May 17, 2011
Managing Change in the Canadian Pharmaceutical Industry
There may not have been any signs of Spring or warm weather this past May 17th, but the inside of the Opal Ballroom (Airport Marriott) heated up quickly as 250 or so pharmaceutical industry colleagues filled the room in anticipation of hearing from the stellar panel of leaders of five Montreal based pharmaceutical companies. With incoming PMCQ 2011-12 President Dan Leger as moderator, the panelists took their seats: Claude Perron (VP & General Manager, Shire), Janice Murray (VP & President ad interim, Novartis), Hugh O’Neill (President & CEO, Sanofi), Patrick Cashman (President & General Manager, Lundbeck) and John Helou (General Manager Specialty Care, Pfizer).
The theme of the evening was: "Managing Change in the Pharmaceutical Industry - the Next Decade", the sequel to a very successful and similar panel held in May 2008. R&D productivity, redefining the way we do business and creating value, these were the key anchors around which the evening’s discussion gravitated.
The life blood of pharmaceuticals has been research and development (R&D), no research, no development. No commercialization, no revenue. The ebb and flow of revenue fueling investment in R&D and conversely R&D fueling new pipelines has been challenged in recent years with more ebb than flow. With many companies facing the proverbial "patent cliff", the topic on everyone's mind is will we be able to fund future R&D?
John Helou welcomed the patent cliff saying, "it should come as no surprise" (in the end he is right, we all know, or should know, patents expire) and that it actually forces companies to adopt a longer, more strategic view of their business, learning how to better focus on the thing that has no patent cliff: the needs of patients, now and in the future.
R&D productivity should not only be defined in 'quantity' but we also need to evolve our thinking to the 'quality'. "This means moving from the current R&D outcome of 'is the product effective and safe' to new measures of productivity namely 'will this product get approved AND will the market accept it' [pay for it]", commented Hugh O'Neil.
But, how can we still fund R&D if we no longer have the blockbuster products of the past? The panel offered interesting insights namely that the blockbuster is not dead but we do need to redefine what a 'blockbuster' means in today's pharmaceutical reality. We still have "blockbuster type problems" commented John Helou in that we still have unmet needs in many disease areas. Take Alzheimer’s disease for example. We currently manage progression but we have not cured Alzheimer. One could say the same for most forms of cancer. The blockbuster therefore is not dead if we redefine it as: that one drug that can treat/cure a majority of patients with an unmet need in a specific disease area, independent of how many people actually have that disease. As a result of this new definition, commercial models need to be redefined as well.
"Brazil and China are the new homes for more mass market drugs" [what we could call the 'blockbusters of yesterday'], commented Janice Murray. In this global context, Canada will have to demonstrate to its global parent companies that Canada is as investment-worthy as the emerging economies. Canada's branded market is more mature, similar to the US and the EU. Nonetheless we have to demonstrate that we can be competitive, that despite tougher public payer dynamics, we have private and/or cash segments that are competitive. "Canada remains a market which is receptive to innovation", commented Claude Perron.
The issue then becomes one of demonstrating that innovation and its associated value. On this, Hugh threw out a provocative comment that "we need to assume that over the next two to five years, [few if any] drugs will receive public reimbursement". This is a logical consequence of government debts and an aging population requiring more healthcare dollars. The notion of ‘value’ therefore needs to be deconstructed into two elements. First do individual patients even understand the value of medication and second, do they even know or care about the current [access] situation? Most Canadians are not aware of the gap in their access to medications relative to citizens in the other 30 OECD countries1. As an industry, we have a role to play to help our society, not only our patients, become aware and then get them to care.
"We may not be able to change government bureaucracy", said Patrick Cashman, but we can empower patients with information so that they can demand change of the governments to which they pay taxes. The only reason our taxes are remotely palatable is because we consider them cash advances on a potential future withdrawal for healthcare if we ever need it. Unfortunately in Canada today this is not always the case and you and I may know it, but ask your neighbor. I would bet they have no idea.
To date, we have spent the bulk of our time and resources listening to, and speaking with, physicians. The time has come when "we should probably be spending more time listening to patients", said Janice. We own the patient education space in terms of our knowledge and know how about peer-to-peer knowledge translation. So why aren't we doing it?
In parallel, we have to help payers with the lens through which they measure our industry's value: outcomes. In primary care, outcomes has centered on compliance. Every medication works better with care, with complementary programs to educate the doctor to prescribe appropriately and the patient to manage their pharmacotherapy. What is pharma doing consistently so that we are perceived to have value beyond the pharmacology of our products, showing that we are contributing to better outcomes?
Listening better to our stakeholders, understanding that our stakeholders have and will evolve over time, and adapting our offering to their needs, this will restore our perceived value and credibility.
"I cannot think of another industry that does so much good", said Dan Leger and yet our public image is comparable to that of the tobacco industry. Why is that?
The closing comments, courtesy of John Helou may shed some light: "To gain credibility as a collective we need to restore trust. We need to take it seriously that every interaction we have builds equity in our brands [and our industry]. One slip hurts us all."
This has the potential to become a declaration for all of us in industry. Are you ready to sign it?