	Like many armies, pharmaceutical marketing organizations are usually better equipped to fight the last war rather than the next one. This is plain human nature; after all, today's leaders were yesterday's young rising stars, gaining their formative experiences in that last war. But success, in war and in marketing, usually goes to the side which accepts and acts on the challenges of the new environment more rapidly.

	We have an advantage over those armies, though. Unlike the British strategists whose early investment in air power helped save their nation from invasion in 1940, we have a clear view of the challenges of our next war because they are upon us already. We know that modern healthcare marketing is going to require: a more complex and multifaceted relationship with the patient and the physician, deep analysis of the vast pools of patient data that are becoming available, new ways of narrowing the scope of our targeting capabilities, and the ability to rapidly respond to changing market conditions. These challenges are not news, and their solutions are well within our reach. The following are three of the obstacles of our next war and how we, as marketers, can overcome them.

Challenge: Thinking remains short-sighted

	For all the "slow and steady" that is required on the drug development side of the pharmaceutical industry, pharma's marketing decision makers tend to think in terms of short-term rather than long-term goals. Marketing and sales goals are set in increments of 12 months; brand managers are rotated out every 12 to 18 months; compensation for those managers is based on how the brand does now rather than five years from today; and the challenge of med-reg approval means that an agency partner will breathe a sigh of relief if it can get even one or two campaigns out the door in a year. Twelve-month budget planning and annual performance review cycles often lead to a "checklist marketing" mentality from brand managers who need to show some kind of progress before year-end. This sort of structure may make perfect sense in the context of a traditional large sales organization, but in a marketplace where long-term relationships with patients and physicians are becoming more critical each day, it has outlived its usefulness.

Solution: Change the incentive structure. 

If brands are to have long-term relationships with patients and physicians, we need to find leaders who are going to have long-term relationships with brands. Rather than a brief stop in a lengthy management rotation, serving as a brand manager should be a long-term commitment that is rewarded and compensated accordingly. If a brand manager knows from the beginning that his or her fate will be tied to the brand's fate for the next five to 10 years-that the person's hopes for a jump to upper management depend on the brand's performance over time-then he or she will be naturally incentivized to look beyond the annual budgets and marketing checklists to think in broader strategic terms. The individual will see the value in slowly building a tapestry of brand touchpoints over a period of years. Leaders whose compensation is based on a long-term horizon can afford to be patient, and the virtue of patience in brand development will only grow as our ability to target becomes more granular and the digital tools become more complex.

	No one will argue the point that big data is offering a transformative opportunity to marketers. But collecting all those mountains of data is one thing; sifting through all of it and drawing actionable conclusions is very much another. There's no way around it: learning how to handle big data is going to be a long, difficult, and expensive undertaking. Large organizations being what they are, many marketers may feel the pressure to invest in a single solution or software package or data warehouse on the enterprise-scale to try to efficiently deal with the challenge of big data. But in so doing, they may only compound the problem-multiplying the volume of data, forcing the entire enterprise to change its workflow all at once in a short period of time, and trying to stretch that single solution across the complexities of many different brands and brand audiences. On top of that, given the speed of change in technology, it is quite possible that any enterprise solution on such a scale will be obsolete by the time it is fully integrated into the processes and another round of lavish spending and training will be necessary just to keep up.

 Just as with the previous challenge, this one demands the virtue of patience. Rather than throwing vast resources into a single solution to the big data challenge, companies and brands should think small, slow, and steady. Start with small-scale, highly targeted data collection and analysis pilots on individual brands or audiences that seem particularly ripe for a granular data approach. And prioritize-choose for your target the data that's really critical or could offer the greatest potential upside. This approach offers three major benefits:

	» It empowers brand managers to make their own decisions as to the right approach for their brand rather than accept a solution dictated from on high.

	» It allows one to show the value of their approach at low risk and gain institutional buy-in gradually.

	Each success story will encourage other brand managers to try their own big data pilots while justifying a greater resource commitment from the enterprise at large. And the experience gained at low risk and on a small scale will come in handy as your organization dives deeper and deeper into more complex and larger-scale data analysis. After a few "wins," you'll find the big data ethos seeping through the entire company; rather than thumping that single big data solution down on the desk of each brand manager, you'll find them competing to outdo each other with their own solutions. Not a bad result.

	Or, put differently, pharma isn't agile. A modern integrated marketing program is going to call for an iterative, nimble, test-and-learn, agile approach with active participation across various functions and a large volume of customized content being produced and rapidly deployed at any given time. The pharmaceutical industry is not noted for having a surplus of any of these characteristics-in fact, just the opposite. We are slow, we are tentative, we are risk-averse, we set it and forget it, we move like an aircraft carrier, we work in siloes. And even when something does get done, it takes six months for legal/medical/regulatory to approve it.

 Pharma marketing departments are not going to magically become nimble after 50 years of creaky joints just because external conditions suggest that doing so will be beneficial. It is going to take an enterprise-wide commitment to break down all the impediments to real agility. To achieve this, we need leaders, leaders at the highest level, who are willing to make agility mandatory across the company. Those leaders need to encourage innovation and smart risk-taking, reward speed and efficiency, and not take no for an answer when the fate of a brand is at stake. The single most critical factor observed in achieving this sort of agility is uncompromising, demanding leadership. Big company or small company-size doesn't matter if the person at the top refuses to accept obstacles.

	If a pharma is fortunate enough to have that leader in place, what are some strategies he or she might try to start greasing up the joints?

-Try testing ideas or prototypes in innovation lab settings. Innovation labs, in some cases, have worked extremely well in order to prove or disprove the viability of a tactic or marketing tool quickly so the team can make a move. Get everyone-brand team; sales; legal/medical/regulatory (LMR); developers; physicians; patients; etc.-in the room, all at once, to talk through the problem, develop a prototype together, give people something concrete to see and touch, listen to what everyone has to say, and make a decision.

-In a tapestry-style integrated marketing program, the differences between many of the assets will be small, and the number of assets will be large. So rather than having to approve every single bit of content, LMR departments should be approving templates, outlines, general approaches-basically a variety of preapproved roadmaps into which the marketing team can plug a specific route for each specific circumstance. Some companies have already done this successfully in the social media space.

-Plenty has been written about the matrix team concept-ask Doctor Google if you want to find out more-but the basic idea in this case is to create a team in which members come from different organizational functions and are led by a particular "activity leader" to whom they may not have a formal reporting line. A good matrix team with both breadth (leaders across functions) and depth (from decision makers at the top to the guy in the cubicle at the bottom) can go a long way toward breaking down the silo mentality that is so prevalent in large organizations.

	These, of course, are not the only new challenges we face in healthcare marketing, but they underlie nearly everything else. Those who turn to face our industry's habit of short-sighted thinking, come to grips with the difficulties of exponentially growing pools of data, and figure out how to grease the joints of their marketing processes-those will be the winners of our next generation of brand wars.

is CEO of Intouch Solutions. He can be reached at 

Articles

Column

How pharma companies can catch up to the requirements of the modern marketing model.

Marketing: Ready for the Next War?

As we turn the page to 2015, the season of annual sales meetings is upon us. Leading pharmas are sharpening their already-honed focus on making their kickoff the gateway to growth, as brand teams refine product messages for drugs in various stages of their commercial life cycles. Sales teams look to these national gatherings to address mounting in-market challenges—from diminished physician access and cross-selling demands to heightened regulatory and competitive pressures.  

With so much to cover, kickoff attendees must juggle an overwhelming volume of new information critical to the job. Meeting days are so jam-packed that reps can hardly catch their breath between presentations—let alone recall the content with any detail in the days and weeks that follow. Even worse, if a drug launch or new indication is delayed for any reason, the competitive responses or client approaches introduced in January or February will be long forgotten by May. Executives may not realize there's a skills gap until it's too late. 

Brain science suggests that nearly 80% of the new information imparted during a kickoff or plan of action (POA) will be forgotten within days and weeks. It's not the fault of the sales rep, sales executives, or the instructors. It also doesn't reflect on the richness of the content or the sound instructional design. It is simply a matter of how the human brain works. This phenomenon known as the "forgetting curve" was first uncovered more than a century ago by German psychologist Hermann Ebbinghaus.  

Over 20 randomized control trials conducted at Harvard and elsewhere in the past decade prove that there's a neurophysiological basis for this, and that a process of interval reinforcement can help make learning stick. Sometimes referred to as the "spacing effect," experiments show that knowledge and skills are preferentially retained in long-term memory if presented and reinforced in small amounts over intervals of time. There's also a "testing effect"—where the simple act of answering a question can provide retrieval practice and active learning that in itself can dramatically improve knowledge retention, compared to passive learning without retrieval practice.  

A recent study of sales meetings in the medical device sector bears out the value of this. At Intuitive Surgical, a manufacturer of robotic surgical systems, product training is typically part of the sales meeting agenda and, like pharma, can occur months before the product actually launches. To test the concepts of interval reinforcement, Intuitive Surgical performed a three-way benchmark comparing knowledge retention scores from those who attended the product training: 1) with traditional training support in the form of eLearning modules, 2) with access to 1:1 coaching by a subject matter expert, and 3) with reinforcement in the form of scenario-based challenges delivered in a Q&A format to their mobile device every few days using simple game mechanics. 

The results were dramatic. In a post-test 90 days after the initial training, Intuitive Surgical found that the mobile game approach delivered the same level of knowledge retention as access to a 1:1 coach, and better retention than the training program alone—with far less investment of time, money, and resources. 

Furthermore, the mobile reinforcement approach allowed them to gather data on what sales reps understood, and their readiness to apply new information to the job. Sales and training executives used the data to drill down into individual performance, and monitor overall capabilities of their sales teams relative to their ability to position new products with buyers. 

Today's most innovative pharmas are putting this brain science to work as well. They're focused on the pull-through of messages delivered at annual kickoffs, mid-year meetings, and POAs. Increasingly, they are making mobile the platform of choice for reps, and incorporating game elements to drive engagement. They're also leveraging predictive analytics to point the way to: 

» Personalized coaching of reps based on knowledge gaps that can create risk.  

» Correlation of engagement and proficiency levels to sales performance data to spot and address issues proactively.  

» Use of confidence ratings to identify cases where either reps have confidence that exceeds actual understanding, or where reps are impressively knowledgeable but lacking in confidence—two circumstances that can impact market share and revenue.  

Executives at the US division of Boehringer Ingelheim, a top-20 pharma, recognize that field reps are squeezed for time, yet must thoroughly understand product attributes, disease states, and competitive positioning as well as the complex healthcare system issues of concern to their physicians. 

The team considered traditional paths to pull through such as eLearning, richer interactive content, and even more face-to-face meetings during the critically important months between sales meetings. They determined that incremental improvements were not sufficient and sought a "game changer." 

After an initial trial, Boehringer Ingelheim rolled out a program to 2,500-plus field reps using a mobile reinforcement platform. Its approach had been scientifically proven in dozens of clinical trials to change selling behaviors with impact to the bottom line. Reps simply answered two questions from their laptop or mobile device every other day. They were immediately scored, could see how their peers answered the same question, and were presented with a concise explanation and on their way in minutes. Engagement was high, spurred on by the competitive leader board aspects of the solution.   

The management team received weekly summary reports and graphs on proficiency and engagement. The information gave unprecedented insight into areas where they required additional support and coaching.  

Pharma facilitates faster time to performance

At present, eight of the top 10 pharmas are employing the same approach to making sure they monitor and manage the capabilities of their sales reps—and from that, enable important management decisions. 

In April 2014, a top pharma ran a reinforcement program as part of its mid-year kickoff following the acquisition of a competitor's drug practice, which included the addition of more than 1,000 new reps. The teams came together at a week-long introductory meeting to the new drugs they would represent in market. Great effort went into providing the reps with the best information by the best resources in the most engaging and helpful way. After the intensive in-person meeting, the pharma established a control group of about 500 reps and a separate group of 2,000 reps who actively participated in a mobile knowledge reinforcement program. 

The introduction of a knowledge reinforcement platform increased retention by 20%—as measured by the accuracy of a rep's first response attempt vs. their final attempt up to six weeks later. This demonstrates that reps gained knowledge over time in addition to retaining it. After program completion, retention among the 2,000 reps who participated was 32% better than the control group, which continued to experience decays in important information they needed to know. Program dashboards provided management with graphical views of baseline knowledge and improvement over time. In addition, as per the "testing effect," the aggregate performance on the first attempt at a question was significantly higher—63% compared to 52%—among those using the reinforcement program compared to the control group.  

Meeting demands of  dynamic market change

The analytics provided on data gathered from deeply knowing what sales reps know can be critical long after the kickoff to assess readiness in light of market changes: 

: A major pharma spent the summer of 2013 readying for a new drug launch and hired nearly 100 new reps in support of it, only to learn in October that FDA review was delayed until 2014. By implementing a mobile reinforcement strategy, they ensured that critical knowledge was retained by the sales team.   

 A West Coast biotech firm with over 2,500 clinical specialists, medical science liaisons, and marketing staff, used this Q&A approach to identify specific clinical topics that were not well assimilated to help guide the targeted investment of training time and resources. 

 The ability to tag data from responses in unlimited ways can be used in the evaluation of the best places to hire reps. For example, perhaps reps from a specific competitor demonstrate a stronger grasp of clinical knowledge and compliance requirements, while reps hired from related industries have sharper selling skills.  

Understanding the important long-term benefits of a sound reinforcement strategy is key to 2015 sales success. But tackling the "forgetting curve" head on is just the beginning. It's time that more pharmas start harnessing technologies to make sales training less about "death by PowerPoint," and more about ongoing, data-driven sales management—before the competition does.  

is CEO and Co-Founder of Qstream Inc. He can be reached at 

New ways for pharma to make sure its sales reps stay sharp amid a flood of new information and a more complex selling climate.

What's Wrong with the Annual Sales Kickoff: And How to Fix it

, not just for gifts, but for some of the trends that shaped big Pharma-for good or bad-during the past year. A simple way to close the book on 2014 is to draw some insights from our three feature stories this month. Whether by design or circumstance, our efforts reveal the random diversity of threats and opportunities facing the industry today. 

	Certainly the cast of players that bears watching is growing larger and less predictable. Our cover profile on Express Scripts Chief Medical Officer Dr. Steve Miller is a lesson on how splendid isolation cannot be a winning strategy for big Pharma today. Interdependency may not induce harmony either, but it is necessary, nonetheless, if only because a stakeholder with buying power for 85 million covered lives carries a big stick. You might call Miller a disruptive innovation in himself, with a publicly adversarial posture that has him refusing to walk softly within the well-worn treads of the drug industry's pricing model. Personalities aside, it's a clear departure for a low-profile company that labored in obscurity as it grew its revenues to exceed those of all the top 10 big Pharma players today. 

	In a lengthy interview, Miller touts his background as a medical researcher and lays out a

 to improve cooperation with R&D drugmakers. His objective is to boost the efficiency of drug development and thus lower the cost of new breakthroughs, particularly in high-demand specialty categories. Competitive self-interest is the driver here: with most generics commoditized and fewer patent expiries on the horizon, Express Scripts' value proposition to its own customers-some 4,000 plan sponsors-must skew heavily toward control of their exposure to higher priced biologics. Given the large ongoing investments PBMs must make in servicing these plans, book retention rates are as important to them as free pricing is to big Pharma. 

	Miller's offer merits some kicking of the tires to test its credibility in the broader policy arena. And there are examples of mutually productive contacts, like a recent deal with Sanofi, where the two companies agreed to share data to guide the conduct of clinical trials and build real-world evidence from post-marketing studies. The proviso is that relations require, from the big Pharma side, careful internal alignment around a negotiating stance that can anticipate any number of scenarios, from good to catastrophic. Relevant is Sanofi's own stumble on "price protection" as a condition for securing Express Scripts' formulary coverage for its all-important US diabetes franchise, a lock hold on future profitability widely assumed as a factor behind the sudden departure of CEO Chris Viehbacher in October. The prompt for PBM contacts in 2015? Trust but verify, and stay close. 

	Next is PE's annual review of industry M&A activity, conducted with Editorial Advisory Board member Young & Partners. The record numbers, aptly described as "frenzied," are motivated by a bewildering array of company responses to changing market conditions. But the statistics also mark the arrival of a new stakeholder with the clout to shift the industry trajectory: the financial activist, who sees opportunity not in the science but in the scaffolding around obscure accounting terms like EBITDA. The evidence this year is that profits from market manipulations can match the rewards from great medicines. The $2.6 billion gain posted by hedge fund activist Bill Ackman of Pershing Square Capital Management, as a consequence of his months-long legal assault on Allergan to steer it to a shotgun marriage with serial acquirer Valeant, just about equaled the revenue earned by Gilead Sciences on its miracle HCV cure 

 during the same period. Does money follow the patient, as health economists like to say? Not anymore, apparently. 

	Third on our list this month is an Executive Roundtable on how companies are upgrading the role of project management to speed the transition from drug development to commercialization. Here, we learn what might be the single-most important lesson from the market churn that characterized the year now ending: the need for focus, at every stage of the decision chain. Participants touted learnings from other sectors, like automobiles, where process efficiencies have shortened the turnaround time to new product introductions, with a powerful impact in concentrating the minds of teams that manage the pathways from development to launch. The big question for big Pharma is, recognizing that its own lead times are always going to be longer, how do you keep the troops engaged, disciplined and on target-for the duration? 

	Manage that transition well, and the rest will fall into place. 

From the Editor

THE CALENDAR SAYS IT'S WRAP UP TIME, not just for gifts, but for some of the trends that shaped big Pharma-for good or bad-during the past year. A simple way to close the book on 2014 is to draw some insights from our three feature stories this month.

2014: Reading Between the Lines

	Foreign governments are enacting anti-fraud legislation as part of broader efforts to crack down on corrupt practices involving pharmaceutical companies and healthcare professionals. The trend reflects more aggressive campaigns to squelch long-accepted payments to doctors and hospitals and draws heavily on US and European policies designed to uncover violative pharmaceutical promotional and sales activities. Evidence of illegal practices abroad, moreover, provide evidence for US prosecutors of violations of the Foreign Corrupt Practices Act (FCPA) and other laws governing industry relations with healthcare providers.  

	The Chinese campaign against bribery and corruption of health professionals has set the tone for aggressive pharma probes and harsh penalties. In September 2014, a Chinese court imposed a near-$500 million fine on GlaxoSmithKline for bribing doctors and hospital officials with payments through travel agencies and industry associations. Novartis has reported an investigation by Chinese authorities into allegations of misconduct by certain employees. China's anti-fraud efforts show no sign of fading, as seen in recent "circulars" that permit "blacklisting" a company from doing business with government health programs if there any any signs of paying commissions and fees to physicians or making "improper" donations. 

	"The globalization of anti-corruption activities is on the march," observed Saul Helman of Navigant Consulting at last month's Pharmaceutical Regulatory and Compliance Congress in Washington, D.C. He noted that pharma marketers face increased scrutiny for potential corruption in many regions. Brazil's Clean Company Act of 2014, for example, holds companies responsible for the corrupt acts of its employees. Canadian legislation makes it a criminal offense for private-sector employees to bribe public officials. Sanofi recently acknowledged investigations into alleged bribery and payoffs to medical professionals in the Middle East and Kenya. Foreign clinical research practices also are drawing more scrutiny, as seen in charges by Japanese prosecutors against a Novartis unit found to tamper with study data. And many governments seek to uncover illicit behavior through new laws requiring transparency and public disclosure of industry financial relationships with healthcare professionals. 

	These foreign investigations provide ammunition for US officials to probe FCPA violations, which involve payments to foreign government officials, including doctors employed by national health systems. GSK has reported that both the US Department of Justice (DOJ) and the Serious Fraud Office in the United Kingdom are investigating whether Glaxo payments to foreign officials violate the FCPA and British law, which could result in more fines and penalties. 

	The US Securities and Exchange Commission (SEC) has become more aggressive in pursuing FCPA cases, and "fines are going up everywhere," noted Susan Markel, managing director at AlixPartners and former chief accountant at the SEC. The Dodd-Frank Act rewards whistle-blowers for informing SEC of situations involving payoffs and bribery that could lead to fraud situations related to inadequate financial disclosure and stock misrepresentation, pointed out Sara Bloom, assistant US attorney in Boston. Pharma corporate mergers and acquisitions are triggering similar investigations into whether material filings have important omissions or misstatements. 

	Prosecutors also continue to investigate traditional collusion and fraud cases, as seen in recent DOJ probes of alleged price fixing by generic drugmakers. And investigators remain on the lookout for evidence that can hold individuals responsible for company transgressions, as seen in corporate integrity agreements that require a high-level executive to certify compliance with its provisions. If executives blame violations on a "rogue employee," explained Bloom, the firm will need to provide evidence that the individual was clearly told not to commit the violative action. 

	Many of these issues are being investigated by the Health and Human Services (HHS) Office of the Inspector General (OIG), which has long been involved in pharma cases involving off-label promotions and kickbacks that violate the False Claim Act (FCA). Notable settlements this past year have involved Endo Pharmaceuticals, Teva, Astellas Pharma, and Shire. Most recently, medical device makers Biomet and Biotronik have settled kickback charges alleging improper payments to physicians to influence product use. 

	The OIG "work plan" for 2015 reveals continued interest in FDA operations and pharma sales to government health programs. The analysts will be looking at FDA inspections of generic drug manufacturers, whether pharma companies meet initial requirements for tracking drugs through the supply chain, how well FDA monitors postmarketing studies for new drugs, and whether sponsors comply with requirements for registering and reporting results to the 

 website. Several studies will examine Medicare Part B spending on drugs, including the need for closer scrutiny of Part B payments for off-label uses of drugs listed in compendia, and how much money Medicare could save if it paid for Part B drugs at 340B prices. 

	OIG senior counsel Mary Riordan noted that her office will continue to monitor whether pharma promotional messages encourage the use of products for unapproved uses, looking specifically at sales reps providing billing and coding advice to doctors to support off-label prescribing, and whether messages to payers and formulary committees are accurate and balanced. 

	With the advent of the HHS Open Payments program, the OIG plans to explore how Sunshine Act data may help investigators identify financial relations between pharma companies and healthcare providers that could influence the purchase of medical products. The OIG is looking to track pharma company payments to hospitals and formulary P&T committees and the resulting discount and rebate agreements. And it's interested in reassessing how the risk of becoming entangled in illegal kickbacks may arise from seemingly common company arrangements with healthcare professionals, such as speaker programs, consulting contracts, and payments for training activities. 

	Riordan advised pharma companies to use Sunshine reports for their own internal monitoring programs by looking at where there are outliers in payments and recipients and spending spikes in certain markets. The Open Payments data provides an "additional tool" for law enforcement programs, Riordan commented. "Whistleblowers will be looking at it and analyzing the data," she noted, "as will the media." 

's Washington correspondent. She can be reached at 

Foreign governments are enacting anti-fraud legislation as part of broader efforts to crack down on corrupt practices involving pharmaceutical companies and healthcare professionals.

US Pharma Probes Go Global

Two words define the future of commercialization project management: Faster and Better

	Payer pressures to slow volume growth and drive down margins, a continuing wave of patent expiries, and fewer ripe targets for drug development have left biopharma companies with one ready remedy for hard times that is uniquely within their own sphere of control: finding better ways to manage those internal operations and processes that produce products. Project and process engineering is attracting more attention from the “c-suite,” while technology is unlocking the many efficiencies latent in the vast stores of information that companies collect on the long road to commercialization. In other words, it’s time to declare process innovation in drug development and commercialization as a strategic capability-when done well, it can spell all the difference in launching a new product, between life cycle hegemony and that hardly-worth-a-ripple “ho hum.”

	To shed light on what works and what doesn’t, 

 convened a prominent global operations strategy consultant, UMT, and four big Pharma practitioners of the art of commercial effectiveness to discuss what makes their days a constant challenge in turning a world of multiplying left-field risks into manageable routines. If you are looking to find synergies in the research arts of serendipity, this group can.

William Looney, Editor-in-Chief, Pharmaceutical Executive

Will Mongon, Vice-President, Business Development, New Product Planning and Foundation Portfolio

Tim Phelan, Executive Director, Global Project Management, Merck Research Laboratories

Matt Portch, Team Leader, Commercial Effectiveness, North America Global Innovative Pharmaceuticals, Pfizer Inc.

Farouk Rhymaun, Vice-President, UMT Consulting

Caroline Sexton, Executive Director and Head, Program Management, Regeneron Pharmaceuticals

Amit Tangri, Vice-President, UMT Consulting

 The objective of today’s biopharmaceutical enterprise is to move seamlessly from the R&D phase to commercialization: accelerating development time to market; executing a strong global launch program, across geographies; building market share against the competition; and sustaining that lead right through the end of the product life cycle. Attaining this objective is easier said than done. Why-and how-does a commitment to functional integration help management navigate that often unforgiving transition from registration to the real-world battle for clinical acceptance and market share?

A distinguishing characteristic of the industry over the last 15 years is the growing gap between expectations and performance. Drug development times and R&D costs are rising, while the number of approved NMEs and utilization of branded innovative drugs, as a percentage of total scrips, is declining. The contrast leads to a singular conclusion: this is an industry that needs to be more efficient. It has to create process improvements that allow for greater selectivity in the products being pushed down the pipeline, at lower cost.

	That is a difficult change to accomplish, for two reasons.  First, it requires a harmonization of functions across the entire organization, not just R&D, even though in practice such functions tend to be heavily siloed. Second, we see today a far more disruptive external environment that prevents the business from relying on a neat sequential path to commercialization, as was common in the past. It’s no longer possible to move a compound down the pipeline by just checking the boxes starting from preclinical, Phase III, and regulatory submission followed in close order by market access, promotion, and sales.  The pace is variable and the spaces where you engage are blurred; product teams have to be ready to address anything, at every stage of the process.

	According to the FDA Center for Drug Evaluation and Review (CDER), the number of approved NMEs has averaged about 22 over each of the past 10 years. During the same period, company applications for market authorization have remained static, which has prompted CDER to state that it does not expect to see a significant year-to-year rise in new drug approvals. The numbers also show some big year-to-year contrasts in approvals, such as the drop from 32 approved NMEs in 2004 to only 20 in 2005 (see chart below). Here, the culprit was the fallout from Merck’s withdrawal of 

, which considerably reduced the tolerance of regulators and industry for risk. Taken together, the approvals data suggest that, however good the science of drug discovery may be, there are an increasing number of hurdles that expose the industry to greater uncertainty, which given the long lead times in biopharmaceuticals, always must be expressed in terms of costs. To survive, industry has no choice but to raise its game internally.

Isn’t demonstrating improvement in health outcomes an additional factor that requires drugmakers to focus on functional and process efficiencies if they want a product to succeed in the marketplace? 

 Acceptance of a medicine is now built around a value-based model rather than the evidence-based approach, where all you had to do was meet the [randomized clinical trial] endpoints set by the FDA. Demonstrating value is a formidable task that, again, cannot be handled sequentially. Different functions-clinical development, P&R, marketing, sales, and medical affairs-all have to come together, starting from the very moment testing begins in human patients.  We have strong evidence of system and process failures due to the many drugs that pass muster at the FDA and then founder as payers and providers hesitate  to embrace the product under real-time market conditions. Why? Because the products usually have little to offer beyond proof of safety and efficacy. The people and capabilities best able to make that broader proposition were not in the room at critical stages of their evolution into products. Innovation-the way regulators might define it-is not enough. Operational excellence through functional integration is the pre-condition for success; without it, innovation remains an abstract concept rather than a driver of competitive advantage.

What is the most essential factor in overcoming these persistent barriers to operational excellence? How do you execute for success?  

Our projects with client companies have yielded two examples that resolve some of the tensions inherent to operating in this new commercial environment. The first involved a company with eight new products it was preparing to launch over the next several years. It had no process in place to manage the abundance of assets, a task which for that company was unprecedented in its scale and complexity. The key flaw we identified was the absence of an information tool that would permit all the participants in the launch process to interact, share, and collaborate among the various strands of work, in real time.  

	Hence, we designed with the company an operational management approach and a system that helped different functions, with multiple assignments, to immediately understand what they were doing both in the context of their brand or function as well as relative to other brands or functions.  Instead of dispensing raw data, we opted for a visualization platform that enabled the teams to actually see the connections needed at each stage of the product journey.  It was designed around accessibility in interpreting information, for data alone is useless unless it can be transposed into the knowledge required to make good decisions.

	The second example of a process challenge is a company that went from managing about a dozen clinical trial programs per year to more than 100. As the data management requirements became vastly more complex, the company realized its existing clinical trial management system infrastructure was inadequate. Specifically, there was no cross fertilization between internal activities and the inputs from CROs handling the trial sites. To address this, we built what we call a “clinical explorer” solution that consolidated reams of information from different sources into one central repository, accessible to all. This considerably reduced the time spent searching through different systems to obtain data, making it faster to track the asset as it moved through the stages of a trial.

	Both cases respond to this central problem in managing an asset, for the long term: maximizing available resources, removing organizational silos, and, by bringing useful information together in one place, extending the bounds of what is feasible through collaboration. There was a major time-saving component, particularly in expediting answers to questions from senior company management.

Consolidating and enhancing the usefulness and accessibility of key data is undeniably important, but how do you take that extra step in understanding factors like anticipating actions on market access that often play out only over a period of years? 

 Making sure information is “fresh” demands a cultural change in organizations, because people tend to be protective about sharing information within their control. Breaking that bond demands a system of governance that has buy-in from the very top of the organization. The other element to keep ahead of the game is generating constant feedback from stakeholders that can influence an asset’s long-term prospects in the market. It’s the only way to guarantee information is constantly updated and replenished.  

 I’d add another element. By extending the reach of useful data to more people, we broaden the scope of decision-making. It actually facilitates different conversations-conversations that in a silo information system don’t take place. This provides an extra measure of exposure to perspectives beyond the current status quo-alternatives that may make the future slightly more predictable.

 Now that we have identified information management as a critical process challenge, what other issues are shaping your capacity to innovate in bringing products from the bench to the bedside? Where are the opportunities and risks?

 Complexity is the dominant issue we confront on a daily basis. Whether it is the outcomes research required to demonstrate value to a growing list of stakeholders, the intensifying competition that demands unrelenting focus on the customer, or meeting the stringent safety and efficacy mandates imposed by regulators, the stark reality is our work is getting progressively harder. Standing in place is not an option.

	It may be counter-intuitive, but Merck believes the best way to fight complexity is to simplify. One key change is trimming responsibility for new product development to a core group of seven individuals with carefully defined functional coordination responsibilities, covering clinical science, regulatory affairs, clinical safety,  value evidence, supply chain, commercial, and project and portfolio management, respectively. The group is empowered to make and move decisions on behalf of the entire organization, and is accountable to three “c-suite” executives: the heads of R&D, commercial, and manufacturing, who act much like a investment committee that decides where the company should place its bets, allocating resources accordingly. The objective is to simplify layers of governance to enable our product teams to react to shifts in the external environment more quickly.

 Does simplification mean in practice fewer people? 

Yes. We are driving decision-making further down in the organization and making the functional areas accountable for their deliverables. A smaller team is also likely to be able to respond quickly to changes at every step of the program, whether it is nuances in trial design that affect the trial protocol, adjusting to regulatory mandates, or responding to  the competition. And we are giving them the ability to access top management to drive a quick resolution.

 Regeneron has the advantage of still being relatively small, so teams have ready access to decision makers to address issues and bring them to resolution. Our greatest challenge going forward is balancing our strong science-driven culture while driving value as we commercialize new medicines. To maintain innovation, it’s important that science and business operate separately while creating synergies among them that accelerate time to market.

My group is geared to providing a commercial perspective throughout the entire product development process. As an asset moves through the R&D pipeline, there are periodic touch points with us, where we strive to ensure that the asset is best positioned to meet the needs of patients, providers, and payers in the marketplace. We monitor progress and constantly update our estimates about commercial potential as new information becomes available. The challenge here is making sure we have the right information at the right time so we are not blindsided or surprised by something out of left field.

 How does the trend toward a more global approach to commercialization affect your responsibilities? Doesn’t this impose yet another layer of complexity on the process?

A global strategy means that nothing is done in a narrow or sequential fashion anymore. This means you have to make more choices as to where and how to deploy your resources.  It also requires initiating the development and commercialization process much earlier; it’s that early start that enables you to make those choices. And perhaps the biggest choice you have to make is what you are NOT going to do. Or to choose where to launch first, in order to apply learnings progressively, from one launch market to the next. It is surprising what you can accomplish with the gift of time; to have a plan ready to go-before you need it. For example, just by having some deep conversations with the manufacturing supply chain teams, we can define very precisely just how much capacity we will need to meet our launch obligations. That alone creates a cost advantage when we go to execute.

  Where does market access fit in the process? 

Market access is essential and here, too, the work has to be initiated very early. First and foremost is determining the value proposition around the asset and then considering whether that is something people will pay for. Handling this task well requires tapping a lot of stakeholders for insight that often cannot be found internally. It’s very different from the former days of the blockbuster, when the only decision was how many hundreds of field force reps you wanted to deploy on behalf of the product. An additional factor is extending these insights out in time-what is the commercial environment going to look like in two, three, or five years?  The US market is fascinating in this regard, because forecasting now involves assessing a customer’s ability to take on exposure risk: should we double up on our value proposition for the Aetna’s who are taking on a lot of new ACA exchange enrollees with scant prior-claims history? Or is the patient likely to bear much of the cost burden, which entails a very different calculation of value? It’s very complex. The pitch to the paying customer is looking very different than the case we make to the FDA.

 Satisfying market access and the regulatory authorities is challenging enough without accounting for differing requirements from country to country. In addition to this, frequent changes in the landscape (competitive, regulatory, political etc.) make a “one size fits all” global strategy a remnant of the past. The key is for the development teams to define the strategy, together with commercial, very early in the clinical development process. 

 Many organizations have adopted a “playbook” approach to add more structure and predictability to the process of integrating all the necessary steps toward commercialization.

A playbook can certainly be useful, particularly as a source of milestones and helping teams navigate through the organization, but care must be taken to ensure it does not become unduly prescriptive. Process can be an impediment to the flexible responses that allow companies to seize a competitive advantage. We must not let process trump the product. 

We find the playbook hard to square with the constant changes taking place in our market environment. It can miss important things, especially when the playbook is designed to guide decisions around global commercialization and launch. You’d have to build a pretty nimble document to track that.

 Another trend challenging the playbook is the desire of customers to have a dialogue that involves the entire drug portfolio. Formerly, the conversation focused on a single product. No more. It’s all about establishing value to the customer by leveraging the full assets of the company. And if you fail to expose your R&D teams to this expectation from the very beginning, there is a large handicap that is hard to surmount at later stages of the dialogue.

Yes. R&D people are passionate about a product they may have spent years creating in the laboratory. It’s hard to be objective about that customer across the table who just wants to know if he has to spend a nickel or a dollar to get it. This is all about building capabilities: do you have people on board prepared to relate to both science and the market? It’s the cross-cultural approach required to prevail in the new market environment.

 AstraZeneca has a tool we call enterprise leadership, the essence of which is being able to eliminate silos­-to change swim lanes. The premise is anticipating and understanding the environment you don’t know, because that is where you are most vulnerable. Relying on a playbook, by definition, means you are always facing backwards because it is based on learned experience. At AstraZeneca, we see the playbook as more of a checklist. It’s a tactical instrument, not a strategy blueprint.    

 A key competency for teams in navigating through change is how effectively they deal with operational ambiguity. A playbook can be useful as a general guide, but teams need to be agile and empowered to adjust and refocus quickly when the changes require them to move in a different direction.

 Is the classic CEO-led change management initiative still useful in creating this cultural mindset? 

: Pfizer has such a program. It’s called OWN IT, and CEO Ian Read put it in place when he assumed the top job three years ago. OWN IT has worked because it is being consistently applied. The imperative, to be responsible to yourself in actions with others, is now part of performance reviews and career development plans. Colleagues are free to start an open conversation about something that he or she believes needs to be fixed without being tagged as a bad news maven or a troublemaker.

Personally, I believe change management is passé for most companies. At AstraZeneca, change is accepted as a given so there is no need to create any branded program-we are changing all the time.

Many companies put the focus on behavioral changes through a culture that embodies a few transcendently clear management principles. It leads from the top, not spreads from the bottom. It is aware that running a business is all about people. And what people want most of all is certainty as an alternative to disorder. People wish to feel comfortable in dealing with uncertainty. That means management must be more tolerant of failure. There is an alternative formula called “conditions of satisfaction” that grants managers more leeway to define their own pace in getting to the right place.

When Merck decided to simplify decision-making and empower teams to act and execute, the process started with two people: the heads of R&D and commercial. They met with SVP positions with oversight over key functions. The SVPs then worked out what specifically they expected the product teams to deliver to them. Once  they were aligned, the expectations filtered down throughout the organization-here is what we want, and this is how we need you to behave. It’s a living dialogue-oral feedback in real time. The process has worked.

Are there particular process issues or challenges in moving from the strategy phase to execution? 

 Such a transition can be very complicated when you define the value proposition for an asset and then try to motivate the field force to engage around it. Many of our sales representatives were educated to sell in a different way; today, it’s all about plying the customer with hard evidence to justify the sale,  in terms of superior health outcomes versus the competition. The reps have to be told why this is important and to understand the “big picture,” which from the customer perspective is critical to closing the deal. Pfizer has found this demands a lot more time spent in telling the sales force “why,” in addition to how.

  Do you have examples from your work on how the vast amounts of information now available about customer habits and orientation can be applied to leverage commercial success?  

Tackling the data revolution starts with awareness that the human part of the solution is as important as the technology. AstraZeneca is zeroing in on all these new information capabilities to better assess how our employees in different functions interact with the customer. We have our field force, our medical reps, and the key account teams in managed care markets-each of these groups have different touch points with customers. How do we bring all the interactions together and turn these into insights that will help us move market share? The learnings can be quite powerful when everyone has access to them, and so we are spending significant amounts of time and money to make that happen. In fact, we recently made a decision to consolidate all our IT activities to be managed internally instead of being outsourced. That’s because we now see IT as a strategic asset.

What is most necessary to making information really work for you in the project management field?  

 The key to making information work for collaboration and communication is establishing an unequivocal “single version of the truth.” It is also important to define who owns that information and the business rules around how it is used across the organization, as well as deciding who can have access to it. Moreover, the concept of data pools-or data lakes-gives us powerful methods to glean real insights from available data. Certainly, technology can be a useful tool, but it is critical to ensure that your IT initiatives are driven by the business.    

Commercialization proceeds on the basis of a series of “go/no go” decisions. Good information can tell us what else might be going on that could affect our decisions. The last thing a project team wants to find out is that a decision should have gone differently if other information was more widely known. It provides the opportunity to hold off on that decision and wait for these other identified risks to play out. The capacity to scan more widely for alerts is one area where we can increase our effectiveness in using IT.

  Another way of referencing this is what we call peripheral vision. Information should be available in real time, but often it is not, so a way to compensate is to work for that broader context, shifting away from the predictable center, gazing instead to the left and right. People can be very myopic, so there is real value in being able to access information that is not entirely visible through your own function.

Structures tend to channel how the information actually gets used. Hence, we fall back on the best attributes of a project manager. First, they should value the contributions of every functional expert in the team.  What these people do, they tend to do very well, so don’t get in their way. Second, they need to be aware of the interdependencies among them; this is where a good project manager can bring the organization to a higher level of performance. Third, they must pay attention to the “white space,” where one task is in transition to another. If you can reduce that time and effort, you get a pay off in terms of everything from speed to a reputation of being a great partner. Everyone wants to work with an organization known for executing well-many companies will pay a premium to work with that “partner of choice.”

One response to the complexity of development and commercialization is sharing the burden with external partners. How does the imperative to “partner well” figure in cross-functional process innovation? 

It’s essential. The distance between program management in drug development and business development-M&A and licensing-has gotten a lot shorter. Partners are also savvier about extracting tangible commitments. Just trusting our good judgment doesn’t work. Of course, every deal is unique and there are lots of qualifications. But you are rarely going to slip if you follow the golden rule- treat any partner as you would like to be treated.   

 Potential partners are interested in assessing Merck’s capabilities, so we are working closely with business development colleagues to help address their questions. For example, when we license out an asset, partners want to know the level of support we can give them since we had the head start in developing the asset. Being able to give that out-licensing partner a good development plan is absolutely critical to sealing the deal.

 For those of you in big Pharma, has consolidation through larger mergers changed the environment for project management and process innovation? What’s the impact been on your work?

At Merck, our role has expanded. Earlier this year, we acquired Idenix, a small biotech where innovation is core to their DNA. This was a great opportunity for us to inventory all their ideas and spread them across our enterprise. While most people play in one segment, we are expected to work across all therapies and functions. There are lots of hidden gems in even the smallest of acquisitions. We find them, and fuse their creative DNA to ours.

This is also true at Pfizer. Our early acquisitions were mainly about the product assets. Now, it’s about the human capital and cultural attributes as well. The combination with Wyeth is especially telling, as Pfizer deliberately kept many of their key people in leadership roles and thus helped transpose much of that company’s culture. The result is that Pfizer today is a more open environment.

How do you manage key vendor relationships today?

Compared to other industries, commercialization in biopharmaceuticals is expensive. Management tends to see-saw between trying to cut the number of vendors-many doing the same things-and adding them back. The latter happens after the cuts leave you with only one or a few vendors, who exploit that privileged position by raising fees. So it’s a constant cycle of expand and contract. But the motivation is always to take costs out of the commercial side of the business, wherever possible.

There is also the fact that relying on one vendor per assignment diminishes the diversity of perspectives you need to render the best decision. Vendors can be helpful, too, in helping to implement strategic program changes that the regular organization might resist. But the value is often over-stated, as vendors also carry an instinct for self-preservation with the people who pay their fees.

 Is the global supply chain an integral element of process innovation?  

 It’s high on the agenda.  A decade ago, the supply chain was an operational, not a strategic, issue.  Costs were immaterial because nearly all medicines were small molecule and easy to manufacture and distribute. This is no longer the case: biologics are hard to replicate and production must proceed in small batches requiring significant monitoring and oversight. Costs of manufacture have risen, so this is getting the attention of people at the top.

Biologic drugs require mastery of both upstream and downstream production capabilities. There is a lot that can be learned, even in the formulation process, by people with extensive downstream experience. You need to incorporate that experience to succeed in biologics. Process innovation in this world is actually just as important as the product. A decade ago, what we did was create a medicine and then build a plant to make it. It was a single supply chain. Now everything-from the API to the pill coating to the replication and synthesis of living organisms like proteins-comes from multiple sources and destinations, all merging at once in a networked chain of logistics. That requires strong management.

Another objective is wresting maximum value through the end of the product life cycle. With that in mind, what is uppermost in managing the intellectual property portfolio?

Our industry is IP. It is still rare to see know-how being resourced for commercial purposes outside the scope of the traditional patent. In the larger tech world, the value of IP is not always connected to a particular asset. In biopharmaceuticals, that link is still clear and strong.

 IP is being managed more intensively in the context of active, anticipatory planning around loss of exclusivity. Companies used to simply accept a loss of exclusivity (LOE) without proactively seeking to manage the transition. Today, considering how to maintain the status of the brand begins very early, because we have discovered that LOE doesn’t necessarily mean loss of revenue. It’s also true that in a global market, LOE rarely occurs all at once, so you can apply different revenue retention strategies for different countries.

It’s important to address this question globally. Our branded off-patent business is booming in Asia, even as revenues drop precipitously when LOE occurs in the US or other mature markets.

As biologic drugs begin to dominate the market, it is getting difficult to set a specific metric or value around IP. The molecular composition of these products and the diversity of the science behind them make any such calculation quite complex. In addition, many new products are the outcome of a shared effort, where big Pharma provides the process expertise while smaller biotechs create the technology.  Partners have to figure out how to divide the IP: who owns which part?

To sum up, how does each of you see your role in your company changing over the next three to five year planning cycle?  What needs to change to help you fit better into the new-and still rather shapeless-business model for tomorrow’s pharma? 

Rather than changing significantly, I think the mandate of project and process management will be reinforced.  There is a critical need for direction, clarity, and scale in taking limited resources and deploying these -surgically-to develop and sell our products. One urgent theme here in the US is looking at our sales and account management resources to apply these human assets effectively in managing the mix of tools-like rebates and samples and co-pay cards and coupons-to bring down expenses while raising our game in providing greater access to our medicines and ultimately generating revenues. We know that achieving this will depend on being able to adapt to different realities, because what works in Minnesota or Boston will not succeed in Florida and Texas. And that requires not just superior logistics and organization but the interpretive skills, buttressed by constant feedback, that enable us to be first, before the competition. We have to apprise the ROI from virtually every action we take in the field. Analytics is going to be a bigger part of the job.

Program and project management is blessed with a simple, self-evident mission: to help the entire organization make the best decisions. The challenge is commensurate with the growth of IT over the next few years. Taking the cue from Murphy’s Law, there will a constant doubling of data available to us. Applying that information to make it quality information, relevant to the business, is more important than ever in dealing with an abundance of risk and uncertainty in the market.

Features

Biopharma's Engine Room: A Pharm Exec Innovation Roundtable

The easy wins for pharmacy benefit management (PBM) companies are mostly in the rearview mirror. When PBMs first emerged on the healthcare scene, the novelty of their cost-saving proposition was enough to sell their services to insurers and self-insured companies. Today, PBMs face fierce competition, and their core services have essentially become commoditized. 

			To stay ahead of the curve, PBMs should consider using the same forecasting technologies that have brought important savings to the utility and staffing fields. By more accurately predicting claims, PBMs can gain leverage in seeking volume-based client discounts, streamline their mail-service business, automate the manual processes for determining resource staffing, and make more timely forecasts that will satisfy the "c-suite" and investors.

			Most revenue or supply chain forecasting is centered on the projection of periodic claims and revenues (typically monthly) for each primary client and channel (e.g., mail order or electronic). Forecasts are usually based on historical claim volumes extracted from summarized transaction-level information. In most cases, the main drivers for the forecast reflect anticipated aggregate plan membership, drug demand, drug lifecycle status, and drug processing costs. Claims are forecasted over horizons of one to three years and used as a basis for business planning and client negotiation. Outside data is rarely used.

			Forecast models are often heavily dependent on member projections based on anticipated client acquisition, retention, and drug-use reduction activity. This can vary dramatically from year to year and has a certain degree of inherent volatility. For instance, if the client is based in a high-pollen part of the country where a large percent of the population uses a prescription allergy medicine, a delay in a medication either going off patent or over the counter could affect the forecast. That type of forecast can't be done one to three years in advance. 

			In general, the drug life cycle (reflecting pre-launch, launch, on-patent period, exclusivity, migration to generic, and retirement) 

cannot be modeled easily. The transition point from brand to generic is particularly difficult to forecast and can cause a major deviation from expected claims.

			It can also be particularly difficult to forecast below the client level. Hidden sources of volatility exist if a PBM can't segment customers or explore regional variation, therapeutic class, or lifecycle point forecasts. All are difficult to do with traditional forecasting techniques.

			PBMs often rely on episodic, one-off analysis. A team will do an extensive analysis to, for instance, understand the potential costs associated with a new class of medicine to treat a chronic illness. This approach is helpful in the short term, but problematic in the long term. These projections are designed to make decisions at a single point in time by looking at multiple scenarios based on unplanned deviations from expected conditions. For example, instead of extrapolating projected costs based on analysis of the cost trajectory of another medicine at similar points in its lifecycle, the forecast process should consider exploring the similarity of cost patterns for a wide variety of medicines based on qualitative and quantitative attributes as the basis for a better forecast.

			One of the biggest forecasting errors PBMs make is not using outside data to inform forecasts. The yearly toll of influenza is a great example of this. The expected demand for antiviral medicine affects the price that the PBM can negotiate, and the counseling on the price the insurer should set with customers. Ideally, you would need to know things like what kind of flu season is predicted, what the client population is like, and what percent of clients get a flu shot.

			These are all interesting questions that can be modeled using historical trends, existing health data on the population, claims for flu shots, CDC reports on flu activity, and the effectiveness of the strains in that year's vaccine. A PBM using simple analytics might suggest to a client that the cost of antiviral medication be kept high to encourage members to get the flu shot. But savvy, more nuanced forecasting might indicate such a poor match between the flu shot and the strains circulating that it would be more cost-effective to decrease the cost of antivirals to avoid secondary infections among those that got the flu shot-but still got the flu.

			There are numerous broader benefits to a sound forecasting process. These include:

 As mentioned, a more accurate claims forecast enhances negotiation leverage. In addition, accurate forecasts reduce the likelihood of penalties due to violations of contractual service level guarantees.

A sound forecast streamlines the mail-service fulfillment process through better inventory control, resource staffing, and overall customer satisfaction improvement.

Automating a forecast process enables faster throughput and timely dissemination of forecast information throughout the organization. Complex, time-consuming, custom models are a strain on analytical and IT resources.

A unified forecasting process that involves interdepartmental participation, review, and consensus can be tied directly to short- and long-range business planning. Customer behavior, market activity, and the influence of global health trends on claims activity can all be built into the planning and growth models.

			Establishing robust forecasting involves working within IT and analytical infrastructure, with key inputs from business users. Forecasting models need the same data that everyone else in the company is working with (assuming it is high-quality). The models must also reflect what the business users need to make critical decisions.

			Here are some strategies that help build more robust forecasting models:

Review interdepartmental marketing and planning strategies. 

You will want to include expansion and price optimization in forecast models. Calculating the impact of forecast error is critical.

Review existing claim data sources for information that could drive lower levels of segmentation, such as looking at demographic patterns, lifecycle patterns, and therapeutic classes. This opens up the potential for a multi-tiered forecast approach.

Explore potential sources of external information

 (e.g., IMS scripts, CDC incident rates, macro-economic factors) as augmentation to the core forecast.

Support time-series forecasting and best-fit modeling. 

Organize transactional claim data into an analytical data mart to support this more accurate way of building forecasts. Time-series techniques, using multiple explanatory variables, allow organizations to test several types of models and employ the structure that best suits the specific data stream.

 As data is updated, the models should be able to leverage the expanded history with minimal intervention. Model accuracy from period to period could be explored within this context.

llow for flexibility in the forecast approach.

 The ability to implement a waterfall forecasting approach should be available, for example, to forecast expected channel migration activity for certain clients and use that forecast as an input to the claims forecast. Additionally, cost-per-claim forecasting could be a separate activity, with results being applied to claims forecasts when producing revenue projections.

 Unlike one-off analysis, scenario analysis is ongoing forecasting using aggressive and conservative models, expected expansion or contraction, and modeling the likelihood of disruptive events (an unforeseen off-patent date, for example). These scenarios can be stored and maintained as needed. This event repository can be reviewed across departments. This would include assignment of potential significance levels on each previous (and planned) event, as well as the likelihood of occurrence.

Share forecasts across the organization. 

Forecasters should control the development of the forecast, but they need to be displayed across the organization so that they are used.

			Building a robust forecasting organization does not require a team of programmers. A small utility cooperative was able to lower its rate four times in one year by using a forecasting solution that a very small team could work with. Forecasting can be added to the analytics process in a phased manner, with short, quick goals to test the effectiveness. In an era when margins are thin and accurate forecasts are critical to business success, ineffective manual forecasting is a burden your organization can't afford to shoulder.

is Advisory Analytical Consultant, SAS Institute. He can be reached at peter.dillman@sas.com.		

Building an effective drug forecasting model today requires a revamped approach.

A Forecasting Rx for Pharmacy Benefit Managers

Building more value in biopharmaceutical dealmaking through the ‘3S’ framework-science, synergy, and survival. 

By Rebecca Ashkenazy, Alex Chang, Cyndi Green, Ted Miller, and Christine de los Reyes.

	Paced by record growth in M&A activity, dealmaking has assumed a prominent role in the biopharmaceutical landscape. Partnering between capital-rich big Pharma players and biotech asset holders in promising therapeutic areas is now commonplace, with the basic objective to acquire or license products,  technologies, or services to support or supplant internal R&D pipelines. However, declining pharmaceutical revenues and the mounting cost of late-stage  research now demand  more creative approaches to speed the transition to commercialization through  novel financing and risk-sharing structures. While the technical pathways to evaluating business development opportunities are well-characterized, less attention has been paid to deriving practical lessons as the “art” of the deal adjusts to meet a new set of expectations among partners. The focus of this article is to showcase the “3S” framework-consisting of science, synergy, and survival- to harness the collaborative energies of each partner, in a way that maximizes the overall value of the transaction, for the long term.  

	The scientific value underlining a product or technology is the foundation for any collaboration. The bar continues to rise in terms of a desirable scientific value proposition and its ultimate ability to result in improved efficacy, safety, or other clinically meaningful differentiation. In their evaluation of the science, collaborators will consider the timing of development milestones and even market entry in relation to competitors. Targeted or “precision medicine” approaches using biomarkers to address subpopulations for accelerated development and improved safety and efficacy are becoming the new scientific standard. Recent approvals in oncology reinforce this phenomenon. Also, innovations in a drug’s mode of administration may be meaningful as a source of value. Those venturing first into unknown areas of science are rewarded when successful, but the risks they face can be daunting, including failure to show significant Phase II/III benefit despite promising proof-of-concept data.

	A product’s scientific evaluation must integrate an assessment of its potential application in commerce. A holistic understanding of competitive products, ancillary services, and evolving standards of care is fundamental.  Expected reimbursement based on a product’s profile, competitive set, and clinical differentiation further guides decision-making. The key question transitions from “will it work?” to “will it be a good business investment that drives value to the buyer and healthcare payer?” Increasingly, therefore, utilization of integrated and networked market, payer, outcomes, and even real-world data need to be mobilized to support a clear value assessment. The relative importance of scientific inquiry to overall diligence depends on aligned factors. When the candidate represents a new target or clinical or regulatory path, the scientific rationale is more critical. When the clinical path is straightforward, the scientific rationale can be less important than other factors such as manufacturing or development efficiencies or successful branding.

The practical lesson: An asset’s safety and efficacy evaluation must be done in the context of the relevant disease state and the evolving environment of clinical practice.

 In R&D, diligence revolves around pre-clinical or clinical data and a thorough search for efficacy and safety signals.  The risk-benefit profile of the associated disease state and how that might evolve over time informs this review.  Efficacy demonstrations must show meaningful differentiation from current and future standards of care.  Safety signals may be tolerated in areas of high unmet need such as rare disease or certain oncology indications, but there is an increasing regulatory conservatism in less morbid disease states.  Importantly, potential collaborators are becoming more confident in embracing a product when there is demonstrated understanding of the positive relationship between the product and the overall scientific-commercial landscape.

	Deal synergy, whether financial or non-financial in nature, results when the output from an interaction is greater than the sum of the contributors’ parts.  Mergers and acquisitions commonly create synergies from more efficient resource deployment. In partnerships, it is ideal when one party augments or complements the other’s core competencies.  In many of the newer multi-discipline, multi-player exchanges, there is added hope that the confluence of previously siloed insights will drive innovation. 

partnerships, big pharma, data exchange, Business Development, M&A, Business Strategy, information exchange, dealmaking, Rebecca Ashkenazy, Alex Chang, Cyndi Green, Ted Miller, Christine de los Reyes, targeted medicine, R&D productivity

Pharmaceutical Executive-12-01-2014

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A Forecasting Rx for Pharmacy Benefit Managers

The '3S' Framework for Post-Deal Growth

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