This past week two CEOs from the industry - one Big Pharma and one from Supply side - gave talks about how the industry is changing and how participants will need to change their business models to be successful in the future.
Lonza CEO, Stefan Borgas, spoke at the annual SOCMA luncheon in NYC on Thursday. In his speech, he told the audience that players on the supply side need to change their approach and must collaborate more on innovation. He said "strategic networking not tactical" is required to evolve strategies to better serve the industry. Some of the innovations that he cited as important in the future include: sustainably driven manufacturing, microreactor technology, green chemistry, elimination of solvents, and development of other environmentally friendly reagents and processes. Mr. Borgas said, we need to think of ourselves as supplying "fine molecules" and not fine chemicals as in the past. He further emphasized fine molecule suppliers "need to learn to put aside the old ways of doing business and improve the entire value chain instead of just part of it."
In keeping with some of these comments, companies like DSM have announced that their executive bonus structures will require close attention to green intitiatives (50% bonus based on green). Several other CRAMs or CMOs have moved in the biocatalysis area in the past half year - in part to provide more green chemistry. Also, Mr Borgas comments regarding collaboration and networking among suppliers is consistent with the message delivered by Ernst & Young's Pharma 3.0 report as discussed earlier on this blog.
John C. Lechleiter, President and CEO at LIlly, spoke at the American Chamber of Commerce meeting in Germany this week. He too focused on "innovation" being the key to the Pharma industry being able to provide new groundbreaking medicines while controlling costs. "Cost control" though has to be done with value in mind and not just an absolute clamp on total cost without regard to the benefit delivered. He noted that pharmaceutical treatments for diseases like diabetes, HIV infection/AIDs, heart disease can have substantial cost beenfits to society in controlling or preventing full impact of these diseases. He also put in a plug for personalized medicine - saying it is time to move away from "one size fits all treatments" to tailored therapies for individual patients that will produce better outcomes. This also will help combat failures in phase 3 trials as this strategy will increasingly remove non-responders from the trial population.
Mr Leichleiter concluded his remarks by saying, "Innovation is not a panacea for the challenges facing our health care systems, but it is hard to see any way out of the current crisis - and I don't think that's too strong a word - without innovation. Indeed innovation needs to be the purpose of health care reforms in both the United States and Germany"
The US Government even gets in on the act. The FDA's chief scientist, Jesse Goodman, in testimony before congress this week indicated that "it's time to build the science of the future". He indicated the agency needs to do a better job understanding scientific advances, modernizing information systems, and recruiting bright new employees. He cited the Sentinel program as one example of a step in the right direction for the agency.
Big changes are happening in the industry and business environment - R&D restructuring at Big Pharma, rise of CROs, CRAMs and CMOs in Asia Pacific, biosimilars, generics, health care reform - to name a few. It will take new MODELS and new APPROACHES to address these changes. The companies who do it best and fastest will come out ahead. Those who resist will become increasingly irrelevant.
"If you don't like change, you are going to like irrelevance even less." Gen. Eric Shinseki, Chief of Staff, US Army
Posted by Bruce Lehr March 26th 2010.