SPECIAL REPORT: Lessons Learned in the Pharma Industry, 2008
Decision Resources, Inc, December 2008, Days: 65
Introduction
2008 will come to be known as the year when real change started to take hold across the pharmaceutical industry. While some company leaderships may have been reluctant to alter the status quo in past years, 2009 looms as a new beginning to invest in those industry-altering steps that will bring long-term success. In this report, we discuss the top ten events/issues of 2008 and the lessons they offer for the pharma industry.
Get the Answers You Need to Shape Your Strategy
- Healthcare reform is the number three priority in President-Elect Barack Obama’s administration. What can companies expect in the way of reform? What cost-containment measures are likely? What advantages are arising?
- The research-based pharmaceutical industry faces many pricing and reimbursement challenges in all the major markets. What are they? What healthcare management tools did employers use in 2008 to manage their costs? What new deal-making activities are taking hold?
- Eli Lilly CEO John C. Lechleiter says we are close “to realizing the most extraordinary breakthroughs of all time in human health.” Why is personalized medicine so important? And achievable? Why is the diagnostics industry in the catbird’s seat?
- The R&D function at most pharma companies has become critically dependent on in licensing or acquiring products and companies to fill pipelines. What are companies doing to protect and nurture this revenue stream? What is a good indicator of the quality of a company’s internal R&D versus its partnering strategies?
- The pharma industry has been stalled in a model of drug development that has centered for years on the fully integrated pharma company (FIPCO) and the blockbuster drug. Is there an imperative for a shift in pharmaceutical business models? Does adopting a new approach necessitate abandoning the previous one? How does the industry transform itself from where it is now to where it needs to be? What strategies are pharma companies using to improve their bottom line?
Scope
- Expert insights: industry analysis from three outside experts and five Decision Resources’ Spectrum analysts.
- U.S. elections: transformed political landscape, reforming healthcare, State Children’s Health Insurance Program (SCHIP), online blogs, biosimilars, guaranteed issue, individual mandates, cost-containment measures, Medicare price negotiation, drug importation, generics, stem cells, personalized medicine, revitalized FDA, research investments, increased scrutiny, secret shoppers, direct-to-consumer advertising (DTCA), electronic health records, electronic data capture, data security, genetic discrimination, New Hampshire’s data privacy lawsuit.
- Pricing and reimbursement: average prices of biologics and small-molecule drugs in major markets, cost-containment, healthcare management tools, health technology assessment, Medicare Part D, comparative effectiveness, cost-effectiveness data, therapeutic substitution, voluntary rebate contracts, cost- and risk-sharing contracts, bundling contracts, biennial price revisions, long-listed drugs, genuine pharmaceutical innovation, self-restraint in setting prices.
- Diagnostics-driven drug development: molecular diagnostics, high-value biomarker tests, genomic profiling, companion diagnostics, Agendia’s MammaPrint, Genomic Health’s Oncotype Dx, subtypes
- Personalized medicine: case studies on Eli Lilly and Roche, misperceptions about the personalized medicine paradigm, tailored therapeutics, optimal patient outcomes, medically differentiated products, holistic approach, disease prevention, cross-industry integration, healthcare continuum, test-drug co development, continuing education programs, value-for-money proposition, personal genome, next-generation sequencing, X Prize Foundation, 1000 Genomes Project.
- Pharma partnering: monumental value to the industry, buying in R&D, source of top ten pharma’s marketed products, Lilly deals, case study on Lilly’s new FIPNet model, alliance management,virtualization, hostile takeovers, mega mergers, decentralized management, outsourcing, partnering, emerging markets, BRIC, alliance health checks, partner of choice, preferred partner, partnering reputation, governance structures, project champion, alliances as critical drivers of value.
- Changing business strategies: case studies on Merck Serono and Sanofi -Aventis, cost-cutting, restructuring, layoffs, targeted therapies, diagnostics-driven drug development, differentiated products, acquisitions, in licensing, alliance management, divestments, demergers, geographic expansion, BRIC-M markets, Big Biotech and Big Pharma’s diverse businesses, revenues per employee, externalization, virtual integration, virtualization, consolidation, diversification, mega mergers, mega blockbusters, focused therapy areas, ratio of blockbusters to total drugs launched.
- Pharma businesses and business models: pharmaceuticals, OTC/consumer healthcare, generics, diagnostics, vaccines, specialty pharmaceuticals, animal health, nutrition, biopharmaceuticals, FIPNet, virtualization, personalized medicine, blockbusters, FIPCO, alliance-centric.
- Changing business strategies: case studies on Merck Serono and Sanofi -Aventis, cost-cutting, restructuring, layoffs, targeted therapies, diagnostics-driven drug development, differentiated products, acquisitions, in licensing, alliance management, divestments, demergers, geographic expansion, BRIC-M markets, Big Biotech and Big Pharma’s diverse businesses, revenues per employee, externalization, virtual integration, virtualization, consolidation, diversification, mega mergers, mega blockbusters, focused therapy areas, ratio of blockbusters to total drugs launched.
- Pharma businesses and business models: pharmaceuticals, OTC/consumer healthcare, generics, diagnostics, vaccines, specialty pharmaceuticals, animal health, nutrition, biopharmaceuticals, FIPNet, virtualization, personalized medicine, blockbusters, FIPCO, alliance-centric.
Spectrum, Pharmacoeconomics, Pricing, and Reimbursement, Decision Resources
United States
Cost-Containment
Health Technology Assessment
Europe
Voluntary Rebate Contracts
Cost- and Risk-Sharing Contracts
Bundling Contracts
More-Flexible Pricing Arrangements
Japan
2008 Lessons
Diagnostics-Driven Development Reaching Escape Velocity
Prachi Vora, M.P.H., Program Manager, Spectrum, Biomarkers and Diagnostics,
Decision Resources
Gene-Profiling Tests
Cost-Effectiveness and Reimbursement
Cross-Industry Alliances
2008 Lessons
Personalized Medicine Steadily Gaining Credibility
Lulu Pickering, Ph.D., Senior Program Manager, Spectrum, Pharmaceutical Industry
Dynamics, Decision Resources
Executive Insights
Lilly’s Future May Depend on a Personalized Medicine Approach
Roche Breaks Down Barriers to Progress
Roche in 2015
The Personal Genome
X Prize Foundation
The 1000 Genomes Project
National Human Genome Research Institute
2008 Lessons
Vital Importance of Partnering to today’s Pharma Company
Lulu Pickering, Ph.D., Senior Program Manager, Spectrum, Pharmaceutical Industry
Dynamics, Decision Resources
Source of Marketed Products
Eli Lilly’s Fully Integrated Pharmaceutical Network
Implementing a More-Flexible Approach
A Virtual Business Based on Outsourcing and Partnering
Lilly Research Laboratories
Taking Advantage of External Innovation
R&D Pipeline
2008 Lessons
Capturing Value with a Vital New Strategic Tool
Lulu Pickering, Ph.D., Senior Program Manager, Spectrum, Pharmaceutical Industry
Dynamics, Decision Resources
Life-Cycle Management
Pharma Executive Insights
Measuring Success
2008 Lessons
2008’s Changing Business Strategies
Peter Wittner, Principal, Interpharm Consultancy
Specialty Pharmaceuticals—Especially Biologics
Merck Serono Goes into Biologics Big Time
Rationale for the Serono Purchase
A New Biologics Focus
Rationale of the Generics Business Sale
Sale of the Generics Division
Companies Balancing Risk through Diversity
Sanofi -Aventis’s Many Diversification Strategies
Geographical Expansion
Vaccines Expansion
Generics Expansion
OTC Expansion
2008 Lessons
Creating Value in an Economic Downturn
Unprecedented Opportunities
Barrie G. James, Ph.D., Principal, Pharma Strategy Consulting
Acquisitions
Divestments
Cause and Effect
Potential Targets
2008 Lessons
Demerging to Create More Flexibility and New Opportunities
John Ansell, M.A., John Ansell Consultancy
2008 Lessons
Blockbusters—Far from Dead and Always Welcome
Jennifer Moniz Carpenter, M.B.A., Program Manager, Spectrum, Therapy Markets
and Emerging Technologies, Decision Resources
Decision Resources Forecasts
2008 Lessons
Year-End Parting Thoughts
Tables
1. Comparison of Presidential Candidates’ Positions on Biopharma Issues
2. Cost of Select High-Value Molecular Diagnostic Biomarker Tests
3. Top Ten Pharmas’ Marketed Products: Source and Contribution to Total Revenues, 2008
4. Deals to Fulfill Eli Lilly’s New External Innovation Strategy
5. Pharma’s Value-Added Strategies and Evolving Business Models, circa 2008
6. Merck Serono’s Strategic Repositioning of Its Revenue Stream, 2003-2007
7. Merck Serono’s R&D Pipeline, July 2008
8. Where Diversity Currently Exists in the Pharmaceutical Industry
9. Breakdown of Sanofi -Aventis’s Sales by Geographical Area and Business Segment, 2007
10. Sanofi -Aventis’s R&D Pipeline of Focused Therapy Areas
11. Select Acquisitions by Pharma/Biotech Companies, 2008
12. Select Divestments in the Pharma Industry, 2008
Figures
1. Recent and Pending Developments in the Obama Administration’s Healthcare Program
2. U.S. Employers’ Use of Common Healthcare Management Tools, 2007-2008
3. Implementing Eli Lilly and Company’s Transformational FIPNet and Personalized
4. Medicine Business Model
5. Roche 2015: Strategic Priorities for Innovation and Long-Term Growth
6. Importance of Pharma Partnering vs. In-house Innovation, 2008
7. Top Ten Pharma Companies: Source of Marketed Product Sales, 2008
8. Effective Alliance Management: Integration Across Key Drug Development Functions
9. Alliance Management: Contributions to Life-Cycle Management Strategies
10. Top Pharma Companies: Revenues per Employee, 2007
11. Average Prices of Leading Biologics, Small-Molecule Drugs, and Pharmaceuticals
12. Overall in the Major Markets as a Percentage of U.S. Prices
13. 11. Novartis’s Net Sales and Operating Income by Division, 2007
14. Sanofi -Aventis’s Acquisition of Zentiva: Increasing Its Commercial Presence in Eastern Europe
15. GlaxoSmithKline and Pfizer’s Largest Therapy Area Businesses Compared with
16. Other Big Pharmas’ Total Sales, 2007
17. Ratio of Blockbusters to Total Drugs Launched, 1997-2005
- 3i
- 454 Life Sciences
- Abbott
- Academy of Managed Care Pharmacy
- Acambis
- Actavis
- Actelion
- Actimis Pharmaceuticals
- Adnexus Therapeutics
- Affymetrix
- Agency for Healthcare Research and Quality
- Agendia
- Agilent
- Akrimax Pharmaceuticals
- Albany Molecular Research
- Alcon
- Alize Pharma
- AllianceVista
- Alpharma
- American Pharmaceutical Partners
- Amgen
- Amgen KK
- Amic
- Antisoma
- Apax
- Applied Biosystems
- Archon Genomics
- Argenta Discovery
- Arius Research
- Asap BioPharma Council
- Aspen
- Association of Strategic Alliance Professionals
- Astellas Pharma
- Astra
- AstraZeneca
- Aurobindo
- Avant Immunotherapeutics
- Avecia
- Aventis
- Bain Capital
- Bankhaus Metzle
- Barr Pharmaceuticals
- BASF
- Bayer
- Bayer Schering
- BearStearns
- Bentley Pharmaceuticals
- Biogen Idec
- BioInvent
- bioMérieux
- BioMS Medical
- Biotage
- Biotherapeutics and Bioinnovation Center
- Blue Cross Blue Shield Association
- Boehringer Ingelheim
- Bristol-Myers Squibb
- Cambridge Antibody Technology
- Chugai Pharmaceutical
- Ciba-Geigy
- CMS
- CoGenesys
- ConvaTec
- CovX
- Crucell
- CVC Capital Partners
- Cytos Biotechnology
- Daiichi Sankyo
- Dako
- Deciphera Pharmaceuticals
- DelSite
- Direvo Biotech
- Dow Chemical
- Dr. Reddy’s Laboratories
- Drug Effectiveness Review Project
- Eczacibasi Pharmaceuticals
- Eisai
- Eli Lilly and Company
- Encysive Pharmaceuticals
- Endo Pharmaceuticals
- Enlight Biosciences
- Entelos
- Epigenomics
- EUSA Pharma
- Evotec
- EyeCyte
- Forest
- Fresenius
- GE Healthcare
- Genelabs Technologies
- Genentech
- Genomic Health
- Genzyme
- Gilead
- GlaxoSmithKline
- GlaxoSmithKline Deutschland
- GlaxoWellcome
- Glenmark Pharmaceuticals
- HealthMedia
- Hoechst
- Hutchison MediPharma
- Hypnion
- Icos
- Illumina
- Ilypsa
- ImClone Systems
- Immunicon
- Innogenetics
- Institut Mérieux
- Institut Pasteur
- Institute of Medicine
- International Drug Development
- Interpharm Consultancy
- Intervet
- Invida Pharmaceutical
- Ipsen
- Iris BioTechnologies
- Janssen-Cilag
- Jerini
- JHP Pharmaceuticals
- John Ansell Consultancy
- Johnson & Johnson
- Kaiser Family Foundation
- Kosan Biosciences
- Laboratoires Roussel
- Lilly Asian Ventures
- Lilly Research Laboratories
- Lilly Ventures
- MacroGenics
- Marrion Merrell Dow
- Maxygen
- Mead Johnson
- Meda AB
- MedImmune
- Medline Industries
- Merck & Co.
- Merck Generics
- Merck KGaA
- Merck-Schering Plough
- Merck Serono
- Millennium Pharmaceuticals
- Mirus
- Mylan Laboratories
- Myriad Genetics
- National Federation of Independent Business
- National Health Service
- National Human Genome Resarch Institute
- Nektar Therapeutics
- Nestlé
- Nicholas Piramal
- NitroMed
- Nobilon
- NovaMed
- Novartis
- Novartis Biologicals
- Novartis Diagnostics
- Novo Nordisk
- NPIL Research and Development
- Organon BioSciences
- Oryx Pharmaceuticals
- OSI Pharmaceuticals
- Oxford BioMedica
- Pfizer
- Pharma Strategy Consulting
- Pharmacia
- Pharmacy Benefit Management Institute
- PharmAtheneof disease, cost-effectiveness, reimbursement, value-added tests, cross-industry alliances, diagnosticbased therapies.
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