Purdue Pharma — From Private Franchise To Open Business

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

In some ways, it is easy to see Purdue and its singular pain-med focus as a model preserved from the time I began covering the industry in the mid-1980s. The typical pharma company back then had a franchise, sometimes a virtual monopoly, in a given area, and the industry overall was more collegial than competitive.

As now with Purdue and others, some of those companies specialized in controversial areas that exposed them to legal or regulatory difficulties, which they accepted and adapted to as a necessary part of doing business. Most of them no longer exist, having vanished into the various industry giants formed by the mega-mergers of subsequent decades. Purdue persists, though.

But the company’s persistence to this point does not mean it is immune to change. In fact, right now it stands on the cusp of a large-scale transformation that will turn the heretofore taciturn company into a model of transparency and simultaneously expand its franchise into new but not entirely unknown areas.

Purdue is actually one of the industry’s pioneers and still preserves some of the old, pre-Big Pharma model as a midsize, franchise-driven company. At the same time, the traditionally opaque, family-owned company is coming out of its shell under the banner of corporate transparency as it begins to expand beyond its niche in the pain market into new areas within pain and outside it using its extended-release, abuse-deterrent technology as leverage.

In many ways, Purdue represents a bridge in the industry between traditional pharma and smaller life sciences companies — a broad area with many companies fitting the title of specialty pharma. The company’s relatively new president and CEO, Mark Timney, is also a bridge of sorts; originally from the U.K. and former head of Merck US, he has a global perspective on drug development, regulatory, and reimbursement issues that inform his strategic planning, but is also well-grounded in operations and tactical management.

Of course, the other side of the Purdue story is that it entered 2015 facing three major legal battles — in Kentucky, Chicago, and California — over its alleged role in increasing pain-med abuse. Thus, Timney discusses the challenge of balancing the company’s social responsibility against the traditional pharma model of maximizing prescription volume.

Voice In The Light
Timney is a relatively fresh face at Purdue, having arrived to head the company in January 2014. He has declared a mission to turn the company’s own face to the world, not only to see the outside more clearly, but also to be seen — transparently. The company remains familyowned, and founder Dr. Raymond Sackler still works at headquarters almost every day. (His brother and cofounder, Dr. Mortimer Sackler, died in 2010 at 93.) Yet Timney aims to operate Purdue on an open-corporation model, or transparency — maintaining a clear presence, voice, and dialog with payers, policymakers, and the public at large.

Timney also seems well prepared to apply his prior experience to steering Purdue through the toughening conditions set by payers and regulators in its largest market, the United States, now in the dawning era of outcomes-driven medicine. (Purdue is one of several Sackler-owned independent associated companies, which operate outside North America as Mundipharma.)

Timney was born and educated in the United Kingdom, where he subsequently worked as a representative for Rousell Uclaf, detailing to physicians, then for a number of companies in various countries, including Merck (MSD outside North America). “I have had the opportunity to work in diverse markets right across the world,” he says, “so I’ve been involved in many different cultures.”

Launching about 30 products in multiple therapeutic areas over the years, Timney says he gained valuable experience in guiding businesses through growth and rebuilding stages, which gave him a hunger for company management. “When the Purdue opportunity came up, it was close to an exact fit for me. I wanted to head an organization that was ready for change, ready to write the next chapter, even though it was unclear where that next chapter would lead.”

He offers an example of how his background prepared him for market changes now just hitting the U.S. healthcare system — changes he has seen before in other places. “When I was a representative back in the U.K., it was already incredibly difficult to get access to GPs because the doctors’ time was being reprioritized. It all changed from a treatment-oriented healthcare system to a preventive-oriented healthcare system.”

Timney says a major turning point in the U.K. was the introduction of EMR (electronic medical record) systems more than 20 years ago. He saw the same effects of EMRs in other markets with single payers, including New Zealand, “probably the toughest payer environment in the world,” and Australia, “another tough system that focuses a lot on health economics.” But now, even in the United States’ predominantly private-insurance system, he sees an almost identical transformation taking place.

“Obviously, as a single payer, once you know what you’re going after, EMR makes it easier to measure and incentivize physician prescribing, and once you can incentivize, you can start to control behavior,” Timney observes. “When I came into the United States, I saw a fragmented healthcare system, with powerful payers, and the government playing a certain role. Then I saw the EMR systems starting to take off and some of the quality metrics come into play, with various incentives being employed, and it seemed very similar to what I had seen among the government- run systems in other countries.”

Real Pain, Real Pitfalls
An avid coach and player of international football, known in the United States as soccer, Timney says he has confronted the company’s unique challenges, including all of the litigation, with almost athletic spirit. He says he pushes to get the best out of his team by “focusing on the positives, building on past successes, and planning how we will grow in the future.” He credits past company management for making “difficult decisions” about dealing with the opioid-abuse issues while trying to ensure access for people with a genuine need for pain medication.

Even now, the company works in the midst of an ongoing debate about the appropriate use and inherent risks of opioids used to relieve specific types of pain and painful conditions. New drug MOAs (mechanisms of action) are emerging from discovery to challenge the time-honored place of opioids in some indications, such as shingles and neuropathic pain. But so far, nothing has replaced the older drugs except for the extended-release forms pioneered by Purdue and others, such as the former Organon.

Critics say the new forms, which discourage sniffing and injection of crushed pills, do nothing to curb new cases of abuse and addiction, but Purdue has aligned itself with patients in pain who want access, versus advocates who deemphasize the pain-driven need and spotlight the abuse. Some say Purdue helped create a pain market that never before existed. Others, overwhelmingly patients, thank their lucky stars the company and its products exist.

Other difficult decisions have involved painful “restructuring” layoffs in communities such as Stamford, CT, which relied on Purdue for decades. “Our former colleagues made decisions that got us to where we are now,” says Timney. “Getting the company to buy into the future vision happened quickly, but the way to getting there is not a smooth road. Part of our strategy was a ‘leaning’ of the organization, a shrink-to-grow mentality, which allowed us to reallocate resources to areas where we could build new capabilities, as in business development. We had to adapt to the changing environment, and the organization quickly got that. These were difficult decisions, but they were the right decisions for the longer term.”

There is not much debate about the commercial success of Purdue since it embarked on its resource adjustments and enhanced extended-release, abuse-deterrent programs. Timney says without bombast that the company revolutionized the pain-management space and produced one of the industry’s greatest success stories — though its privately held status kept it from sharing much of the story with the world.

“Without a doubt, the Purdue business model, focusing on a particular category and a handful of products, has been historically successful,” Timney says. “To go forward, we have to evolve, continuing to meet the needs of customers and patients and all of our stakeholders. We state our strategy clearly in three steps: compete, win, and grow. They are actually three overlapping phases.”

He explains that the compete step requires assembling and strengthening critical capabilities for doing business in the changing marketplace. Managed care presents an example: “How do we build the right capabilities for the managed care of tomorrow, not the managed care of today?” Or marketing: “How do we build capabilities in the marketing space to befit a 21st century pharmaceutical company, and building upon what we’ve done in the past, how do we become agile enough to introduce new products into an established system rather than just a pain-focus system?”

Win is a step that demands market leadership, Timney continues, not only in opioids with abuse-deterrent properties, but even broader, such as introducing abuse-deterrence into other therapeutic areas where the need exists. Purdue sells three of only four approved products with abuse-deterrent properties. He cites the CNS area as a logical new target for future company products, emphasizing how it has prepared for such expansion internally and in its stance toward other industry players.

“During the past year or so, we have changed our research model from one which focused heavily on internal discovery; we’ve virtualized the discovery to be much more externally focused, and we adjusted the size of our internal unit to have a much more flexible R&D structure with a business-development focus. Thus we are much more externally focused, and we’re open for partnering. We are able to scan the landscape rather than stay fixated on our internal programs.”

The second stage of Purdue’s win strategy is attaining a broader leadership position in pain, Timney says. Though successful, the company’s focus on chronic pain and opioids has been a very narrow one therapeutically. Purdue is researching new options for pain treatment, including nonopioid medicines and other modes of abuse-deterrence, including those reducing oral abuse. While Purdue already adheres to PhRMA’s Principles for Responsible Clinical Trial Data Sharing, the company is exploring new ways to share clinical trial information with key stakeholders.

Partnerships may be the primary vehicles for entering new areas outside pain, says Timney, especially in cases where Purdue can add its franchise-honed skills to the partner’s market presence. “We are phenomenally good at complex products, complex marketplaces, and complex customer management. That is usually where Big Pharma really struggles.”

Reach Machine
Timney says the company has built its own communications platform to engage with a new crop of stakeholders; namely, investment banks and potential partner companies. “Once we started to open the door for business in new areas, people said they hadn’t known Purdue was interested outside of pain. In the past, we have not been an organization that does external deal-making. Now, we are looking at what could be eight to 10 active business development deals.”

In the partnering information on Purdue’s website, the company lists capabilities that emphasize the breadth and depth of its technology — from discovery tools to formulation, clinical trials, and so forth — making it appear almost CRO-like.

But Timney says the company aims to be much more than a technology supplier to partners.

He observes Purdue has one of the largest specialty/primary care field forces in the industry, with about 550 representatives. “We have the ability to educate multiple stakeholders across many different and difficult areas.” For example, many of those reps already call on specialists outside pain, such as oncologists, and could add nonpain products to their kit bag. Similarly, he says the company’s R&D organization can apply its extensive knowledge of patients and specialists in those areas to developing nonpain therapeutics.

“We are positioning ourselves for partnering in every possible area, licensing to acquisition, and at any stage of development — partnership in the true sense, whether commercial or development. Nothing is off the table. That is the beauty in the flexibility of being a private company. We really can take this in any way we want.”

He says the company’s initial aim is to obtain multiple later-stage assets in each targeted area. “This is an important point — if we step outside of pain, we want to build a franchise. Getting just one partnership or one asset in a space is not enough. We need to know where the science is heading and build our innovation upon the unmet need with three or four different types of opportunities in the same space, to spread the risk along our development pipeline.”

"During the past year or so, we have changed our research model from one which focused heavily on internal discovery."

MARK TIMNEY
President and CEO, Purdue Pharma

 

Creating a much broader therapeutic focus for Purdue may help it move beyond the balancing act inherent to its pain franchise — between the traditional pharmaceutical business goal of achieving ever-greater prescription volume, and limiting the misuse that follows as a function of always expanding availability. Beyond abuse-deterrent technology, entering new areas is the only way to grow, the third charge of Purdue’s rallying cry.

“We don’t want a single prescription other than one written for the right patient, for the right reason, and by the right prescriber. We have developed world-class abuse-deterrent practices in coordination with the FDA, as well as our stakeholders in law enforcement and throughout the healthcare system. But the strategy of focusing more broadly in pain and outside of the opioid space does give us significant opportunities to grow.”

At the same time, and despite what Timney argues are systemic barriers to limiting pain-med abuse, he unequivocally confirms the company’s commitment to the pain area. “It is important to understand no single policy or product will ever solve a problem as complex as prescription drug abuse. It’s multifactorial. But it is also a fast-moving area of technological innovation. The stakeholders, such as the FDA and the DEA, are fully behind it; they want this area of innovation to grow, and our customers realize the value these products can offer in offsetting costs associated with the abuse.”

Timney is also clear about Purdue’s intended position in the pain market. “Only a few months ago, there was only OxyContin [oxycodone HCI] that had abuse-deterrent properties. But now there are four such products on the market and more than 30 others in development at this point, though not all will make it. The FDA and, I believe, Purdue have set a very high hurdle on what really is abuse-deterrence. We have helped define and shape that. It is greater than one company, but as I keep saying to my organization, that doesn’t mean we should ever stop taking a leadership position here.”

Window For The World
Is the change at Purdue — restructuring for its march into new territories — merely a clichéd shift in the winds, a meteorological trend fated to skirt along the surface only to vanish in the inevitable counter-wind? Or does its meaning run deeper beneath the company’s mantra of compete, win, and grow? Pharma franchises traditionally face less competition than diversified companies. But Purdue has found its narrow space sufficiently competitive to impose evolutionary pressure on the company and motivate its adaptation.

One measure by which the outside world may judge the therapeutic expansion is how much it restores and perhaps increases the scale of operations lost in its restructuring, as well as boosting its revenue and product portfolio size; in a word, grows. Competing and winning should ensure growth — but not always, as they say, in this crazy business.

Another remaining unknown about Purdue: Will constant “transparency” change the private company from a longterm planner to a short-term actor, similar to public companies in the industry? Timney and his team must shuffle the ball carefully if they wish to preserve some of the farsighted strategic benefits of private ownership and silent running. Ironically, some of the largest public pharma companies have been talking about walking behind a corporate screen, essentially becoming faceless mega-holders of incorporeal product brands. The future of either path is even murkier than some corporate minds.

Just as surely as Purdue’s present state and recent history, its distant past may have important lessons for today’s young life sciences companies. Could a contemporary company, inspired by science, launch itself into business with the same build-a-franchise strategy — maybe buy a small-market commercial company, license in other products in therapeutic clutches, and use the revenues to fund R&D? Actually, the answer is a qualified yes, still playing out in companies such as Sucampo, featured in our March 2015 issue.

Yet, be the answer yay or nay, the question raises important issues, including how far franchise-building may divert a company from its original intent. Still, many start-ups reinvent themselves, and sometimes more than once, heading off in new directions when new science and business paths open up. To such companies, enterprise is as close to the heart of innovation as science. In that sense, Purdue is just beginning. Let us return some day to see its progress a bit further down the path.

Do you have something to say about Purdue, its restructuring, and its therapeutic- area expansion? Please post your comments on-line with this article under Current Issues or Past Issues at lifescienceleader.com.

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Purdue’s Path To The Pain Space

Ever since its modern beginnings in 1952, when the brothers Mortimer and Raymond Sackler acquired tiny Purdue-Frederick, the company has tended to stay quiet and contained within a narrow space. Actually, it was a series of spaces, all ultimately leading to pain. One of the company’s first sets of products included Pre-Mens, a treatment for premenstrual “tension,” along with two vaginitis ointments.

The most outstanding fact of Purdue’s founding was its immediate and apparently instinctive jump into niche franchise-building. Originally motivated by a desire to develop psychiatric drugs, the Sackler brothers started the company as a means to fund their R&D, and during the formative years of the company leapfrogged from one small group of related products to another — from gynecological to GI, to arthritis, to the ear, to antiseptics, and finally to pain.

Purdue’s first million-dollar product, the laxative Senokot (senna), catapulted the company to a higher scale of international sales and infrastructure in the late 1960s, and its lucrative Betadine line added another rocket thrust in the same period. (In a close metaphor, Betadine was used to sanitize the Apollo 11 capsule after splashdown.) Senokot is still sold in the company’s OTC line.

Purdue’s entry into the pain space, specifically opioids, came in the early 1970s, after U.K. scientists at Napp Laboratories developed a sustained-release technology, eventually called Contin and initially applied to two successful asthma drugs. Generic competition for Betadine was looming by then, but the next blockbuster franchise was born in MS Contin, an oral, sustained-release form of morphine. Contin-based forms of the other major opioids used in pain, oxycodone and hydrocodone, would follow, and abusedeterrence became the new imperative in the 2000s.

Now there are four abuse-deterrent products on the market. OxyContin (Oxycodone SR) was reformulated in 2010 to make it more difficult to solubilize or crush. In 2014, three new abuse-deterrent products were introduced: Purdue’s Targiniq (oxycodone ER), with a substance to block the drug’s effects if the tablet is crushed; Hysingla ER (hydrocodone ER), resistant to chewing, crushing, snorting, or injecting; and Pfizer’s Embeda (morphine sulfate and naltrexone hydrochloride) extended-release (ER) capsules with properties designed to reduce oral and intranasal abuse (i.e., snorting) when crushed.

Abuse deterrence may be effective for many patients but the results are not straightforward. Studies show many abusers simply switch their drug of choice, often to the chief illegal alternative, heroin. Sustained release has also had a mixed reception among pain sufferers, some of whom prefer shorter-acting drugs for their flexibility in treating chronic but variable pain. In the pain space, despite a great turnover, a high level of medical need remains.