Friday, December 17, 2010

The View Is Great, But Is It All Down Hill From Here?

By Peter B. Kramer, PhD

As I await with anxious anticipation the next Drug Delivery Partnerships conference and wonder what it will be like to sit in the audience rather than act as co-chair, I am struck by the slowly evolving decline of the pharmaceutical industry.

As the industry declines, pressures build in all areas – from personnel to partnering – and those pressures change the way we operate. It may be interesting to reflect on those changes not from the microcosm of “this year’s deals” but from the macro: Where are we coming from and where are we going. Let me try to do that in this forum, and after you read this, please tell me what you think…

We – you and I and all of our colleagues in biopharmaceuticals – have contributed in various ways to an industry that makes a difference. We have transformed AIDS from an unknown death sentence to what is now viewed as a treatable chronic disease. We have contributed to a 50% decline in cardiovascular disease and a 30% increase in five-year cancer survival.

But for all of the good we’ve done, I find an interesting comparison between the biopharmaceutical industry and Gregory Maguire’s novel, “Wicked” (now a Broadway musical). In “Wicked,” the author transformed L. Frank Baum’s Land of Oz (aside – the Land of Oz was written at the Hotel Coronado, site of DDP 3; compare/contrast with the Doral), making the good Wizard a villain and the wicked Witches both victims and heroes.

In much the same way, our industry sometimes feels transformed by the current health care crisis. Are we part of the solution or part of the problem? Are we charging too much for unsafe, contaminated, and/or ineffective products, or are we innovating cures for deadly diseases? Are we contributing to closing the donut hole or just assuring greater sales of our products at ever rising prices?

Trends in the industry are troubling: We have a sustainability problem. Total biopharmaceutical sales have flattened. Despite growing R&D expenditures, the number of new products approved each year – New Molecular Entities and Biologics – declined precipitously after 1995 and only recently flattened out. We have a robust generic industry in the US, which is assuring that products that fall over the patent cliff are made available to patients at just a bit more than their lowest cost-of-goods. That’s good; except how do we fund improved products?

Increased development costs and safety concerns and the need to prove better efficacy than the drugs developed ten years ago that are falling over that cliff – along with pricing pressures from government, consumers and third-party payers – beg the question of how long the industry can maintain itself in its current form. And what will we do when the current form is no longer sustainable?

We have already benefited from increased R&D efficiencies and external innovation. And if anyone thinks that Personalized Medicine is a solution rather than another problem…well that’s a subject for another day.

Right now the solutions to this sustainability issue – evinced by big pharma upper managements’ actions – appear to be merging, acquiring and downsizing. Not particularly inventive; but observations on the skills and abilities of our upper management is, again, a subject for another day.

Absent a significant change, the robust growth of the 90’s and the stability of the 00’s are gone. Certainly, there will be islands of stability and even growth in one or another area, and drug delivery is most likely one of those areas.

As an enabling technology for many innovative approaches to new pharmaceuticals and – on the other end of the life cycle – as a value-extending technology providing marginal improvements to existing pharmaceuticals, the drug delivery model offers an alternative to the consolidation approach to problem-solving that has begun to dominate conventional upper management wisdom.

While drug delivery, alone, is obviously not the answer, drug delivery “thinking” – appropriated to address the sustainability issue – could open doors to all kinds of possibilities, instead of perpetuating a “Musical Chairs” mentality that will ultimately lead to industry obsolescence.

Musical Chairs is a game my children learned to hate; so they changed the rules. Is it time for us to do the same? Or do we let natural processes do it for us?

More observations to come …. Comments?

ABOUT THE AUTHOR Peter B. Kramer is a consultant for Princeton Technology Consulting (, a business development services provider to the biopharmaceutical industry with a focus on technology transactions and strategic planning. Dr. Kramer was previously Executive Director at Bristol-Myers Squibb, where he formed and headed up the Technology Transactions Group to negotiate research and development collaborations in support of drug discovery and development. Dr. Kramer has 25 years of pharmaceutical, biotech and university transactional experience and was the co-chair of the Drug Delivery Partnership conference for 7 years.

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