Saturday, September 26, 2009

80% of Success Is Just Showing Up

THE MARKET

Continuing on with the 10 SMART questions, pharma companies need to ask, after defining an overall market opportunity, a pharmaceutical company needs to understand the prescribers, the competition and the regulatory environment in which it will be operating.

V. Who Are The Prescribers And What Do They Think?

With a defined patient pool, it is much easier to get a handle on the prescribers and the settings in which they operate. As product development focuses on more targeted indications, understanding the prescribers in terms of who they treat and how they treat is critical to the development of a compound. KOLs are called Key Opinion Leaders for a reason; they help shape and design evolving treatment guidelines. And practicing physicians do what they do best: they practice. Through both qualitative discussions and quantitative surveys, being able to get at those professional medical practitioner insights underlie the successful development and ultimate adoption of a given product.

VI. Competitive intensity

According to Andrew Grove, former CEO of Intel, only the paranoid survive. This is as true in pharmaceuticals as it is in computer chip-making. Clean slates are set up to keep score. Clean rooms are the battle grounds of competition. And clean hands are needed for fair fights. In an industry driven by innovation, mass production and evolving needs, the competitive intensity of existing and future markets will either unleash or damper the potential of a given product. What looks good in the current market may look less attractive in the future given competitive activities.

Like macromolecular crowding, indication opportunities appear and then narrow depending on competitive products emerging in a therapeutic space at any given point in time. This crowding results in opportunities changing in radical ways, and not always to the good. Identification of those emerging market entrants make an impact analysis necessary for defining the evolving opportunity and assessing how the commercial opportunity could possibly be reduced.
The product landscape of the future needs to be defined in terms of both direct and indirect competition. While it is important to quantify the potential impact and order of entry of competitive pipelines, it is just as important to value the impact of indirect competition, particularly in the treatment algorithm.

For example, what impact could a novel treatment for pre-diabetic patients have on the reduction of patients progressing to diabetes or what happens to second line cancer treatment therapies when a new first line treatment becomes available? Or how do you think about the diagnosis and treatment of a disease when a new test or a new bio-marker shows high degrees of correlation?

The continuing emergence of bio-markers and companion diagnostics will also revolutionize the use and the application of assets in development. As more and more companies focus on personalized medicine, they will be seeking and using biomarkers to diagnose disease risk in individual patients and appropriate companion diagnostics to assess the safety and efficacy of drugs in specific patient sub-populations. In effect, adopting the Wayne Gretsky hockey quote of skating to where the puck is going to be not where it is.

VII. What Is The Optimal Clinical Development Path and Associated Regulatory Hurdles?

As the market is being defined in terms of patients, prescribers and competitors, just getting the product on the market requires an additional level of analysis. The clinical development path in terms of defining the market differentiation based on meaningful endpoints affects acceptance by prescribers, payers as well as regulators. The analysis shapes the delta in end points that make or break a product in terms of intent to use as well as intent to prove.

Woody Allen said that 80% of success is just showing up. The regulatory pathway becomes a hurdle to just showing in the medical market space. Increased demands on safety and improved efficacy, as regulators become more conservative and shy away from risk, is significantly reducing the number of drug approvals annually. What is the thought process and guidelines will regulators use? How will the gauntlet of advisory boards be addressed? Defining that shining path through becomes an important light at the end of the development tunnel.

But Woody Allen, while a clinician of universal angst, was never a clinician who had to make life or death treatment decisions. He also said, “I don’t want to achieve immortality through my work. I want to achieve it by not dying.” Just getting regulatory approval is not enough. It is important, starting all the way back in the clinical development process, to target the endpoints that will demonstrate clinically meaningful differentiation.

And what happens if the light grows dim? Clinical development needs to also include contingency options. The various decision paths a drug can follow depends on the outcomes realized at different milestones. It is important for companies to think through and plan the various options as early as possible in clinical development to contain intrinsic value and to mitigate risk.

VIII. How Do Payers, Market Access, Pricing and Reimbursement Affect The Opportunity?

Defining the impact of market access parameters on the target patient pool and the willingness of payers to pay is not always neat nor is it nice. Whether it is the National Institute for Health and Clinical Excellence (NICE) in the UK or the various US private and public payers, the payer algorithm needs to be tightly defined and aligned with the treatment algorithm to understand product coverage, acceptance and pricing. How do these payers think? What analogs will provide a guide to that thinking? How do they value the differentiation of the science behind the product and the needs the product is seeking to address?

As if answering these questions weren’t tough enough, pricing goes into a whole new level of complexity. What should the reference price be? What is the relationship between price, formulary status, access and eventually market share? What is the optimal pharmacoeconomic value of a drug? These elements of value affect the ability to price in the market and the access available to that target patient pool depending on reimbursement.

Whether the health system is private insurance as in the US or Government as with the NHS in the UK or different governments in the EU or self-pay in emerging markets, the ability for patients to bear the cost burden is directly and crucially related to the amount of money they have available for treatment.

This issue becomes particularly complex in emerging markets where there are large patient populations that are rapidly shrunk when self-pay is taken into account. In contrast to other kinds of questions where differentiated relationships can be fairly straightforward, payers, access and reimbursement has its own unique set of complexities.

Sunday, September 20, 2009

Pharma Opportunites Lie In the Eyes of the Marketer

UNDERSTANDING THE OPPORTUNITY FOR NEW DRUG COMPOUNDS

In the beginning, there is an opportunity. The challenge is figuring out how big that pie is and then how big a slice can be cut out. Providing more more thoughts on key Pharma questions that must be asked when you want to understand how big the opportunity:

I. What are the recognized and unrecognized medical needs?
In any given therapeutic area, there are a host of needs that are both known and unknown. An unmet recognized need could be associated with inadequacies associated with the current Standard of Care, offering an opportunity that could be addressed through improvements based on specific clinical endpoints. Unrecognized, unmet needs can be gleaned through conversations with stakeholders (patients, doctors, payers) and can lead to a paradigm shift in the treatment of the disease that is different from the current Standard of Care.

II. How Can We Best Address The Unmet Need?
Identifying the medical need is one thing; the ability to address that need is another. Opportunities can be on many different sides of the care equation, for example, improved efficacy in terms of ameliorating symptoms or being curative, better safety and tolerability or more convenient forms of dose administration. All of these elements factor into better initiation, compliance and adherence. Just because there is a need does not mean there is an opportunity. It is critical for companies to clearly define where and how they want to play.

III. Is the Science To Address the Unmet Needs Differentiated in a Clinically Relevant Way?
Following the characterization of the need is the science. Does the company’s science support the improved efficacy, safety or dosing truly differentiated. Over the last decade, the pharma industry has been criticized for developing me-too follow-on compounds designed to stand on the shoulders of patent expiries of blockbuster compounds and offering little in the way of true differentiation. The most powerful advantage in any business, pharmaceutical or otherwise, is the advantage of innovation. For pharma companies, innovation lies in the differentiation of the science.
There has been and will continue to be a tectonic shift from small molecules to large molecules as the science and the solution for disease cure and management becomes increasingly less productive in small molecule development. Targeting and scientific developments no longer keep pace with the commercial pressures required for success and growth in the marketplace. As a result, companies need to carefully assess how their science stacks up in the marketplace vs. existing and emerging competition.


IV. Who Is The Target Patient Pool?

Of course, there is the patient, who is waiting for the relief or the cure. Who are they? How many are there? In assessing target patient populations, both product and commercial developers many times identify a patient population that is too large, leading to over-optimistic commercial objectives and possible misappropriation of resources. The key here is to truly match the medical need with the appropriate patient pool by identifying the underlying symptoms or disease manifestations to as precise a level as possible. This accurate definition and identification of patient populations is critical to many other aspects of commercial development, e.g. clinical trials and physician targeting and messaging. When a company understands the real sub-population for a given indication and need, it is better able to accurately define the commercial opportunity.

Saturday, September 12, 2009

10 SMART Commercial Pharma Questions

Have you ever played “Truth or Dare?” The first player asks “truth or dare.” If the responder says “truth,” the first player asks a question, usually embarrassing. If they reply “dare,” the questioner asks them to do something, also usually embarrassing.

In the cycle of drug development, biotech and pharmaceutical companies alike play this game internally every day. Do we move this product into Phase 3? How much is this market segment really worth? Will physicians use this product and, if so, how? Are the clinical endpoints meaningful enough for physicians to use the product vs. another standard of care? And, critically, will it be reimbursed.

Then, of course, we work in a world of limited resources. No pharma company, no matter what its size, has an infinite amount of money and resources to water through its pipeline. For individual compounds under development, they challenge is to fail early and fail fast so resources can be reallocated as quickly as possible. In addition, for an entire portfolio, whether it is for a specific therapeutic area or an entire company, management needs to understand how its decision to invest in one product vs. another affects its risk and its value.

Time and again, we have seen both big and small companies ask these questions internally. And frequently the answers are inadequate and, when confronted by the CEO, embarrassing.

It is not that the players want to be embarrassed. For them, the game is real. There are patients waiting, stockholders looking for investment returns, fellow employees rooting for a success and payrolls to be met. Most importantly, these players are smart. They have developed a drug that has real potential.

The challenge is being able to answer all the necessary questions to gain the human and financial resources to keep the project moving forward. No one owns a perfect 2400 SAT score for answering all the questions here. No one has the time and the staff to even list them all, let alone, answer them all.

When topics range from epidemiology to disease characteristics to treatment algorithms to perceptions by physicians and payers, the ability to assemble, synthesize and develop critical observations and insights can challenge the skills of any Merit Scholar.

In order to assist companies with these kinds of analyses, toward understanding the Opportunity, the Market and the Value, Manu Bammi and I have developed 10 Smart Questions that must be asked in order to truly understand opportunities and win the game.

THE OPPORTUNITY
In the beginning, there is an opportunity. The challenge is figuring out how big that pie is and then how big a slice can be cut out.
I. What are the recognized and unrecognized medical needs?
II. How Can We Best Address The Unmet Need?
III. Is the Science To Address the Unmet Needs Differentiated in a Clinically Relevant Way?
IV. Who Is The Target Patient Pool?


THE MARKET

After defining the pie, a company needs to ask itself if who is going to serve the pie and who are they going to have to fight with to get their fair share of that pie.
V. Who Are The Prescribers And What Do They Think?
VI. What Is The Competitive intensity?
VII. What Is The Optimal Clinical Development Path and Associated Regulatory Hurdles?
VIII. How Do Payers, Market Access, Pricing and Reimbursement Affect The Opportunity?

THE VALUE
There are two elements to Value in the SMART questions that you must ask: What are the revenues and how do you mitigate risk and preserve and realize the maximum value.
IX. What Are The Potential Revenues Associated With This Opportunity?
X. How Can Risk Be Managed, Value Preserved and Resources Allocated In An Optimal Way?

THE END-GAME

To paraphrase Dr. Seuss, oh the places you will go and the things you will see by seeking to answer these ten questions. By understanding the Opportunity, the Market and the Value in this kind of a rigorous and diligent way, companies can adapt the best industry practices that have proven to be successful. From the simple questions to the mature play of truth or dare, answering these questions are a game that major pharmaceutical and biotech companies cannot afford to lose.