thepharmabusiness

Pharma companies needs to look at social media

2009-09-30T03:01:00.000-07:00

A wide range of companies have embraced social media (SM) and integrated SM programs into their marketing plan. But pharmaceutical companies are not sure how to integrate this approach and are just starting to learn. I can understand why Pharma is reluctant towards SM – the rules are not clear about what you can do and not do.

FDA is seeking input on SM and a public hearing will be held on November 12 and 13, 2009. EU has banned all DTC advertising and all correspondence needs to go via medical practitioners. Healthcare professionals act as gatekeepers of information and has to ‘educate’ the public. This means that all SM activities have to be directed towards healthcare professionals. But what if information is giving to the wrong people?

On the Internet, patients can assemble in support groups and share knowledge about products, treatments etc. – across countries. Knowledge sharing take place everywhere on Twitter, Facebook, patient groups and other media solutions. The big question is: what role can Pharma companies play and how can social media be utilized?

Traditionally, the sales force has been the heart of Pharma marketing. Detailing, samples, conferences and services have been used to build an emotional involvement with customers and the sales force has been a crucial part of this strategy. To create a positive Buzz around your product you need to involve KOL’s and doctors and get them to embrace your treatment. SM could play an important role in the involvement of KOL’s and doctors.

The use of media
Pharma companies have corporate websites, product-sites etc. and is maybe using one or two of the “new media things”. But they lack knowledge of what to do and how to do it and to create a strategy that encounter the marketing objectives. Healthcare professionals are choosing products based on safety, efficacy and some emotional attachment: “I know it works, my patients are responding well to the treatment, the manufacturer’s reputation is recognized and I know they are very ethical”. SM can affect these emotional attachments and improve the company reputation. But you have to do it right – big surprise!

A place to start
Before you can get started you have to understand what SM is all about. When you have done that, research and pinpoint your target customers: how are they using SM, how can you target them and what kind of information are they looking for? You simply needs to understand what Facebook, Twitter, Youtube etc. can give you, how your customers are using them and what combination is the most effective! But most importantly, you have to make a clear-cut strategy and make your objective smart and measurable.

Always keep in mind your target customer, understand them and what you are doing – strategize. If you can grasp all three, I believe you can create a powerful platform and create an unmistakable brand awareness.

To measure your success or failure, you can measure data points like brand ambassadors in a program, conversations that are generated from them, time spent on websites, referrals etc. I found a very interesting Blog post about this matter:

http://social.eyeforpharma.com/story/explore-be-bold-measure-healthcare-word-mouth-and-web-20

I think, Pharma companies needs to modify their marketing focus and start to implement other and new approaches. SM can leverage the brand awareness and give valuable information about your target customers. But you have to ‘go all in’ and research your customers use of SM, make an effective strategy and remember to measure your results.

Don't you dare cut your marketing budget

2009-08-22T15:39:00.001-07:00

Nobody can runaway from the recession – it is a reality and we have to work with it. Some people are already noticing better times in the horizon, but nobody can be sure. Traditionally, a downturn in the economy means cutting marketing budgets. And according to a survey by marketingprofs.com, the financial crisis is causing immediate 2008 budget cuts and already affecting the 2009 budgets. In a recession, consumers become value oriented, distributors are concerned about cash, and employees worry about their jobs. But don’t let you get carried away by the negative mood. A downturn is no time to stop spending on marketing. It is a unique opportunity to consolidate your market position and increase your competitive advantage.

My message is clear: Don’t you dare cut your marketing budget – only if you are in a desperate need of working capital. If the budget is cut, your message could get lost in all the “noise” made by competitors. It’s time to get smart about your marketing dollar and spend it to bring results. That’s easier said than done.

How to do it

The key is to know your customers and look at your marketing spending as an investment – not an expense. Remember to: Devise a strategy, maintain market spend, assess and allocate the budget, research your customer thoroughly, target and reach out to them.

In other words it is extremely important to be well positioned. I firmly believe that if you get these things right your company could survive any recession and possibly thrive in them.

I have found the following guidelines:

Research the customer. Instead of cutting the market research budget, you need to know more than ever; how consumers are redefining value and responding to the recession.
Maintain marketing spending. This is not the time to cut advertising. It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost.
Adjust product portfolios if/when consumers trade down to models with fewer options.
Support distributors. In uncertain times, no one wants to tie up working capital in excess inventories.
Adjust pricing tactics. Customers will be shopping around for the best deals.
Stress market share. Companies are in a battle for market share and, in some cases, survival.
Emphasize core values.

Good luck surviving the recession and remember you have a unique opportunity to improve your market position – if you are willing to act instead of only reacting.

Another mega Merger and Acquisition: something is cocking in Pharma

2009-03-09T09:06:00.000-07:00

The trend continues to bring us mega M&A’s. Merck has today consolidated its position as one of the biggest Pharma companies by announcing the acquisition of Schering-Plough Corp. for USD 41.1 billion in stock and cash. The acquisition will give the company more firepower to fight the battle against the drooping sales, generic competition and intense pricing pressures.

Merck and Schering are already partners in a couple of popular cholesterol fighters, Vytorin and Zetia (together these drugs generate USD 4 billion in annual sales) and the two companies is said to be a “perfect match”. The deal will form the world’s second-largest prescription drugmaker, only topped by Pfizer. The planned merger of Pfizer and Wyeth, a deal worth USD 68 billion, is said to be the way out of the major revenue gap that will emerge in 2011, when Pfizer’s blockbuster cholesterol-treatment drug, Lipitor, will begin to face US generic competition.

Merck’s strategy has been to buy small companies and rights to individual experimental drugs, but this has all changed. Merck has long been trying to find suitable strategies to address the falling revenue, as blockbusters like Fosamax and Zocor have seen generic competition hammer sales the last couple of years, and now the company has left “the small company strategy” and acquired a top 20 Pharma company. In addition the deal will improve earnings per share and cash flows as Merck loses patent protection on top brand names like Singulais (allergies) and Cozaar (high blood pressure). Compared to Merck, Schering has relatively few drugs nearing patent expiration and this has, in my opinion, enhanced the strategic fit.

The transaction is expected to close in the fourth quarter and the shared 2008 revenue of the two companies totalled USD 47 billion. The combined company will have a more diverse portfolio across important therapeutic areas, including cardiovascular, respiratory, oncology, neuroscience, infectious diseases, immunology woman’s health and other areas.

The big question is: how will the stock market respond to the deal? When the Pfizer-Wyeth deal was announced the Pfizer share slumped by 10% and I believe the same thing will happen to the Merck share.

The Orphan Drugs Act (ODA): Pharma’s new blockbuster approach

2009-02-12T06:44:00.000-08:00

As earlier described the Pharma companies have experienced a staggering decrease in growth rates, cut-backs in approved products and an increasing threat from generic manufactures. The crisis (and I am not thinking about the current economic crisis – the Pharma industry is often unaffected by the state of the financial market) forces the companies to be risk-averse and focus on large therapeutics felts – future blockbusters with a solid revenue stream. Because of Pharma’s focus on big indications, for example cholesterol-lowering medications, the competitive environment is fears and many companies have looked for different strategic approaches and one answer is orphan drugs.

An estimated 6,000-7,000 rare diseases and conditions, affecting 25 million Americans, remain either untreatable or are treated with therapeutics that are not very effective (e.g. they are non-specific, or offer limited symptomatic relief) or causes serious adverse effects. The signing of the ODA by Ronald Reagan in 1983 was meant to give hope to more than 25 million Americans suffering from a rare disease or condition and no doubt the ODA has made an impact. 325 drugs have received market authorisation, as of April 2008 – in the decade before the act was passed, only 10 treatments had been developed for rare diseases. Naturally the act has an effect on the companies too.

The ODA provides direct incentives to developers of drugs for rare diseases and disorders (i.e. those affecting <200,000>

Seven years of marketing exclusivity: completely bars competition from similar compounds
R&D tax credits
FDA counselling and fast-track programs
Grant funding of clinical development
Short review time: FDA has the recent years used about 2,5 months on approval – which is significant lower compared to the approval time of NME’s and NDA’s

The ODA has made niche products an interesting business and there are currently more than 303 drugs in development for orphan indications . Cancer and cancer-related conditions are the most common indication for orphan drug development, accounting for 142 of 303 therapies listed in the PhRMA.

The idea behind the ODA was to get Pharma to develop new alternatives to untreated rare diseases and Pharma has made it a good business. The market pull incentives to compensate for low sales has made some orphan drugs blockbusters (see figure 1).

Figure one depicts a number of examples of orphan drugs reaching blockbuster status. But how can a drug targeting <200,000 people secure an annual cash flow of minimum USD 1,000 millions? The answer is simple: by setting a high price. The most widespread criticism of the orphan drug legislation has been the sky-scraping treatment cost. Many healthcare professionals, patients etc. have expressed that the only error in the orphan drug act is the missing regulation of the price. If the price was regulated it would improve the accessibility and affordability, but should naturally not conflict with the interests of the Pharma companies to invest in the segment. Development companies are in the market to generate shareholder value and have to create a positive ROI and when the indication is small it affects the price.

According to the Global Markets for Orphan Drugs report (by BCC), the total market size of orphan drugs in 2006 was USD 58.7 billion and is expected to rise to USD 81.8 billion by 2011. Around 60% of the orphan drugs are biologics and the report depicts the most promising categories within biologics to be monoclonal antibodies, interferons/interleukins, growth hormones, and plasma products. The future success of the orphan drug blockbuster strategy is depending upon the entry of biogenerics. The biogeneric market is very attractive to generic manufactures nevertheless the approval process is not made clear-cut by FDA, yet. But no doubt legislations permitting biogenerics is on the way – just look at Europe, where EMEA has approved a couple of biogenerics. This will only change the name of the game when a drug is loosing patent protection. In my opinion the above incentives of the ODA will still make the orphan drug blockbuster strategy an attractive approach. But in time the competitive environment of orphan drugs can be too crowed and push Pharma in other directions.

Victoza® (liraglutide) from Novo Nordisk

2009-01-16T07:33:00.000-08:00

Novo Nordisk is fighting hard to get liraglutide approved by FDA as soon as possible. The company filed for European and U.S. approval last year and FDA is expected to approve the drug around May 2009. The approval process has been delayed due to FDA’s extended data requirement.

Liraglutide is a human GLP-1 analogue, designed to induce the same effects as a blood sugar-improving hormone and will be competing head on with Eli Lilly/Amylin’s Byetta. FDA has already approved Byetta and the product could hereby profit from a first mover advantage. But Byetta has run into trouble. Byetta has been linked to an increased risk of deadly pancreatic disease. This has forced FDA to strengthen the warnings about life-threatening pancreas when using the product. The FDA says that Byetta and other suspect drugs should be promptly discontinued if pancreatitis is suspected. Novo has not experienced any of the above problems in the clinical trials with liraglutide and it should be easy to discriminate all links to pancreatitis and create a competitive advantage compared to Byetta.

Victoza® (liraglutide) contra Byetta

Liraglutide has three advantages:

Liraglutide is a once daily injection (Byetta is a twice daily)
The Lead-6 data has indicated a better efficacy compared to Byetta
No link between the product and pancreatitis

If Novo Nordisk can utilize the once daily version, the better efficacy and Byetta’s impaired reputation , the first mover advantage of Byetta could be effect less and Victoza could quickly meet its blockbuster potential and secure a market leader position.

However Victoza’s success could be short termed. The expected launch of Byetta Lar (once-weekly injections) in mid 2010 will be a serious challenge, due to the impressive results in clinical trials. Byetta Lar has documented a weight loss in the size of 4-5 kg, after one-year treatment – compared to “only” 2-3 kg with Victoza. Byetta Lar could challenge the possible market leader position of Victoza – if the product is approved.

Goldman Sachs has predicted the global sales of Victoza to reach DKK 6,000 million in 2012. In my opinion Novo has to focus on pushing the product and build up a strong market position within the six first months of launch – if not the predicted global sales will be diminished. Novo has to utilize the window of opportunities before Byetta Lar is approved. If they succeed the product could be a future cash cow.

Pharmaeconomics: the future?

2008-10-08T00:36:00.000-07:00

The increasing cost of new innovative medicines is debated by payers and healthcare professional all over the European Union. How to optimize the pharmaceutical purchasing budget and get as much value for money is the objective of public buying organizations and private insurance companies. One way of doing this is to implement Pharmaeconomics or cost-benefit evaluations of new and existing drugs.

The UK government has structured the National Institute for Health and Clinical Excellence (NICE) - an organization that evaluates the value for money in newly approved medicines and line extensions. The National Health Service (NHS) is legally obligated to provide funding and resources to the hospitals purchasing budget in England & Wales, if a drug is recommended by NICE. If a treatment is not recommended it means for the time being it should not be prescribed routinely by NHS doctors. When a Pharma company is introducing a new drug a positive recommendation by NICE can be crucial.

I believe that every Pharma stakeholder must get use to cost-benefit evaluations of newly approved and existing drugs, and if the value for money is “to low” the product will not be reimbursed or recommended. But this can induce a bad trend in Pharma. The industry has to deliver ROI of pipeline investment and if a marketed product is not reimbursed/recommended, the market potential is decreased and hereby the future earnings. This will increase the prices and for that reason more products will exceed the NICE threshold of £30.000 a year for “good-quality life gained”. If NICE do not increases the threshold, I think future approved drugs will have a difficult time gaining recommendation – the companies could be trapped between delivering ROI (increase prices due to costly development and a longer approval process) and get recommendation (decrease prices to meet NICE threshold). Pharma could hereby be fenced in by this pricing schism.

Pharmaeconomic evaluations are already an integrated part of getting a new drug approved and get reimbursement/recommendation. Many countries are taking pharmaeconomics into account, but the extent to which differs. The Netherlands, the UK, Sweden, Estonia, Latvia and Lithuania have specific guidelines for conducting pharmaeconomic analyses[1] and I think it’s only a matter of time before more will follow. To answer my question in the headline: Yes, pharmaeconomics is the future and many companies do already build the approval on cost-benefit analysis. But if an organization like NICE do not implement some flexibility in the evaluation, it could induce the mentioned bad trend – and that would be non-beneficial for companies, patients and payers.

[1] http://ppri.oebig.at/index.aspx?Navigation=r20-

Aside the normal agenda of this Blog

2008-09-11T06:29:00.000-07:00

I would like to encourage you to check-out another interesting Blog – www.thebusinessupdater.com . The objective is a little bit aside this Blog – focus is not on a specific line of business, but on business life in general. However I have read many of the articles with great pleasure and think it has some good perspectives on business related topics in general. I can positively recommend the newly published article about using passion to create a competitive advantage.

In my time as a student, I was part of a team conducting an internal analysis to clarify the vision, mission and strategic focus of a smaller Danish software company. The company was not doing well and we identified big differences in the perception of the future strategy between key employees, and a total lack of company vision and mission. The only thing that drove the company was a shared passion for the company and the product[1]. By using in deep qualitative interviews with all employees we identified a possible vision, mission and clarified the strategic focus – this was of course linked to an external evaluation of the competitive environment. Our conclusion was implemented (with some adaptations) and when we contacted the company two years later they could report a growth rate of 40%. A shared passion and an unclear strategy, was changed to a shared vision, mission and a clear company strategy. This made the company able of conducting a turnaround and is now improving both the top- and bottom-line.

A missing strategic outlook is a common problem when a newly started entrepreneur is setting up a business: the passion is there, but many do not take the time to identify the competitive advantage and how the company can be differentiated from competitors. When setting up a new business it’s not enough to have passion and a gut feeling of how to get success. In addition you have to analyze the market and clarify your vision, mission and a strategic focus. All elements are pivotal for success and no one can be left out – unless you are extremely lucky, and luck will only give you a short term of success.

[1] The company was a family owned business. The mom was the CEO, the father was a programmer and the daughter was head of sales. We quickly identified this as part of the problem.

Big Pharma and Academic institutions partnering: “The New Old Trend”

2008-09-08T01:10:00.000-07:00

The easy double-digit growth rate is something of the past for Big Pharma and many companies has been forced to cut sales staff, streamline the pipeline and look beyond own boundaries for in-licensing opportunities with blockbuster potential or company acquisitions with a strategic fit[1]. All this to accommodate the threat from generic manufactures when blockbuster drugs are losing patent protection[2]. To paint up an even gloomier picture; FDA did only approve 16 new drugs last year (2007), and is on the pace to approve just 18 this year. The approval rate in 1997 was 39 drugs, and the staggering decrease from 39 approvals to 16 approvals in 2007 is making the future for Pharma pretty bleak.

Big Pharma is always on the look-out for the next blockbuster product and the search is not only focusing on late-stage, but also early-stage candidate. This has created the trend I call: “the new old partnering trend”.

The Old Trend: Big Pharma-academic partnership engaged university researchers for a certain line of research that benefited their projects, and that research was carried out exclusively by the university scientist.

The New Old Trend: The new involvement tend to be more of a team based approach, where university and industry scientists are working together on wide-ranging experiments to advance new drug discovery and stimulate basic research – in hope of more potential blockbusters in the future.

Examples of this New Old Trend are[3]:
GSK entered into a five-year, US$25 million deal with Harvard to support stem-cell research, focusing on heart disease and cancer.
AstraZeneca signed a multi-year collaboration contract with Columbia University to develop novel therapeutics for metabolic diseases.
Pfizer formed a three-year, US$14 million collaboration with four research universities to study the field of diabetes.

To sum it up: Pharma needs to approach the R&D process from another perspective, and one way could be to collaborate with academic institutions, instead of only using them for a certain line of research. But if The New Old Trend should have a reel impact the academic institutions and Big Pharma needs to break down the barriers and start look at the positive benefits of working together – the three mentioned cases could indicate willingness from both sides.

[1] UCB recently refocused and cut workforce by 17%.
[2] The world best selling drug Lipitor (Pfizer) will lose patent protection in all territories over the next 3-4 years. Risperdal (J&J) the 10th best selling drug lost patent protection in EU in 2007.
[3] From:”Big pharma gravitates to the academe”, Financial Times.

Trend in clinical trials

2008-08-26T07:22:00.000-07:00

An analysis of clinical trials registered between October 2005 and September 2007 has been published by Nature[1]. The conclusion is clear: Most registered trials were in oncology, followed by central nervous system (CNS) disorders and cardiology. This could indicate the future for marketed products within the three therapeutic fields.

Oncology is the largest therapeutics area with more early phase trials than any other area. The market for anticancer drugs[2] is the second largest therapy market, with US$34.6 billion in global sales in 2006 – only exceeded by lipid regulators[3].

The position as a follower is occupied by CNS – most depression and schizophrenia trials are being conducted. However both indications have experienced a negative growth, with moderately few early phase trials. This could indicate a shift in CNS-focus by the Pharma and Biotech companies, maybe due to the lack of success in psychiatric diseases compared to other areas – sleep disorders, multiple sclerosis and Alzheimer’s etc.

Cardiology is the third biggest therapeutic area with targets like hypertension, cardiovascular diseases etc. Both indications showed a decrease in trials and why the industry has paid less attention to cardiology development is not clear. One explanation could be the intensive competition from strong market leaders, many of which soon will become generics.

To sum it up: the future competitive environment within oncology is increasing based on the number of clinical trials registered. A too crowded market with strong market leaders could make it financially risky to develop a new oncology drug. Nevertheless, many indications are still untreated or with a limited number of competitors and before this has changed I cannot picture a decrease in registered oncology trials.

[1] www.nature.com/reviews/drugsdisc
[2] Drugs like Gleevec, Taxotere, Leustatin, Gemzar etc.
[3] Drugs like Lipitor, Zocor etc.

Strategies when your product is losing patent protection

2008-08-21T04:29:00.000-07:00

Expiring patents is one of the Pharma industry’s weak points. When a product goes out of patent the generic manufacturers are often quick to grab the opportunity and erode the market with cheap copies. The price is often reduced by 70-90% and has a significant effect on the revenue made by the original producer.

As I see it the originator has four strategic alternatives:

Follow the price level of the generic competitors
Waive the product and let it generate as much profit as possible with a minimum of resources utilized
Launch a generic copy and try to cannibalize the market
Launch an improved version and pull the patent losing version out of the market before the patent expires (the company can of course keep both on market)

The last alternative is often applied because of the possibility of protecting the revenue by moving all patients from the patent losing product to the new and improved version. For this strategy to succeed the company has to demonstrate a better efficiency or safety compared to the old version. The Danish pharmacies cannot substitute between the generic and the new improved version – if the benefit is approved and acknowledge by the Danish health department, and hereby is the generic risk bypassed.

Imigran (sumatriptan): a case study of applied patent strategies

Imigran from GSK lost DK patent protection in May 2006 and 10 companies has eroded the Danish market with different tablet variations of sumatriptan (GSK has a nasal and an injectable variation of sumatriptan with no generic competition on the Danish market). GSK tried to protect their revenue stream by using the second and last strategic alternative:

The first strategic move was to introduce Imigran Sprint and deregister the four pack of Imigran[1]. GSK could hereby get around the generic challenge, but the Danish health department did not find the rapid formulation of Imigran Sprint evident and made the new and the old version substitutable.

The second strategic move was to launch a generic copy and try to cannibalize the market. Sumatriptan “GSK” was launched when the patent expired in May 2006 and the idea behind this move must have been to compete on price with the other generic alternative from Sandoz – many generic manufactures followed.

If you examine the sales figures of Imigran it gets evident that the revenue was reduced by half from 2006 to 2007. The three biggest Migraine products on the Danish market are Imigran (GSK), Maxalt (Merck) and Relpax (Pfizer). GSK has protected their position as a market leader, but I think it is only a matter of time before the market share of Maxalt or Relpax exceeds the one of Imigran.

To sum up: GSK tried to apply two of the described strategies and has to some extend protected their market share – Imigran is still the market leader in selective 5HT-receptor agonists. But the revenue was cut by half when the patent protection expired.

[1] http://www.laegemiddelstyrelsen.dk/db/filarkiv/5938/20060406.pdf

Lundbeck: a company facing tough challenges

2008-08-13T07:06:00.000-07:00

The Danish CNS company Lundbeck has released an interim report for the second quarter of 2008 that illustrated positive elements. But it was impaired by the failure of Flurizan.
The Q2 revenue continued to grow and reached DKK 2,938 million. But the increase had no impact on the bottom-line due to the DKK 481 million depreciation of Flurizan – Flurizan was in-licensed from Myriad in May 2008. Lundbeck and Myriad has decided to discontinue the clinical trials and the DKK 481 million investment made by Lundbeck is hereby gone down the drain. The investment was considered as part of the defense against the pending patent expiry of Lexapro/Cipralex. The product will lose patent protection in March 2012 in US and if Lundbeck doesn’t in-license or develop a successor it will be impossible to secure a positive development in revenue. The Q2 revenue of Lexapro/Cipralex was DKK 1.926 million and a big part of that can, and probably will, vanish when the patent expires.

Pfizer’s major anti depressant Zoloft (sertraline) lost patent protection in 2005, causing severe attrition in sales resulting in the product’s displacement from market leader to number two in the global anti depressant market in 2006. A number of generic versions are present on the Danish market and has made the sales of Zoloft drop significantly.

The solution
Lundbeck’s pipeline product Lu AA21004 has potential, but I find it almost impossible to prepare the product for market introduction – to get it through phase III trials and get marketing approval, on less than four years. The product will enter a market with fierce competition, both from marketed products like Lilly’s Cymbalta/Yentreve, Wyeth’s Effexor and the generic versions of Lexapro/Cipralex. The market potential of Lu AA21004 is hereby uncertain and the clinical trials needs to document an improvement in efficacy and/or side-effects etc. compared to the competitors.

Lundbeck could in-license a product but the company hasn’t had success yet and the clock is ticking. The company must in-license a late stage product if it should take over from the patent-losing Lexapro/Cipralex and it is a tough challenge. The competition from other Pharma companies interested in licensing future blockbuster candidates is harsh and a late stage candidate is expensive – as showed in the case of Flurizan.

To sum it up: Lundbeck has to act fast and has limited attempts at coming out of this heads first.

This Blog

2008-08-10T11:31:00.000-07:00

This Blog will mainly focus on the Pharma and Biotech industry - implemented/future strategies, business insight etc. I will give my view on the industry, that has been the focal point of my attention for many years.

Further I will try to update you on recent articles, business reports etc. - that can update or enlighten you and give you insight in the exciting world of Pharma and Biotech.