Biopharma Leadership in Times of Transition

Ignacio Vaccaro, PhD

Will Heard, PhD

The biopharmaceutical industry is facing a wave of significant transitions, not least due to recent layoffs and strategic shifts announced by several Big Pharma companies. As these organizations streamline operations and sharpen focus on key growth areas, leaders must adapt swiftly to manage change effectively.

For insight on the adjustments necessary to navigate this landscape—across areas such as product launch and management, talent development, and M&A and partnering—Pharm Exec recently chatted with Ignacio Vaccaro, PhD, senior director and head of the strategic alignment and business acumen practice at BTS, and his colleague, Will Heard, PhD, a director in the BTS London office.

Ignacio has held senior positions in industry. He holds a PhD in strategic management from Erasmus University Rotterdam. Heard, who joined BTS as a business analyst in 2015, holds a PhD in cell and disease biology.

PE: The transition taking place in the industry is due to a variety of factors, such as new legislation (IRA), a changing pricing/reimbursement climate, looming patent cliffs, and various geopolitical and macroeconomic drivers. How much are companies weighing these influences in their short and long-term strategic planning—whether involving commercial, business, R&D, etc.?

Heard: There are a few factors coming to a head, including:

• Launches are smaller and more competitive, and it’s really hard to launch multiple products with excellence simultaneously.
• The cost of capital is so much higher—and assets use cash for years before they launch and start generating it—so there's a huge impact to NPV (net present value).
• New factors, e.g., IRA, have clear short-term implications, like direct negotiation, but this also makes lifecycle management a totally different proposition. Biopharma companies need to bring new indications to market as soon as possible rather than focusing first on a niche one.
• There has been a rollercoaster for pharma companies. There was huge demand in 2020, and salaries skyrocketed. The challenge is, right now, many companies are realizing they have a lot of expensive talent and expertise that is different from what they need going forward, which increases pressure on their ability to respond to the changes in the industry. Biopharma leaders are realizing that the ways of working in the past, and the type of talent from the past, might not be what we need for the future.

Vaccaro: In addition to Will’s points, in adjacent industries, such as medtech, there is huge focus on some of these factors:

• Geopolitics are affecting market access and supply chains.
• Evolving customers are seeking more integrated solutions.
• New technologies, such as artificial intelligence and augmented reality, are driving R&D budgets.

All of these factors are driving strategy and planning cycles and demanding a balancing act between delivering today and planning for disruptive technologies.

PE: What approaches are Big Pharma companies—some dealing with layoffs, restructurings, pipeline shifts, etc.—exploring these days to streamline operations and help adapt to and manage these challenges?

Heard: We are now seeing a big focus on streamlining operations and R&D. Big Pharma companies are getting really clear on what they are doing, and what they are not doing, whether that is doubling down on an area of existing strength, or focusing on a new strategic direction, or determining which markets to focus on (US/China/EU5, and the rest can fend for themselves).

The focus across the business are:

• R&D. Things like the IRA have significantly more impact on small molecule therapies—so we are seeing an acceleration of the trend into biologics and next-generation therapies. We are also seeing large-scale layoffs in R&D hubs.
• Commercial. Needing to get great impact from brand teams.
• Product strategy/launch excellence. It is critical to start it even earlier. I remember working with one global pharma organization in 2019 where they were proud that research was disconnected from development and commercial. Now launch planning almost comes into the decisions about whether to conduct a proof-of-concept trial.

PE: Juggling staff loss and shifts in program focus, is there added importance on revamping strategies in talent management and leadership development—knowing it’s more critical to get those decisions right?

Heard: Absolutely. The key is to have the right skills for the future. Lots of companies are benchmarking against competitors for what a good GM looks like, for example. However, those are the skills we used to need, which are now less relevant.

We are seeing a lot of roles evolving rapidly:

• Asset leaders, for example—they are now needing to start earlier, implement scenario planning, rehearsing, and bringing the right people in at the right time. They are managing PR in a way they didn’t need to in the past. Lots of therapies are next-gen without a well-established path to market, which calls for doing things differently.
• Medical is another key area. The role of medical is evolving so quickly, now providing medical expertise as a critical integrator of insight across the business. In fact, one organization we work with is repositioning medical as the “integrator” of insight.
• A lot of companies are reassessing for what their key roles will look like in the future and assessing against that with simulations to provide granular insight and make better hiring decisions for the future of the business.

It even goes down to the building blocks of performance management. A lot of organizations are coming to us looking to have more robust performance management processes and seeing that the culture may also be a challenge—do we have culture that allows frank and open feedback conversations?

Vaccaro: We’re seeing an added emphasis on:

• Thinking across the enterprise—companies in biotech and adjacent areas and working with increasingly complex ecosystems and technologies.
• Understanding evolving business models and how the organization creates value in that context.

PE: Of course, many Big Pharmas have considerable cash on hand and are enjoying strong or at least stable growth. But, that said, are we in a new era now where large pharma companies are more discerning and calculated in how they allocate their investing dollars, including pursuits around M&A, partnering, and licensing?

Vaccaro: Capital and resource allocation are becoming more critical across the board and bringing into focus the need to accelerate capability development in different areas:

• From the commercial/business perspective, those leaders and their teams require stronger understanding of end-to-end value creation, enterprise thinking, and financial implications of different decisions.
• From the finance/FP&A (financial planning and analysis) perspective, increasingly these teams are being asked to evolve from a focus on reporting on past performance and into a forward-looking organization providing intelligence, optionality, and scenario analysis that allows the organization to evaluate different potential allocation of resources.

Heard: They have to be [more discerning]. Now is the time for Big Pharma leaders to get really clear on where they play and where they don’t.

• Dealmaking seems to be back after a slower year in 2022. The average pharma deal size was up 77% in 2023 vs. 2022. Oncology is still a major focus area. So they are still able to make big bets where it creates value. There is also a bit of a scramble around metabolic diseases and GLP-1 receptor agonists like Wegovy from Novo Nordisk or Zepbound from Eli Lilly.
• We are also seeing a lot more partnerships, with companies trying to strike the right balance between what they should do themselves or with partners—again, the critical importance of getting clear on where they need to partner and where they don’t.

Innovative clinical technology platforms—cell and gene therapy, antibody-drug conjugates (ADCs), and digital technologies—have been among the five highest-value areas for alliance investment since 2020.

For Big Pharma leaders, the challenge is often identifying the technology or platform they need, but they know they don’t have the culture to make it thrive. A good example are the recent spinoffs of consumer health divisions from GSK and Pfizer, where those organizations struggled to create value with the culture of a Big Pharma organization.

We are often seeing companies expressing a value like “follow the science” or something along those lines, meaning it’s important to avoid thinking from a therapeutic area silo. Instead they are looking to see if their asset would create more value in another therapy area and follow that, rather than look from traditional silos.

PE: In turn, how are you seeing the trajectory of the biotech business the rest of the year and beyond? Value from differentiation and new innovation in treatment and technology seem to be king—what are the skills biotech leaders need today to seize on those opportunities?

Heard: Firstly, it’s an enterprise perspective and leaders’ ability to see how we all work together to create value for the patient and our other stakeholders. Pharma companies need deep expertise, but this has created some siloes in organizations, and if those siloes are too intrenched, companies will fall behind. The really successful organizations are experimenting in new therapy areas/models/ways to market that require an unprecedented level of cross-functional collaboration.

Secondly, is the capability for and discipline around scenario planning and rehearsal. Whether it is in service of recruiting for the future or delivering launch excellence, using tools like simulation are key to practice future scenarios and situations, so when it happens, the leadership team is ready to act fast.

Third, is digital savviness, AI, and predictive analytics. For biotech industry leaders, it is not necessarily needing to know exactly how they work, but needing to understand the business applications of the technology and how it will dramatically change the way the industry works.

As an example, some of my peers took five years while earning their PhDs to define the structures of some proteins. Now it can be done in silico to a huge degree of accuracy. I don’t think that will be the last evolution from patient enrollment to drug discovery. It’s almost at a point where imagination is the limiting factor, rather than the technology.