BioPharm 2011: Stakeholders’ changing roles in therapeutic development

by Keeley Wray on September 9, 2011

Can we get this family to function? (Photo: eyeliam/Flickr)

My summary of BioPharm America 2011: We are a family and we just need to work together. As stakeholders in developing new treatments, we each have our own shortfalls and strengths, we’re under pressure, and our roles are changing over time.

Here’s the panelists’ take on the different players.

Big pharma: The old business model is broken. Pharma is cutting R&D and other programs that aren’t generating enough return. Companies now approach markets differently, said Angus Russell, CEO of Shire. A new product doesn’t have to be a first-line therapy to justify market entry; there’s a business case for selling a targeted drug to patients who don’t respond to generics and have no other solution. Doctors may need to go through a slew of generics first, but eventually will use the product. Ideally, such trial and error won’t be necessary in the future: A biomarker will predict whether it’s best to give a generic or the boutique, targeted drug.

Biotech companies are struggling. Anna Protopapas, Executive VP at Takeda was looking at a list of biotech companies from 2005 and noticed only 10 percent are still around today. That’s a pretty high attrition rate. It’s not easy to get funding, the risks are high. Maybe new business models can save the day, was the hopeful speculation.

Academic medical centers are in a prime position to help turn around the industry. They have all the access to patient data, including genetic and phenotypic, that can help inform personalized treatments. Investigators’ conflicting objectives, however, can hold them back: What makes for a successful academic career may not be ideal for developing products. Translational science involves more risk than the typical NIH RO1 project, said Gary Gottlieb, President and CEO of Partners HealthCare System, leaving scientists reluctant to venture into the territory. Jose Carlos Gutierrez-Ramos, Senior VP of BioTherapeutics R&D at Pfizer, proposed enabling them to innovate and try new things by providing support for many smaller clinical trials with, say, 20 people. Getting compounds into humans sooner could allow hypotheses to be proven within 5-6 years rather than the standard 10-plus. With new, novel collaboration structures, relations between pharma and academic medical centers are smoother and mutually beneficial now, noted Polly Murphy, VP of Business Development, R&D, Pfizer. Our own Erik Halvorsen, Director of Technology and Business Development, Children’s Hospital Boston, added that doctors like deal structures that scope out a project all the way to clinic.

Venture capital firms are leaning towards more mature biotechs because they are lower risk. As a result, after some time, the mature biotechs will be saturated with investment, while early-stage players – startup biotechs and academia — feel the tightness of the VC’s wallet. Making matters worse, long-term investments by VCs aren’t generating the return that was anticipated. Daphne Zohar, Managing Partner, PureTech Ventures painted a foreboding image of VCs sinking in a slowly rising tide. Unless they rethink their strategy, they won’t be part of the ecosytem.

Diagnostic companies, to date, have been functioning like contract research organizations, creating companion diagnostics for therapeutic companies. But the relationship isn’t much better than a “work for hire,” said Bryan Dechairo, Head of Extramural R&D, Medco Research Institute, and when the product comes to market, the diagnostic companies aren’t getting a worthwhile financial return. In the future, this may change as companies develop, and physicians adopt, “stand alone” diagnostics. Pharma, valuing the diagnostic companies at their true worth, will follow with drugs. Companies like Myriad and Prometheus are leading the industry toward this type of value proposition innovation, Dechairo said. We can expect more companies not traditionally involved in healthcare to enter this space.

Payors and pharmacy benefit managers will be pivotal players in the future pharma industry. They are demanding treatments that reduce costs – or provide enough benefit over existing approaches to justify their higher price tag. Changes in healthcare finance will put pressure on innovation. Payors will drive out inefficiencies in the system and have an input into care, providing decision support knowledge gleaned from their backlog of claims and other data.

The FDA seemed pretty hard hit in almost every discussion. Seeking FDA approval is like running for political office: You do everything you can and follow the specified path to success, but ultimately fail. This makes product development riskier for investors and companies than sometimes seems necessary. Charlie Baker, Entrepreneur-in-Residence, General Catalyst Partners, noted that medical device companies are starting to go overseas, where the approval process is more straightforward and predictable. Also, cooperation between the FDA and Medicare/Medicaid reimbursement needs to be improved, said Gottlieb of Partners, so that companies don’t achieve FDA approval only to find healthcare systems can’t get reimbursed for the treatment or test.

There are a few stakeholders missing from the above mix. Patient advocacy groups, NIH, biotech media, and CROs are all parties worth mentioning. Perhaps their roles are changing less. In general, I’m optimistic that the move towards cooperation will yield positive results — even if it’s familial love forced upon us by the economic crash rather than magnanimity toward patients.

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