The BioBlog

August 20, 2011

John Curd – Obituary

Filed under: Uncategorized — Tags: , — Ted Feuerbach @ 10:45 am

I am a Consultant who used to do statistical data analysis for pharmaceutical companies. I guess that I have been “out of the loop” for a while, since I just learned that, last April, John Curd died of natural causes at age 65.

Several years ago, I did some consulting work under John at Novacea, where he was President and CMO. During his tenure at Genentech as CMO, I had also done a couple of contracts but, at that time, I only knew him from letterhead. Back in those days and afterwards, I knew that John had presided over the development and bringing to market, of three of Genentech’s biggest blockbuster drugs.

John moved on to help found a few other startups, including Novacea.

Later, at Novacea, John made a special effort to get to know each and every person at the company. He was polite, friendly and talkative. He wanted to know what you did for the company and what he could do to help make your work more productive. He seemed genuinely interested in what you had done in your life and career. You would never have known, from talking to him, what a stellar career that he had had.

As I was told by the manager that brought me in (and later by John) that a major part of the mission of Novacea was not just to bring their first drug to market, but to streamline the entire clinical trial/submission process, i.e, faster, cheaper, better.

At that time, most of the work was being farmed out to CROs and they were just starting to bring all of that in house. Novacea had already recruited a serious amount of talent for their small staff. John had taken a personal interest in the recruiting process at Novacea and, I must say, their permanent staff was the best of the best. I was one of two consultants that were brought in to help set up the core of their statistical programming environment (a few month contract).

Then there was a serious crisis that was very time critical and it fell to me to find a solution. I was temporarily taken off my original contractual project to work on this. That was when I started to have direct business dealings with John.

How an executive deals with a crisis tells a lot about the person. Many executives just throw a problem down and demand that someone solve it… Not John. He asked focused questions and drilled down until he understood all of the issues and learned what resources that I would need to solve the problem, right down to giving me his home number that I could call any time of the day or night. He expressed the seriousness of finding a solution but, without seeming panicked. As far as the deadline was concerned, the best that I could offer was that, it would not be cheap or easy. It would be close, but that I could probably make it. He accepted that. Throughout the process, he never put undue pressure on me. He only wanted to do what it took to solve the problem.

With the help of several of Novacea’s staff, I was able to make the deadline, just under the wire. Only later did John want to know what could be done to prevent a situation like this from occurring in the future and what could his staff have done better to make my task go smoother (nothing I told him, they gave me better support that I could have imagined). The one question that he never asked me was, who was responsible for the problem in first place. He was totally solution driven.

Over the following years, we were in occasional contact. I always enjoyed talking with him and valued his advice, most of all. John was a giant in the industry. He will be missed.

John Curd, MD (July 1945 – April 2011)

June 24, 2011

The 4 P’s – Patents and the Expiration “Cliff”

Filed under: Pharmaceutical — Tags: , , , , , , , — Judy Feuerbach @ 4:41 am

Between 2009 and 2012,  many blockbuster drug patents already have or will expire, generic alternatives will be created at a lower price, causing a dramatic decrease in sales and profitability for the formerly patent-protected drug.  The large number of drugs going off-patent by 2012 has become known in the industry as the patent “cliff and will continue to worsen for the rest of the decade.

The revenue generated from these drugs with expiring patents can be significant.  In 2009: Pfizer’s cholesterol drug, Lipitor, lost patent protection.  Sales of Lipitor represented 23% of its 2009 pharmaceutical revenue.  In 2010, GSK’s asthma drug, Advar/Seretide, loses patent protection.  It represented 71% of GSK’s respiratory drug sales and 21% of their pharmaceutical sales in 2009.

Each of the 5 of the pharmaceutical companies with highest 2009 sales (Pfizer, J&J, GSK, Roche & Novartis) is implementing similar strategies to address the Patent “cliff”.  Replacing these “lost” sales with new patentable drugs is also challenging and fraught with risks.  The success rate for a newly discovered drug at pre-clinical stage is approx.10%, meaning that 90% never make it to market.  The Pharmaceutical Research and Manufacturers of America (PhRMA) estimates the cost to develop a new drug or biologic in 2005 at >$1Billion and the R&D development time at 10-15 years.

Focus
One strategy used by the top 5 is to focus on a specialized product pipeline in one of the high growth therapeutic markets, especially those that meet the health needs of the aging population (65+yrs.)  Drugs that treat cardiovascular, oncological, and anti-inflammatory diseases, such as rhumetoid arthritis are commonplace in the top 5 pharmaceutical company’s new product pipeline schedule.

By product specialization, the company gains productivity and efficiencies from the synergy of like-products, requiring similar support and manufacturing systems.  Of course, being too focused risks a  lack of product diversity.  “Putting all of your eggs in one basket” so to speak.  Pfizer’s pharmaceutical segment represents 90.88% of total 2009 sales.   Novartis has an interesting product strategy by playing on both sides of the branded-generic product fence with their generic drug arm, Sandoz representing approx. 17% of 2009 sales.  Johnson & Johnson maintains a more balanced product portfolio between pharmaceutical, medical device and consumer products with their pharma product line at 36% of total 2009 sales, medical devices at 38% and consumer products at 26%.

Even with a focused approach to new product development, pharmaceutical companies struggle to introduce new patentable drugs due to the the long lead time, high cost and substantial risk of failure  during development.   To widen the funnel for viable patentable drugs, pharmaceutical companies have been partnering, outsourcing or acquiring companies with complementary product lines.  In my next blog, we’ll look at the benefits and pitfalls of increasing the patent-protected product portfolio via acquisition or outsource.

For an example of how badly Lilly (10th largest by sales) is being hit by the patent cliff, read Jim Edwards’ BNET.com article:  Patent Cliff Losses Mean Eli Lilly Must Acquire or Be Acquired

June 14, 2011

The 4 P’s – Product Pipeline

10-15 years…….US$500 million – US$2 billion……10%……..
The lead time, estimated cost and success rate to develop a new drug from ideation, through regulatory approval and to market launch.

With the patent cliff in play, the pharmaceutical industry must launch new blockbuster drugs to offset reduced sales from those whose patent has expired or is nearing expiration.   A strong product pipeline requires a wide product funnel, significant funding, and broad in-house research and development (R&D) expertise.  Drug development, clinical trials and the regulatory process necessitates long lead times from drug ideation to market launch. In 2006, Pfizer’s suffered two blows to their pipeline: the late-stage failure of Torcetrapib due to safety concerns and withdrawal of Exubra from the market due to market nonacceptance by those who would “use it, prescribe it or pay for it.“    Torcetrapib was expected to be the next patentable, blockbuster drug replacement for Lipitor, whose patent expired in 2009.   Often, the only viable short-term solution to fill gaps in a product pipeline is to buy it.

Strategy: Outsource and/or Acquire

In addition to in-house developed products, the pharma industry is building more robust  pipelines through mergers, acquisition (M&A) and outsourcing, as evidenced by Pfizer’s acquisition of Wyeth and King Pharmaceuticals.  Depending on the purchased company’s pipeline, this strategy can reduce the risk of failure, can provide a faster lead time to market and, when combined with the purchasing company’s in-house products, creates a stronger product pipeline.  Acquisition also allows a more flexible market strategy to enter a new therapeutic segment or to fill out an existing product portfolio with complementary products.  A pharmaceutical company can also “buy” into a new geographic market segment, such as the emerging markets of Brazil, Russia, India, and China, thereby diversifying into new markets- another of the common strategies by the top 5 pharmaceutical companies.

A 2009 survey quoted in a recent Deloitte article on pharmceutical acquisitions and product development found that 44% of 360 senior pharmaceutical industry executives believed that “most discovery” and “early-stage” drug research would take place outside of the large life science companies.  This belief was further reinforced by 52% of executives of $15 billion pharma companies and by 58% of pharma R&D and 67% of biotech company participants in the survey. 1

Grafting technology into an organization through acquisition is not a new concept for the pharma industry.  For decades, the pharma industry has entered into alliances, agreements, mergers and acquisitions for R&D, drug discovery, development, and co-marketing/commercialization.  Large Pharma partners in these agreements include universities, smaller biotech companies and other larger pharmaceutical companies.

Although some M&As are quite successful, a high percentage fail to meet the goals of the acquisition.  For the pharmaceutical industry, the success of these alliances; i.e., a timely, patentable, blockbuster drug, is critical for the near term profitability of the top pharma companies.  Many of the alliances, mergers and acquisitions have already been put in motion and we have only to wait and watch for the losers and the winners in the patent cliff game.

1. Deloitte, “Acquisitions versus product development: An emerging trend in life sciences”, pg 4.  Based on 2009 Deloitte white paper “The future of the life sciences industries: Transformation amid rising risk.”

June 8, 2011

The 4 P’s for Top Pharmaceutical Companies – Patent, Pipeline, Pricing, and Profitability

In addition to high cost, long lead times and risks associated with new product development, and downward pressures on market pricing, the pharmaceutical industry continues to wrestle with expiring patent protection for key revenue generating drugs.  In marketing, the 4 P’s are Product, Place, Price and Promotion.  For the pharma industry, the 4 P’s of concern are the Patent “cliff”, a robust new product Pipeline to replace newly off-patent drugs, and Pricing that meets Profitability requirements to survive in this industry.

The top 5 pharmaceutical companies, based on gross sales, are Pfizer, Johnson & Johnson (J&J), GlaxoSmithKline (GSK), Roche, and Novartis.  Each is implementing similar strategies to address the pharma  4 P’s.  The strategies include:

  • Focus & diversify
  • Outsource and/or acquire
  • Reduce costs/increase efficiencies

As mentioned in my earlier blog, to fill out their product pipelines, pharma companies have adopted a strategy of acquiring companies with complementary product lines, with promising products in R&D or with products further in the approval process.

The success of these strategies are dependent upon many factors but the successful integration of the  purchased company or product into the acquiring company will be the most critical to ensure a strong  product pipeline, new patent-protected products, and pricing for optimal profitability.  In future blogs, We’ll take a look at each of the pharma 4 P’s, their challenges and the strategies implemented by the top 5 pharmaceutical companies to address those challenges.

October 15, 2010

Another Merger – Pfizer and King Pharmaceutical

Pfizer’s merger announcement with King Pharmaceuticals this week is the latest in a string of mergers and acquisitions (M&A) in the pharmaceutical/biotech industry. In 2009, Pfizer bought Wyeth, Roche bought the remaining shares in Genentech and Merck & Co acquired Shering Plough, consolidating the key industry players. Driven by increasing new drug R&D costs, expiring patents, and the economic crisis, major pharmaceutical companies will continue the merger, acquisition and diversification trend in an effort to lower costs, maintain profit margins and establish competitive advantage in the changing marketplace.

Companies can achieve lower cost of operations (COO), if merged effectively. If not, COO savings will be elusive. More importantly, through M&A, pharmaceutical companies have the opportunity to lower the R&D cost and lead time to bring new drugs to market. The Pharmaceutical Research and Manufacturers of America (PhRMA) estimates the cost to develop a new drug or biologic in 2005 at >$1Billion and the R&D development time at 10-15 years.

By careful partner selection, pharmaceutical companies can acquire new drugs, with greater viability and lower risk of failure based on clinical trial results or FDA approval. At the same time, they will significantly shorten the 10-15 year lead time to market. Companies can also use M&A to establsh competitive advantage by increasing their product offerings, method of delivery, and brand name recognition.

Through the Pfizer/King US$3.6B merger, Pfizer will broaden their existing pain relief and product offering (Lyrica and Celebrex) with Kings Avinza, Flector Patch and Embeda. Embeda is the first Opioid pain product recently approved by the FDA which discourages pain medication misuse or abuse, potentially providing competitive advantage. With recent uncertainties in the pharmaceutical market place and world economy, one certainty is that the M&A trend will continue.

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