Also, officials were in favor of expanding patient involvement in regulatory meetings and more widely adopting a patient-focused drug development mindset, with patient experience-derived endpoints. “Patients are uniquely positioned to inform our understanding of the therapeutic context,” noted Theresa Mullin, director of FDA’s Office of Strategic Programs. 

	Fourth, pricing is clearly an issue that can’t be avoided, but in the confines of the rare disease space, it is surprisingly minor and certainly not a focal point of division and contention. Rare disease treatments have grabbed headlines with six-figure prices, but when the complexities of treating for real “value” arise, rare disease could be the industry’s saving grace. Clearly, many rare disease treatments are showing astounding results that are worth the price and effort.

	With the political season heating up, the industry promises it will have a retort to those who seek to crush it on the profit motive and price gouging. Huge treatment prices in rare diseases are easy to point to. But maybe the industry can flip the rare disease example to its favor. It’s a complex issue, but one that NORD’s participants grasp. Hopefully, the rest of the industry is listening.

Rare disease supporters deliver inspiration and optimism-as well as promise of regulatory cooperation.

Strength From the Few: The NORD Summit

	When Baxalta Inc. separated from Baxter on July 1, 2015, the company had a unique opportunity to design and build from the ground up the market access capabilities required to succeed as an independent, $6 billion biopharmaceutical business. Baxalta looked ahead five years to what it envisioned were the trends in the industry, defined value from the perspective of those influencing access decisions, and specified the competencies the company needed, thereby aligning the new organization and roles to facilitate the achievement of the ultimate goal-providing patients with medicines they need at acceptable prices.

	To us at Baxalta, “patient access” streamlines the value chain within our company to ensure our products meet our customers’ needs, and in the end create solutions that result in value for the patients, our company, and the healthcare system at large. While it was a significant challenge to arrive at an entirely new paradigm for our organization, the following steps were instrumental in achieving this shift that ultimately has made Baxalta a more focused organization.

	Healthcare authorities do their best to respond to the increasing needs of an ageing and "empowered" patient population on the one hand and have limited resources in healthcare systems on the other. As such, they are often required to limit access within their respective markets to innovations they perceive as reducing costs or delivering superior value, or ideally both. While this is not a new challenge, it has become much more intense in recent years.

	Baxalta realized that it must understand the value of a drug, especially of a new drug or treatment, from the perspective of those influencing the decision to provide access. This was the starting point of Baxalta’s journey to redefine market access:

		To define the key deliverables required.

		Look at the competencies needed to produce the deliverables.

		Define roles that are built around these competencies.

	In the process, Baxalta broke with a few paradigms in the healthcare industry, and validated others. "The result is an innovative, customer-centric way of ensuring Baxalta staff is optimally positioned to understand patient needs and translate these into a value proposition that matters to payers,” explained John Glasspool, executive vice president and head of corporate strategy and customer operations, Baxalta.

2. Define the competencies needed tomorrow

	Instead of focusing on the gaps visible today, Baxalta’s leadership team challenged the global organization to look forward and identify the 

competencies required to compete effectively in the future and to build a model that anticipates these needs. Interviewing a broad range of stakeholders inside the company helped to identify the trends shaping the market access landscape globally (see chart above). Once identified, Baxalta validated these trends with industry experts.

	Securing access to innovative medicines is a team sport. How does one organize operationally to address the needs of patients, payers, providers, policy-makers, and professionals? We defined specific scenarios-such as a health technology Assessment (HTA) for a new product-to test whether the competencies were the right ones and think through how they would be deployed (see example in chart below).

	Since the needs of payers and other access stakeholders at the local level differ, the scenarios helped test whether global, regional, and local roles were properly designed and the interfaces between them sufficiently clear; and highlighted the linkages with other functions critical to access such as R&D, marketing, and regulatory. Walking through the scenarios helped clarify how the competencies helped address the needs of the external stakeholders. As a result, the scenarios reduced the inevitable anxiety and confusion associated with reinventing a function such as “market access” and evolving the approach to “patient access.”

	We found that in order to ensure the new model is properly implemented, we would need to approach it as if we were launching a new product. Roles and responsibilities needed to be redefined, and training programs needed to be developed to help close the competency gaps. The roles have a much more global focus, so processes were implemented to define how global teams will collaborate. Treating the launch of a new patient access organization like a product launch helped the Baxalta team involve key internal and external stakeholders from the start, allowing new ways of collaborating to better meet patient needs.

	Basing the new patient access model on forward-looking competencies was a crucial step, uniquely enabling our access organization to succeed today and be ready for tomorrow’s likely challenges. Having external 

opinion leaders contribute to internal thinking strengthened and completed our efforts. The scenarios were critical in helping the organization think through how these competencies would be deployed. They helped patient access professionals visualize collaboration with each other as well as the larger organization to ensure the outputs created meet the needs of the various stakeholders. Treating the launch of a new patient access organization like a product launch helped Baxalta make sure the company was prepared to embrace innovative ways of working to provide patients with the medicines they need at acceptable prices.

 is Vice President, Patient Access, Baxalta. He can be reached at 

 is Managing Partner of Valeocon Management Consulting. He can be reached at 

The key steps to implementing the "patient access" model of the future

Market Access Reinvented

	Another day, another attack on exorbitant drug prices. Cancer centers pay more attention to cost in selecting treatment options. Plans and pharmacy benefit managers (PBMs) impose strict limits on prescribing of hepatitis C

 virus (HCV) treatments and new anti-cholesterol drugs to control outlays. Turing Pharmaceutical’s 50-fold boost in the price of an old anti-infective treatment ignites moves to curtail drug spending on all fronts. Collateral damage may emerge in reduced support for legislation authorizing added incentives for biomedical innovation and for intellectual property protections around the world.

	While most complaints have targeted costly new specialty drugs, activities by Turing and Valeant Pharmaceuticals have focused attention on hefty price hikes for old medicines, often following product or producer acquisition. Even generic drug makers are under scrutiny following steep increases for traditionally cheap, widely used parenterals.

	Industry marketing practices, moreover, are driving investigations of whether Valeant has violated anti-kickback laws and policies governing patient assistance programs. And Turing has raised antitrust issues related to using a closed distribution system to prevent generic drug competition. Sen. Amy Klobuchar (D-MN) called for the Federal Trade Commission to probe this issue, while the New York attorney general launched an investigation. Generic drug firms have long complained that narrow distribution programs established under risk evaluation and mitigation strategies (REMS) make it difficult to obtain drug samples needed for bioequivalence testing.

	Numerous polls show that consumers want the government to take action to curb drug costs, and the politicians are responding. Hillary 

Clinton rolled out a plan for lowering prescription drug spending in September that emphasizes evaluating medical products based on value and speeding more new generic drugs and biosimilars to market. Clinton wants to end “pay-for-delay” deals, permit drug imports from abroad, end tax deductions for DTC advertising, and require drugmakers to spend a specific portion of profits on R&D. The only good news for pharma is Clinton’s proposal that insurers limit beneficiary co-pays for drugs to make therapies more affordable for patients.

	Clinton’s list also includes the perennial price control strategy of allowing Medicare to negotiate prices for drugs covered by Medicare Part D drug plans. Such proposals have gained traction as Medicare spending on pharmaceuticals has begun to climb after several years of flat growth. A huge (52%) increase in premiums for about 18 million Medicare Part B beneficiaries, which covers drugs provided by doctors and clinics, plus looming premium hikes for Part D plans, is prompting greater focus on how costly prescription drugs may drive these trends.

	The Medicare Payment Advisory Commission (MedPAC) is conducting a broad discussion of Medicare drug coverage and payment policies. An important issue is whether greater use of more expensive specialty drugs will shift more beneficiaries into the Part D “catastrophic” program funded by the government. The Commission plans to make recommendations next year on a range of coverage strategies, including better drug utilization management, improved medication adherence, and programs for “bundling” payments for cancer care.

	Medicare also is launching a value-based insurance design model in 2017, which allows certain Medicare Advantage plans to test whether reduced patient cost-sharing for services and prescription drugs can improve care and save money for beneficiaries with chronic conditions such as diabetes and heart disease. The initiative reflects widespread interest in assessing the value of pharmaceuticals and whether higher costs are justified by improved product efficacy or

 safety. Payers and plans say they will ante up for high-value therapies, and pharma companies are looking more seriously at pay-for-performance deals linked to reimbursement.

	This is generating demand for independent, credible methods for calculating, say, the value of preventing a heart attack or of providing an additional year of life. Not surprising, there is considerable disagreement over how to assess drug benefits, risks and affordability, as seen in the ongoing discussion of the cost of new PCSK9 inhibitors (Amgen’s 

 from Sanofi and Regeneron) to control very high cholesterol. A September report by the Institute for Clinical and Economic Review (ICER) criticized $14,000 list prices for these new therapies and concluded that $4000 better reflects their value. At a recent symposium sponsored by the Pew Charitable Trusts, Amgen senior vice president Josh Ofman charged that the ICER assessment focused too much on short-term affordability as opposed to long-term health benefits, and that ICER systematically under-estimates population risk and over-estimates the likely uptake of these drugs. ICER president Steven Pearson responded testily that he’s “very proud of our work” and that pharma companies can’t expect “a blank check anymore” to cover costly medicines.

	The National Pharmaceutical Council (NPC) separately critiqued ICER’s value assessment framework, calling for greater transparency in its models, assumptions, and data used in evaluating treatments. NPC questions how ICER calculates drug uptake rates and emphasizes the need to recognize changes in treatment value over longer time periods.

	A common pharma complaint is that analysts too often use drug list prices in calculating costs and benefits and ignore discounts and rebates routinely negotiated by payers in their assessments. The ability of PBMs to obtain much lower prices from manufacturers was clear in Express Scripts’ announcement that it will cover both of the new anti-cholesterol drugs due to hefty company price concessions. Last year, Express Scripts and other PBMs used competitive bidding to select only one of the new HCV treatments for formulary placement, decisions that upset many consumers.

	Express Scripts plans to manage the cost of the new cholesterol therapies with strict patient utilization and step-therapy strategies, noted senior vice president Steve Miller. And more sophisticated data systems that can help determine if a patient has previously used statins and the outcome will enable the plan to better target prescribing to individuals unable to control extremely high cholesterol levels, as per FDA-approved labeling.

's Washington correspondent. She can be reached at 

Drug-Pricing Backlash Reaches Fever Pitch

’s 2013 end-of-year supply chain roundup, we began with a three-word vision of the immediate future that left little room for ambiguity: “Serialization is coming.” With the impending laws regarding “track and trace” promising to alter the way pharmaceuticals are packaged and shipped, we outlined how global pharma was gearing up to deal with the effects of serialization, and how companies needed to review their own internal practices and those of their outsourcing partners, as the need for technology solutions for both sides of the outsourcing relationship became more evident. 

	Of course, that message still stands, and it is arguably even more urgent if we are to believe Ian Haynes of 3C Integrity Consulting, who unnerved many in the audience at London’s recent FlyPharma 2015 conference when he said that pharma is still not ready to meet the obligations of track and trace. But since 2013, a number of other concerns-some equally as transparent, others less immediately visible-have emerged to stand alongside the move to serialization as potentially major disruptions in the way the industry operates. Indeed, as we head into 2016, one industry insider believes the pharma supply chain is facing a confluence of challenges “the likes of which it has never seen before.”

	Alan Kennedy, director at PartnerSave, pulls no punches when he outlines the litany of challenges that he sees confronting the pharma supply chain over the next five years. He points to “the escalating good distribution practice (GDP) demands on the industry (and the need for greater harmonization); the pressures from the marketplace for cheaper medicines; shifting consumer expectations, with the trend towards more specific, personalized medicines; and rocketing costs.”  

	The crises are already starting to hit. Kennedy says: “A lot of pharma companies are waking up to the fact that they need to sharpen up their act in terms of compliance with the regulations. But while a lot of the need for change is regulatory driven, it’s also competitive. There’s a lot of lip service paid to the need for reform, but the problem is translating the intention into action.”

	One of Kennedy’s “perfect storms” on the horizon is gathering around outsourcing from, and supply to, emerging markets. As these are the markets “where growth is coming from,” he stresses that pharma companies must be better integrated and work more closely with their partners if they are to continue to expand in developing countries. “They’ve got to make sure that the best practices that apply here also apply there. There’s no use having a state-of-the-art facility in the US but not in, say, India or Latin America, where you’re doing business; products have to be reliably protected from start to finish.”

	John Menna, UPS vice president of global strategy, healthcare logistics, often observes companies “doing a fantastic job of maintaining the efficacy of their products from manufacturer all the way to the destination country.” But when the products get to their destination, where there isn’t the same commitment to rigorous procedures, “they end up not being stored at the proper temperature, in the right environment, and with the right protocols.” And companies may be unaware of this, Menna adds. “If a vice president of supply chain at a big Pharma company flies out to the destination and sees how products are being stored there, they may be in for a shock. Companies need to take a hard look at their supply chain endpoints, and at the providers that they’re using.”

	Fast-growing firms must establish their emerging market networks in a “much smarter, more flexible way,” Vitaly Glozman, partner at PwC, told 

. Traditionally, big Pharma’s “huge, static networks” have been difficult to change or use effectively. Glozman believes that a “hub-and-spoke” model could provide the key. “By investing in a hub in, for example, Dubai and then outsourcing the hub’s ‘arms and legs’ to local distribution warehouses across the Middle East, a company can minimize its CAPEX investment and achieve flexibility,” he explains. “Or, if things go south, it has the ability to reduce volumes and spend, kind of like transitioning its CAPEX to its OPEX.”

	As companies gear up to expand into more countries with more products, however, there will be, accordingly, more threats to data and product security. “A lot of companies are going to be selling so-called drug-device combination products that include data collection capabilities. These products will enable the patient to communicate the results. How that data will be transitioned back to the pharma company or provider presents a big challenge. Companies will not only have to deal with product security but also patient information security,” says Glozman.

	Certainly, pharma seems somewhat unprepared for the supply chain demands of an increasingly patient-focused future. This is largely a result of the healthcare supply chain remaining, says Menna, a “

 supply chain, where manufacturers, wholesalers and distributors push products into the channel and downstream to the hospitals, doctors’ officers and ultimately to the patient.” 

	But things are moving to a point where patients are 

 products through the supply chain for their own consumption. “This is similar to a retail environment; to take an extreme example, it’s like an online purchase of audio-visual equipment to be delivered to the home.” With more personalized medicine procedures being done outside the institutional setting and closer to the patient- either in an outpatient facility or even patients’ homes-logistics solutions will need to start providing for the sending of alerts to patients, allowing them to determine when and how a product is delivered, and facilitating the transportation of critical specimens from the patient to diagnostic labs.

	As the pharma supply chain evolves  from “push” to “pull,” analytics will become a more vital part of the process. Much has been written about analytics and big data, but now more than ever, leveraging the data that pharma has been collecting and investing in predictive and prescriptive analytics will be key to maximizing the promise of data, for issues ranging from temperature tracking to warnings of drug shortages and recalls.

In Pharm Exec’s 2013 end-of-year supply chain roundup, we began with a three-word vision of the immediate future that left little room for ambiguity: “Serialization is coming.” With the impending laws regarding “track and trace” promising to alter the way pharmaceuticals are packaged and shipped, we outlined how global pharma was gearing up to deal with the effects of serialization, and how companies needed to review their own internal practices and those of their outsourcing partners, as the need for technology solutions for both sides of the outsourc

Pharmaceutical Executive-11-01-2015

Pharm Exec's 2016 Pipeline Report

The 'Prosolidate' Push: New Agency Service Mix

Pharm Exec's Pipeline Report: Twisting the Spigot

Strength From the Few: The NORD Summit

Market Access Reinvented

Drug-Pricing Backlash Reaches Fever Pitch

The Push for a Pull Supply Chain

Think Globally, Act Locally

Precision Medicine's March to Market: 'Pairing' for Success

Drug-Pricing Backlash Reaches Fever Pitch

Country Report: Turkey