Biotech’s Toughest Love

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Biotech companies are a critical element of the pharmaceutical business, delivering life-saving and quality-of-life improving medicines and medical devices to patients.  They can be considered a beating heart of innovation, filling up many of productivity and innovation gaps at pharmaceutical companies. A broad array of their novel products and discoveries brings hope for patients suffering from previously untreatable conditions and diseases. Small biotech organizations tend to operate with very few experts onboard, prioritizing clinical development and regulatory expenditures to reach their value creation goals: achieving proof-of-concept and obtaining regulatory approval. Historically, commercial aspects were not at the top of the biotech’s priorities. Now, more than ever, biotech needs to get commercial aspects of drug development right. Regulatory approval of the new drug is a significant milestone; however, without commercial/market access & pricing strategy in place, it may lead to a failure further down the road.

Small entrepreneurial biotech entities focused on the discovery, usually have no infrastructure, experienced personnel or cash to advance assets to the clinic. They depend on gaining investment to fund their clinical development plans from various financial sources. A predominant number of biotech companies own only early development assets (pre-clinical and early clinical – phase I/II), up to proof-of-concept (PoC) and then, transfer the development/sell the drug to big pharma leveraging their late development and commercialization expertise. Heavy dependence on obtaining the sufficient funds for phase I-III drives the biotech focus first on achieving PoC and then the regulatory approval. Historically, both of those achievements significantly contributed to increased valuations of the single assets and/or made the biotech an attractive target for potential acquisitions. It is the main reason why the majority of biotechs still concentrate on R&D operations and is neglecting the commercial planning. The issue is, the drug development environment is evolving and what was the gold standard yesterday, may not be valid today or tomorrow. Biotech organizations potentially may be facing painful wake-up calls if they do not accommodate the necessary commercial inputs, HTA/payers rigors and requirements during early clinical product development.

Discovery biotech companies, which have no existing commercial capacities, lack the relevant expertise within the company. Without the competencies, it may be impossible to anticipate and plan in the particular area. This knowledge gap (which can be filled by specialized firms or CROs) can result in an unattractive product without clear differentiation strategy and value for the payers or/and unsuccessful launch. Many companies realize too late in the process that commercial new product planning [Fig 1.] should be implemented with start of FIH studies at the latest. However, the recommended timeframe is even before the clinical development starts (e.g., lead optimization). As depicted below, product market access, pricing, and evidence synthesis & generation are an essential part of commercial and drug development activities [Fig. 1, 2].

Fig. 1: New Product Planning – Key Activities.

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Fig 2.  Evidence Synthesis & Generation, Access & Pricing – Key Activities.

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In the USA, payers, policymakers, PBMs, healthcare professionals and patients want to understand the real value of the new drug. Payers have very specific clinical and HEOR data requirements regarding endpoints, comparators, PROs and Quality of Life measures. Thus, companies have to analyze and obtain the evidence needed and prepare core value messages to be shared with payers (e.g., data supporting claims of superiority of the investigational treatment over a standard of care and existing alternative therapies).

The right timing and early-enough commencement of the key commercial activities are crucial. Majority of the biotech do not plan market access activities ahead of their pivotal clinical studies, assuming it as ‘late-stage’ work, which should be taken care of by the asset acquirer. With this approach, assets may come to the market with regulatory approval, but they lack the right evidence to gain fast and continued market access. Such circumstances may result in significant additional expenses to fill the evidence gaps. It will also have a direct negative impact on the value of the asset and the value of the biotech company and may leave patients with unmet needs. Fortunately, such situation can be prevented by engaging in early scientific advice consultations with payers/HTA in the major markets (US, EU, Canada) in advance of starting their phase III clinical studies. Payer engagement can help the biotech companies:

  1. Understand the requirements for evidence development.
  2. Analyze the existing evidence gap – requirements that cannot be met from pivotal clinical studies.
  3. Guide the development of supplementary HEOR evidence plan.

Failure to implement commercial and market access strategies and tactics may mean, less attractive product, with a lower value for a potential bidder and restricted access to the new medicine for the patients in need. However, with right planning and awareness, the biotech leaders can deliberately adjust their prioritization and planning, making sure they have relevant resources (talent and budget) to meet the demands of the rapidly changing drug development environment.

References:

  1. Why Biotech Needs to Get Market Access Right: https://www.linkedin.com/pulse/why-biotech-needs-get-market-access-right-colin-wight/?trackingId=4pCnybtnbQ6kHb7fzkzJnA%3D%3D
  2. Building Market Access Competencies for the Future, Pharmaceutical Executive, November 2016 edition
  3. https://redsneakersblog.com/2017/01/14/dilemmas-of-the-pharma-market-access-pricing-function/#more-1478
  4. https://redsneakersblog.com/2017/04/17/creation-of-drug-development-plan/
  5. https://redsneakersblog.com/2017/03/18/investing-and-partnering-in-drug-development/
  6. https://redsneakersblog.com/2017/05/30/small-biopharma-pains/

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