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Future Challenges for Big Pharma

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Future Challenges for Big Pharma - - Dr. Aurup 1-11-12

Future Challenges for Big Pharma

  1. 1. FutureChallenges for Big Pharma Peter Aurup, MD VP & Head - Global Clinical Trial Operations January 11, 2012
  2. 2. Clinical Development: The Pressure is On!• We face Challenges• We have Choices• We are making Changes… NOW!Regulatory PressuresPricing PressuresGeneric CompetitionIP ProtectionClinical EffectivenessRising ExpensesPatient EnrollmentInvestor DemandsConsumer Mistrust 2
  3. 3. CHALLENGES
  4. 4. Challenges: The New Industry Reality1. Development of new medicines and vaccines has become more costly and complex2. Return on Investment (ROI) is in many cases negative for the pharmaceutical R&D industry3. The regulatory landscape is transforming4. The bar for new drug approval and/or reimbursement is constantly being raised5. Investor and consumer pressures are mounting6. Patents are expiring at a record rate7. Global reach is now an imperative8. Changing disease states and aging populations call for an emphasis on new or different therapy groups – Innovation is key! 4
  5. 5. 1. Development Cycle Times are Longer R&D CT Years % Change NME R&D Cycle Time - Composite 98-00 99-01 - -2% Industry Median 00-02 01-03 14% -8% 02-04 4% 98-00 4.4 7.1 11.6 03-05 04-06 1% 3% 05-07 5% 99-01 4.2 7.1 11.4 06-08 -2% 07-09 1% 00-02 4.3 8.6 13.0 08-10 1% 01-03 4.0 7.9 11.9 02-04 4.0 8.4 12.4 03-05 4.4 8.1 12.5 Disc Mdn 04-06 4.4 8.5 12.8 Dev Mdn 05-07 4.5 9.1 13.5 06-08 4.5 8.8 13.2 07-09 4.5 8.9 13.4 08-10 4.4 9.2 13.6 0 5 10 15 YearsNME R&D Composite Cycle Time: Target Identification through First Approval in a Major Market KMR Group 2011 R&D Performance 5
  6. 6. 1. Development Costs Have Increased Dramatically Industry Cost of a Successfully Developed New Molecule 1, 2 $1,400 $1,300 $1,200 Millions of $ $1,000 $802 $800 $600 $445 $400 $319 $200 $137 $0 1976 1988 1992 2000 2010 • Cost includes cost of failure1 CBO report/Tufts, 2006, 2011; 2 DiMasi et al 2003 6
  7. 7. 1. Development Success Rates Have Dwindled NME Success Rates By Phase And Overall 2006-2010 Industry KMR Group 2011 R&D PerformanceSuccess Rate = (number of successes) / ((number of terminations) + (number of successes)) 7
  8. 8. 2. ROI for R&D in the Pharmaceutical Industry has Turned Negative R&D Investment as a Percentage of Sales Has Increased, While ROI has Decreased 18 3.0 16 16 2.8 16 Sales/Capitalized R&D Investment 15 15 R&D/Sales 14 2.6 Sales/Capitalized R&D 14 13 13 2.4 2.2 12 11 11 2.0R&D/Sales 1.8 10 9 1.6 8 8 8 7 1.4 6 1.2 6 5 1.0 0.8 4 0.6 2 0.4 0.2 0 0.0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 Note: The capitalized R&D analysis is Sales for a given year/R&D spend for 11 years (adjusted for inflation). Source: Credit Suisse / C. Arnold et al.; published in In Vivo: The Business & Medicine Report, April 2009 8
  9. 9. 3. Regulatory Landscape is More Difficult to Navigate • The regulatory landscape is changing • Outcomes data often requested prior to drug approval • Greater emphasis on product safety requires extensive data • Increased post-marketing regulatory requirements • More requirements to conduct clinical trials in a country as a prelude to registering and marketing a product • Need good interaction with local regulatory agencies for clinical trial authorization 9
  10. 10. 4. It’s Harder to Get a Drug Approved and Paid For• Health Technology Assessment (HTA), value demonstration, and effectiveness are increasingly required for approval and/or reimbursement Prescription Medicine Spending Growth Declined: 1998–2008 Source: CMS2 10
  11. 11. 5. Payor and Consumer Pressures are Mounting Insurance Covers a Lower Share of Prescription Drug Costs Than Other Medical Services Percent of Spending for Each Type of Service Paid Out-of-Pocket: Privately Insured People Under Age 65 with Prescription Drug Coverage PhRMA Analysis: Medical Expenditure Panel Survey, 2007 11
  12. 12. 6. Patents are Expiring at a Record Rate Blockbusters Total 45 97 products are predicted 41 to lose exclusivity in the 40 40 USA by 2013 35 34Predicted number of products 32 30 This includes 15 25 24 blockbusters with sales > 22 $1 billion per annum 20 19 15 10 $60 billion worth of products going off patent 5 5 6 3 3 3 by 2011 4 3 0 2011 2012 2013 2014 2015 2016 2017 Year of predicted loss of exclusivity in the USA 12 CMR International, 2011 Global R&D& Clinical Programmes
  13. 13. 7. Global Reach is Now an Imperative• Economies of emerging markets are growing more than twice as fast as the developed world• Diversified populations must be enrolled in trials • Regulators increasingly want clinical trials to include specific populations in their own countries / environments / cultures• Executing global clinical trials is more difficult than ever • Protocols are increasingly complicated • Western European market is increasingly costly • Strong, growing competition in key emerging market countries for resources, including access to: – Qualified investigators – Patient populations – Vendor partnerships 13
  14. 14. 8. Medicines Must Address Changing Needs• Some major diseases have been partially conquered: • 45% decline in heart attack deaths and heart failure from 1999 to 2005* • U.S. AIDS deaths decreased dramatically following the introduction of highly active antiretroviral treatment** • Improvements in treatment have helped reduce mortality in certain cancers by up to 50% or more during 30-year period***• Aging populations call for emphasis on different therapy areas: • Alzheimers… Parkinson’s • New ways to manage chronic conditions: Diabetes… Arthritis• Innovation is the key to success! * Source: K. Fox, et al. Journal of the American Medical Profession 297, 2007 **Source: Center of Disease Control, 2009 *** Source: D.K. Epsey, et al, Cancer 116, no. 3, 2010 14
  15. 15. CHOICES
  16. 16. Choices: Pharma’s Present—and Future—Path How are we choosing to: • Respond to economic and investor pressures? • Ensure that we get new products to market? • Gain efficiencies and expedite clinical trial execution? • Foster Innovation?CONSOLIDATIONS PORTFOLIO PRIORITIZATION PARTNERSHIPS OUTSOURCING EXECUTIONAL EXCELLENCE GLOBALIZATION INNOVATION …. AND MORE! 16
  17. 17. Responding to Economic and Investor PressuresCONSOLIDATIONS • Mergers within the last few years consolidated some major pharmaceutical “powerhouses” • Pfizer /Wyeth; Roche /Genentech; Merck /Schering-Plough • Integrating companies results in positives and negatives: That sucking sound? Layoffs July 8, 2010 1:13 PM draining brains from pharma Merck Closing 8 Plants, August 22, 2011 8 Research Sites October 25, 2011, 12:38 PM GMT Job Cuts Hurt, But Will Save Novartis Future Pain 17
  18. 18. New Strategies Rationalizing R&D SpendingPRIORITIZING PORTFOLIOS • Some companies are slashing R&D spending in response to investor demands • Others are prioritizing investments based on more calculated risks / returns • Harder look at early development programs • Increased willingness to “kill” programs earlier and more often • Changing incentives / rewards to match changing strategy 18
  19. 19. Increases in Early Development Candidates Did Not Translate Into More Product Launches….PORTFOLIO PRIORITIZATION Early Late development development Prior to 2007 it appeared that450 426 companies were adopting a “shots400 365 on goal” strategy350 329 Strategy resulted in an 87% 282 87% increase in early development300 261 pipelines between 2002-2007250 228 However, this increase did not200 appear to make much impact in150 Late Development numbers100 67 51 46 49 54 59 Study of 83 failed Phase III 50 31% compounds showed 66% 0 terminated due to lack of efficacy 2002 2003 2004 2005 2006 2007 Inferred that many compounds progressed not on scientific merit, but in attempts to fill the gap left by Early Development = Preclinical, Phase I and Phase II impending patent expiries Late Development = Phase III and Submission © CMR International, a Thomson Reuters business 19
  20. 20. More Prioritization of Development ProgramsPORTFOLIO PRIORITIZATION Early Development pipeline Early Late development development has decreased by450 426 approximately 50% since 393 2007400 365350 329 Late Development pipeline 282 50% 290 has remained more stable but300 261 has also seen a decline of250 228 212 around 50% since 2007200 This may indicate 2 things:150 The poor quality of previous100 51 46 49 54 59 67 55 Phase II pipelines 33 32 50 48% A change in strategy away 0 from Quantity towards 2002 2003 2004 2005 2006 2007 2008 2009 2010 Quality Early Development = Preclinical, Phase I and Phase II Late Development = Phase III and Submission © CMR International, a Thomson Reuters business 20
  21. 21. Increased Use of Adaptive TrialsPORTFOLIO PRIORITIZATION • Companies increasingly choosing to determine a drugs benefit/risk ratio at specific study points in pivotal trials • Rise in adaptive designs for clinical trials • In adaptive trials, decisions for mid-study changes can be made at predetermined opportunity points • Decisions based on information available to date – No waiting for total trial data • Greater use of sophisticated portfolio management techniques • Stop the development process sooner, not later if a drug wont prove safe, effective or be approved for sale 21
  22. 22. New, Improved Partnering OpportunitiesPARTNERSHIPS • Companies can expand product development via joint ventures, research university agreements to share R&D costs Proportion of Total R&D Expenditures on Alliances or Joint Ventures By Stage of R&D in 2009 All Companies Major Mid and Other Research Early Development Late Development International Roll Out s & Line Extensions 22 CMR International, 2010 Pharmaceutical R&D Factbook
  23. 23. Partnering for Global Reach, Improved EfficiencyPARTNERSHIPS • Grow top line by creating new and different partnerships: • Strengthen push into global or emerging markets • Improve bottom line in other areas: – Manufacturing as well as clinical: Merck and UPS – Outsourcing clinical activities to Contract Research Organizations (CROs) 23
  24. 24. Clinical Outsourcing Expected to Increase (Functional and Programmatic)OUTSOURCING Programmatic outsourcing Projected change in industry can range from 100 percent outsourcing rates over the next of a company’s book of 3-5 years1 business to a small slice of Percent of responses, n=25 the pie 28 Functional outsourcing of Continue at specific clinical tasks is today’s levels increasingly common 28 Sponsors remain responsible for all parts of 8 64 Increase clinical trial oversightIncrease by between Need strong Master Servicemore than 10% 1-10% Agreements and appropriate1 Weighted average of survey responses metrics to ensure quality and Source: McKinsey & Company Survey, February 2010 analysis timeliness of deliverables 24
  25. 25. Strategic Rationale for More Clinical OutsourcingOUTSOURCING • Quality and capabilities of major Contract Resource Organizations (CROs) have increased worldwide • Provide more access to global capabilities and infrastructure for conducting clinical trials • Improves a pharma company’s flexibility in adjusting to a volatile book of business and associated labor demands • Reduces fixed operating costs • Meets demands for specific job roles while potentially moving some work to lower-cost geographies with skilled workforces • Reduces risk for “stranded resources” when studies end • Allows companies to focus on core capabilities internally • Provides performance /cost transparency 25
  26. 26. Battling Increased Complexity of Clinical TrialsEXECUTIONAL EXCELLENCE 2000 2010 Change Changes in Clinical Trials: Resources, Length and Participation Total Procedures per Trial Protocol (Median) 101.5 164.6 62% Clinical Trial Staff Work Burden (Median Work-Effort 28.9 46.5 61% Units) Length of Clinical Trial (Median Days) 472 768 63% Total eligibility criteria per protocol (median) 31 54 74% Number of Countries Participating in Phase III 11 34 209% Pivotal Trials (Mean) Clinical Trial Participant Enrollment Rate 75% 58% -17% points Clinical Trial Participant Retention Rate 69% 43% -26% points Source: Tufts Center for the Study of Drug Development 26
  27. 27. Expediting Clinical Trial ExecutionEXECUTIONAL EXCELLENCE• Global clinical trials are very difficult to plan and manage • Need the right protocol… right mix of countries … right investigators…high-performing Clinical Trial Teams – Including internal and contracted resources globally • Need sites to initiate on time – With drug on hand and EDC ready to go• Appropriate monitoring plans must be in place • Review patient enrollment plans • Verify storage conditions for clinical supplies • Review emergency un-blinding procedures • Perform source data verification• Last but not least: we need patients! 27
  28. 28. Improving Patient RecruitmentEXECUTIONAL EXCELLENCE • Variety of patient enrollment factors • Eligibility • Willing participation; good retention rate • Accurate patient enrollment projections are necessary for success • Under-estimating patient enrollment leads to too many patients enrolling too soon • Lagging behind enrollment projections impacts schedule and resources • Experimenting with new technologies / social media for qualified patient recruitment 28
  29. 29. Patient Enrollment Ex-US is On the UpswingGLOBALIZATION Proportional Change of Enrolled Patients in Each Geographical Region Between 2002 and 2008 2002 2008 EU Core 14% 17% EU Non-Core 12% 18% EU Accession 7% 10%North America2002 200853% 32% ME & Africa 2002 2008 3% 3% SE Asia & W Pacific 2002 2008 6% 11% Latin America 2002 2008 6% 8% CMR International 2010 Pharmaceutical R&D Factbook 29
  30. 30. More Emphasis on Country Site SelectionsGLOBALIZATION• Appropriate selection of countries for clinical trials, based on: • Good access to patients • Disease state/standard of care compatible with protocol • Quality of available investigators: – Sufficiently trained staff to manage study procedures – Healthcare professionals who understand clinical trials, ICH / GCPs – Understand local regulatory requirements and healthcare environment • Adequate facility for evaluating patients and performing study procedures – Good storage conditions for clinical supplies – Ability to perform source data verification • Speed of regulatory / Institutional Review Board (IRB) Approvals • Cost of doing business 30
  31. 31. Improved Tools for Planning & PredictabilityEXECUTIONAL EXCELLENCE Planning: Robust Benchmarking and Simulations: PA to FPE FPE to LPE PA to LPE Monte CarloCMR Data Ph Months (Days) Months Months Sites # Patients Pt/Site # studies Simulations: (Days) (Days) 3.85 9.03 13.22Industry Median IIb 66 664 7.1 8 (117) (274.5) (402) Industry 25th 3.34 7.28 12.01 IIb 45 450 4.0 8 Percentile (101.5) (221.25) (365.25)Execution: Predictive Analytics:Study Optimizer: Screening & Randomization Site Site Ready Planned Ready Actual & Planned Projected Screening & Randomization Actual & Projected
  32. 32. Race to Meet Major, Unmet Medical ChallengesINNOVATION • Need Treatments for Alzheimer’s Disease Projected Annual Medicare & Medicaid Spending, With and Without New Treatment Advances (billions)* * Assumes research breakthroughs that delay the average age of onset of Alzheimer’s disease by five years beginning in 2010 Source: Alzheimer’s Association 32
  33. 33. Need New Treatments for Degenerative DisordersINNOVATION • Parkinson’s Disease Costs Society $27 billion Per Year in Medical Bills and Lost Wages Projected Worldwide Increase in Prevalence of Parkinson’s Disease E.R. Dorsey, et al: Neurology 68, no. 5 (2007) 33
  34. 34. Competition is Increasingly Internal, TooINNOVATION Bold Way to Spur Innovation In 2008, GSK Research split into competitive teams (Discovery Performance Units) with scientists at the center Compete for funds after a three-year review, due in 1st Qtr. 2012 Teams who fail to meet targets may be disbanded 34
  35. 35. CHANGES
  36. 36. We Must Adapt Behavior, Culture to New Reality• Work differently to be successful • Changing internal culture and behaviors is not easy • “Big Pharma” had long been a stronghold in the economy – Viewed as secure, high-quality employers and corporate citizens • Now we are an industry under siege – from payers and consumers• Commit to increasing external licensing and research • R&D investment is too costly to always be done alone• Make globalization work • People need our medicines everywhere • Partnering can help us reach patients and markets without substantial internal investments 36
  37. 37. What Has to Change in Development for Big Pharma?• Organizational inertia • Overcome tendency to just keep doing things the way we always have • Build structures that are flexible and adaptable to constant changes in demography and geography of the development portfolio• Aversion to constant process evolution • Alleviate concerns that changing something will impact safety or compliance• “Not invented here” syndrome • Be willing to partner on innovative therapies and new ways of operating • Cultivate and enhance capabilities in vendor oversight and management – Without doing their work for them!• Change attitude that vendors are “just” service providers • Build strong relationships with vendors across all levels of organization • Work collaboratively, as one team • Make vendor oversight and management a core capability 37
  38. 38. Exploring the Ways to “Get it Right” 38

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