Building a Fully Integrated Biotech Company: What does it take? Part II

Laura Randa, a seasoned health care and life sciences healthcare executive with three decades of experience and her daughter, Lauren King, an associate at Springboard continue their discussion on building a fully integrated biotech company

Photo by GR Stocks on Unsplash

This week we are continuing our discussion on building a fully integrated biotech company. Once again, we focus on one key question: what strategies do organizations need to think about when optimizing the launch to commercialization?

Typically, about 50% of the executive team turns over during the transition from R&D to fully integrated biotech, and about half of the companies that make this move destroy shareholder value during the two years following their first product launch.

The biggest challenge for most biotech companies is adjusting from being judged on clinical progress to being judged on how they meet the financial expectations of investors. These new expectations have profound implications for strategic choices, program decisions, capital allocation trade-offs, talent choices, and organizational evolution.

The companies that have successfully navigated these challenges typically mine existing assets to achieve their full potential; they focus on a few disease areas; they build out their licensing and acquisition capabilities; they develop a formal strategy and bring everyone on board, and they rebalance their organizations and retain key talent.

Continuing from last week, we share five key operational trends that drive growth in drug launches today: organized strategy, organizational capabilities, early engagement with payers, increasing attention to value, and the importance of forecast with inputs from stakeholders amidst intense competition. Read more on organized strategy and early engagement with payers here. Companies need specific capabilities to respond to these industry trends and to provide differentiated value.

  1. ENGAGE PAYORS EARLY TO ADDRESS CHALLENGES — BUILD YOUR STRATEGY WITH YOUR STAKEHOLDERS. Historically, clinical-stage executives have underestimated the value of speaking with payors early on. Having a good payor strategy and engaging with them early can only be beneficial to an organization. We have the opportunity with payors today that we didn’t have many years ago — they want to understand how the product will differ from the current standard of care. It’s important to look at this dialog as an opportunity; engaging payors early allows them to better understand the clinical value and the value to patients of the target product profile. It should also be noted that, regardless of whether you are looking for an acquisition or commercial partner, you should still plan on engaging payors. Buyers and partners will want to know what payors think. There are numerous examples in the marketplace that have failed because the payor receptivity was just not there at launch, and the organization took years to reset, reprice, and relaunch while hemorrhaging money. Approach payors when they can understand your Phase 2 program and provide their required input as you develop your Phase 3 programs. Previously, information like this wasn’t shared until approval, and if payors had concerns or were interested in additional data, companies had to go back to collect it. Early involvement allows you to work payor requirements into your Phase 3 programs and bridge two objectives together. Incorporating a clinical representative into those payor meetings allows clinical colleagues to hear what the payor wants first-hand and incorporate that into clinical development. Typically, some of the patient outcomes/endpoints that payors want are difficult or impossible to obtain in retrospect and don’t focus just on the primary endpoint. Hearing from the payors early means patient outcomes can be incorporated into clinical programs when possible.
  2. INCREASED FOCUS ON VALUE. Efforts to manage drug spending have increased new products. This can be seen in through formulary restrictions and increased use of pathways. This, combined with limited data at the time of accelerated approvals, means that pharmaceutical companies are working more closely with payors to establish the value proposition of a product. In addition, novel high-cost modalities are forcing a change to the value proposition, from one focused on pure drug provision to a personalized-service model, requiring a go-to-market (GTM) model redesign. The combination of increased diversity in evidence packages and a growing focus on value elevates the importance of both health-economics-and-outcomes-research (HEOR) and pricing-and-market-access (P&MA) teams. HEOR teams are increasingly involved earlier in drug development to ensure that key end points and comparators are included in clinical trials, building a broader evidentiary strategy (including real-world evidence, patient-reported outcomes, meta-analyses, and registries) that demonstrates therapy value. More companies should also consider the key role that P&MA teams can play, in working with payors well ahead of launch to ensure dossiers are optimized (for instance, through payor advisory boards). Further, more advanced companies may engage in launch-sequence modeling and value decisions to maximize therapy potential. Pharmaceutical companies must be able to choose the right narrative to communicate product value, for example, through advanced and direct comparisons. Within pricing and contracting, innovative schemes (for instance, around drug portfolios) and outcomes-based contracts are becoming important in product strategy given external pressures such as increased competition and greater focus on pricing. As an example, the median annual cost of a new cancer drug launched in 2017 exceeded $150,000, and the cost pressure is even higher for novel therapies (such as CAR-T-cell therapies), given the added challenge of determining a viable pricing model for one-time cures. While there are complexities and challenges in setting up outcome-based payments schemes (for instance, price-reporting requirements in the United States ), examples do exist in oncology, including Novartis’s innovative contract for CAR-T-cell therapy, Kymriah, in Germany and the United States. As part of the agreement, Novartis shares the risk by partially reimbursing treatment costs if a patient dies of their illness within a given period.
  3. DON’T JUST BUILD FORECASTS, LET THE DATA DRIVE THE STRATEGY. Forecasts are often incorrect, but they are crucial to the success of an organization. Organizations must do enough scenario planning for the board to realize the investment needed and what the implications are with each scenario. You must be able to scale up and scale down as you progress through the life cycle of the launch. Forecasting should contain not just your own data but also the epidemiological data in more than a one-year assessment. Look back at competitors and consider why they didn’t do well in year one of their launches. Be candid with internal discussions, challenge each other, and if it doesn’t look right, adjust but don’t dismiss. Ironically, it becomes more challenging for organizations when they get revenue and must continue to deliver — the market value can collapse relatively quickly. This is where scenario-based forecasting can be useful. Don’t get yourself caught flat-footed if you haven’t done scenario planning— major disasters can be avoided if you are able to pivot.

Making the shift into commercialization is one of the most difficult pieces of organizational growth. A clear strategy with data-driven decisions paves the path to a successful product approval. In this fast-paced world, taking time to slow down and evaluate all the variables involved in commercialization is the difference between entering the market strong or floundering. It really comes down to being ready through strategy and preparations, executing your plans, and going the distance.

Having in place systems that consistently track talent, capabilities, and resource allocation are critical for planning and enable faster decision making, both at the region level and globally. Strategic workforce planning (hiring, partnerships, consortia, and acquisitions) should also be embedded into business-planning cycles. Companies that build these measures into their best practices will be successful in having the right capabilities in place and staying ahead in the fast-moving and competitive biotech arena.

Did you find the strategies listed in this article helpful? How have they worked for you? If you enjoyed this article, share it with your friends and colleagues!

Laura Randa is a seasoned health care and life sciences healthcare executive with three decades of experience building high-performing teams and leading commercial markets across the supply chain. She is Chief Commercial Officer at Curio Digital Therapeutics Inc. Throughout her career in senior executive roles, Laura has provided corporate leadership, executed successful turnarounds, and held responsibility for multi-billion-dollar P&L’s. She has successfully led teams of up to 250 people through product launches to maximize returns, with a focus on driving a fast trajectory to peak sales. Her diverse experience includes large biopharmaceuticals, biotech, managed care, government, specialty and retail pharmacy, hospital systems, public policy, healthcare services, and consulting.

Lauren King is a summer associate at Springboard Enterprises and is a rising sophomore at the University of Michigan. She hopes to study business administration with a concentration in marketing and sustainability. On campus, Lauren serves as a mentor to the incoming freshmen business students in the Ross Peer Mentor Program and has been recognized as a high achieving member of the Michigan Marketing and Advertising Club. Her skills in organization and problem solving have developed her interests in environmental science, computer coding, data interpretation, and writing.



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