Magazine Article | November 7, 2010

There's No Use Fighting It … Change Is Coming

Source: Life Science Leader
Dan Schell author page headshot

By Dan Schell, Editorial Director, Life Science Leader

It’s a scary time to be an executive in the life sciences sector. No matter if you’re the CEO of a top pharma company or the founder of a new biotech startup, these days it seems there’s always some new policy, trend, or regulation that’s impeding your progress. Perhaps it’s always been this way, but now the ubiquitous and immediate nature of our news sourcing has made certain issues reach a wider audience and thus, become a bigger concern. Drug safety is a good example. Nowadays, everyone knows when there has been a problem with any type of drug, whether it be a recall or an adverse reaction. Of course, on one hand, this is good — lives can be saved. However, we’ve also seen, as a result of the public’s increased awareness of drug safety issues, a shift toward more stringent regulations and guidelines concerning clinical trials. So now, instead of looking for side effects in 1,000 patients, companies are being pushed to test perhaps 10,000 patients. Of course, this causes the cost of trials to skyrocket — along with the length of time to complete them — forcing many pharma and biotech executives to reevaluate their profitability models.

In recent years, cutting costs via outsourcing has been one of the primary strategies for ensuring life sciences companies stay in the black. But now, one of the industry’s favorite locales for achieving savings associated with manufacturing is also cutting into margins. On page 26, freelance editor Karl Schmieder outlines the negative impact that Puerto Rico’s brand-new Law 154 could have on offshore pharma companies that have manufacturing facilities on the island.

Another recent trend has been to pursue niche or orphan drug development in hopes of boosting profits. However, niche pharma players such as CSL Behring’s President Peter Turner (featured on page 8) note that entering these markets isn’t as simple as it sounds. “The rare disease business model is considerably different from the one that drives mass-marketed drugs,” he says. “For example, patient populations are much smaller, targeted marketing rather than mass marketing strategies are effective, and small groups of physicians and therapy providers play pivotal roles in product adoption and uptake.”

As 2011 approaches, many pharma and biotech companies prepare to face a new era in life sciences with fewer staff, more headaches, and lower profitability expectations. Those that are going to succeed need to embrace the new paradigm shift rather than fight it. In the United States, specifically, we need a renewed focus on fostering innovation and R&D, while at the same time employing efficiency tactics such as lean manufacturing. These changes won’t happen overnight, and they won’t be easy … but they are inevitable.