The life sciences industry is currently facing unprecedented turmoil. Peter Muller of Schlafender Hase outlines five trends pharma companies will need to weather in 2017, and the considerations needed for smooth adaptation.
The life sciences industry is in a state of flux for a whole series of reasons, which can largely be traced back to shifting market dynamics and growing regulatory rigour. In a conservative and inevitably slow-moving industry as this, it can be hard to keep up with the changes. Below are five of the biggest sources of disruption to pharma companies’ equilibrium, which they need to smooth their way through to avoid losing momentum, revenue and market share.
Merger & acquisition activity
The need to respond to changing market demands more swiftly than life sciences firms can manage under their own steam has fuelled merger and acquisition activity in the market in recent years. Analysis of deals in pharma and life sciences by PwC revealed that 101 transactions were announced in the sector during Q4 2016, worth $34.4 billion in disclosed value (28 of these deals have already been completed). Seven of the transactions were worth $1 billion+, the highest - Lonza’s acquisition of Capsugel - costing $5.5 billion.
KPMG expects more of the same in 2017, with Europe’s largest biotech company, Actelion, the subject of great interest and suggestions that it could be a takeover target for Johnson & Johnson and Sanofi. It isn’t just that the big brands are keen to take advantage of shortcuts to new innovation. Being acquired by a bigger name is the stated exit strategy for many biotechs bringing hot new products to market.
To capitalise on these strategic and often sizeable purchases, the acquiring company must be able to align its branding, content and labelling conventions quickly, reliably and efficiently. This is important if the new parent organisation is to maximise the revenue opportunity while minimising exposure to any risks associated with inconsistent, inaccurate or incomplete consumer messaging in onward packaging, dosage and safety instructions.
It isn’t inevitable that the acquired brand will surrender its identity. In the case of Actavis when it acquired Warner Chilcott plc, the better-known brand was kept, but when they subsequently acquired Allergan they decided to rebrand under Allergan. But the need to align content and label assets, update company information and standardise on key wording, registered symbols and logos according to the controlling organisation’s style guide, is clearly an important part of blending portfolios. It is critical to upholding brand image, stabilising compliance efforts and maximising process efficiency - not to mention market opportunity.
Comparing content assets manually against an approved master and verifying that they meet the rebranding criteria is a laborious task, which multiplies with each SKU (variation of product). Harnessing automated checking using technology that can compare and accurately spot and highlight anomalies - at high speed across huge batches of content assets - can reduce the time taken by as much as 85 per cent. This can have a marked impact on speed to market with products under new ownership: keeping stock moving while reducing companies’ exposure to issues and providing valuable savings as acquiring companies total up the final costs of the transition of ownership.
Over-the-counter growth & the rise of generic drugs
The growing global over-the-counter (OTC) drugs market, and increasing emphasis on generic medications, is another driver of upheaval for the pharma industry with an impact on the way manufacturers must manage efficiency and the accuracy and consistency of marketing and patient safety information.
Pressures on health services in markets such as the UK – whether that’s to get an appointment with a clinician for a consultation about minor ailments, or to qualify for a subsidised or free prescription – are prompting more people to go to local pharmacies, supermarkets and extended-hours convenience stores for the medication they need. Analysis by Technavio suggests the global OTC drug market, which was valued at $120 billion in 2015, will be worth $162 billion by 2020 (a compound annual growth rate of 6.37 per cent). In the intervening period large volumes of branded drugs will see their patents expire, leaving a gap that could be filled by generic products.
If they are paying for their own drugs over the counter, patients are likely to be more cost-conscious, prompting them to choose stores’ own brands. Consumers are becoming more confident about doing this, encouraged by media coverage and consumer studies which have exposed marketing practices designed to get patients to pay a lot more for a recognised name – and for painkillers rebranded repeatedly for specific types of pain. Reassured that the active ingredients are more or less the same, they are opting for cheaper no-name products that may potentially be made elsewhere, and/or repackaged and distributed by third parties.
A report from India, a popular source of outsourced generic drug manufacture, has forecast that the global generic drugs market is on course to grow at a compound annual rate of 10.53% between 2016 and 2020. Clinical prescribers – hospitals and community medical teams - also have a growing interest in generic drugs, because of the pressure to keep their own costs down. But what pharma manufacturers save in production and marketing costs, they must make sure they are not sacrificing in quality, safety and reputation. The more suppliers/product handlers there are in the chain, the more critical it is that efficient and reliable quality checks are in place to align labelling and patient leaflets. So that, as information is updated in the light of emerging contra-indications or the discovery of new side effects, these are reflected throughout. Strict deadlines are applied to these requirements, so companies need to move quickly or risk products being withdrawn from the market until they are compliant again.
Again, it comes down to finding reliable automation solutions that can reduce packaging complexity yet instil confidence that nothing is able to slip through the net.
Patient self-service: putting information online
As patients are encouraged to take more responsibility for their own health, and are invited to have more involvement in and control of their treatment, drug companies are turning to digital channels to meet that need. Publishing information online is also more cost-effective, and easier to update quickly, so it makes sense for pharma companies to harness these media.
In the US, online channels are proving a powerful and effective way of reaching out to and engaging with consumers for promotional purposes. Here it is becoming increasingly common for brands to have product-specific microsites - where they can drive traffic captured via social media, for instance. Surveys suggest that 73 per cent of US adults now use online health information and tools.
For safety’s sake, digital information formats must also include the relevant prescribing dose and safety information, so it is vital that companies are able to manage and coordinate these channels alongside traditional, physical patient leaflets – ensuring that messaging is consistent and accurate across the board. Practically, this means being able to check content in XML or HTML formats as well as traditional PDFs and text or Word files.
Although harmonisation of product information is high on the agenda internationally, from the EMA’s IDMP (Identification of Medical Products) efforts in Europe to equivalent plans in the US and Asia, the chances of local variances in information delivery in each country are still quite high – certainly in the short term. The US is currently taking a tough line on off-label claims, affecting the promotional claims and wording used in drug marketing, so this needs to be tightly controlled.
International harmonisation efforts are in everyone’s interests and, ultimately, should make life much easier when there are far fewer authorities to publish product information to, but for the time being global life sciences players still need to put in a lot of work to ensure that they are meeting the quality and safety standards in each individual market.
This can be a demanding requirement, given the varying emphases not to mention language, phrasing and symbol differences between countries. Checking content across different languages and cultures presents its own issues because of the subtle differences in interpretation of particular phrasing. Unless the parties responsible for checking translations are completely fluent in multiple languages, the scope for error is significant so it is important that teams have the backup of sophisticated software to smooth the process and highlight anomalies. One reliable way to do this is by comparing the code behind the characters to be printed – allowing two files to be compared in any language and any font (as long as these support Unicode).
Deloitte advises firms to move away from after-the-fact checks to timely detection and resolution of compliance and quality events, as a means of reducing the risk that regulatory issues will hamper innovation and slow revenue generation. In the climate firms are now operating in, prevention (of problems) is more cost-effective than cure, so tools that allow the industry to be on the front foot have much in their favour.
It is becoming more and more challenging for life sciences companies to find and keep the right talent for regulatory and quality purposes. A report published by UK trade association ABPI in late 2015 already pointed to challenges with the quality of experienced candidates applying for senior level regulatory roles, which was being cited as a critical concern. More experienced roles require a blend of RA expertise and commercial knowledge, and RA experience that has been too niche has created issues in absorbing other responsibilities easily. Companies were reporting that typical recruitment times to fill a position were 6–12 months.
This situation is worsening now. Brexit and the free movement of labour in Europe; increasingly complex compliance requirements; the expanding presence of pharmacovigilance; and the stress placed on those responsible to be absolutely meticulous in the accuracy of product information, are all factors making it harder to build and maintain teams of regulatory professionals.
Manual tasks are unrewarding, demotivating and a poor use of qualified professionals’ time. In a recent study by international people and organisational advisory firm Korn Ferry, almost three-quarters (73 percent) of employees cited their number one driver at work was doing a job that had meaning and purpose. Yet pharmaceutical companies don’t typically employ proofreaders; rather they use scientific writers with Masters degrees or PhDs to check over content, at great expense.
As they try to plug the gaps, and hang on to the qualified and experienced experts they already have, life sciences companies need to be clever about how they support those people to make best use of the time, and how they alleviate the aspects of their job which add the least value professionally yet cannot be skimped on.
There is no question that 2017 will be a challenging year, but it should be exciting too. Change is necessary, and disruption can bring healthy regrowth – as long as companies see the changes coming and take steps to adapt. In our client work we see organisations right across the maturity spectrum: as long as companies have the right mind-set and vision, they’re on the right track - even if some will take a bit longer to get to where they need / want to be.
This article has been published in International Pharmaceutical Industry, Summer, 2017
 Pharmaceutical and life sciences deals insights: Year-end 2016 Update, PwC: http://www.pwc.com/us/en/health-industries/pharma-life-sciences/publications/pharma-life-sciences-deals-insights.html
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 Are more expensive painkillers worth the money?, BBC ‘Trust Me, I’m a Doctor’: http://www.bbc.co.uk/programmes/articles/14RlXMhR7g7Dk09vK7YmWXl/are-more-expensive-painkillers-worth-the-money
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