Durable Take-Homes from DCAT Week 15 — And Our Annual CMO Awards Celebration

By Wayne Koberstein, Executive Editor, Life Science Leader
Follow Me On Twitter @WayneKoberstein

It is now weeks since I returned home from this year’s DCAT Week conference in New York City, yet other writing projects have kept me from imparting my impressions of the event. In a way, the delay has benefitted my perspective, testing each “take-home” for durability of importance over time. Agatha Christie often said that memories, rather than decomposing with age, actually gain clarity over time. The important links remain, while the non-essential ones slough off like falling leaves.

My enduring memories of DCAT Week center around the following points:

• Market conditions remain tough and will only grow tougher globally for biopharmaceutical companies and their suppliers.
• Most of the record number of FDA approvals in 2014 were for cancer drugs. Think about that.
• Big Pharma is aiming more for focus than size; top companies are growing slower than the overall market.
• Globally, branded generics, specialty drugs, and biosimilars will be the primary drivers of biopharma growth.
• The FDA is being deliberately cautious and slow in defining, applying, and implementing predictive “quality metrics” in biopharma manufacturing, with help from industry.
• CMOs in India and other Asian centers for biopharma manufacturing are now courting Western clients with government-aided plant and technology upgrades.
• Biological drugs with premium prices two orders of magnitude over generic competition (e.g. Humira/methotrexate) are putting a strain on healthcare systems, fueling their demand for evidence of related cost savings.
• High-tech is coming to healthcare — as close as it can get to you, the patient — with mobile monitoring and other gadget-driven media.

It was relatively easy to remember those points because each one of them sparked a line of thinking. Also, I have the aid of all my tweets from DCAT Week, at #DCATWEEK, which you can see all together at my Twitter profile, @WayneKoberstein. And, like other attendees, I have most of the slide presentations from the sessions I attended. So between the memories and the memory aids, I can reconstruct my thoughts, taking the points one by one. Many of the points in my list above speak for themselves, however, and it would be tedious to elaborate on every one, so I will pick just a few of them and share some related observations.

GLOBAL MARKETS GETTING TOUGHER

As in previous years, Graham Lewis, VP of global pharma strategy at IMS Health, led off DCAT Week’s first session with a report on global market trends and conditions for biopharmaceutical companies and their suppliers, based on IMS statistics and analysis. The report held some good news for the U.S. industry sector, which has rebounded since 2007 and continues to lead the world in regional market share, while Europe has fallen behind, giving up its number 2 position to China. But IMS sees a peak in U.S. growth rates in 2014, and a rather steep fall thereafter. Thus, the “pharmerging” markets, despite a shallow decline in growth, will essentially be growing at the same pace as the developed markets by 2018.

Why the drop in U.S. market growth? Payers — meaning the industry’s customers consolidating their bargaining power — have now established what amounts to a second layer of regulation for new chemical and biological entities approved by the FDA. Whether by government oversight under federal healthcare reform or by the huge corporations managing care for millions of patients, the pressure on industry to show hard evidence of value, including cost savings, will only intensify. Growth will inevitably slow as companies catch up with the demand.

In doing so, they will realize the current “niche blockbuster” model — drugs with premium prices for small populations, especially “personalized” cancer treatments — is not sustainable. And the reason is not just about bureaucratic cost control. Competition from new technologies with broader, safer, more efficacious, and more cost-effective applications will emerge to outlast many niche products. One dramatic example is already upon us — cancer immunotherapy.

But some high-priced drugs, especially biologics, show impressive resilience. Biosimilars were supposed to bring price competition and cost savings to some of the most expensive drug spaces, but so far their additional savings (on price) are modest, according to David Dunn, IP and science consultant at Thomson Reuters. Dunn said prices on approved biosimilars are at most about 30 percent below the brand, and sometimes offer no discount at all because they carry the same price as the brand.

FOCUS VERSUS REACH

Lewis also noted that only a few of the top 20 pharmas are truly global. Most are selective of more limited geographies, especially among the emerging markets. Another piece of evidence to support that statement — Big Pharma is growing slower than the overall market.

Globally, branded generics, specialty drugs, and biosimilars are fast becoming the primary industry-growth drivers. Gilead has joined the top 10 — as number six, ahead of Merck — and before Cubist’s purchase by Merck, it was the fastest-growing company in the industry.

MANUFACTURING’S QUALITY CHALLENGE

One of the most valuable and reliable benefits of DCAT Week is the direct participation of the FDA and some excellent regulatory consultants in summarizing the status of a key agency initiative. In this case, the subject was the FDA’s proposal for industrywide “quality metrics” in manufacturing. Quality in the drug supply chain has finally matured into a full-time concern for biopharma companies and regulators, and because the FDA has responsibility for all drugs imported into the U.S., it now oversees production plants worldwide.

As mentioned above, the U.S. agency is being deliberately cautious and slow in defining, applying, and implementing the quality metrics, trying to ensure that the metrics can truly predict quality of the final product and throughout the production line. Industry is not fighting the idea; it is largely trying to help. The ISPE and other industry groups are actively supporting the quality initiatives by the FDA, EMA, and other regulators. But the biggest obstacle is at the plant level — changing the mindset of plant managers from basic compliance to continuous improvement.

Meanwhile, quality is also becoming a rallying cry for manufacturers outside the United States. CMOs in India and other Asian centers for biopharma manufacturing are now courting Western clients with government-aided plant and technology upgrades. But last year’s spike in FDA citations for CMOs in India spells caution and holds lessons for their clients. Robin Jones, Teva’s head of quality compliance, described the company’s mobilization to deal with a supplier-related crisis in India.

My vision of the conference is admittedly tinged by my previous work with DCAT, so I would insert a single suggestion for improvement: the event could and probably should be more open for journalists who wish to cover it. But the bottom line is positive for insiders or newcomers to the organization. DCAT Week is a unique, valuable event that always delivers a great program and extensive intermingling of industry suppliers and client companies.

CMO AWARDS CAP WEEK

Some of the DCAT Week attendees stayed an extra day to join the gala dinner, held every year for conference sponsors and others at the hosted tables. Last year, the keynoter was Hilary Clinton; this year, the man who shot Osama Bin Laden. For me and my compatriots, however, along with a large crowd of DCATers and associated players, the CMO Awards ceremony put on by the Life Science Leader group was a welcome conclusion to the week — relaxed, fun, and with plenty of goodies to eat and drink.

One of my favorite parts of the evening is the awards presentation, when we hand out dozens of crystal figures to the variety of winners. The awardees are selected through a voting and scoring process involving the people in the pharmaceutical and biopharmaceutical companies using CMO services, and the winners are CMOs scoring in the top 10 percent. Top scorers in each category receive special recognition with the Industry Choice Award.

Several of us on our team helped with this choreographed routine. Louis Garguilo, executive editor of Outsourced Pharma, announced and greeted the winners. LSL’s chief editor Rob Wright handed out the awards, then stood for photos with the winners and Adam Covitt, VP of Federal Equipment, the ceremony’s chief sponsor. My big part came thereafter — directing the winners to a colleague who handed them the box for their award, then away from the stage area and safely back into the crowd. I bragged later of having prevented several serious collisions between excited and distracted winners and the watchers.

My evening was divided between meeting new people, some in first-time winning companies, and greeting old friends such as Terry Novak, now COO at Pernix Therapeutics. A large banquet room at the W New York was jam-packed with people sitting, milling about, eating, and drinking merrily throughout the four-hour celebration. As in any awards program, the winners were ebullient and the non-winners disappointed, yet the festive air and high spirits (however defined) seemed to wash all cares away as people connected and reconnected in joyful networking.

As noted by Louis Garguilo in his report on the ceremony, the crowd of winners and celebrants was remarkably international, well reflecting the globalization of the biopharma industry and supply chain. These are the people responsible for the steady supply and quality of the world’s most valuable brandname and generic medicines, distilled as the best of the best from the universe of manufacturing represented at DCAT Week and among our readership. The two events are thus highly complementary and belong together, both in time and in purpose.