Personalized medicine has been one of healthcare’s most anticipated and least understood treatment paradigms. Physicians remain optimistic regarding its future, however the 52 doctors surveyed differed in their views in its implications for therapeutic research and development (R&D). Patients, by contrast, were viewed as increasingly interested in embracing the therapy.

Physicians were asked in which therapeutic areas do they feel the use of personalized medicine—for example, the use of genetic testing to tailor drug therapy to an individual—would be most prevalent. Of the doctors surveyed, nearly 58 percent said oncology/hematology, followed closely by cardiology (48 percent), allergy and immunology (38.5 percent), endocrinology (32 percent), and rheumatology (nearly 29 percent). In contrast, doctors felt the therapy would be least common in orthopedic surgery and obstetrics/gynecology.

Clinicians disagreed, however, on whether financial incentives are strong enough to encourage widespread collaboration between developers, payers, consumers, and pharma. When asked, “How will the adoption of personalized medicine affect the priorities and processes for pharma/biotech R&D?” physicians’ anonymous responses ranged from, “More opportunity for profit will drive new genetic testing,” to “No effect.” (It should be noted that a greater percentage of doctors did feel that opportunities for profit and for developing new drugs would increase.)

The Cost of Adoption
Much like a new consumer technology or ‘green’ product, the limits to widespread adoption are directly affected by the costs to the patient or payer. This is backed up by the Lehrman/Bloomberg survey, in which nearly 81 percent of respondents felt the adoption rate was directly affected by the willingness of the patient or payer to pay. And even when personalized medicine is adopted, 79 percent of physicians feel it would be only narrowly embraced.

These numbers are based on several factors, not least of which is the collaboration between diagnostics companies, drug makers (including pharma companies and biotech firms), patients, and physicians, the combination of which is where survey respondents think the big push will come from. Several clinicians believed that therapeutic companies would continue to target known genetic situations where biomarkers are linked to disease. Others believed that the entire R&D paradigm would change to link effective therapy to individual patient genetic profiles. The biggest detriment to adoption seemed to fall on whether the right incentives are in place to foster collaboration between the therapeutic and diagnostic companies toward developing personalized medicine therapies—are the financial incentives strong enough to encourage the collaboration needed?

Overall, what is garnered from the Lehrman/Bloomberg survey on The Future of Personalized Medicine is that diagnostic and therapeutic companies will have to partner to champion wider adoption rates. It is this participation that will help to alleviate payer and patient concerns over paying for additional screenings as well as higher targeted therapy costs.

Over the next two years, Merck will shut down eight manufacturing plants, as well as eight research sites, as part of the ongoing Schering-Plough merger process. The company said in a statement that the various site exits will help “create a flexible R&D organization.”

Taking a page out of Pfizer’s book (Pfizer announced plans to cease production at eight of its global manufacturing sites in late May), Merck said it would try to make the transitions as painless as possible, working with local governments and other manufacturers to sell the plants in the hope of keeping workers employed. Still, Merck expects the worldwide cuts to total 15 percent of its work force by 2012.

Two of the sites being phased out are in the US, seven are in Europe, with the rest scattered from South America to Canada. Sixteen worldwide R&D labs were spared, and the company said it will continue to focus on cardiovascular, metabolic, and infectious disease areas, as well as four others.

Merck is also hoping to find annual savings of $3.5 billion by 2012. In addition to creating a flexible R&D organization, the company will also save $2.7 billion to $3.1 billion as a result of this restructuring.

The Japanese are taking a play from the US pharmaceutical industry’s rulebook and restructuring itself under the auspices of a fun catch phrase: “Transformation for a New Takeda.”

The punch line, however, isn’t too funny.

According to a two-year mid-range plan announced yesterday, Takeda will cut about 1,400 positions in the US to fend off loss of revenue due to looming generic competition. That number includes about 28 percent of the sales and marketing division and 20 percent of employees at the drug development center, according to Business Week.

Takeda’s billion-dollar blockbuster Actos is set to lose patent exclusivity in two years, and the company is still reeling from generic competition with its heartburn medication Prevacid.

Most of the job losses will be in the Chicago offices, particularly in the Deerfield and Lake Forrest offices and R&D center. According to the company, it plans to “shift to lean and flexible marketing organizational networks that can flexibly respond to changes in the business environment and product mix.”

“Takeda has experienced halted development in some pipelines and delays in obtaining drug approvals,” it stated in a release. “The company has therefore decided to respond flexibly to these changes in the business environment and ensure a sustained growth trajectory by developing and implementing a Mid-Range Plan starting in the fiscal 2010, one year ahead of schedule.”

Takeda is forecasting a net profit loss of 26 percent and a 4.5 percent drop in sales. The company is banking on a number of new products—primarily in metabolic/CV, oncology, and CNS. It currently has four new treatments filed, and another 10 in Phase II trials. The company expects to recover by 2016.

Last week’s annual meeting of BIO in Chicago once again proved illustrative in showcasing the high profile that governments now plays as the biotech sector’s chief advocate. While private venture capitalists confined themselves to the margins of the meeting, the Convention hall was bursting at the seams with host country “pavilions,” each designed to highlight its status as destination partner of choice for the industry.

Missing from the slick videos, graphics and takeaway tchotskes was any real sense of the importance of pricing and reimbursement levels that can accommodate the high cost of capital, increased regulation and long development lead times that together have sharply lowered effective periods of market exclusivity for biotech. Instead, the talk was all about building more Potemkin villages around infrastructure – tax breaks, R&D allowances, funding for basic research and facilitation of academic partnerships – that do little to compensate those who risk private capital for a profitable return on the investment.

The essential steps required to promote rapid commercialization of research, where government has to pull back and basically let the market work for itself, just didn’t seem to be part of the conversation. It’s another sign that the “public utility” model may well be the most realistic scenario driving the industry’s future; ironically, its the most innovative research segment – biotech – that seems to be leading the way.

One example of this disconnect between advocacy of “front end” support for innovation and neglect of the “back end,” where products face an increasingly skeptical phalanx of payers, was the appearance of Sir Michael Rawlins in a series of impromptu exchanges at BIO hosted by the UK Department of Business, Innovation and Skills. Rawlins heads the National Institute for Health and Clinical Excellence [NICE], which reviews medicines for evidence of cost-effectiveness prior to listing on the NHS,. NICE is criticized in some quarters of industry for holding back access to medicines on grounds that their clinical value is insufficient when weighted against strict metrics of affordability.

Rawlins made a number of useful points in suggesting where governments are heading in this puzzling, increasingly disconnected game to “promote” biotech:

• What’s wrong with good evidence to help politicians decide where to commit scarce public funds for health? Rawlins noted flatly that results of the UK election will not compromise the mandate of NICE in critically appraising medicines for listing in line with the priorities and resources of the NHS – all three major parties support the organization’s role “without hesitation.”
• NICE has broadened its roots as a leader in the politics of public health. Rawlins himself is chairing a bipartisan government commission to review the entire UK regulatory climate for medicines, with recommendations due by the end of the year. By default, NICE is thus likely to survive this critical review unscathed.
• Austerity will help promote the NICE reputation by deflecting criticism away from politicians in making unpopular resource choices. Rawlins believes that drastic cuts in public spending to restore the fiscal balance in the UK will actually enhance the value of metrics-driven tools to ensure decisions are made fairly and on the basis of independent evidence. Hence NICE is actually likely to grow in political stature as a consequence of the urgent need to curb public spending.
• Can you “define” innovation? NICE believes it can. A new priority for NICE in 2010 is identifying areas to “disinvest,” including recommending the removal of some medicines from NHS reimbursement. However, Rawlins is no fan of the big pharma “headroom for innovation” argument – new molecules will still have to prove their merit as “value drivers,” regardless of whether such disinvestment frees up funds for alternative use.
• NICE work carries significant implications beyond the UK. As the financial crisis spreads to more countries, reliance on appropriate evidence to ration health care will increase, and NICE is determined to sell its model to anyone who is interested. Rawlins said NICE has created an international consulting unit with a five person staff. It is working closely with a number of multilateral agencies – including the World Bank and the Inter American Development Bank [IADB] – as well as the UK Department for International Development [DFID] to promote health technology assessment tools in emerging middle-income markets. The focus is on helping countries decide what to spend on medicines through therapeutic targets and clinical guidelines, rather than individual product appraisals. Nevertheless, it’s a trend that will affect biotech fortunes for good or bad in markets that are slated to account for much of the growth in global pharmaceutical spending over the next 10 years.

Much of the drive for this addition labor sculpting stems from AZ’s desire to streamline its R&D; the company will focus on fewer disease targets and expects to cut up to 3,500 jobs in that sector, which currently employs about 12,000.

But it’s not all bad news. Some jobs might survive via relocation, and because the company wants to expand its work in biologics, the net loss could end up in the 1,800 range. This should save AZ at least $1 billion a year, money they need for pipeline projects close to launch, such as the highly anticipated motavisumab, which aims to prevent respiratory syncytial virus (RSV). But that’s just the tip of the iceberg. AstraZeneca’s pipeline contains over 100 projects, about 30 percent of which were acquired by licensing, according to CEO David Brennan.

The company has not disclosed which disease areas it will leave behind during this streamlining process, but it’s unlikely they’ll drop ones diabetes (with seven compounds in the works and a rapidly growing patient population) or cancer.

According to the Times of London, GlaxoSmithKline is also expected to have unpleasant news for employees during Thursday’s release of its 4Q figures: They’ll be cutting 4,000 jobs, mostly in Europe and America. A similar bloodletting took place last February, when an estimated 6,000 got the axe. This is all part of Glaxo’s plan to save $2.7 billion by 2011.

Pharm Exec: Tell me about your new role at Elan, and what the company’s expectations are for you?

RT: They asked me to come in and do something different with a vision: How can we build an organization that could learn from what pharma does well, but not replicate what is broken in the system, while taking advantage of new technologies and new approaches to reach customers and change behaviors. I didn’t have to tear anything down or tweak it; I could just start from scratch.

I can take the best of what has worked for other companies. That’s what makes it difficult for Big Pharma to change—they have it already build in the core infrastructure, so it’s hard to change mindset. It’s complex, but that’s what intrigued me about going to Elan. I could see what I wanted to change and now I had the opportunity to try.

Pharm Exec: What are the biggest challenges you must deal with?

RT: To bring in the right talent with deep functional expertise and breath of experience, and share a vision of creating a new virtual type of organization. How do I partner strategically with other organizations to do the work? I want to own the strategic thinking and decision-making, and then work with research companies and agencies to have them do the execution. So it’s mostly getting the right people.

Elan is a strong R&D company that understands the importance of commercialization. When I got here, they welcomed me and said “we need your help.” The challenge has been how do I cut myself in enough pieces to get involved to do everything that I want to do? If you come from a Big Pharma organization, not everyone can make that transition, so I need people who can do that and have the right mindset and flexibility to be innovative, while realizing that you don’t have to be perfect—80 percent or maybe even 70 percent might be good enough. When you don’t have enough resources, you can’t strive for perfection, so you have to make sure you answer the most critical issues; you must prioritize.

Pharm Exec: What advice do you have for emerging leaders? If you knew then what you know now about leadership you would…

RT: I would have taken more time to develop myself versus just trying to do a good job. It’s a problem that most women have. It’s easy to tell other people what to do. I give good advice to other people, but I didn’t have anybody to give me advice in the past. For women who are young and now have the opportunity to be part of the HBA, it’s incredibly powerful. You’re not alone in how you feel and have people you can talk to outside of work in a safe environment.

Here’s why:

More competition. Nearly two thirds of the R&D pipelines of the major innovative drug companies are now focused on specialty drugs. Assuming some of these will be authorized for sale, the result is going to be increased competition and declining market exclusivity per therapeutic category – mirroring the trend already evident in primary care.  The overall impact is more choice for payers, leading to increased pressure on specialty’s ability to command premium pricing.

Fiscal pressures. More of the high cost burden for specialty drugs is being passed on to patients. This is shredding the argument that specialty drugs are “special needs” and thus exempt from the normal dictates of a price-conscious consumer market. The ability of industry to determine how patients contribute to the cost is critical to specialty, due to a smaller prescribing base, the need to keep as many patients as possible on therapy, and the importance of tracking compliance with complex regimens,.

Unfortunately, the trend in pharmacy benefit programs is to replicate “one size fits all” solutions introduced for asymptomatic and chronic care medicines. Industry thus has to focus on creative ways to help a key untapped constituency – the under-insured – pay for high-end specialty drugs. Occupying the vast middle ground between subsidized low-income patients and the larger self-insured employer and union pools, the needs of the under-insured must be addressed. Failure to do so will make the specialty pricing model politically non-viable. Its fate will be no different than the path for so-called “me too” drugs – can CMS negotiated prices or even price controls be far behind?

Value. Specialty’s future depends on living up to its name – the business imperative is differentiate or die. In other words, define your value to the customer, or the customer will do it for – to – you.  The challenge here is that industry is not really stepping up to the plate with the hard evidence of value where it counts, in improving health outcomes, against existing products and from a system-wide perspective. A recent survey of US payers conducted by Amerisource Bergen found that 50 per cent felt they had “zero” input into the development process for new specialty drugs, with a mere eight per cent finding it “adequate.” And almost all this input occurred during the Phase III stage, which is equivalent to stopping the clock at the eighth inning, with bases loaded.  Will companies really want the input at that point, or more directly can they do anything about it?

The discussions set up a stark display of two alternative futures. One is the politicians’ vision of a commoditized drug world focused on basic primary care. Innovation will drive more toward finding efficiencies in low cost services to meet budget priorities, rather than spreading the adoption of new technologies widely enough so smaller diseases or indications get priority. The other is the flexible application of innovation in drug discovery to seed the promise of personalized medicine, where specialty drugs can justify higher price points if they can demonstrate real value as a coordinating driver toward better health outcomes.

Achieving this latter outcome – which carries significant advantages to both industry and the patient – depends on investing a lot more in customer-based insight and doing what that insight actually tells you. Is big pharma alert and nimble enough to adapt to a environment where good prices are simply the result of a value proposition agreed with the customer? The answer will determine whether specialty remains special.  If past is prologue, what do you think?

In addition to inflammation, the Nutley operation serves as headquarters for Roche’s oncology disease biology area, as well as RNA therapeutics—an emerging area based on increasing understanding of how genes are activated in cells. Pharm Exec recently got the opportunity to speak with the facility’s Director of Human Resources Marcie Geremakis, who shared her thoughts about the ongoing recruitment process.

Pharm Exec: What are the biggest challenges for HR during these times?
Marcie Geremakis: One of the challenges we’ve been addressing is that on the Roche Nutley site there are some functions moving to San Francisco as part of our acquisition of Genentech. It’s a growing mode, so we have to make it clear to the external world that we’re growing and looking for people to come in. We always want to represent ourselves truthfully to a candidate that this is happening.  

Another challenge when recruiting a candidate is to present the mission of research at Roche, making it very clear that this is what we’re all about, this is what the job is about, and this is what their responsibilities would be. In a time of organizational change, it’s very important to do that with a clear and consistent message to a candidate coming into any organization.

PE: How is Roche creating a work environment that encourages innovation, and vouching for job security in midst of such a challenged business model?

MG: By being committed to clarity as a message and purpose as an organization. We are committed to delivering and communicating news to employees. In the research world, we’ve made the mission of our research very clear, including our goals for 2010 and 2011.

I think that people find stability in our message. They also become aware of the type of work environment we have here at Roche, at Nutley in particular, and how we value talent and how we take care of talent. So, I think that’s the message [potential employees] get both when we interview them and when they come on board.

PE: What is being done at the company to address corporate reputation?
MG: It’s a very exiting time for the people we’re bringing to Roche for the first time. With the acquisition with Genentech, we are forming a new relationship, so the research population is very excited about Roche’s prospects for the future. The message has been a motivating factor.

I don’t want to leave out the other units at Nutley that have been affected by the transitions. However, in this time of organizational change, we as a company have handled it very well.

PE: How do you envision the human resources role at pharmaceutical companies in the near future?
MG: Roche is a company that embraces the HR function. In these times of organizational change, it’s a key part of the business, and one thing we’ve maintained is our focus on talent management. We work very hard at developing employees and giving people an opportunity to broaden their skills. At this time, we have to be even more diligent in helping our current employees to develop and remain productive in a stable environment. We also have to acquire the right type of talent as the initial step in [seeding] the talent pipeline.

That is where HR has served the business well at Roche research. HR is part of every leadership team on the Nutley site and globally. We have a strong presence in how the organization functions and will continue to lead new initiatives to move the business forward.

The deal adds more than $3 billion in annualized sales to its global pharmaceutical business—three-quarters of which are in international markets. Abbott will be adding the ex-US Solvay pharmaceuticals to its existing pharma division, which has been growing in double digits on an operational basis, according Abbott CEO Miles White.

“We are adding from a position of strength,” White said in a conference call. “Our business has performed well in developed countries with branded products, such as Humira.”

Solvay offers Abbott a portfolio of complimentary products in cardiology, neuroscience, and gastroenterology; as well as new compounds, such as pancreatic enzymes and hormonal therapies.

Abbott also gains control of Solvay’s vaccine pipeline—an area Abbott has yet to enter—and a small diagnostics business. Seventy percent of Solvay’s business is branded generics, sold mostly outside of the United States.

Solvay is currently trying to boost its $200 million influenza vaccine business by establishing cell-culture production capabilities to be used for seasonal and pandemic flu vaccines.

The biggest gain for Abbott is Solvay’s existing penetration in emerging markets. Solvay is currently active in 50 countries with products in 150 countries. Solvay has a broad emerging markets infrastructure with a presence and brand loyalty in Russia, Brazil, and India.

White estimates combined sales in emerging markets to be about $4 billion by 2013. Solvay sales in Russia last year exceeded $150 million; twice what Abbott sold in that country.

“Solvay also gives us approximately $500 million in additional incremental research and development capacity that we’ll use to drive future pharmaceutical growth,” White said. “This extra funding power also provides us with additional flexibility to access opportunities through licensing and external partner agreements.”

Abbott expects the transaction to close in the first quarter of 2010.

Steven Paul, Lilly

Last week, Lilly announced a major restructuring plan focused around the creation of one Developmental Center of Excellence and several individual business units. The media (Pharm Exec included) focused on the news that 5,500 jobs were being cut as part of the plan. This week, we’re talking to Lilly to find out what the company’s R&D structure will look like beyond the elimination of positions.

Steven Paul, president of Lilly Research Laboratories and executive vice president of science and technology, filled Pharm Exec in on the details.

Could you clarify the role of the new Developmental Center of Excellence? Is it simply a coordination vehicle?

Its main purpose is to speed innovation to patients and to the market. Yes, it is a coordinating vehicle—we have put there the key functions for clinical development, including all the key elements such as process research development, regulatory, safety, and project management. There is going to be a single operating model at Lilly, which we piloted for the past 12 to 18 months, and that’s something we call critical chain, which is a way of seamlessly developing drugs.

Why the change?

The reason we are doing this is because we have a terrific Phase I and II pipeline—we have 64 individual molecules in development, 21 in oncology, and our goal is to get those molecules into Phase III and into the marketplace and to patients.

There are three key pillars from a technology and methodology perspective. One is critical chain methodology—a project management tool that we piloted. One hundred percent of the projects using critical chain methodology are on track, either at or ahead of their milestones, as compared to about 60 percent of our traditional development projects. We will expand this to all of our projects by the end of this year.

The other pillar is something we call advanced analytics. This is the use of clinical trial modeling and simulation, as well as adaptive, seamless design. In other words, moving from Phase I to II and from Phase II to III without stopping.

We piloted this on four projects. We literally determined the dose in Phase II—in a multi-arm study—moved the two doses that were optimal into Phase III without stopping, and continued on with the commercial development of the molecule.

This can save enormous amount of time, and you can do it on the front end. For a few molecules you could probably do it for Phase I, II, and III. Not all molecules will meet the criteria for this. It obviously requires that you have enough clinical trial material. But when you have a validated target and the molecule is behaving very well in Phase I through proof-of-concept, at that point, these kinds of trials can literally cut years off the development time of a molecule.

The third pillar of this Center of Excellence is the idea of tailored therapies. Lilly has been very successful with tailoring, but we now believe that it needs to be applied across the portfolio in a much more robust way, beginning in Phase I and not after a drug is in Phase III or on the market. Tailoring the right patient, right dose—these are essential for determining whether a drug works.

Are you altering the end points in a trial as a molecule is moving through the trial?

Not necessarily the end points. For example, because the purpose of Phase II is to pick the dose of a molecule—and to confirm efficacy and safety—you usually stop at the end of it. You look at the data, look at the best two or three doses, and move into Phase III. This way you can stop the doses that you don’t want and enroll patients into the programs that you do want.

You can also do this on the basis of tumor response. Let’s say you are in Phase II for an oncology drug that works in breast cancer. Now we know that virtually no oncology drug works for all people that have breast cancer. But let’s say you have a marker—logical or molecular—now you can determine which type of breast cancer is responding to your drug and without stopping. You literally keep enrolling patients that have that type of breast cancer.

CNS doesn’t seem to have its own business units, yet it has been a major Lilly franchise.

I think this was misinterpreted in the press release and something we are trying to clarify with the public. We are very interested in CNS, and the biggest products we have right now are CNS drugs—Zyprexa, Cymbalta, etc. But they are mature products that will lose patent protection over the next few years, beginning in 2011, so they were put into the developed markets business unit. But we have a very robust science pipeline. In fact, we have two Phase III molecules for Alzheimer’s disease. So we have not, by any means, lost interest or enthusiasm for CNS.

How are your business units different from similar models in other companies, such as J&J and Pfizer?

When we make a commercial decision on a molecule—traditionally after Phase II—at that point the molecule will move into the business unit with two exceptions. In oncology we will move all Phase I molecules into the business unit, because we often do Phase I trials for cancer in cancer patients. The other business units will pick up the molecules at the commercial decision time.

What about benchmarks? Is it all about speed to market or the number of new compounds being commercialized?

We have an unprecedented amount of molecules in early stages and mid stages, so our success as company as we transverse the patent cliffs is going to require that we speed innovation to patients. If you didn’t have enough good stuff to speed to patients, none of this will be effective. We feel we’ve got the quality molecules we need to make this work.

Is there a deadline for the restructuring plan?

This is all going to occur by January 1, 2010. We are well on our way for the Development Center of Excellence because we’ve been piloting critical chain, adaptive designs, and tailored therapies for some time. We are ready to go, and this will be rolled out at our analyst meeting in December.

Have you substantiated the number of people being laid off as opposed to positions being eliminated?

No. Frankly, we don’t have the answer to that question. We’ve done very well over the years with attrition. We’ve already reduced by 7,000 people by attrition over the last few years. We hope this predominately occurs by attrition, but obviously it might not. We don’t know the percentages, but that will all be worked out in the next few months.