minting the glitter: - informa markets

MARKET ACCESSLESSONS FROM THE FRONT

SUPPLY CHAINTIME FOR TRACK & TRACE

MEDICAL INNOVATION’STOP 10 WINNERS

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PHARM EXEC’S 2014 PIPELINE REPORT

Minting the Glitter:Are Blockbusters Back?

NOVEMBER 2013

WHERE BUSINESS MEETS POLICY

VOLUME 33, NUMBER 11

WWW.PHARMEXEC.COM

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ES345525_PE1113_003_FP.pgs 10.26.2013 02:44 ADV blackyellowmagentacyan

4

NOVEMBER 2013 www.PharmExec.comPHARMACEUTICAL EXECUTIVE

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JOE LOGGIA, Chief Executive Off cer; TOM FLORIO, Chief Executive

Off cer Fashion Group, Executive Vice-President; TOM EHARDT,

Executive Vice-President, Chief Administrative Off cer & Chief

Financial Off cer; GEORGIANN DECENZO, Executive Vice-President;

CHRIS DEMOULIN, Executive Vice-President; RON WALL, Executive

Vice-President; REBECCA EVANGELOU, Executive Vice-President,

Business Systems; JULIE MOLLESTON, Executive Vice-President,

Human Resources; TRACY HARRIS, Sr Vice-President; FRANCIS HEID,

Vice-President, Media Operations; MICHAEL BERNSTEIN, Vice-President,

Legal; J VAUGHN, Vice-President, Electronic Information Technology

Murray L. Aitken

Senior Vice President,

Healthcare Insight,

IMS Health

Stan Bernard

President,

Bernard Associates

Frederic Boucheseiche

Chief Operating Off cer,

Focus Reports Ltd.

Joanna Breitstein

Director, Communications,

Global TB Alliance

Drew Bustos

Vice President, Global Communications,

Cegedim Relationship Management

Rich Daly

Founder,

Sage Path Partners

Rob Dhoble

CEO,

Adherent Health

Bill Drummy

CEO,

Heartbeat Ideas

James Forte

Vice President, Marketing,

Campbell Alliance

Fred Frank

Vice Chairman,

Burrill & Co.

Les Funtleyder

President,

Poliwogg Investment Advisors

Matt Gross

Director, Health and Life Sciences

Global Practice, SAS

Terry Hisey

Vice Chairman,

Nat’l Sector Leader, Life Sciences,

Deloitte

Michele Holcomb

Vice President Corporate Strategy,

Teva Pharmaceuticals

Bob Jansen

Principal Partner,

Zensights LLC

Kenneth Kaitin

Director & Professor,

Center for the Study of Drug Development,

Tufts University

Clifford Kalb

President,

C. Kalb & Associates

Daniel A. Kracov

Partner & Head,

FDA and Healthcare Practice,

Arnold & Porter

Bernard Lachappelle

President,

JBL Associates

Rajesh Nair

President,

Indegene

Daniel Pascheles

Vice President,

Global Business Intelligence,

Merck & Co.

Elys Roberts

President,

Ipsos Healthcare North America

Barbara Ryan

Managing Director, Strategic

Communications, FTI Consulting

Alexander Scott

Vice President, Business Development,

Eisai Corp. of North America

Michael Swanick

Global Practice Leader Pharmaceuticals

and Life Sciences, PwC

Mason Tenaglia

Managing Director,

The Amundsen Group

Peter Tollman

Senior Partner, Managing Director,

Boston Consulting Group

Al Topin

President,

Topin Associates

Bill Trombetta

Professor of

Pharmaceutical Marketing,

St. Joseph’s University Business School

David Verbraska

Vice President, Regulatory Policy,

Pf zer

Albert I. Wertheimer

Professor & Director,

Pharmaceutical Health Services Research,

Temple University

Ian Wilcox

Vice President,

Hay Group

Peter Young

President,

Young & Partners

Pharmaceutical Executive’s 2013 Editorial Advisory Board

is a distinguished group of thought leaders with expertise in

various facets of pharmaceutical research, business, and mar-

keting. EAB members suggest feature subjects relevant to the

industry, review article manuscripts, participate in and help

sponsor events, and answer questions from staff as they arise.

VOLUME 33, NUMBER 11

2011 Neal Award Winner for

“Best Commentary”

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Contents6


Roundtable

Roundtable onMarket AccessWilliam Looney, Editor-in-Chief

Market Access is a window

on what matters in the real

world of soaring patient

expectations and crimped

budgets for innovation.

Pharm Exec convenes a

diverse panel of experts

to identify the key markers

of common ground: its

time, people, and money

against that greatest

intangible—hope.

26

Supply Chain

Scanning the FutureTimothy Denman,

Senior Managing Editor

In response to well-

publicized security threats,

regulatory authorities in

the United States and

Europe are moving toward

the enactment of new

legislation that will change

the way pharma products

are handled and shipped

throughout the supply chain.

36

Pharm Exec’s 2014 Pipeline ReportBen Comer, Senior Editor

Across a constellation of categories, bright

new drugs are moving into position. The

pharma model may have changed, but

companies are keeping their blockbusters.

16

NEWS & ANALYSIS

Washington Report

12 Transparency Troubles for PharmaJill Wechsler, Washington Correspondent

INSIGHTS

From the Editor

10 Payers: Late for the Party?William Looney, Editor-in-Chief

Back Page

66 Top Medical Innovations for 2014Ben Comer, Senior Editor

On The Cover: Tilton Widro

Country Report: Taiwan

42 Preparing for TakeoffFocus Reports, Sponsored Supplement

The past three years have been some of the most eventful in memory for Taiwan’s life sciences industry.

At this year’s Bio Taiwan exhibition, the annual conference that invites the international life sciences

community to the island, the excitement was palpable. Foreign companies turned out in record numbers

to a keynote address from President Ma Ying-Jeou, who acknowledged that Taiwan was a latecomer

to the sector, but nonetheless had the capability and will to compete. Buoyed by a successful wave of

f nancing, good product strategy, and increasing international penetration, the industry seems conf dent.

PHARMACEUTICAL EXECUTIVE VOLUME 33, NUMBER 11 (Print ISSN 0279-6570, Digital ISSN: 2150-735X) is published monthly by Advanstar Communications Inc., 131 W. First St., Duluth, MN 55802-2065. Subscription rates: $70 (1 year), $125 (2 years) in the United States and Possessions; $90 (1 year), $145 (2 years) in Canada and Mexico; $135 (1 year), $249 (2 years) in all other countries. Price includes air-expedited service. Single copies (prepaid only): $7 in the United States, $9 in all other countries. Back issues, if available, are $20 for the United States and Possessions, $25 for all other countries. Include $6.50 per order plus $2 per additional copy for US postage and handling. If shipping outside the United States, include an additional $10 per order plus $3 per additional copy. Periodicals postage paid at Duluth, MN 55806 and additional mailing off ces. POSTMASTER: Please send address changes to PHARMACEUTICAL EXECUTIVE, PO Box 6180, Duluth, MN 55806-6180. Canadian G.S.T. Number: r-12421 3133rt001, Publications mail agreements NO. 40612608. Return Undeliverable Canadian Addresses to: IMEX Global Solutions, P. O. Box 25542, London, ON N6C 6B2, Canada. Printed in the USA.


this month on PharmExec.com

Packaging and labeling authentication and

tamper evidence

77%

Social media and improved consumer education

9%

Increased regulation and enforcement

5%

Unique drug-product design or authentication printed directly

on a solid-dosage product

9%

Top Stories Online

Gov’t Shutdown Halts FDA SubmissionsBlog PostBen Comerbit.ly/GzxSOY

Field Force Evolution: Adapting to Thrive in a New Ecosystem October Issue onlineBen Comerbit.ly/19PLHFj

Pharm Exec Industry Audit SlideshowBlog PostJulian Uptonbit.ly/1609orr

Accept It, Wikipedia is a Public Health Issue. Now Let’s Fix It.Blog PostBeth Bengston bit.ly/19kAOJm

Readers Weigh InWhy would any doctor in his right mind take

information from Wikipedia and use it as a source

for medical advice? It is the source of the

information on Wikipedia, not Wikipedia itself,

that should be used as the basis for supporting

any facts.

Michael Wood, 10/15/13 “Accept It, Wikipedia is a Public Health Issue”

bit.ly/19kAOJm

The total costs are higher than anyone ever

imagined—and they keep growing. But those are the

direct costs [of compliance]; the indirect ones are

inestimable as the unintended (or perhaps intended)

consequences of all this have resulted in a chilling

effect on otherwise perfectly legal and desirable

activities that are essential to the advancement of

medicine and health.

David Davidovic, 10/17/13“Putting a Price Tag on Compliance: Cheap Change or Big Bucks?’”

bit.ly/1gL70Ji

From a PBM’s perspective, there is a distinct trade-off

between broader Rx choice and lower costs. As I’ve

noted in my coverage, PBMs are reducing choice in

therapeutic categories with high levels of

interchangeability.

Adam J. Fein, 10/22/13 “The Rx Industry, PBMs, and Obamacare”

bit.ly/1a4hDlH

Coming soon toPharmExec.com

2014 Industry Forecast

Pharm Exec’s Editor-in-Chief William Looney considers the external and internal forces guiding pharma next year.

Keep in Touch!Scan here with your

smartphone to sign up for

weekly newsletters

Data Point

Q: Which tools are having

the most signif cant effect

in thwarting counterfeit drugs?

Poll data courtesy of online Pharm Exec readers

between Sept 22, 2013 and Oct 16, 2013

12TH Annual Pharmaceutical Industry Audit

Join The Conversation!

@PharmExecutive

Facebook.com/PharmExec

http://linkd.in/PharmExecMag

Most-read stories online:

September 25, 2013, to October 24, 2013


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From the Editor10


Pharm ExEc’s two kEy FEaturEs this month illustrate the strategic contradiction facing today’s industry. On the one hand, our annual survey of R&D pipeline prospects reveals an open well of potential from the scientifc discoveries associated with the map-ping of the human genome. That was nearly a decade ago, and its legacy is now bearing fruit, in the form of a more precise targeting of trials and treatments that promise to save more lives, at lower cost. The larger meaning here is that the case for the blockbuster product—at least in clinical terms—is due for a revival.

But when we raise the other hand, we see a blank wall of indifference to this bounty. After a seven year hiatus, Pharm

Exec returns this month with a roundtable panel of experts to examine the state of market access in medicines—a state that our participants defne as one where that market is being managed to slow or even reduce access, particularly for new originator products that once were referenced as innovative. Now they are reference priced—of-ten against the oldest generic product in its class.

In most countries today, there is little or no premium allowed for innovation. Germany, the world’s fourth largest economy and surely one of the richest, is subjecting companies to a bewilder-ingly complex new drug beneft assessment pro-cess. In the case of life-saving oncology products, this requires delivering as primary endpoints evidence of progression free survival projected toward overall survival—a virtually impossible measurement for any new cancer product. Fail-ure to meet this hurdle risks a product being priced within fxed reference price classes, where older generics are the main comparator.

This is unfortunate because, as senior editor Ben Comer notes in the pipeline profle, all this new science carries a potentially large beneft on the cost side. It speeds up the development pro-cess. More precise molecular targeting enhances the selection criteria for clinical trials and thus provides more accuracy in test results. Companies are also faring better in focusing R&D spend-ing around areas of unmet medical need. For example, our survey tags a slow but steady resur-gence of Big Pharma interest in next-generation antibiotics to treat hospital borne infections that kill 23,000 people each year in the United States alone. Controlling antibiotic resistance with a single effective new drug could produce billions in savings on costly acute care services.

Hepatitis C is another silent consumer of healthcare dollars, with Gilead’s sofosbuvir emerg-ing as 2014’s biggest new launch. But payers are likely to sound a skeptical note given the potential cost exposures—this is a ticket punched at rare disease prices—as well as the fact that the drug’s constituency includes many from society’s mar-

ginalized elements, who are unfamiliar with the concept of the “empowered patient.” It will be in-teresting to see if the hype around sofosbuvir ends up confrming an unpleasant truth about even the best planned product launches: the pace of market uptake is today measured in years, not months.

Advances are also emerging to add value to patients, even in the most crowded therapeutic segments. Despite all the options that exist in the anti-hypertensive class, thousands of patients are still non-responsive to conventional treat-ment and face heart disease, kidney failure, and an early death. In yet another indication of how technology is building a stronger treatment con-vergence between drugs and devices, Medtronic has developed a new last-ditch invasive proce-dure called renal denervation that can reverse the decline. It underscores the point that, for sick patients, no treatment arsenal for their condition can ever be considered too big.

Of course, none of these advances matter if they don’t get the opportunity to prove their clinical value to patients. Our panel on market access offered a blunt assessment of the indus-try’s state of play with payers, contending that in most countries the drug assessment process is opaque and overtly politicized; that good evi-dence rarely, if ever, moves the needle on access or reimbursement decisions; and the invitation to dialogue early in the development cycle is not grounded in commitments that extend to the fnal stage of marketing authorization and reimbursement. Unfortunately, the process mo-tivates both sides to lower their tolerance for risk—even though the best clinical innovations require more up front risk, not less.

It is also apparent from the discussion that those who drive the market access function are often isolated from their company’s top decision-makers, many of whom have had virtually no exposure to the messy work that goes into ana-lyzing and understanding that “payer perspec-tive.” Ultimately, the market access function is all about education—and the need to enlighten extends not just to the payer, but to the “c suite” as well. Remember: It’s the balm of consensus that perfumes the pipeline.

Payers: Late for the Party?

william LooneyEditor-in-Chief

[email protected]

Follow Bill on Twitter:

@BillPharmExec


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• Educating patients on the clinical

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1212

PHARMACEUTICAL EXECUTIVE

Washington Report

It seems like open season on

the pharmaceutical industry.

Academics and consumer

activists charge pharma com-

panies with hiding clinical trial

information on medical product

safety, fueling the campaign to

expand public access to conf-

dential research information.

The federal government’s “Sun-

shine” program for disclosing

fnancial ties between industry

and physicians refects a lengthy

campaign to curb marketing

tactics perceived to boost inap-

propriate prescribing.

Media reports regularly at-

tack high drug prices, both for

life-saving specialty drugs and

for widely used treatments such

as asthma inhalers. And recent

disclosures raise questions about

too-close ties between pharma

companies and Food and Drug

Administration offcials.

The well-known industry re-

sponse to these and other charg-

es is that prescription drugs

account for only 10 percent of

US spending on healthcare and

that appropriate drug use saves

money by keeping people out of

hospitals and operating rooms.

Developing new drugs, more-

over, is enormously expensive

and risky, warranting strong

patent protection and a healthy

return on investment.

Such arguments, sadly, fail to

generate public confdence in the

biomedical research enterprise.

Public surveys give pharma com-

panies poor ratings, citing high

prices, low integrity, and failure

to disclose unfavorable safety

information. There’s a clamor

for valid data on drug effective-

ness and comparative prices, and

high hopes that health reform

initiatives will make such infor-

mation more transparent.

Data disclosure

One clear sign of the times is

the success of the campaign for

broader access to proprietary

clinical data. The conversation

already has shifted from data

“disclosure” to data “sharing,” as

sponsors seek strategies to retain

some control over proprietary

information in the face of the Eu-

ropean Medicines Agency (EMA)

proposal to release patient-level

clinical reports submitted in

regulatory dossiers beginning

January 2014. FDA is weighing

comments on its June 2013 query

about making available masked

and de-identifed data submitted

in applications. And an Institute

of Medicine committee began

deliberations last month on “Re-

sponsible Sharing of Clinical

Trial Data,” with the intent of

issuing guiding principles and a

framework for such initiatives.

An interim report is due in Janu-

ary, and a fnal report in De-

cember 2014 that will assess the

benefts and risks of data sharing

and opportunities for responsible

disclosure.

Pharma companies in the

United States and Europe are

pressing hard to modify or post-

pone the EMA data release plan

so that third-party programs and

voluntary initiatives will gain

time to demonstrate that they

can enhance data transparency

while protecting patients and the

research enterprise. There is gen-

eral agreement that clinical data

sharing can be benefcial in im-

proving the effciency of clinical

trials, validating regulatory deci-

sions, and increasing public con-

fdence in clinical research. But

sponsors are leery about who

controls access to data, the pur-

poses of disclosure, and the ad-

equacy of safeguards to protect

all parties.

A related fear is that releasing

full regulatory dossiers could

expose proprietary formulation

and manufacturing data and

information on product devel-

opment and future indications.

And public access to clinical

data could undermine product

exclusivity in countries such as

Australia, Brazil, China, and

Korea that link exclusivity to

data confdentiality, explained

Pfzer senior vice president Jus-

tin McCarthy at a Pharmaceuti-

cal Research and Manufacturers

Transparency Troubles for PharmaHigh prices, murky fnancial relations, and a reluctance to

disclose clinical data undermine public trust in industry and

the research enterprise.

Jill Wechsler is Pharm Exec’s Washington correspondent. She can be reached at

[email protected].

Public surveys give pharma companies poor ratings, citing high prices, low integrity, and failure to disclose unfavorable safety information.


13

NOVEMBER 2013 www.PharmExec.com

Washington Report

of America (PhRMA) briefng in

October. He warned that if the

EMA proceeds with its plan for

full release of regulatory submis-

sions, companies may rethink

their development and registra-

tion strategies, possibly by de-

laying submissions for approval

in Europe or limiting confden-

tial commercial information in

dossiers.

To head off the EMA pro-

posal, sponsors are rolling out

voluntary data sharing initia-

tives, as outlined in a “prin-

ciples” document issued in July

by PhRMA and the European

Federation of Pharmaceutical

Industries and Associations

(EFPIA). Companies are form-

ing independent scientifc re-

view boards to evaluate outside

data requests and procedures

to protect patient privacy. But

there’s a lot of skepticism about

how comprehensive and impar-

tial these programs will be.

Paying for access

Data sharing is integral to mul-

tiple FDA-industry partnerships

formed to evaluate and validate

innovative research methods to

accelerate testing of new drugs

and medical products. Yet such

initiatives frequently draw fre as

opportunities for industry to in-

fuence regulatory decision-mak-

ing. FDA’s increased reliance on

user fees, as well as its interest in

accelerating the development and

approval of breakthrough drugs,

prompt critics to question the ob-

jectivity and completeness of the

agency’s evaluation of new, risky

medicines.

FDA is examining whether

its policies for managing public-

private partnerships are suff-

ciently transparent and ethical

following a report that industry

“paid to play” in collaborative

efforts to improve the develop-

ment and testing of new opioids

and other pain medications. A

headlined article in the Wash-

ington Post (Oct. 10, 2013)

claimed that to participate,

pharma companies had to pay

a $25,000 sponsor fee to the

meeting organizers. Although

the cited activities are based on

10-year-old e-mail communica-

tions and have been superseded

by other FDA initiatives and

policies, Congress may investi-

gate the case, partly in light of

strong public concerns about

the marketing and distribution

of illegal opioids.

Trust critical

Low credibility with the pub-

lic and the medical community

makes it diffcult for pharma

companies to make their case on

these thorny policy issues. The

current level of trust in industry-

funded research and study re-

sults “is extremely low,” observe

Lisa Egbuonu-David, director

of ROI-Squared, and Tanisha

Carino, senior vice president at

Avalere Health, in a commen-

tary published by Health Affairs

in September. This “trust co-

nundrum,” they note, makes it

more challenging for sponsors

to produce credible evidence of

the value of new drugs. And such

evidence is key to justifying cov-

erage by payers and pharmacy

beneft managers, particularly for

costly but critical specialty drugs.

The authors emphasize that

it is important to restore trust

in industry-sponsored research

and to develop innovative mod-

els for obtaining evidence of

real-world effectiveness, in a

world with increased transpar-

ency in the cost of hospital pro-

cedures, medical care, and out-

of-pocket spending on medical

products that makes consumers

more conscious of perceived ex-

cessive charges for medical care.

Pharmaceutical companies need

to conduct real-world studies on

products and be able to discuss

results with key decision-mak-

ers. A comprehensive, consistent

approach to measuring the clini-

cal value of medical products

is central to a framework that

encourages industry funding of

scientifcally valid research for

all stakeholders.

Debating Tax DeductionsThe overhaul of the US corporate tax structure is still a top priority

for the business community, which seeks to lower the current 37

percent rate to enhance the global competitiveness of US compa-

nies. However, there continues to be debate over how low to go.

The Coalition for Healthcare Communications and the Advertising

Coalition fear that pushing corporate taxes down to the low 20s

will lead to curbs on tax deductions for advertising and promo-

tion. All marketing costs now are deductible, but proposals have

surfaced over the years to limit the break for consumer advertis-

ing, particularly expenditures on prescription drug ads. Without

the deduction, marketing costs increase by the tax rate, i.e., by 20

or 30 percent, explains CHC director John Kamp. Some pharma

companies are staying neutral on the issue, though, saving their

ammunition for policies favorable to intellectual property protec-

tion and tax treatment of foreign revenues.


SPECIAL SPONSORED SECTION

Front Center&Aligning Distribution Strategies with New Reimbursement and Market Landscapes

As the Affordable Care Act contin-

ues to unfold, bringing 27 million

new patients into the healthcare

system, the reimbursement landscape is

rapidly shifting. In addition, the specialty

market, particularly oncology, is under-

going a series of important changes.

To understand how new and criti-

cally important trends impact the com-

mercial success of specialty pharma-

ceuticals, McKesson Specialty Health

conducted a workshop during CBI’s

Bio/Pharmaceutical Retail Strategy

Summit on September 19, 2013.

McKesson Specialty Health’s work-

shop, entitled “Navigate the Reimburse-

ment Landscape and Align your Distri-

bution Strategies,” focused on the state

of the specialty pharmaceutical industry

for the next fve years, and the need to

create fexible distribution strategies to

take advantage of changing trends in re-

imbursement and the overall market.

The site of delivery of oncology care

has undergone many changes over the

past few years with many practices join-

ing large networks or hospital groups,

largely driven by changes in reimburse-

ment and legislation. This is happening

at a time when oncology is experiencing

other important transformations such as

the growth of targeted therapies requir-

ing biomarker testing, the rise of oral on-

colytics, the introduction of biosimilars

and cancer vaccines, and the growing

treatment choices and complexity in any

given cancer type.

Pharmaceutical and biotech compa-

nies need to be familiar with these chang-

es while creating novel distribution strat-

egies to enable the delivery of the right

product through the right channel at the

right time and at the right price.

An Eye To The Future

Kicking off the workshop was a review

of the results from a survey distributed to

the registered attendees prior to the work-

shop. The survey asked the respondents

what they thought the specialty market

would look like by 2018. Most believed

it would be “slightly different,” according

to presenter Anne Hoang, senior man-

ager of Corporate Strategy & Business at

McKesson. CBI respondents believed spe-

cialty pharmacies and patients will gain

infuence on driving brand volume. Con-

sequently, respondents expected a shift in

brand spend with more dollars allocated

to supporting and interacting with pa-

tients and pharmacists. Payers were also

expected to see an increase in spend.

“As we see a blurring of the lines be-

tween healthcare stakeholders, we often

ask our manufacturer customers: are

you doing enough to explore collabora-

tion with payers and employers?” Hoang

asked. “With the complexity of pay-

ments, many are starting to implement

risk sharing schemes; if you are not at

least experimenting today, it will be dif-

fcult to start that process in a few years.”

The specialty market’s future includes

familiar challenges of high operating

costs as well as the complexity of its

therapies. And now there’s the Afford-

able Care Act, changes in regulations

that include sequestration and 340(b),

as well as the rise of precision medicine

and changing reimbursement incentives -

all of which will have a direct effect on

where, how and by whom products are

acquired and used. When asked about

their current and expected shifts in dis-

tribution strategies, the survey respon-

dents expected a shift towards exclusive,

limited and direct distribution.

There is good news on the commer-

cial side for the specialty market: the

market is projected to grow from $92 bil-

lion in 2013 to $140 billion in 2017, said

Heather Morel, vice president and gener-

al manager, Informatics, Access & Safe-

ty Services, McKesson Specialty Health,

and second presenter at the workshop. By

2017, specialty will account for 40 to 45

percent of the total pharma market (in $

sales), and oncology alone will account

for 30 percent of the specialty market.

Within the oncology market, oral

products’ share of the market is expect-

ed to nearly double, from 22 percent in

2013, to 43 percent in 2018.

“While an important portion of the

market will be occupied by orals, there

is still going to be a signifcant portion

of the market that will be buy-and-bill,”

Morel predicted. “That will still require

getting product to the physician’s offce

so it can be administered.”

The Changing Face of Practice

Changes within the oncology sites of

care began years ago. “Over the past fve

years, many community oncology clin-

ics closed their doors, merged or joined

a network or hospital program,” said

Devon Dickey, vice president, Business

Development, Supply Chain Services,

McKesson Specialty Health, and the

third workshop presenter. Those changes

were largely driven by economic pres-

sures on practices facing increasing costs

ES347253_PE1113_014.pgs 10.30.2013 18:45 ADV blackcyan

SPECIAL SPONSORED SECTION

and decreasing reimbursement, as well

as economic incentives such as 340(b)

favoring hospitals.

As pharmaceutical and biotech com-

panies adapt their strategies to shifting

sites of care, they must also think ahead

and anticipate future changes. In a re-

port released in August 2013, the Moran

Company found that costs of outpatient

cancer care were 47% higher for Medi-

care benefciaries in the hospital outpa-

tient setting compared to those treated

in community practices. In light of such

results, pharmaceutical executives must

ask themselves if the current trend to-

wards patient care in a hospital outpa-

tient setting is sustainable. They must

also anticipate future trends.

The rise of oral oncolytics greatly

impacts community oncology practices

in several ways. While some practices

dispense oral medications, others rely

on pharmacy channels. Depending on

the way practices provide their patients

with access to oral therapies, methods of

compliance and monitoring may vary.

Practices must work in tandem with

other stakeholders such as pharmacists

and support services to educate, monitor

and help patients adhere to their treat-

ment, which often includes several medi-

cations. Practices, like pharmaceutical

and biotech companies, must adapt to

varying distribution channels and fnd

ways to ensure appropriate therapy and

provide compliance support to patients.

In addition, the rise of targeted

cancer therapies and immunotherapies

selected based on a patient’s genetics,

is expected to account for more than

60 percent of cancer therapeutics sales

by 2017 [Data Monitor, 2010]. More

than half of all cancer treatments in

early stage development rely on bio-

markers for patient selection. The use

of biomarkers may allow physicians to

predict a likely or unlikely response to

a specifc treatment in a matter of days,

rather than having to wait months.

As hopeful as that sounds, the future

of biomarkers and molecular testing is

cloudy. Little agreement exists on which

biomarkers are important, or what test-

ing methodologies are most effective –

both of which leave payers skeptical.

“If payers can’t identify what they

are paying for, it is much more diffcult

to get it paid,” Morel said. “McKes-

son Specialty Health is taking an ac-

tive hand in developing reimbursement

codes and working to codify which

molecular tests are being run. We are

developing standards around the kinds

of tests that should be done, such as

standard molecular panels around co-

lon, breast and other tumors. Payers

are more likely to pay once shown that

molecular testing is being used appro-

priately and productively.”

Fundamental changes to the health-

care landscape

The Affordable Care Act and its infux

of new patients into the healthcare sys-

tem, along with government-sponsored

plans and exchanges, add more stake-

holders and important infuencers to

the mix. Market consolidation means

fewer payers with a wider reach. How-

ever, with the advent of lower cost

health plans and the exchanges, the

burden of payment is on the patients,

which is likely to have large complica-

tions for expensive specialty care drugs.

According to an analysis by McKes-

son Specialty Health, sequestration is

costing the typical oncology practice

$30,000 per month in revenue. Most

of the loss is concentrated in 15 oncol-

ogy drugs. Providers are still providing

these drugs, but they are feeling the

fnancial pressure as well as increased

competition from hospitals, advantaged

through the benefts of drug acquisition

savings from participation in the 340(b)

program.

“Pharmaceutical companies need

real-time and actionable data on

reimbursement,” Morel said. “You must

have the ability to adjust strategies. The

reimbursement landscape shifts. While

it is diffcult to be nimble, deeply un-

derstanding what is happening to your

product and how it is fowing in the

marketplace real-time is essential.”

Adjusting Distribution Strategies

“Pharmaceutical and Biotech compa-

nies should consider a variety of factors

when evaluating distribution strate-

gies,” Dickey said. Four trends have

evolved over the past fve years: regu-

latory implications include the impact

of ACA, government policy decisions,

drug approvals and potential restric-

tions such as REMS. Changes in site

of care (hospital vs. clinic) also have a

direct impact on distribution channel

decisions. Payer decisions on reimburse-

ment affect utilization and distribution,

as does the evolution of patient popu-

lations as orphan launches turn into

products with multiple indications.

“As the population ages and survival

rates improve, cancer is becoming a

chronic disease that requires long term

treatment,” she said. “Physician pay-

ments for cancer care have decreased

14.5 percent in the past six years while

hospital payments have risen by 19.5

percent. The question is, are these pay-

ment advantages and changes in site of

care sustainable? So when you’re look-

ing at your distribution strategy—what

you thought fve years ago may no lon-

ger be viable. You need to look at what

is going on today and, more important-

ly, anticipate the next fve years and the

impact of the market changes on your

product and disease state”.

Dickey summarized by saying that

one needs to be smart in the present

to be proftable in the future. “Decide

where a product should and is likely to

be distributed in the future and then de-

sign your distribution channel with that

fexibility in mind.”

brought

to you by

ES347254_PE1113_015.pgs 10.30.2013 18:45 ADV blackmagentacyan

16


Pipeline Report

2014 PIPELINE REPORT:

The Sprintto ValueT

his year’s pipeline report is a little different from reports in previous years

in that it takes a closer look at fewerer categories -- the ones where the

biggest things are happening: cancer, heart failure, obesity and diabetes,

and hepatitis C, in addition to novel antibiotics, not a goldmine by any stretch,

but an absolutely critical need. The last category, Outsiders, Sleepers, and Early

Stagers, describes products that don’t f t neatly into this year’s setup, but are

nevertheless worthy of mention. In October, a study in Nature Reviews Drug Dis-

covery took pharma analysts to task for getting the numbers wrong—a lot—but

we’ve endeavored to corroborate the forecasts, both bullish and bearish, and are

conf dent that this year’s report spotlights real value, for patients and bottom-

lines. The pharma business model might have changed, but a lot of companies

have managed to hold on to their blockbusters.

Image: Tilton Widro

Genome-guided tumor diagnostics

and treatments with the power to

manipulate a patient’s immune response

have the potential to impact cancer

outcomes in dramatic fashion. At the

Cleveland Clinic’s recent Medical

Innovations Summit (see Pharm Exec’s

Back Page this month), Eric Klein, chair

at the Clinic’s Glickman Urological &

Kidney Institute, championed the work

of companies like Genomic Health

Inc.—and its recently CLIA-approved

OncoType Dx prostate cancer assay—as

critical to the future of cancer research

and drug development. The genotype of

a tumor may prove to be more useful

than the genotype of the patient in

which it resides. If identifying a “driver

mutation” in metastatic cancers turns

out to work in practice, it won’t matter

where a tumor originated in the body.

Consequently, “drug development will

be more rapid as a result,” says Klein.

Designing clinical trials around a

specif c tumor mutation instead of a

patient’s cancer type probably won’t

start happening next year. In the short-

er term, immunotherapies have main-

tained their buzz among researchers,

with a spotlight on the role of Pro-

Cancer: Multiple Targets

grammed Death-1 (PD1) as a way to

cut off one important safe harbor for

cancer cells looking to protect them-

selves from warring T cells. In addition

to Bristol-Myers Squibb’s nivolumab—

which received FDA Fast Track desig-

nations in malignant melanoma, renal

cell carcinoma and non-small cell lung

cancer last April, Stephanie Hawthorne,

director, clinical, and scientif c assess-

ment at Kantar Health, points to Mer-

ck’s lambrolizumab and Roche’s MPDL

3280A as key players in the PD1 game.

Compared with nivolumab, Roche’s

MPDL 3280A (which targets the PD1

ligand—PD-L1—as opposed to the re-

ceptor) may have a better safety prof le,

while Merck’s lambrolizumab may beat

nivolumab on eff cacy, although it’s too

early for excessive conf dence on that

prediction, says Hawthorne.

Lambrolizumab also received FDA’s

Breakthrough Therapy designation last

April, and clinical trials are initially fo-

cused on melanoma and non-small cell

lung cancer. Nivolumab is targeting

melanoma and lung cancer, with the ad-

dition of renal cell carcinoma in Phase

III. Merck announced plans to study

lambrolizumab in other haematolgical

malignancies, and has early trials run-

ning in triple negative breast cancer,

colorectal cancer, bladder cancer, and

other solid tumor cancers. Thompson

Reuters’ Cortellis database puts sales of

lambrolizumab at roughly $845 million

by 2018; Decision Resources’ Efua Edu-

sei made a similar prediction, around

$800 million by 2019. “Merck would

def nitely have a better commercial op-

portunity if Yervoy wasn’t already on

the market,” notes Edusea, adding that

nivolumab could eventually restrict sales

of lambrolizumab. With Zalboraf also

looming large in the melanoma space,

the initial label, launch date, and time-

line for additional indications on both

drugs could open or block the entrance

to blockbuster fame and revenues.

Roche is taking a different approach by

shifting melanoma to the backburner;

instead, MPDL 3280A is targeting the

By Ben Comer, Senior Editor


17


Pipeline Report

biomarker population in lung cancer as a lead

indication. Merck followed suit with lambro-

lizumab, says Hawthorne. Thomson Reuters

puts nivolumab sales at just over $2 billion by

2018; Decision Resources is more conserva-

tive on nivolumab, with sales just crossing the

blockbuster mark by 2019.

In some ways, J&J/Pharmacyclics’ ibrutinib

takes a similar approach to treating cancer by

inhibiting a normally protective pathway for

infection-fghting B-cells. Like cancer cells

hiding from T cell lymphocytes after cor-

rupting the PD1 receptor pathway, the B-cell

receptor pathway is corrupted when B-cells

turn malignant. Ibrutinib inhibits the Bruton

tyrosine kinase (BTK), which regulates B-cell

survival. A frst in class oral BTK inhibitor

and an FDA Breakthrough Therapy desig-

nee, ibrutinib has fled with FDA for chronic

lymphocytic leukemia (an orphan indication),

and mantle cell lymphoma, also a rare disease.

Achieving that rare double win—improved

survival and reduced toxicity compared with

chemotherapy—plus a fast track to market in

the United States has prompted analysts to go

big on ibrutinib. Estimates range from $3.5

(Thomson Reuters Cortellis) to $6 billion

(Credit Suisse) by 2020.

In addition to ibrutinib are Gilead’s idelal-

isib, a phosphoinositide-3 kinase (PI3K) inhibi-

tor, and Rigel Pharmaceuticals’ fostamatinib,

a spleen tyrosine kinase (SYK) inhibitor. Both

products, like ibrutinib, affect the B-cell path-

way. Gilead fled idelalisib in the United States

for a non-Hodgkin’s lymphoma indication, and

in October Rigel announced an end-of-Phase II

meeting with FDA to discuss fostamatinib for

immune thrombocytopenic purpura, or ITP

(AstraZeneca ended its partnership with Rigel

after the drug failed as a treatment for rheuma-

toid arthritis). Thomson Reuters is bullish on

idelalisib, predicting sales of $3.8 billion, just

short of projected ibrutinib sales. Hawthorne

gives “a slight nod” to ibrutinib due to effcacy

and safety; additionally, ibrutinib is pursuing

a frst-line indication in addition to second-

line, whereas idelalisib is not currently in the

clinic for a front-line indication. Roche/Biogen

Idec’s obinutuzumab, a CD20 inhibitor, is also

a key product in this area; tested as a mono-

therapy and in combination with chemo for

chronic lymphcytic leukemia, obinutuzumab

also plays on the B-cell pathway, and also re-

ceived FDA’s coveted Breakthrough Therapy

designation. Obinutuzumab was also granted

priority review, and given a PDUFA date of

December 20, 2013. Analysts are slightly less

jazzed about obinutuzumab, at least compared

with ibrutinib and idelalisib; forecasts from

EvaluatePharma, Credit Suisse, and Thomson

Reuters ranged from $400 million to around

$750 million by 2019.

In breast cancer, palbociclib, a clinical can-

didate emerging from a research collabora-

tion between Warner-Lambert (now Pfzer)

and Onyx (now a subsidiary of Amgen),

dazzled attendees of the San Antonio Breast

Cancer Conference in 2012 with the results

of a randomized Phase II trial. “It quadrupled

progression-free survival,” says Hawthorne.

Currently in Phase III, palbociclib is being

tested in combination with letrozole (brand

name Femara, an aromatase inhibitor), and

separately in combination with AstraZen-

eca’s Faslodex (fulvestrant), to prove supe-

riority over Faslodex alone. Edusei says sev-

eral generic products in the hormone receptor

positive (HR+) space, including letrozole, are

available on the cheap, but palbociclib seems

to represent a signifcant improvement over

those products. Palbociclib targets metastic

breast cancer in HR+ patients—more specif-

cally, estrogen receptor positive (ER+)—that

are also HER2 negative. HER2 positive breast

cancer gets a lot of press, because of many

new and successful drug targeting those pa-

tients, but hormone receptor positive patients

are a much larger breast cancer population:

roughly 75 percent of all breast cancer inci-

dence is ER positive, according to the Univer-

sity of Maryland Medical Center. Thomson

Reuters predicts blockbuster sales for palbo-

ciclib; Edusei and Decision Resources puts the

number at $750 million by 2019.

Unfortunately, Eli Lilly had to can a 1,144

patient multinational Phase III study on ramu-

cirumab, a VEGF antiangiogenic monoclonal

antibody for breast cancer in September, but

there’s a silver lining. Ramucirumab received

an FDA Fast Track designation for gastric can-

cer, and a Priority Review in October. Gastric

cancer is a “high unmet need…if you can pro-

long survival, I think [Lilly] has a very good

option for those patients,” says Hawthorne.

Drug Name: nivolumab

Drugmaker: BmS

PhaSe: III

LauNch Date: 2015

Peak SaLeS: Blockbuster

Drug Name: lambrolizumab

Drugmaker: merck

PhaSe: III

LauNch Date: 2015

Peak SaLeS: minibuster

Drug Name: mPDL 3280a

Drugmaker: roche

PhaSe: II

LauNch Date: N/a

Peak SaLeS: N/a

Drug Name: ibrutinib

Drugmaker: J&J/Pharmacyclics

PhaSe: registered

LauNch Date: 2013


Drug Name: idelalisib

Drugmaker: gilead

PhaSe: registered

LauNch Date: 2014


Drug Name: fostamatinib

Drugmaker: rigel Pharma

PhaSe: II

LauNch Date: N/a

Peak SaLeS: N/a

Drug Name: obinutuzumab

Drugmaker: roche/BI

PhaSe: registered

LauNch Date: 2013


Drug Name: palbociclib

Drugmaker: Pfzer/amgen

PhaSe: III

LauNch Date: N/a



18


Pipeline Report

Interestingly, ramucirumab targets the VEGF

receptor, whereas Avastin targets the ligand.

Avastin failed in Phase III trials for gastric can-

cer, which raises the question: is there a true

mechanistic difference in targeting the recep-

tor versus the ligand? If so, “these angiogenics

will start to separate themselves in terms of

where they might be active,” says Hawthorne.

Sanof/Regeneron haven’t announced plans

to test Zaltrap in gastric cancer, but Clinical-

Trial.gov shows a Phase II study of Zaltrap for

esophagogastric cancer, a malignancy in the

throat as opposed to the stomach. Gastric can-

cer incidence in Japan has risen sharply in re-

cent years; Decision Resources says the global

gastric cancer market will reach $2.3 billion

by 2021, with 44 percent of those revenues

coming from Japan. Thomson Reuters pegs

ramucirumab sales at $725 million by 2018,

Leerking Swann says $1.3 billion by 2020.

Drug Name: ramucirumab

Drugmaker: eli Lilly

PhaSe: registered

LauNch Date: 2014


Patients entering emergency rooms in the

United States are more likely to be there

as a result of acute heart failure than for any

other reason. In the last 25 years, heart failure

incidence has increased by about 175 percent,

and what’s worse is that drug development

in this high need area has been abysmal,

says Martin Sullivan, executive medical

director of cardiovascular medicine at INC

Research, and a board certifed internist and

cardiologist. Heart failure has been an “arena

of therapeutic futility…there have been

probably 20 candidate compounds tested

over the last 15 years, and we’re zero for 20

on these compounds,” says Sullivan.

That could change with Novartis’s serelaxin,

a peptide hormone currently under review in

the United States and Europe. FDA granted Fast

Track status in 2009, and Breakthrough Ther-

apy status last summer; Sullivan says serelaxin

could be a “home run” for heart failure. Citing

the RELAX-AHF Phase III data, Sullivan says

serelaxin “had a reduction in dyspnea, a small

improvement in [hospital] length of stay, and

most importantly, a signifcant reduction in re-

hospitalizations and death in 90 days.” Serelax-

in is a recombinant form of human relaxin-2, a

naturally occurring hormone; pregnant women

release relaxin during labor, which causes liga-

ments to relax and become more fexible to

facilitate childbirth. Using a hormonal treat-

ment like serelaxin for heart failure is interest-

ing because “it has so many different effects on

so many different pathways,” says Sullivan. “It

effects infammation, fbrosis, cell cyclin, it’s a

vasodilator, it does all kinds of things.”

It could also make Novartis the proud

parents of a new blockbuster for acute heart

failure. Thomson Reuters predicts sales of

roughly $1.2 billion by 2019, and serelaxin

could receive European approval by this year’s

end. Seamus Fernandez, managing director of

major and specialty pharmaceuticals at Leer-

ink Swann, wrote in a recent analyst note that

serelaxin’s Breakthrough Therapy status did

not confer an expedited FDA review of the

drug, according to Novartis management, but

the company expects a US approval in late

2014. Leerink Swann is predicting $1.3 bil-

lion in sales for serelaxin by 2020.

Sullivan also points to Acorda Thera-

peutics GGF2 candidate—a naturally oc-

curring neuregulin or growth factor—and

the results of an early stage trial, which im-

proved some patients’ ejection fraction by

nine percent. Ejection fraction is a measure

of how effectively the heart pumps blood.

Like serelaxin, GGF2 is a peptide prod-

uct with multifaceted effects in the body,

including “cell cyclin, cell death, CNS ef-

fects…and it effects cell programming a

little bit, potentially in vivo,” says Sullivan.

After a 24-hour infusion, patients given

a higher dosage of GGF2 showed a heart

function improvement at 28 days and 90

days. Acorda said it has discussed a new

trial protocol with FDA for 2013, presum-

ably a Phase II study, but ClinicalTrials.gov

shows only a small Phase Ib double-blind

study testing a single GGF2 infusion for

safety and tolerability. This product may

be further off, but Sullivan says if the data

holds through Phase III, “that would be a

major advance in heart failure.”

Incidentally, the Chinese company Zensun

is also testing a neuregulin drug candidate

Heart Failure: Possible Success

Drug Name: serelaxin

Drugmaker: Novartis

PhaSe: III

LauNch Date: 2014


Drug Name: ggF2

Drugmaker: acorda

PhaSe: Ib

LauNch Date: N/a

Peak SaLeS: N/a

Drug Name: Neucardin

Drugmaker: Zensun

PhaSe: II

LauNch Date: N/a

Peak SaLeS: N/a


19


Pipeline Report

called Neucardin for chronic

heart failure. A Phase II trial has

been completed in the United

States, and drug has been fled

already in China. The company

is currently enrolling a Phase III

trials in the United States, but

Phase II data was less impres-

sive than Acorda’s. However, a

Zensun press release states that

678 people with chronic heart

failure have been given Neucar-

din, and Phase II data demon-

strated a “three to fve percent

placebo corrected improvement

in left ventricular ejection frac-

tion.” SciClone Pharmaceuticals

will market Neucardin in China,

in a deal worth upwards of $30

million if Zensun meets its regu-

latory milestones. Forecasting

for GGf2 and Neucardin is too

Device AlertIn hypertension, Sullivan says companies are tweaking the pharmacology of existing drugs, but

there isn’t a real gamechanger on the horizon. However, a minimally invasive procedure called renal

denervation “is the real breakthrough,” says Sullivan. Medtronic Vascular is currently enrolling a

580-patient Phase III trial to test its catheter-based renal denervation system for patients. That

trial, called SYMPLICITY HTN-4, is one of several the company is conducting, including a compre-

hensive observational trial with a read-out scheduled for next October. Medtronic introduced its frst

renal denervation Simplicity catheter in 2010, but the renal denervation system is currently only

available for investigation use in the United States. However, Medtronic announced in March that

FDA and CMS would conduct a parallel review to determine approval and to make a national cover-

age determination for Medicare patients. At the end of October, Medtronic presented three-year

results from its Symplicity HTN-2 trial; the data indicated an average blood pressure reduction of

-33/-14 mm from baseline, and an overall response rate of 85 percent.

Sullivan says physicians have “dozens of patients in their practices that are literally on fve drugs,

and they walk into the offce with a blood pressure of 180/100…and those patients do terrible, they

go into renal failure, stroke, and heart failure.” Clinical trials using renal denervation in these patients

“all look really good,” says Sullivan. “A drop in systolic blood pressure by 30mm is a big advance.”

Other companies, including St. Jude Medical and Boston Scientifc are also working on renal denerva-

tion for hypertension, but Medtronic currently leads the category. A Transparency Market Research

report predicts that the renal denervation market will grow to $1.9 billion by 2021, up from $88.5 mil-

lion in 2012. Medtronic’s share of the market in 2012 was a whopping 85%, according to the report.

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PHARMACEUTICAL EXECUTIVE NOVEMBER 2013 www.PharmExec.com

Pipeline Report

speculative at this point to be meaningful, but

if any drug candidate shows it can improve

symptoms and survival in heart failure pa-

tients, the dollars will almost assuredly follow.

Last year’s pipeline covered the PCSK9

inhibitors—notably Amgen (AMG 145)

and Sanof/Regeneron’s (alirocumab) candi-

dates, both of which have important Phase

III data read-outs in 2014—but there isn’t

much new to report since last year aside

from forecasts on both drugs getting reined

in. Leerink Swann now estimates that AMG

145 won’t quite reach blockbuster status

by 2020, and Thomson Reuters scaled back

alirocumab to just under $500 million by

2019. Credit Suisse still thinks AMG 145

will reach blockbuster status by 2020, and

puts alirocumab’s sales at $865 million in

2020. During its 3Q earnings report in late

October, Pfzer announced a “major” Phase

III program for its PCSK9 inhibitor, called

bococizumab, according to an analyst note

from Fernandez at Leerink Swann. Three is

a crowd, so Pfzer tossing its hat into the

PCSK9 ring can’t be good news for Amgen

and Sanof/Regeneron.

Obesity and Diabetes: Two Birds One Stone

There’s still a lot to be said for the American

Dream (assuming it hasn’t succumbed to

heart failure), but the American Diet is not

worthy of admiration. “Other countries are

starting to live like us…and die like us,” said

Dean Ornish, president of the Preventative

Medicine Research institute, during the

Cleveland Clinic’s recent conference on

obesity and diabetes. “Weight loss can

reverse heart disease, prostate cancer, Type 2

diabetes” and other conditions, he said.

FDA has already approved two new obe-

sity drugs—Arena/Eisai’s Belviq, and Vivus’s

Qsymia—the frst FDA approvals for the

condition in over 15 years, but given the

size and extent of the health problem, not

to mention the cost, better treatments and

devices are needed. Future therapies will

attempt to target the “microbiome” or gut

fora, to change the way that food is synthe-

sized in the gastrointestinal tract. Anthony

Viscogliosi, principal at Viscogliosi Brothers,

a New York-based VC/private equity frm,

said he wants to invest in “meds that inhibit

fat syntheses…that can change the microbi-

ome to turn sugar and fat into water.”

Next-gen probiotics and nutraceuti-

cals could potentially impact the microbi-

ome—scientists have developed a trimethyl-

amine N-oxide (TMAO) assay that detects

TMAO—a microbial byproduct of intestinal

bacteria—in the blood, that is associated

with a 2.5-fold increase in stroke and heart

attack. But the microbial genome, or micro-

biome, contains about 3.3 million genes.

Compared with what we still don’t know

about the human genome, and its 23,000

genes, an active therapy for a specifc micro-

biome target probably won’t emerge in the

next couple of years. However, Steve Nissen,

the Cleveland Clinic’s department chair of

cardiovascular medicine, told conference-

goers that the TMAO biomarket “could take

off in 2014…and drugs will follow.”

In the shorter term, Orexigen Therapeu-

tics may be the most promising and lucra-

tive late-stage oral medication for the treat-

ment of obesity. In January, FDA asked for

additional cardiovascular outcomes data

and proposed a resubmission procedure for

Orexigen’s Contrave, a naltrexone/bupro-

pion combination pill, and the company ex-

pects to resubmit to FDA by the end of this

year. Orexigen appears to have faired better

in Europe; EMA has accepted its submission

under the centralized procedure, and Orexi-

gen expects approval in the second half of

2014. Despite a similar effcacy in compari-

son with Belviq and Qsymia, naltrexone/

bupropion is still getting blockbuster nods.

Thompson Reuters projects roughly $1.1 bil-

lion by 2019, and Credit Suisse corroborates

that approximation, putting 2020 sales at

$1.1 billion. Credit Suisse predicts very simi-

lar sales for both Belviq and Qysimia, which

suggests the level of need in the market, or

opportunities for the products to differenti-

ate from one another, or both.

Novo Nordisk is preparing to fle a 3-mg

version of its GLP-1 liraglutide (aka Victoza)

Drug Name: contrave

Drugmaker: Orexigen

PhaSe: registered

LauNch Date: 2014/2015


Drug Name: liraglutide

Drugmaker: Novo Nordisk

PhaSe: III

LauNch Date: 2014


Drug Name: tak-875

Drugmaker: takeda

PhaSe: III

LauNch Date: 2015/2016


Drug Name: afrezza

Drugmaker: mannkind

PhaSe: registered

LauNch Date: 2014


Drug Name: Lantus biosimilar

Drugmaker: Lilly/BI

PhaSe: III

LauNch Date: 2015


Drug Name: u300

Drugmaker: Sanof

PhaSe: III

LauNch Date: 2015



The Industry Channel Where Business Meets Policy

1. 2013 Industry Audit: Presentation by Bill

Looney, Editor Director,

Pharmaceutical

Executive, on key

trends identifi ed

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company executive.

2. Highlights of PE editorial RTs on

market access issues

and alternative R&D

fi nancing.

3. Conclusions from the 2013 Drug Pipeline review by Ben

Comer, Senior Editor,

Pharmaceutical

Executive.

4. Regulatory reform in China interview with

Ken Kaitin of Tufts

Center, by Bill Looney.

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22


Pipeline Report

for an obesity indication in the United

States, and has entered Phase III trials in

over 20 countries for that indication. In

the United States, Novo will fle by the

end of this year, and expects to get an

approval in 2014. The company may try

to best the new raft of obesity treatments

by maximizing the label; in June, Novo

completed a Phase III trial studying

obese patients with sleep apnea. Clinical

studies indicate that liraglutide at 3 mg

could bring down body weight by an av-

erage of eight percent, a slight improve-

ment on Belviq and Qysmia, but liraglu-

tide is an injectable, not a pill, and it’s

expected to be costly. Gideon Heap, an

analyst with Decision Resources, says he

likes liraglutide in obesity for the follow-

ing reasons: “In theory, [liraglutide] will

avoid any of the CNS side effects that

trouble a lot of physicians in obesity, and

Novo also has some good trial designs

going,” says Heap. “They are develop-

ing it with a Phase II trial that attempts

to show prevention of the onset of Type

2 diabetes. If that gets a positive out-

come, I think it would represent a strong

bargaining chip for getting better reim-

bursement [over Belviq and Qsymia].”

Credit Suisse forecasts have liraglutide’s

obesity indication adding another $500

million a year to the increasingly lucra-

tive Victoza franchise, by 2019. Decision

Resources predicts roughly $800 million

by 2019, with a launch late next year.

Since 1997, there have been 10 new

classes of diabetes drugs, and yet, many

patients still aren’t able to keep their glyce-

mic levels under control. Takeda hopes to

bring an 11th class of drug to market with

its TAK-875 compound, a GPR40 ago-

nist. Currently in Phase III testing, TAK-

875 is going head-to-head against Janu-

via, and could potentially launch in 2015

or 2016, according to Heap. TAK-875 “is

causing a bit of excitement because it’s

showing good effcacy while maintaining

a high level of safety, of a kind you would

see with the DPP4 inhibitors,” says Heap.

“It’s as effcacious as sulfonylurea, but in

Phase II showed low rates of hypoglyce-

mia, and crucially, it doesn’t appear to in-

duce any kind of weight gain.”

Al Mann hopes to bring a new drug

delivery device to market; this time he’s

more hopeful than ever. In September,

Mann personally assured Pharm Exec

that Afrezza, a product that needs little

introduction, will receive its long-await-

ed FDA approval in April—if it isn’t ap-

proved somewhere else frst. Analysts

seem to agree that MannKind’s inhal-

able insulin will indeed get approved,

but a lingering question remains: will

patients want to use it? “There aren’t a

lot of patients out there demanding an

inhalable insulin,” says Heap. “Possibly,

the developers of these [inhalation] de-

vices are a bit carried away with how

important they think that is.” After com-

pleting two 24-week Phase III trials with

its next-gen Dreamboat inhaler device,

MannKind resubmitted with FDA in

October. Thomson Reuters is predict-

ing over $2 billion in sales, but Kiran

Meekings, a consultant at the Thomson

Reuters Life Sciences team, isn’t so sure.

She worries about the potential for ad-

verse pulmonary effects over the long

term. MannKind’s clinical work has at-

tempted to mitigate concerns about lung

function associated with chronic use

of an inhaled insulin, and Mann says

Afrezza “is not in the lungs very long,

we go quickly through the membrane

into the blood, with no accumulation.”

Meekings says MannKind’s pulmonary

safety study results “weren’t necessarily

cause for concern…but it’s something

that needs to be monitored.”

Finally, Eli Lilly and Boehringer Ingel-

heim are attempting to bring a biosimi-

lar insulin—the oldest biologic drug—

to market. The European Medicines

Agency (EMA) accepted the companies’

long-acting insulin glargine biosimilar

submission in July, and the product is

in Phase III in the United States. Insulin

glargine, also known as Lantus, is Sano-

f’s top seller, with over $6 billion in sales

last year. Credit Suisse is bullish on the

biosimilar version, with predicted sales

topping $1.2 billion by 2019, not bad

for a copycat. Thomson Reuters is more

conservative, with a forecast of $415

million in annual sales for the biosimilar

by 2019. Sanof, for its part, is rushing

forward on U300, a reformulated insu-

lin glargine; the company said during

a 3Q conference call that it would fle

in the United States and Europe during

the frst half of 2014. That product’s

new attributes, according to Sanof, are

fewer incidences of hypoglycemia, and

a smaller volume of subcutaneous injec-

tion compared with Lantus. Incidentally,

Lantus loses patent protection in 2015.

Novo Nordisk, the biggest seller of in-

sulins worldwide, hopes to wrest back

marketshare from Sanof, but prob-

ably won’t get Tresiba approved in the

United States before 2016, at the earliest.

Thomson Reuters estimates the new and

improved version of Lantus will earn

$1.1 billion by 2019, a fraction of Lan-

tus’s current annual sales.

Device AlertOn the device front, GI Dynamics’ EndoBarrier, an intestinal liner that doesn’t require

surgery to implant, is currently being tested in a 500-patient pivotal Phase III study in

the United States. “The product works more like a drug, but it’s technically a device,”

says Stuart Randle, CEO at GI Dynamics. Already commercially available in the United

Kingdom, Germany, Australia, Israel, Chile, and elsewhere, the EndoBarrier has shown “a

reduction in HbA1c levels [the key measure of glycemic control in diabetes], a signif-

cant reduction in weight, but also statistically signifcant reductions in blood pressure,

cholesterol, triglycerides, and other cardiovascular markers,” says Randle. The total cost

of the device and procedure, on average, is $10,000. Randle says the typical EndoBar-

rier patient is on one or two diabetes drugs, is obese, and is moving toward or is already

on insulin therapy. The Phase III study will read out in the frst half of 2016, and Randle

anticipates an FDA Premarket Approval (PMA) and US commercial launch in 2017.


23


Pipeline Report

Hepatitis C: Banking on Sofosbuvir

Ben Weintraub, senior principal and

director of research at inThought, a

division of Symphony Health Solutions, calls

his $3 to $4 billion sales estimate on Gilead’s

sofosbuvir—a nucleoside analog polymerase

inhibitor targeting all six HCV genotypes—

conservative. “The question is not whether

sofosbuvir is going to be the biggest drug for

hepatitis C ever, or the biggest drug launch

ever…I think everyone agrees that it’s going

to be both of those things,” says Weintraub.

“The question is whether it’s going to be the

biggest drug ever.”

Weintraub says he’s seen estimates as high

as $15 billion, but the reason for his conser-

vatism is the misguided assumption that the

population of hepatitis C patients receiving

treatment will rise from a current level of

10 percent, to as much as 90 percent once

interferon, and it’s horrid side effects, are

taken out of the picture. Weintraub thinks

the percentage of HCV patients receiving

treatment will only increase to around 20

percent. The price of therapy is one access-

limiting element, but more importantly,

says Weintraub, is the fact that a substantial

portion of the HCV population won’t all of

sudden come in to the clinic for sofosbuvir,

or any other HCV drug. “If you’re an IV

drug user, if you’re homeless and you have

HCV, getting treated for it is not your pri-

mary concern,” says Weintraub. “Your de-

pression, your alcoholism, your drug abuse,

your 12 other diseases, those are the things

that doctors might be more worried about

taking care of frst.”

Several analysts including Weintraub

say sofosbuvir will receive FDA approval

by the end of this year. Sofosbuvir will be

prescribed in combination, but Weintraub

says it’s likely to be priced per regimen,

not per drug, at “whatever the market will

bear, $70,000 for sofosbuvir, riboviron and

a protease inhibitor, whatever that winds

up being.”

Raghuram Selvaraju, managing director

and head of healthcare equity research at

Aegis Capital Corp., says Enanta/AbbVie’s

ABT-450 combo is “every bit as good as

sofosbuvir,” but isn’t getting as much press

because the combination regimen will likely

be three or four drugs, instead of potentially

two with sofosbuvir. Selvaraju says both so-

fosbuvir and ABT-450 “are very, very good

at treating genotype-1 treatment naïve pa-

tients”—the largest HCV genotype glob-

ally, and the hardest to treat—“but they are

much less good at treating null responders.”

After the initial fanfare surrounding sofos-

buvir’s “marquee drug launch,” Selvaraju

says the quad ABT-450 regimen “is going to

show better activity against null responders

with genotype 1 than the sofosbuvir two-

drug regimen.” Phase III data from two

ABT-450 studies are scheduled to read out

this quarter, but the product isn’t expected

to launch until 2015. However, FDA gave

ABT-450 Breakthrough Therapy status in

May, which doesn’t automatically confer

an expedited approval, but could possibly

tip approval into 2014. On a recent AbbVie

earnings call, CEO Rick Gonzalez told in-

vestors that ABT-450’s interferon-free stud-

ies are “coming in April 2014.” Scott Brun,

AbbVie’s head of drug development, dis-

missed an analyst questions about “pill bur-

den” associated with the ABT-450 regimen,

mentioned above by Selvaraju. “Sustained

virologic response is king, and we’re in the

high 90 percent range,” said Brun.

Hepatitis C is heating up as these drugs

and others compounds get closer to mar-

ket, but the key late-stage players haven’t

changed. Recently approved in Japan,

J&J’s simeprevir is expected to be ap-

proved in the United States by this year’s

end, and BMS’s daclatasvir picked up

FDA’s Breakthrough Therapy designation

in April. For more information on these

products and others in HCV, see Pharm

Exec’s 2013 Pipeline Report. Weintraub

describes J&J’s simeprevir as an Incivek/

Victrelis follow-on drug, and says with

AbbVie and BMS both launching in late

2014 or 2015, “Gilead looks like it will

have a least a year” without meaningful

competition. But there’s a caveat: the ini-

tial sofosbuvir approval includes interfer-

on; the all-oral HCV combo everyone is

waiting for won’t get approved until 2014.

Drug Name: sofosbuvir

Drugmaker: gilead

PhaSe: registered

LauNch Date: 2013


Drug Name: aBt-450

Drugmaker: abbVie

PhaSe: III

LauNch Date: 2015



24


Pipeline Report

Drug Name: tedizolid

Drugmaker: cubist

PhaSe: registered

LauNch Date: 2014


Drug Name: cXa-201

Drugmaker: cubist

PhaSe: III

LauNch Date: 2015


Drug Name: solithromycin

Drugmaker: cempra

PhaSe: III

LauNch Date: 2015


Novel Antibiotics: HHS Begs for New Treatments

Most large pharmaceutical companies

haven’t rushed to develop new superbug-

swatting antibiotics or anti-infectives, despite

a dire need for such products. That’s because

historically, antibiotic R&D programs are

often long and expensive, without much of

a fnancial upside on the other end; prices

have been pushed down by generics, and

the course of therapy is short. The pricing

problem could change; in September, the

CDC announced that some 23,000 people in

the United States die from antibiotic-resistant

bacteria each year, and at least 2 million are

infected. “There’s a very direct correlation

between superbugs and incredibly high

hospital costs and mortality, says Thong Le,

managing director of WRF Capital, the VC

arm of the Washington Research Foundation.

“A lot of the antibiotics we’re using today

have been around for 50 years.”

Last year’s Generating Antibiotic Incen-

tives Now (GAIN) Act, ratifed as a provi-

sion PDUFA V, is designed to push drug mak-

ers back into the antibiotic and anti-infective

space. Thanks to the GAIN Act, incentives

for companies willing to take up the task of

novel antibiotic development include auto-

matic eligibility for Fast Track status and Pri-

ority Review, which shortens the FDA review

period to six months. Once approved, the

antibiotic would be granted an additional

fve years of market exclusivity.

It’s not clear whether that’s a strong

enough kick to make Big Pharma roll. Last

spring, HHS’s Biomedical Advanced Re-

search and Development Authority an-

nounced a deal with GlaxoSmithKline to

provide up to $200 million over fve years to

develop new antibacterial products. Similar

government-fnanced deals with Big Pharma

have been struck in Europe. Meanwhile, a

few smaller biotech frms are focusing on

the antibiotic-resistant and infectious disease

space, and several new products could go to

bat against the superbugs next year.

Raghuram Selvaraju at Aegis Capital Corp.

says Cubist, with its dual acquisitions of Trius

Therapeutics and Optimer Pharmaceuticals in

2013, has positioned itself “in the vanguard

of anti-infective drug development.” Fast

Tracked via the GAIN Act, Trius’s tedizolid

phosphate, a second-geneartion oxazolidi-

none antibacterial agent was fled with FDA

in October for the treatment of acute bacte-

rial skin and skin structure infections, and

is also being tested for the treatment of seri-

ous Gram-positive infections, including those

caused by methicillin-resistant staphylococ-

cus aureus (MRSA). The drug will compete

against Pfzer’s Zyvox, with a couple of added

benefts, like easier administration and dos-

ing, and slightly fewer side effects. Credit Su-

isse has modest estimates for tedizolid, $200

million by 2020. A second Cubist product,

CXA-201, in Phase III for complicated intra-

abdominal infections and complicated uri-

nary tract infections, is expected to fle at the

end of this year, assuming the Phase III data is

strong. Selvaraju thinks CXA-201 will launch

in early 2015, and earn $700 million by 2022.

That product will face off against meropen-

em, a broad-spectrum beta lactam antibiotic

to which bacteria is growing resistant.

The best targets for infectious disease, from

a fnancial perspective, are community-ac-

quired pneumonia and complicated skin and

skin structure infections (CSSSI), says Selvara-

ju. “We like CSSSI because the clinical trial de-

sign is pretty straight forward, compared with

a lot of other indications,” says Selvaraju. “We

like community-acquired pneumonia lung in-

fections because there are comparatively fewer

solutions for that currently available.”

Selvaraju says Cempra’s solithromycin,

a Phase III product targeting community-

acquired pneumonia, shows promise. In

September, Cempra reported in vivo data

showing that solithromycin is active against

a broad range of pathogens, including four

of FDA’s Qualifed Infectious Disease Patho-

gens under the GAIN Act.

For the moment, pharma doesn’t seem to

be answering Janet Woodcock’s increasingly

frantic calls for new novel antibiotics. Many

small companies, including Cellceutix, Du-

rata, Anacor, and others are moving through

clinical trials and targeting serious bacterial

infections, but more work is needed to better

understand the complex biology of the su-

perbugs, and to take them down.


25


Pipeline Report

Drug Name: amr 011

Drugmaker: NeoStem

PhaSe: II

LauNch Date: N/a

Peak SaLeS: N/a

Drug Name: secukinumab

Drugmaker: Novartis

PhaSe: III

LauNch Date: 2014


Drug Name: OrmD 0801

Drugmaker: Oramed

PhaSe: II

LauNch Date: N/a

Peak SaLeS: N/a

Drug Name: suvorexant

Drugmaker: merck

PhaSe: registered

LauNch Date: 2015


Drug Name: Sativex

Drugmaker: gW Pharma

PhaSe: III

LauNch Date: 2016


Drug Name: sebelipase alpha

Drugmaker: Synageva

PhaSe: III

LauNch Date: 2015


Outsiders, Sleepers, and Early Stagers

Like last year, some of the products uncovered

during the research phase of this year’s

pipeline report weren’t easily shoehorned

into the categories presented, for one reason

or another. Here are few category outsiders,

sleepers—defned as potential big sellers people

aren’t talking about—and early stage drugs

that look solid, but haven’t gotten far enough

in the clinic to prompt blockbuster whispers.

» Amorcyte’s (acquired by NeoStem in 2011)

AMR 001 drug candidate, an early-stager,

is a bone marrow-derived stem cell product

in development for the emergency treat-

ment of severe heart attack. The company

is assessing CD34-positive autologous stem

cells (autologous means the stem cells come

from the same patient they’re used to treat)

that would potentially improve health out-

comes following a severe heart attach. Re-

sults from the Phase II trial are expected

during the frst half of next year. Martin

Sullivan at INC Research says next-gen cell

therapies like AMR 001 represent the next

generation of better cell therapies, a promis-

ing development

» Novartis’s secukinumab is an Isle 17 mono-

clonal antibody for the treatment of psoria-

sis. A sleeper because psoriasis is often in the

shadow of rheumatoid arthritis, at least from

a biologic drug perspective, secukinumab

could wake up investors with blockbuster

sales as soon as 2018, according to several

forecasts. In Phase III trials, Novartis had to

toss out the psoriasis area and severity index

(PASI) 75 scale, because everyone in the trial

passed the 75 percent mark, says Ben Wein-

traub, at inThought.

» Even as an early-stager, Oramed Pharma-

ceuticals’ ORMD 0801 is ahead of the big

diabetes shops in the race to oral insulin for

diabetes. Oramed is pursuing a Type 2 in-

dication frst, for patients who don’t want

to transition to injected insulin, but the

company has also launched a trial study-

ing ORMD 0801 in Type 1 insulin depen-

dent patients. Raghuram Selvaraju, at Aegis

Capital Corp., says if ORMD 0801 fnds

its way to market in the next four or fve

years, “it would blow [MannKind’s] Afrez-

za away.” Liquid (and Afrezza’s powedered)

insulin must be kept refrigerated; an oral

version, particularly without the need to

keep it cold, could be huge in markets with

access issues.

» Merck’s suvorexant, a hypnotic and out-

sider, has been fled in the United States and

Japan for the treatment of insomnia. But

FDA denied the application last summer in

a Complete Response Letter, over worries

that the dosage was too large. Merck plans

to resubmit in the frst half of 2014; FDA

did not require additional trials. The con-

sensus among analysts prior to the CRL was

blockbuster sales, by 2019. Given the rela-

tively short hold up in resubmitting, Merck

may still get a sweet dream or two out of

suvorexant.

» GW Pharmaceuticals’ sleeper product Sa-

tivex is probably the frst drug derived from

raw cannabis to cross the FDA’s desk at

least since marijuana was slapped with a

schedule 1 classifcation in 1970. Schedule

1 drugs are considered to have “no currently

accepted medical use.” Sativex is approved

in 22 countries, but in the United States,

Phase III trials for a cancer pain indication

will conclude next year, with an NDA to fol-

low in early 2015, according to GW Pharma

CEO Justin Gover. Credit Suisse puts sales

at roughly half a billion by 2020.

» Synageva Biopharma’s sebelipase alfa is

an outsider in Phase III for the treatment

of Wolman disease, a rare lisosomal stor-

age disorder in which patients are unable

to break down certain lipids. Most infants

with the disease don’t survive more than a

year, and adults with the disease have prob-

lems with swelling of the abdomen, liver

enlargement and serious, life-threatening

digestive problems. Sebelipase alfa would

become the frst approved treatment for

Wolman disease, and FDA has granted Or-

phan Drug, Fast Track and Breakthrough

Therapies status. Given the pricing environ-

ment for orphan drugs, Synageva Biophar-

ma could be rewarded handsomely.

Ben Comer is Pharm Exec’s Senior Editor. He can be reached at [email protected].

Forecasting data in Pharm Exec’s 2014 Pipeline Report relies in part on Springer’s Adis R&D

Insight database, Thomson Reuters Cortellis, Credit Suisse, and Evaluate Pharma data. We very

much appreciate the use of these resources.


26


Roundtable

Roundtable on

Market Access Market Access is a window on what matters in the real world of soaring

patient expectations and crimped payer budgets for innovation. Pharm Exec

convenes a diverse panel of experts to identify the key markers of common

ground: its time, people, and money against that greatest intangible—hope.

William Looney, Pharm Exec: The biopharmaceutical indus-

try confronts a strategic dilemma: just as the genomics revolu-

tion is yielding a rich harvest of biologically-based medicines

that promise to raise the standard of treatment for patients, its

ability to price these medicines at will is eroding. In response,

the drug majors are redef ning the traditional one-to-one rela-

tionship to payers through messaging with appeal to a broader

set of stakeholders as well as detailed evidence to document

the medicine’s clinical and economic value. The industry calls

the new strategy “market access”—is it working, how is the

function likely to evolve over the next few years, and what are

the key considerations for companies?

Kevin Barnett, Promidian Consulting: My f rm has com-

pleted a new study that provides insight around this ques-

tion. Extensive surveys and interviews were conducted with

more than 50 leaders from managed care, employers, Med-

icaid, other institutions, as well as the biopharma industry.

Our focus was on elucidating how market access dynamics

will evolve over the next f ve years and def ning implications

for biopharma companies. We found that there is a very high

expectation of change, in 12 relevant areas ranging from the

role of biomarkers, IT and comparative effectiveness stan-

dards to formulary design, management, and contracting.

Interestingly, payers and manufacturers were aligned on the

By William Looney, Editor-in-Chief


27


Roundtable

future direction and import of most of

these issues. The notable exceptions

were in the management of specialty

drugs, where payers expect increased

scrutiny, and on the role of compara-

tive effectiveness, where payers are

more bullish than manufacturers in

thinking that use of this particular tool

will increasingly drive pricing and ac-

cess decisions.

With specifc reference to the 12

“change drivers” we identifed, the

growth of personalized medicine

through biomarkers and compan-

ion diagnostics scored the highest

in terms of the expected degree of

change over the next three to fve

years. Both groups understand that

this is a positive trend because all

these tools have a common objective:

to improve outcomes and avoid inap-

propriate utilization by getting the

right medicine to the right patient at

the right time. This is the essence of

“managed” care, one where the pa-

tient is the chief benefciary.

Right behind this as a change

driver is IT and how it will shape pre-

scribing patterns, particularly as in-

centives for EHR and other integrat-

ed systems are implemented, at the

practice level. IT is a key enabler of

the third highest degree of expected

change, which is the role of emerging

models of care like the ACO, where

the “episode of care” approach de-

pends on having information systems

that can talk seamlessly to each other.

We spoke with managed care frms

and other payers about whether these

new models would succeed in sav-

ing money while improving quality.

The consensus is the jury is still out,

largely because earlier efforts to in-

tegrate care failed to take root; these

are in many ways a pilot effort. Ulti-

mately, ACOs may prove an interim

step in what is likely to be a lengthy

journey toward a common delivery

platform—one that binds patients,

providers, and payers around a more

effcient approach to treatment.

Beneft design issues came next as a

change driver. Clearly, the structures

by which patients access care are in

fux. There is a great deal of explo-

ration underway—focused on coin-

surance, deductibles, and preferred/

non-preferred tiering of formulary

access—to fnd the right balance be-

tween quality of outcomes and con-

tainment of costs. One issue from

our discussions is how the insurance

beneft offered under the Affordable

Care Act’s insurance exchanges will

infuence private insurance plans. The

exchanges are likely to offer drug ben-

efts less robust than what is currently

offered on the private commercial

side—will we see a spillover of that

trend to the private market? That’s an

important question for both manufac-

turers and payers.

Next on the list of expected changes

is the management of specialty drugs.

Most of the drugs being approved by

the FDA are specialty, and Express

Scripts forecasts that only fve years

from now this category will account

for half of total drug prescription ex-

penditures, up from 25 percent today.

The price tag for these therapies is a

major pain point for payers, of which

manufacturers are all too aware.

Progress and pitfalls

Looney: Does the study identify the

therapeutic areas most likely to set the

agenda on market access over the next

three years?

Barnett: Yes. We asked managed

care decision-makers to identify the

disease areas they would prioritize in

managing drug utilization and expen-

ditures during this period. Oncology

came out on top, followed by rheuma-

tology, diabetes, respiratory, orphan

diseases, neurology, and obesity. The

common link here is the impact that

actions by both manufacturers and

payers can have on addressing un-

met medical need. Targeted therapies

for cancer that address the etiology

of the tumor is a clear example, and

their novelty in raising the likelihood

that the medicine will end up in the

patients most suited for it suggests

access can be secured at a premium

price—a win for manufacturers. In

diabetes, the number of new patients

with all the co-morbidities of this

disease continues to expand the mar-

ket. Economically, it’s a huge burden

for payers and there is strong interest

in any medication that will help low-

er the overall cost of treatment. We

found too that the science of diabetes

looks promising, with new classes of

drugs coming on stream that attack

the disorder in different ways. There

is a big potential innovation premium

here for industry.

Obesity scored the greatest in-

crease in interest as a priority therapy

over the forecast period. Some of the

same co-morbidity factors driving

diabetes are at work here. The pipe-

line for new products with fewer side

List of ParticipantsKevin Barnett, Executive Vice-President and Managing Director, Promidian Consulting

Brendan Bertsch, Senior Director, Pricing. Contracts and Trade, Optimer Pharmaceuticals

Kara Clinton, Senior Director, Oncology Managed Markets, Eli Lilly & Co.

Michael McLellan, Head, Market Access, Oncology Business Unit, Pfzer Inc.

Joshua Parks, Senior Director, Pricing and Strategy, Bausch & Lomb, a Valeant Company

Sanjay Shah, Executive Vice-President, Optimal Strategix Group

Sanjiv Sharma, Vice-President, Commercial Operations, Duchesnay USA

Jim Smeeding, Executive Director, National Association of Specialty Pharmacy

Richard Stefanacci, MD, Associate Professor Health Policy, University of the Sciences,

and Chief Medical Offcer, The Access Group.


28


Roundtable

effects looks promising. And payers

appear willing to reimburse obesity

treatments because of the impact on

population wellness, which translates

to lower health costs.

Looney: The biopharma business

is uniquely affected by public policy

and legislation. Can we identify from

the study the key challenges coming

on the regulatory front?

Barnett: Executives on the man-

aged care side are very focused on

the implementation of the Affordable

Care Act. Uncertainty is the prevail-

ing sentiment. It remains to be seen

if this complex law is a growth op-

portunity. Will expansion of the

Medicaid-eligible population as well

as the individual insurance exchang-

es create a windfall of new customers

whose healthcare needs can be met at

reasonable cost, through a balance of

young and healthy against an older

demographic with serious health

risks? Another issue is coverage rules

for drugs, including formulary man-

agement and related design questions,

which are impacted in turn by rules

on whether manufacturers can offer

co-pay offset and coupon incentives

directly to patients in the exchanges.

The study also looked at the pros-

pects for biosimilars. A bare majority

of respondents from the managed care/

payer side believe biosimilars will be-

come widely available to US patients in

the next three years; there is a stron-

ger consensus that, if this happens, we

will see downward pricing pressure on

drugs that lead to meaningful savings

for payers. Realistically, however, most

payers contend that discounts of at

least 30 percent against the originator

brand will be required to deliver any

real savings.

Finally, the managed care group

struck a distinctive note on compara-

tive effectiveness rules. Surprisingly,

most aren’t currently employing this

evidence tool to shape decisions on

formulary coverage. Interviewees

said they are waiting for relevant

government agencies like CMS to

take action; many point to internal

resource constraints as the culprit in

their failure to making it a priority.

Structural transitions ahead

Jim Smeeding, National Association

of Specialty Pharmacy: Did the study

conf rm the trend toward a blurring

of the roles played by payers and pro-

viders in the healthcare system?

Barnett: Yes. The ACO model

with its focus on episode of care as

an alternative to traditional fee-for-

service is viewed as here to stay. If

payers want to reduce costs, it re-

quires that they embrace the concept

of active medical management; it’s

no longer f nancially viable to act as

a passive third-party.

Closed information loops

Sanjay Shah, Optimal Strategix Group:

There is some way to go before we

have truly integrated care in the United

States. This is because actions by all

parties—providers, payers, and manu-

facturers—remain driven by disjointed

f nancial incentives and misalignment

on assumed risk that are hard to re-

verse. Europe is further ahead, having

embraced payment schemes that are

built around performance and out-

comes, expressed via the accumulation

of evidence of comparative effective-

ness (which differs from eff cacy estab-

lished in well-controlled clinical trials)

through post-approval observational

studies, in the real world setting. It is

possible that policy pressures in the ex-

pensive, high- prof le specialty biologics

segment might accelerate a similar tran-

sition here.

Barnett: Payers we interviewed

will be demanding progressively

higher substantiation of clinical ef-

fectiveness for these biologics. They

admit, however, that creating work-

able criteria to demonstrate value—

criteria that are mutually acceptable

to payers and manufacturers—is still

a work in progress. Support is strong

on a conceptual level but the goal

now is to move from that to some-

thing that you can actually measure.

If by uniformity you mean the United

States will evolve toward a single fed-

eral standard of cost effectiveness, I

suspect this idea will be f ercely re-

sisted, not just on methodological

grounds but because of the politics.

Kara Clinton, Eli Lilly & Co.: There

is substantial discussion on how to

manage and reduce costs in healthcare.

Information and data will continue to

be critical as we examine disease and

treatment costs holistically. Pharma-

ceutical prices are relatively transpar-

ent and have been a major focus of re-

ducing costs. However, drugs are often

not the major driver of the expense of

treating a patient. To reduce healthcare

costs, stakeholders should start with

accurately measuring and comparing

all costs with improved transparency

and data. It is also important to cap-

ture cost offsets and savings in differ-

ent treatment options. What does it

cost to treat an individual throughout

Actions by all parties—providers, payers, and manufacturers—remain driven by disjointed f nancial incentives and misalignment on assumed risk that are hard to reverse.—Sanjay Shah, Optimal Strategix Group


29


Roundtable

the full course of a disease? This is the

key principle in aligning market access

with treatment outcomes, in an afford-

able way.

Joshua Parks, Valeant: The situa-

tion in Europe today suggests it may

be naïve to assume that better infor-

mation combined with the right clini-

cal prof le will result in patient access

to a new drug. The patient popula-

tion is increasingly diverse, so it fol-

lows that there is an equally diverse

range of opinion on what constitutes

improvement in the standard of care.

All the industry’s computer models

will have little inf uence on that deter-

mination, which most often ends up

being, “we just can’t pay for it.” This

is the direction European countries

are taking, and it will be interesting

to see where that leaves the European-

based industry three to f ve years from

now. Precedent shows that there will

be less innovation and slower uptake

of newer drugs.

Looney: Don’t we need to start

with an agreed definition among

payers and manufacturers about

what the concept of “effectiveness”

really means? Does it apply to clini-

cal standards only or does it incor-

porate cost?

Smeeding: It carries a very broad

scope. Some of the larger provider

and managed care organizations

have evolved their own internal def -

nitions. Efforts by the networked

academic organizations like ISPOR

have also brought the various inter-

ests together, which is critical as the

mechanics of effectiveness evalua-

tions must make sense to the insur-

ance providers f rst, because they are

the ones who pay the bill. But drug

makers will confront price resistance,

regardless of the degree of consen-

sus on standards. It’s always been a

contest of wills to wrest a good price

from a payer, and I don’t expect that

to change very much.

Sanjiv Sharma, Duchesnay USA:

Each provider wants to design their

own cost effectiveness model because

everyone in the business claims their

covered patient base is unique. The

practical implication is a drug manu-

facturer is forced to do endless varia-

tions of the same thing to accommo-

date this pretense.

Brendan Bertsch, Optimer Phar-

maceuticals: In the United States, no

standard for effectiveness can include

a frank assessment of cost. Only

clinical applications are permissible;

anything beyond that entails endorse-

ment of rationed care, symbolized by

the “death panels” that are supposed

to be implicit in the Obamacare leg-

islation. European precedents don’t

travel well here.

Michael McLellan, Pf zer: Crite-

ria for effectiveness in Europe seems

to focus predominantly on cost, so

much that one might suspect that in

some countries, the institutionalized

process known as health technology

assessment [HTA] is more of a politi-

cal tool masquerading as an objective

evidentiary standard. It provides an

opportunity for payers to tactically

create negative assessments prior to

negotiating a reimbursement price.

The lack of objective and scientif c

benef t assessments becomes clear

when a manufacturer can submit

the same dossier of evidence for the

same drug to HTA authorities in a

number of countries and get a very

different conclusion in each one. It

would be unfortunate if these assess-

ments amounted to no more than a

clever way to manage a f xed budget

for medicines, instead of identifying

true innovations that benef t patients.

The situation could only change

if the agency doing the benefit as-

sessment was not so closely tied to

the payer negotiating reimburse-

ment. There are efforts underway to

create a pan-European assessment

process on relative effectiveness.

Opinions differ, but my view is that

this is unlikely to improve the cur-

rent problem of HTA bias and lack

of objectivity, in a way that rewards

drugs addressing unmet medical

needs. That’s because all reimburse-

ment negotiations are inherently po-

litical; payers in countries control-

ling access to new drugs are unlikely

to relinquish direct control over the

HTA process. The group coordinat-

ing the pan-European HTA assess-

ment pilot, the European Network

for Health Technology Assessment

[EUnetHTA], consists of representa-

tives of the national HTA agencies.

You can’t expect them to support

any significant changes to the sta-

tus quo in their home countries, as

it would adversely impact their pre-

rogatives as the gatekeepers on pa-

tient access.

In the United States, no standard for effectiveness can include a frank assessment of cost. Only clinical applications are permissible; anything beyond that entails endorsement of rationed care, symbolized by the “death panels” that are supposed to be implicit in the Obamacare legislation.

—Brendan Bertsch, Optimer Pharmaceuticals


3030 Roundtable


Sharma: Throughout my career,

I’ve been closely involved in negotia-

tions on clinical and cost effective-

ness standards, in Canada as well

as the United States. My experience

leads me to conclude that the only

way industry can avoid making this

process a narrow budgetary and f -

nancial calculation is to engage the

patient. Putting forward an articulate

patient perspective is unsettling to

the payer—which actually conf rms

we are doing the right thing. Patient

involvement tilts the discussion away

from a focus that is exclusively about

the cost of therapy.

What do payers want?

Richard Stefanacci, University of

the Sciences and the Access Group:

Through my work as chief medical of-

f cer for a number of Medicare Advan-

tage plans as well as membership on

a national P&T committee, I can say

there are only two things that drive

payers on market access. The f rst is re-

turn on investment—not just what do

we get by listing your drug, but, more

important, how soon? No longer do

payers want to be told about savings

over a 10-year time span. Their fall-

back position is to eschew any imme-

diate decision on coverage, in favor of

“watchful waiting.” If manufacturers

want to avoid this outcome, being able

to make that case for ROI is critical.

The second driver for payers is regula-

tion. If we are told we must cover a

drug, we do it. Academic judgments

about cost effectiveness have little, if

any, impact on the decision.

I am intrigued that in the survey,

respondents from both the manufac-

turer and managed care side seemed

to downplay the role of the patient.

In this new healthcare environment,

manufacturers must position value

from the point of view of the patient,

not just the provider. As patients will

be forced to bear more of the cost

burden, their adherence will be based

more on how they perceive value.

Smeeding: As costs for drugs

mount, particularly for life-threat-

ening conditions like cancer, patient

access programs will become a criti-

cal ethical issue. There are a lot of

uninsured and under-insured people

where the pressure will be intense to

get them on therapy. Such programs

are predominantly company-spon-

sored but I predict we will see more

government involvement in how these

programs work, and for whom.

Parks: Europe is already there.

In contrast to the United States, na-

tional authorities have to reconcile

two conf icting commitments: f rst,

to offer the broadest access possible

to all citizens, and, second, to con-

tain costs within a f xed annual bud-

get. Their response offers a precedent

for the United States: It requires some

people—those with more assets—to

pay a bigger portion of their health

costs out-of-pocket. Overall insur-

ance cover is important, but patient

share of costs is going to be right up

there too.

Stefanacci: The trade-off for pa-

tients from the Affordable Care Act

is lower plan premiums through gov-

ernment programs like the Health

Insurance Marketplace plans and

Medicaid, partly as a result from re-

stricted access to providers and cer-

tain types of care, including drugs as

well as higher patient cost sharing.

Clinton: Payers are interested in

data on how biopharma technologies

improve outcomes for a def ned popu-

lation relative to the current treatment

standard. In oncology, with rapidly

changing treatment standards, this

can be a signif cant practical challenge

for companies. Traditional Phase III

trials have protocols and standards

that are approved by regulators years

in advance of the trial completion. By

the time results come, the standards

can evolve and the relevance of the

data can be challenged. There are ef-

forts with regulators to address this

issue, but it is a current risk that bio-

pharma must take as a given in the de-

velopment process.

McLellan: Payers need to provide

industry a feasible way to develop

the evidence they are asking us for,

so that it is not a constantly moving

target. Right now they are not doing

this. The non-binding consultations

we have with them do not allow us to

agree on what will constitute a data

package to ensure access for drugs that

have a meaningful benef t, including

what should be the right comparator.

This is going to discourage future in-

novation. I submit that it is in the payer

interest to play this game, and it starts

with a fair playing f eld to help us work

through the payers’ fear of the budget

impact of true innovation, in areas of

Criteria for effectiveness in Europe seems to focus predominantly on cost, so much that one might suspect that in some countries, the institutionalized process known as health technology assessment is more of a political tool masquerading as an objective evidentiary standard.

—Michael McLellan, Pf zer


31


Roundtable

unmet medical need, because these in-

novations do not always carry a cost

saving or cost offset.

Innovation—the moving target

Shah: The cost challenge is com-

pounded by the lack of consensus

on how to decide which innovation

creates value. Not every player in

healthcare shares our view of what

we would characterize as innovative. I

recall inviting a senior executive from

Humana to participate in a payer ad-

visory board for a J&J compound we

were developing for diabetes. He not-

ed that, at his company, innovation

was rarely described as coming from

a bottle. Instead, innovation came in

a Nike shoe box, because it motivated

employees with diabetes to exercise.

McLellan: It is commonly assumed

that it is up to the payer to defne inno-

vation. Not true: their frst responsi-

bility is to allocate a fxed budget. You

cannot pay for things with money you

do not have. The concern is how pay-

ers are managing the process. It is not

a coincidence that virtually every pre-

liminary beneft assessment of oncol-

ogy products by NICE in the United

Kingdom is negative, regardless of the

clinical data presented or the patient

access scheme we present upfront.

Another new trend I fnd alarming is

the separation of the beneft assess-

ment [the value] and reimbursement

negotiations [the price] in countries

like Germany. This puts manufactur-

ers in a diffcult position and allows

the payer to gain the higher ground,

stating “we think your product falls

short...so let’s now talk about price.”

In the new payer environment, pro-

viding the clinical data that payers

are asking for, such as showing clini-

cal superiority in a head-to-head tri-

al, or developing molecularly targeted

drugs that identify for treatment only

those patients most likely to respond,

isn’t producing the expected response.

This is because the payer is so focused

on cost relative to any clinical value. I

have heard it said that the only thing

a payer dislikes more than a product

without good data is a product with

good data. Understanding this per-

ception is a frst step in defning what

motivates payers in a price controlled

market. Their beneft assessments

seem to stray from the consensus in

the medical community and any re-

quest by companies for even a small

price premium over comparator prod-

ucts—based on data demonstrating

signifcant statistical superiority over

those comparators—will likely lead

to prolonged negotiations. This chal-

lenge is further compounded when

the comparators are generics. In some

cases, payers are now settling limits

on how much they will pay, per pa-

tient, per year. To remedy this, there

is going to have to be some give on

both sides, but unless society is satis-

fed with only having the treatments

of today, more alignment must be

made on the incentives to advance

medicines ability to improve popula-

tion health.

Parks: Industry still has some le-

verage in that we can decide where we

choose to launch—or not launch. As

some of the emerging markets become

bigger over the next fve to 10 years,

there will be more options to pursue

a launch strategy beyond the budget-

constrained countries. I believe the

biggest threat is the erosion of support

for so-called incremental innovations.

These are the products with clinical

attributes that are quite meaningful

to patients and whose success has al-

ways fueled the next round of frst-in-

class breakthroughs. These products

are in wide disfavor now, with some

companies reconsidering plans to ad-

vance next generation therapies.

Managing many parts

Looney: Market access is still a rela-

tively new function within Big Phar-

ma. What are the key elements of a

What’s Next for Market Access?

Promidian’s Future of Market Access study reviews how market access issues are likely

to evolve over the next three to fve years, with a particular focus on defning the implica-

tions for biopharma companies. The study includes two components: primary research

with managed market executives and market access KOLs (including those from MCOs,

PBMs, Medicaid, employers, and ACOs); and primary research with executives from lead-

ing biopharma companies.

Key areas of focus in the study are:

• Where the most change is expected in managed care/market access over the next

three to fve years.

• Degree to which and how the US Affordable Care Act will affect business.

• Top business priorities for managed care.

• Therapeutic categories that represent the highest priorities for payers, currently

and over the next three years.

• The biggest market access-related changes and priorities for biopharma.

• Expectations on what will happen with biosimilars and comparative effectiveness

research.

• Which biopharma companies are most effective in dealing with payers, and what

differentiates these companies.

• Opportunities and requirements for biopharma companies to positively differentiate

themselves in the way they interact and conduct business with payers.

• Assessment of how perceptions and expectation of payers and manufacturers

compare across the questions included in the study.

For more information, contact Kevin Barnett at [email protected]


32


Roundtable

successful market access program,

from both a strategic and operational

perspective?

Parks: By def nition, market access

is a cross-functional activity. It re-

quires pooled expertise from clinical

development, commercial affairs, and

professional relations, among other

functions. Most important, it must

carry forward a global perspective

that incorporates a detailed aware-

ness of conditions in individual target

countries. What really distinguishes a

successful program is the capacity to

communicate and engage with stake-

holders who can build out messages

that promote the value of the product.

The point is to create a groundswell of

support for a new product, ensuring

that key players like the patient com-

munity are aware of its benef ts and

how it can help them.

Stefanacci: Market access is not

a project that should be launched at

the 11th hour. Everyone knows that,

but still most companies come to

the table too late. It is amazing as a

payer representative to see companies

visit us for the f rst time when they

are well into the Phase III trial pro-

cess. At that point, it is too late for

our viewpoint to have much impact

on the value proposition. We wonder

why we are being consulted.

Barnett: Our work indicates a key

differentiating factor for successful

companies is that senior management

truly “gets it.” They have a strong

understanding of payers and market

access. These executives ensure the

realities of payer and market access

dynamics are ref ected in commercial

processes and the way their compa-

nies conduct business with payers. It

all has to tie together from a clinical

and marketing perspective, leading

ultimately to a strong value message

that differentiates the product and

justif es the price point.

It’s a race car: but who’s driving?

McLellan: Market access is not really

a function; it’s a goal. We all know

the goal must be def ned early on in

the process. The challenge is that even

when the goal is agreed, the incentives

of the internal players are often very

different. Clinical development peo-

ple are vital, yet their organizational

mandate is to maximize the number

of molecules that make it to registra-

tion. It is hard to get them to think

beyond that marker of success. The

elusive target here is integration of the

market access strategy. Yet you will

f nd many companies are still working

within a model of over-specialization

around small parts of the process. It

is like designing a race car, where one

expert pushes the accelerator, another

applies the brakes, and still another

turns the steering wheel. This race car

is unlikely to reach its goal anytime

soon and more likely will crash into a

wall. Expertise in pricing, reimburse-

ment, outcomes research, real-world

data, and other relevant functions

sit on the same team, with the same

reporting lines and priorities. Pf zer

is now working toward such an inte-

grated model.

Clinton: This approach can have a

damaging effect because it leaves the

impression that the essential objec-

tive in market access—a strong value

proposition and access of technology

to patients who need it—are some

other function’s problem. In reality,

every part of the development and

commercial process should be asking

the question: What is the value of this

drug to patients who have the disease

and how can we improve on that?

Shah: I would call market access

both a business function and an en-

terprise capability platform, span-

ning many activities. The objective

is to ensure that as an enterprise we

create value during the entire product

lifecycle, starting with early phase

drug development, and compete

across the full continuum of health-

care, not just the pharmaceutical

benef t in isolation. The value propo-

sition is going to fail if it is conf ned

only to the pharmacy benef t “silo.”

Sharma: Every market access lead-

er should have two major strengths.

The first is the ability to think like

a lawyer on the bench—you must

know the rules, inside and out, and

methodically define what the op-

tions are. The second is putting all

the disconnected strands of activity

together into a set of arguments that

will deliver results, and be commu-

nicated in a way that stakeholders

can understand. Another aspect of

this role is how important it can be

to avoid the conventional wisdom.

The best practitioners in this field

are those with the ability to think

outside the box—because in market

access, there is no box.

Success seeds from the top

Bertsch: People who do market access

tend to be mid-level executives. There

is much less expertise and awareness

the further up you go in the chain of

command. The absence of people with

As some of the emerging markets become bigger over the next f ve to 10 years, there will be more options to pursue a launch strategy beyond the budget-constrained countries.

—Joshua Parks, Bausch & Lomb


33


Roundtable

real clout can make it harder to com-

pel others to collaborate.

Looney: What options exist to ad-

dress these challenges? Might open-

ing your doors to payers raise the

level of engagement internally?

McLellan: In the United States,

we can talk with the payers and have

a fairly open exchange of views, in-

cluding with people at the top of the

decision chain. Outside the United

States, this kind of dialogue is diff -

cult, often for cultural reasons. The

only way to really understand the

payer environment is to sit across

the negotiation table with payers in

a price control country. It is unfortu-

nate that few in the organization will

ever get that chance.

Shah: Successful market access

programs make a commitment to

cross-organization pollination of

talent to codify the market access

mindset throughout (e.g., through

rotational assignments for promising

staff in related areas). For example,

managers who are designated “fast

track” for advancement must include

a stint on market access work in their

career development and progression

plan. Obviously, this will take time

for us to see a CEO with day-to-day

exposure to payers in his resume.

Contact with payers has not been re-

warded among those who follow the

traditional routes to the “c suite.”

Looney: What about the patient

perspective? Is it f rmly embedded

in the market access mindset of your

companies?

Stefanacci: Some of the larger pa-

tient advocacy groups are increas-

ingly active partners of the industry

in early- and mid-stage drug devel-

opment. These groups are actually

funding some of this work, so as a re-

sult patients are signaling their value

proposition right at the very start.

This assures their voice in the treat-

ment development process.

McLellan: We say that the work we

do must benef t the patient. Neverthe-

less, patients factor too infrequently

into a decision to reimburse a new

drug. Patients—and their families—

have a clear stake in our efforts to

develop new treatments. They want

to see and understand our data. If the

data shows an advance in the standard

of care, patient groups are likely to be-

come a factor in the payer decision to

budget for a new drug or to speak out

when a benef t assessment decision

lacks a strong medical rationale.

Sharma: To achieve that objec-

tive, industry has to move beyond the

intellectual level and engage on the

basis of a direct, emotional connec-

tion with the patient. This is a tactic

that industry handles relatively well

on the promotional side. But we are

less proactive in making that real-

world connection to the patient when

it comes to negotiating a price or a

position on the formulary.

Def ning the best in Market Access

Looney: Can we come to a consen-

sus on what factors are likely to de-

termine success in an era that we all

agree is going to pose more challenges

to market access?

Parks: One issue facing the indus-

try is the gap between patients with

drug coverage and those without it.

There is a real ethical divide. Some

patients will get the cutting edge

therapies that can cure or extend life;

others may not and suffer the conse-

quences. What if society no longer

supports the incremental innovations

required to fund the next generation

of breakthroughs? We can say that

industry’s task is simply to develop

medicines that pay for research and

deliver returns to shareholders. But

some very powerful forces in society

don’t see it this way. Resolving this is

going to require some diff cult con-

versations. One cannot be conf dent

that the politicians will step up to

lead in building a new consensus on

P&R. What I fear more is the “kick

the can down the road” mindset that

gives industry little clarity in manag-

ing all this uncertainty.

Shah: We must press for a better

def nition of what constitutes value in

pharmaceuticals. The dialogue must

shift from cost to value. If a product

shows it has value, then intrinsically

the cost is aligned with the def nition

of benef ts and outcomes desired,

which is what value is. A good start

toward moving the debate away from

being exclusively about cost is con-

testing the idea that an incremental

advance has no value. Drugs carry a

high variability in the individual re-

sponse, which shows how important

having a choice of therapy is when a

clinician treats a patient.

Clinton: The days of approach-

ing market access and cost cutting

with an “Us vs. Them” philosophy

are numbered. We need to focus the

discussion on how to help the pa-

tient with his disease instead of a

Every market access leader should have two major strengths. The f rst is the ability to think like a lawyer on the bench. The second is putting all the disconnected strands of activity together into a set of arguments that will deliver results.

—Sanjiv Sharma, Duchesnay USA


34


Roundtable

limited focus on what happens when

he receives our drug. If we can think

through the entire disease from di-

agnosis through resolution, we can

identify other, creative ways to opti-

mize outcomes and control costs.

Bertsch: There is a contradiction

at the heart of market access that

poses more diff culty in the years

ahead. While everyone lauds the idea

of closer partnerships with payers,

no one wants to assume any risk in

that relationship. Contracting deals

are a good example. Payers demand

a payback when outcome goals are

not achieved, while manufacturers

fret that performance metrics are

unrealistic because the data on their

product is f awed or unavailable. So

both sides hesitate because there is

too much risk.

Shah: Data is ref ective of a frag-

mented delivery system. It cannot

demonstrate cross-sector impacts be-

cause the process by which that data

is generated, managed, and accessed

is siloed. Our greatest contribution to

value, which is how the drugs budget

impacts the cost of healthcare over-

all, is virtually impossible to prove

with the data we can compile today.

Smeeding: This is a bit of an ex-

aggeration. I have been fortunate to

work with a specialized employer

database whose model is integrated

across the full range of health ser-

vices and encompasses a relatively

stable survey population tracked over

a long period of time. We have been

able to draw out some very interest-

ing data that links pharmaceutical

access to health outcomes.

Clinton: My challenge is whether

our market access capabilities are

able to address the complexity of the

new insurance models that are part

of health reform. The industry is well

prepared to assist patients without

insurance through direct patient as-

sistance programs. There is less guid-

ance for us on how to assist people

who are under-insured, with minimal

coverage but are not indigent. Under

the new reform law, I suspect we

will see large numbers of people who

opt for less than adequate coverage,

with high deductibles and co-pays

for drugs. We will face an interesting

situation—more insured people who

will be seeking sources to help pay

for their medicines.

Coupons conf ict

Looney: A source of tension between

payers and manufacturers today is

the latter’s use of co-pay offsets and

discount coupons to maintain brand

loyalty and discourage patients from

switching to the lower cost gener-

ics mandated by provider formulary

programs. How is this debate likely

to shake out, particularly as the pool

of insured patients grows with imple-

mentation of the individual mandate

under the Affordable Care Act?

Stefanacci: The consensus among

payers—including the Center for

Medicare and Medicaid Services

[CMS], where I served as Health

Policy Scholar—is that these offsets

have a distortive effect on the effort

to manage drug utilization. It contra-

venes the spirit of the Medicare Part

D drug benef t, where the so-called

“doughnut hole” was introduced

to ensure patients are motivated to

choose the lowest-cost generic option

to avoid full liability for the cost of

higher priced branded medications.

Payers prefer that companies support

patient assistance programs [PAP]

that don’t circumvent their utiliza-

tion management protocols.

Smeeding: Co-pay offsets and dis-

count cards exist because of the tier-

ing of formulary access. Manufactur-

ers want to defend brand share and

argue that these incentives reduce

costs to patients and thus promote

better adherence and fewer hospi-

tal stays. Payers say in return they

have made very careful assessments

that some products are preferred to

others; on eff ciency grounds, their

covered population should adhere to

that judgment and not be inf uenced

by outsiders with a vested interest in

promoting an alternative. Both par-

ties are defensive and are reluctant to

put their case directly to the public.

And a growing volume of data indi-

cates that co-pays in general are a

disincentive to adherence, can lead to

poor health choices, and thus don’t

make much sense economically.

Stefanacci: This presents a tough

balancing act for payers. They real-

ize that patients are primarily driven

into plans by the premium; in fact,

rich benef ts typically attract high

utilizers. So one balancing act is be-

tween premiums and benef ts. Anoth-

er is between patient out-of-pocket

charges and outcomes. While high

The days of approaching market access and cost cutting with an

“Us vs. Them” philosophy are numbered. We need to focus the discussion on how to help the patient with his disease instead of a limited focus on what happens when he receives our drug.

—Kara Clinton, Eli Lilly & Co.


35


Roundtable

out-of-pocket reduces a plan’s Rx ex-

penses, it could actually cost a plan

in poorer health outcomes, tipping

the balance. We will see how plans

fare in accommodating these con-

f icting forces.

Finding common ground

Looney: Can you identify areas where

payers are making constructive con-

tributions to the dialogue that all

sides seem to want?

Smeeding: We are seeing increased

alignment of incentives between

manufacturers and payers, result-

ing in coordinated management of

pharmacy benef ts. And adherence is

f nally being taken seriously by both

parties, with much productive work

taking place in the neglected special-

ty segment. Data is being shared for

use in specif c applications linked to

outcomes. For example, there is ex-

citing work underway in Medicare

on medication therapy management

where reimbursement will be based

on star ratings covering how well you

are following patients after treatment

and avoiding adverse events linked to

the inappropriate use of drugs. This

is encouraging the development of

patient registries, where payers and

drug f rms can both contribute to the

generation of real-world data that

leads to savings system-wide.

Clinton: United Healthcare and

Aetna are conducting numerous pi-

lot experiments with the industry

focused on oncology medicines. They

do not put price at the center of the

discussion but instead consider how

to eliminate inappropriate f nancial

barriers to positive patient outcomes.

Parks: Data is not always pris-

tine. There is a difference between

the careful, well-controlled popula-

tion of a clinical trial monitored by

regulators and the observational data

taken from clinical settings and pa-

tient registries. Once a drug gets used

in the real world, the “confounders”

on data rise exponentially. These are

diff cult to scrub to obtain a clean

result. We’d like more support from

payers and regulators in f nding ways

to reconcile the confounders and get

at least some semblance of a pure

data set—one that is useful for deci-

sion-making.

Looney: Any f nal comments

about the pace of change affecting

market access?

Stefanacci: The US healthcare

system is facing a revolutionary

shift away from employer-based

insurance. We will see movement

toward the new Health Insurance

Marketplace [HIM] exchanges, led

by a gradual mass exodus from em-

ployer-sponsored plans. The Obama

Administration has actually given a

boost to this trend by delaying the

penalty on employers for not provid-

ing coverage. The other shift is in

care delivery, specifically where phy-

sicians like myself practice. This is

different than the physician hospital

organization model of the 1990s that

failed, forcing physicians back into

private practice. Physicians today

are accepting these new care models

as they tend to be more comfortable

with being salaried, committed to

normal work hours, and handing

the administrative burdens over to

someone else. This new “organized

customer” is here to stay. With the

shift of physicians toward these new

care delivery models, treatment de-

cisions will be decided not by phy-

sician “pull through” but instead in

the “c suites” of these new provider

groups. Decisions on drugs are no

longer in the hands of the physician.

Access determinations will be made

at a much higher level, based on the

delivery of outcomes that these new

provider groups are being held ac-

countable for.

Parks: Information is equally

transformative. Apple recently un-

veiled a new digital product it calls

Life Tracker that is primarily de-

signed for athletes interested in eval-

uating their training progress. But

imagine how payers could use this

technology to follow the routine life-

styles of their insured populations

and make coverage and treatment as-

sessments around that data. Whoever

can f nd commercially advantageous

uses from this rising tide of informa-

tion technology will get to the top of

the market f rst. Just think of what

this data retrieval could mean for

managing Type 2 diabetes.

William Looney is Pharma Exec’s Editor-

in-Chief. He can be reached at wlooney@

advanstar.com

Author’s Note: Statements attributed to

participants in this roundtable do not necessarily

represent the off cial views or positions of their

aff liated companies.

We are seeing increased alignment of incentives between manufacturers and payers, resulting in coordinated management of pharmacy benef ts. Adherence is f nally being taken seriously by both parties, with much productive work taking place in the neglected specialty segment.

—Jim Smeeding, National Association of Specialty Pharmacy


36


36

PHARMACEUTICAL EXECUTIVE NOVEMBER 2013 www.PharmExec.com

Supply Chain

Scanning the Future In response to some high-profle

thefts and product counterfeits that

have occurred over that past few years,

governments around the world have

turned their attention to securing the

supply chain through regulation fo-

cused on product serialization.

Currently, during manufacture

every batch of pharmaceuticals is as-

signed a lot number. Each container

of product produced in that batch has

the same lot, or serial, number. This al-

lows the manufacturer some ability to

track its product as it moves through

the supply chain to its fnal stop at

the pharmacists’ bench. Product is be-

ing followed, but it is being tracked

with a wide net. If there is a problem

with the lot from theft, tampering, or

counterfeiting the entire lot must be re-

called—there is no way to differentiate

individual containers produced in the

same lot.

“The issue with pharmaceuti-

cal cargo is not so much the impact

of the product itself that is stolen [or

Getty Images/fotostorm

In response to well-publicized security threats, regulatory

authorities in the United States and Europe are moving

toward the enactment of new legislation that will change

the way pharma products are handled and shipped

throughout the supply chain.

The state of the pharmaceutical

supply chain can be summed up

in three words: serialization is

coming. The era of “track and trace” is

upon us. Although it is unclear at this

moment what level of tracking will ul-

timately be required, companies need

to be prepared for regulations that will

alter the way pharmaceuticals are pack-

aged and shipped. New laws will raise

your risk profle—particularly in ensur-

ing product safety.

The changes are occurring as the

act of manufacture itself has become a

strategic global priority for Big Phar-

ma. Unlike a decade or two ago when

much of the production was handled

in-house, pharma is relying more on

contract vendor manufacturing to keep

pharmacy shelves full. As more and

more of the R&D and manufacturing

functions are outsourced, the impor-

tance of a safe and secure supply chain

becomes ever more prevalent.

By Timothy Denman, Senior Managing Editor


Presented by

Sponsored by

ON-DEMAND WEBINAR

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EVENT OVERVIEW:Oncology continues to evolve towards a promising, but increas-ingly intricate future. Physicians face rapidly changing technology and legislations, more complex treatment decisions, as well as reim-bursement and time pressure. All of these factors have created a shift in physician needs, impacting their relations with the pharma-ceutical-biotech industry. During this presentation, we will examine how industry trends are impacting the way Pharmaceutical and Biotech companies interact with physicians, and how to implement strategies to optimize

engagement with providers.

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n Key industry trends impacting oncology providers

n How to implement strategies that foster strong relationships with providers

n New approaches to deliver relevant and timely information to providers

PRESENTERS

Debra Patt, MD

Medical Director of Healthcare Informatics,

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practicing physician at Texas Oncology

afliated with The US Oncology Network

Sandy Smith, RN, MSN, AOCN

Senior Director of Clinical Education Services,

McKesson Specialty Health

MODERATOR

Julian Upton

Senior Editor,

Pharmaceutical Executive

For questions, contact Sara Barschdorf at [email protected]

Key Learning Objectives:

n Understand key trends in oncology impacting physicians

n Review physicians’ preferences when engaging with the Industry

n Examine strategies that drive sales force efectiveness

n Discuss ways to foster long-term relationships with physicians and other providers

n Learn how to develop a multi-pronged approach to maximize your time with providers

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Who Should Attend:

Professionals from

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38


Supply Chain

counterfeited],” says Don Hsieh, di-

rector of commercial and industrial

marketing at Tyco Integrated Secu-

rity. “The products are made in lots.

If that particular lot has to be recalled

the cost will be in multiples of the

original loss.”

Under the upcoming regulations,

product will need to be traceable at

the unit level. Giving each unit it own

serial number will allow individual

packages to be tracked up and down

the supply chain, allowing for great-

er security and lessening large-scale

recalls.

The United States and Europe have

fallen behind Turkey, Italy, Chile, and

even India and China in the area of

regulatory requirements for track and

trace and are in the process of playing

catch up. Although each entity is pro-

posing different levels of traceability,

one thing remains constant: increased

regulations are on the way.

Legislation: a closer look

United States. The idea of unit seri-

alization is not new—the California

Board of Pharmacy has been working

on a bill that will require an electron-

ic pedigree at the unit level for over

a decade. Under the legislation that

is scheduled to go live on January 1,

2015, every change of ownership of an

individual unit as it passes through the

supply chain needs to be recorded and

available for inspection at the pharma-

cy level. At least 50 percent of a com-

pany’s product that is sold in the state

will need to comply with the new leg-

islation by the start of 2015, with the

remainder on January 1, 2016.

As the California initiative gets

closer to implementation, the federal

government is working on legislation

simultaneously that would supersede

the California law. The House and

Senate approved a draft version of the

Drug Quality and Security Act in late

September. Should the proposed leg-

islation be enacted (www.govtrack.us

gives it a 42 percent chance of being

signed into law), it would supplant any

and all state legislation on track and

trace and ePedigree.

Despite the uncertainty surround-

ing which legislation will ultimately

become the standard, industry is fo-

cused on the January 2015 deadline

for implementation and the California

ePedigree legislation, as it is likely to

come on line frst.

“I would say that nearly half of the

frms that we have polled have already

started their pilot testing,” Jamie

Hintlian, principal, Americas at EY,

told Pharm Exec. “It is a very tight

pack. No one is out front in the sense

that they have 100 percent of their

lines and products serialized. I think

most are going to come close to hitting

the 50 percent mark by January 2015,

but there are concerns. Concerns

about how much do you invest versus

hedge because maybe there will be a

federal law that trumps California.

While many would like to wait and

see, they are not ready to play chicken

with the state of California, the 12th

largest economy in the world.”

The proposed legislation gaining

traction in Congress does not go as far

as the California initiative, at least at

the start. The main points of the pro-

posed bill, H.R. 3204, include:

» Four years after enactment, manu-

facturers need to serialize each

package of product distributed

within the United States.

» At the start of 2015 for manufac-

turers and July 2015 for dispens-

ers—as product changes owner-

ship, companies need to provide

or receive transaction information,

history, and statements in a single

document (paper or electronic).

Four years from enactment, all in-

formation needs to be exchanged

electronically.

» Ten years after enactment transac-

tion information needs to be ex-

changed in an electronic matter at

the unit level starting at the point of

manufacture.

The glaring difference between the

California and Federal proposals is the

timeline required for full serialization

at the unit level. California calls for

unit serialization on January 1, 2015,

while the Federal legislation requires

the same four years after the Drug

Quality and Security Act takes effect.

The differences are forcing industry to

decide whether to pull for a particular

piece of legislation. But which one?

“To some degree, industry’s prefer-

ence for one piece of legislation over

the other will depend on where or-

ganizations are on the readiness con-

tinuum,” Hintlian says. “It appears

based on the recent September agree-

ment between the House and Senate,

the federal direction may be closer to

California’s direction, as it requires se-

rialization at the package level. In this

case, organizations that have made

progress with their California com-

pliance programs will likely continue

with their programs, although some

may alter their timelines for deploy-

ment based on how the federal direc-

tion is fnalized.”

European Union. Like their US

counterparts, EU lawmakers are in the

midst of hammering out some form of

serialization legislation. The Direc-

tive 2011/62/EU the European Parlia-

ment issued in June of 2011 gives EU

member states until 2016 to enact se-

rialization legislation. Just like in the

United States the exact legislation is

unclear—with each of the 28 Member

States being charged with creating its

own legislation things are bound to

get increasingly complicated.

Unlike the proposed US legislation,

the likely EU laws will focus on the au-

thentication of the product at the time

of dispensing, instead of the individual

movement of the product through the

entire supply chain. When a pharma-

cist scans a blister pack (the most com-

mon form of dispensing in Europe) at

the counter, the product’s serial num-

ber would be run through a database

to check if that particular number was


39


Supply Chain

fagged for any reason. If the product

was fagged the pharmacist would be

unable to dispense.

Biggest threats to the supply chain

Counterfeit pharmaceutical drugs are

becoming more and more prevalent

around the globe—as counterfeiters

become more sophisticated it becomes

increasingly diffcult to tell the differ-

ence between a counterfeit product

and the real McCoy, especially at frst

blush. While there will always be a

black market for prescription drugs,

the adoption of stricter tracking of

pharmaceuticals as they cycle through

the supply chain will make it tougher

for counterfeits to make their way into

the legitimate trade.

UPS’s 7th annual “Pain in the (Sup-

ply) Chain Survey” polled healthcare

executives across the globe on their

top business and logistics concerns.

According to the report, 48 percent of

those polled believed that counterfeiter

sophistication is growing faster than

countermeasures. In Asia, 76 percent

of those polled were concerned about

product security, signifcantly more

than their peers elsewhere.

“As more and more companies are

moving into the Asian, Latin Ameri-

can, and African markets, the length

of the supply chain and the handoffs

have increased,” William Hook, vice

president, global strategy, healthcare

logistics at UPS said. “Every time

the chain is increased you leave a

vulnerable point.”

As the supply chain lengthens in a

global marketplace, the possibility of

theft increases as well. While most

would agree that the supply chain in

the United States is relatively secure

from theft, the same cannot be said of

other areas of the globe.

“On a percentage basis, pharma-

ceutical theft in the supply chain is not

high,” Hsieh says. “What is interesting

is it is usually one of the higher value

products that are stolen. There was

a high of several million dollars per

theft incidence a couple years back.

Then many pharma companies put a

limit on the amount that can go out

in one shipment. Last year the average

pharmaceutical cargo theft was valued

at about half a million dollars.”

Be Proactive—and Think Small

In anticipation of serialization legis-

lation taking effect, pharmaceutical

companies need to review not only

their own internal practices, but also

those of their outsourcing partners. As

more and more work is outsourced the

possibility for mishandling of product

becomes greater and greater, and the

need for technology solutions for both

sides of the outsourcing relationship

becomes more evident.

“We are seeing OEMs who are

struggling with small contract manu-

facturers who don’t have systems that

can facilitate the sharing of product

information,” John Danese, senior

director, life sciences at Oracle says.

“I have spoken with some of our

OEMs who are preparing for the Cal-

ifornia ePedigree regulation and oth-

er global track and trace regulations.

They say some of their CMO’s idea

of an advanced data sharing mecha-

nism is a fax machine. Additional

electronic communication is needed

moving forward as these regulations

come online in order for these small

companies to be able to exchange the

necessary data.”

The global pharma supply chain

continues to grow with each passing

year. With every additional link in the

chain greater risk follows.

Timothy Denman is Pharm Exec’s Senior

Managing Editor. He can be reached at

[email protected].

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In the 6th annual UPS Pain in the (Supply) Chain survey, UPS sees emerging evi-

dence of a coming shift in the healthcare supply chain.

Judging by the results of the latest Pain in the (Supply) Chain survey, while most healthcare companies continue to grapple with all-too-familiar pain points in their supply chains, some are reporting that the strategies they employed have brought about success.

Meanwhile, the increasing complexity of healthcare products, the burdens of the regulatory environment and the promise of emerging markets are combining to generate not only new challenges but also opportunities to rethink the supply chain.

This year’s expanded survey reveals that while healthcare companies have been successful to varying degrees in address-ing the industry’s most prevalent logistics challenges, the strategies that ensure bal-anced success are elusive .

New insights, however, show that those who have been most successful are increasingly leveraging logistics and dis-tribution partnerships for expertise and

support in areas such as new market ac-cess, supply chain optimization, regulatory compliance, IT, monitoring and interven-tion, and even shipment insurance. UPS sees the trend towards partnership gain-ing momentum as healthcare logistics ex-ecutives seek proven methods for optimiz-ing their intricate, elongated supply chains.

While many healthcare manufacturers rely primarily on their own initiative and resources to manage their supply chains, it is becoming increasingly apparent that the industry leaders reporting the most signif-cant and sustained supply chain improve-ments are leveraging global supply chain solution providers. This leaner model is less capital intensive, freeing up resources and allowing companies to focus on their core life sciences competencies.

New growth opportunities exist along-side an increasingly complex regulatory

and legislative environment.

Supply chain concernsRegulatory compliance, product security and cost management top the list of global supply chain concerns in 2013. For the frst time, product security jumped ahead of cost management to become the second top global supply chain pain point. (see chart above). The latest survey shows that

companies are focusing on technology adoption, increasing regulatory expertise and using partnerships with outside ex-perts to overcome compliance challenges. Despite other countries’ regulations, three-quarters of healthcare executives are still planning to tap new global markets within the next fve years.

Today, supply chains are longer and products are more high-value and com-plex, making product protection para-mount to success. As product protection challenges grow in intricacy, many logis-tics executives are insuring shipments with trusted partners and also investing in technology solutions. Top cost chal-lenges include shipping and labor, and more complex supply chains. Healthcare professionals then are focused on logistics and distribution partnerships, technology investment and supply chain optimization

as leading cost management strategies.

Future strategiesThe top three growth strategies for health-care executives over the next fve years are technology investment, global market expansion and increased use of new distri-bution channels — with signifcant jumps in the number of executives employing these strategies.

In the three leading supply chain con-cerns (regulatory compliance, product pro-tection and managing costs), two themes surface as supply chain best practices: accumulating or partnering for expertise, and using best-in-class technologies.

Logistics professionals are ensuring they have the supply chain and regula-tory profciency — whichever route they choose to conquer these challenges.

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noVeMBer 2013 FOCUS REPORTS S2

This sponsored supplement was produced by Focus Reports.

Project Director: Andrey MuntyanProject Coordinator: Emilie LaumondProject Assistants: Joan Abellan Ponce de Leon,

Stephen WagerProject Publisher: Julie AvenaGraphic Assistance: Omar Rahli

For exclusive interviews and more info, please log onto www.pharmaboardroom.comor write to [email protected]

The past three years have been some of the most event-

ful in memory for Taiwan’s life sciences industry. At

this year’s Bio Taiwan exhibition, the annual confer-

ence that invites the international life sciences com-

munity to the island, the excitement was palpable. Foreign

companies turned out in record numbers to a keynote ad-

dress from President Ma Ying-Jeou, who acknowledged

that Taiwan was a latecomer to the sector, but nonetheless

had the capability and will to compete. Buoyed by a suc-

cessful wave of fnancing, good product strategy, and in-

creasing international penetration, the industry seems

confdent.

Painting by Adele Chen

Preparing for TakeoffTAIWAN:TAIWAN:


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S3 FOCUS REPORTS noVeMBer 2013

Albert Liou, vice chairman of PAREXEL International,

thinks that now Taiwan needs leadership, and success stories.

He points to the drug development chain. “Taiwan has great

capabilities in each step along the chain,” he says. “But the

linkages are not as strong as they could be. Academically and

therapeutically, Taiwan is very capable in certain areas, like

liver disease. But in terms of drug development from discov-

ery to market, we are several years behind the West. We need

leadership that can unite the links in the chain. We need, as

well, our frst success stories to serve as motivation and as

development models.”

“We believe those frst stories are coming shortly,” Liou

says. As for leadership, many in Taiwan look to a man that has

emerged as a major connector in the country’s life sciences in-

dustry: Johnsee Lee, who chairs Taiwan’s Development Center

for Biotechnology (DCB) and the Taiwan Bio Industry Orga-

nization (TBIO).

When Lee took over his post at the DCB in 2010, he felt

that the institute focused too much on academic research:

“The wrong place for us,” he says. Many industry stakehold-

ers have pointed out that in the life sciences, Taiwan has too

long emphasized—“perhaps overemphasized,” says Lee—basic

research over commercialization, and that the DCB was do-

ing the same work as other national institutes like Academia

Sinica.

Lee quickly got to work positioning DCB as the “second

baton in the relay race,” a translational facilitator between

the lab and the shelf. As Taiwan implements a strategy that

its economic council calls Diversify-Innovate-Globalize

(DIG) to ease away from the country’s reliance on informa-

tion and communication technologies (ICT), commercializ-

ing new industries is the name of the game. Biotech is at the

top of a list of six strategic emerging sectors: the “key indus-

try” to watch in Taiwan today, says EY’s country managing

partner James Wang.

In his capacity as chairman of the TBIO, a unifying as-

sociation in Taiwan’s life science industry, Lee is responsible

not only for helping Taiwan’s drug development effort, but for

connecting the dots in a staggeringly diverse sector. In 2013,

Taiwan’s Ministry of Economic Affairs (MOEA) counted 1505

life sciences companies in this market of 23 million people.

Grouped under the heading “biotechnology”—the term that

we will use throughout this report—these companies may be

surprising in number for a small island nation, but they are

perhaps most impressive in variety. Taiwan has 450 companies

in the applied biotech segment, 350 companies in the pharma-

ceutical segment and 705 medical devices companies!

From left: Johnsee Lee, Chairman, Development Center for

Biotechnology; Albert Liou, Vice Chairman Asia Pacifc, Parexel;

James Wang, Country Managing Partner, EY

Bio Taiwan 2013 with President Ma Ying-Jeou



taiwan report

pharmaboardroom.com


Focus Reports frst met Medigen chairman

Stanley Chang in 2010. “Three years ago,” he

says, “we sat and spoke in the very same offce,

with the very same furniture. The difference is

that today, our company has grown almost 40

times in value.”

Medigen, whose early-stage liver cancer drug

PI-88 should “by all indicators” be the second

innovative drug to come out of Taiwan after Tai-

gen’s Nemonoxacin, went public on the GreTai

exchange in 2011 in an IPO that Chang calls highly suc-

cessful.

“In the past,” he says, “investors in Taiwan believed

that this sector was hopeless, and that drug development

was mission impossible. But we have championed the

idea that as long as the vision is correct, as long as the

strategy is correct, and as long as the market conditions

are correct, our goals are achievable!”

Chang believes that investor confdence was bolstered

by two factors: trial results, and market potential. PI-88

has now successfully moved to Phase III. Its

intended target, liver cancer, is a leading killer

in China, Taiwan, and Asia at large.

Medigen is participating in the pilot program

that is testing the waters for clinical collaboration

between Taiwan and China. Chang is excited: “In-

vestors saw two hurdles for our industry in the

past: approval in Taiwan, and approval in China.

In the next year or two, those two hurdles will for-

mally become one. There will be mutual recogni-

tion—saving huge amounts of time and money.”

Is his company overvalued? Chang says no. “Let’s con-

sider the typical case in the West: normally, when a bio-

tech company has several projects in its portfolio, its fron-

tier product is in Phase III, and its business fundamentals

are strong, its share price hovers around 10 USD. Hence,

our stock price is not over-infated—rather, companies

like Medigen were undervalued in the past. We are now

approaching the international standard. In fact, I believe

there is room for further growth.”

An IPO case study: Medigen

Stanley Chang,

CEO & Chairman,

Medigen

Biotechnology Corp

Medigen Biotechnology Corporation upholds the vision of “Innovations for a Better Life” focusing at the

developments of new therapies for liver diseases and cancers. Medigen has three major business units:

New Drug Development, Nucleic Acid Testing, and Cell-Based Vaccine Technology.

We believe that, through international collaborations and persistence in pursuing best innovations,

Medigen will become one of the premier biotechnology companies in Asia.

14F, Bldg F, Park St., Nangang District, Taipei City 115, Taiwan (R.O.C.) / Tel: 886-2-2653-5200 / Fax: 886-2-2785-6120

www.medigen.com.tw


taiwan report



Wang believes Taiwan is on to

something. “The industry is extremely

diverse, and it’s flled with companies

that are in most cases much smaller

than their Western counterparts,” he

says. “But that kind of structure is

good— it’s good for innovation, incu-

bation, and cultivating a knowledge

focus.”

Growth drivers

The Biotechnology & Pharmaceutical

Industries Promotion Offce (BPIPO) re-

ports that total revenues for the industry

have more than doubled between 2004

and 2012, to USD 8.88 billion. Lee at-

tributes much of the difference to the

newcomers, founded amid a wave of in-

vestment that began in the early 1990s.

After what Lee calls an “ungraceful” de-

velopment period, these companies have

now surpassed Taiwan’s “old guard”—

large, established players that sold ge-

nerics locally for decades—in terms of

innovation and internationalization.

Wang says the industry is in the lat-

ter end of its incubation stage. Look-

ing ahead, Taiwan Inc.’s pipeline looks

great: 17 compounds in Phase I, 73 in

Phase II and III, and 6 at the NDA stage

(BPIPO, April 2013).

Meanwhile, the Economic Coopera-

tion Framework Agreement (ECFA), a

preferential trade pact between China

Biotechnology Industry Revenues, 2004–2012

Source: Biotechnology & Pharmaceutical Industries Promotion Office, Ministry of Economic Affairs, 2013

10,000

9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

–

2004 2005 2006 2007 2008 2009 2010 2011 2012

8,885

3,6

89

2,7

03

Billions U

SD

Applied Biotech Pharmaceuticals Medical Devices

CAGR 9%

2,4

93

Vision: Diamond Action Plan for Biotechnology

• Translation: Bridge upstream innovation with downstream commercialization

• Incubation: Establish biotech hubs through incubation of startup companies

• Funding: Facilitate access to venture funds, grants and tax incentives

• Regulation: Set up regulatory environment of international standard

Legislation

• Biotech and New Pharmaceutical Development Act offers industry incentives, including the possibility to offset

35% of R&D and employee training expenditures against corporate income tax

• Revision of Income Tax Act reduces corporate income tax from 25% to 17% (relative to 25% in China and 22% in Korea)

National Science Council-funded National Programs

• National Science and Technology Program for Biotechnology and Pharmaceuticals (2000 – 2010)

• National Research Program for Genomic Medicine (2002 – 2010)

• National Research Program for Biopharmaceuticals (2011 – present)

Ministry of Economic Affairs sponsoring schemes for industry

• Fast track approval (30 days) for grant application

• Subsidy for clinical trials up to 49% of total budget

Source: Biotechnology & Pharmaceutical Industries Promotion Offce, Ministry of Economic Affairs

Government support: a breakdown

Excellent turnout at BioTaiwan



taiwan report

pharmaboardroom.com


Chang Yi Wang, chairperson & CSO of United

Biomedical Inc. (UBI) and UBI Asia, is working

on a functional cure for HIV and a vaccine for

Alzheimer’s.

Wang: At UBI Asia, we helped change the

ecosystem in Taiwan. From the outset, we in-

sisted on developing truly heavyweight products

in this country.

When we frst arrived here, the environment

was quite immature. Despite the fact that Tai-

wan was investing in biotech, there seemed

to be no cohesive planning. The market had money and

knew how to sell and make generics, but did not have

experience in transforming researchers’ ideas into new

commercial drugs.

I have not seen any true biopharma products come

out of Taiwan yet, despite the establishment of institu-

tions to bridge academia and industry. I believe this is

because the emphasis in the past was on technology

development, rather than products. Technology is impor-

tant, but the ecosystem needs a product focus

to elevate technology to the next stage. A plat-

form can deliver a thousand results, but which

results? Without a product, you cannot tie the

pieces of the puzzle together.

UBI’s fagship HIV receptor antibody was able

to act as that catalyst. We have built a very sol-

id drug development platform and team in this

country, and we have worked closely with agen-

cies like the Center for Drug Evaluation (CDE)

to obtain Phase I approval for drugs that are

frst-in-man. CDE had little experience in such matters:

in the past, Taiwan was a hub only for Phase IV trials, or

bioequivalence studies for generics. Nobody had looked

to Taiwan for frst-in-man research before us. Today, we

can bring a pipeline of drugs through Taiwan—some are

already in Phase II, and others will soon get there.

The next stage will be to scale up. We are preparing for

Phase III, and commercialization. The government contin-

ues to lag behind us, but we can help them to catch up.

Products make the platform

Chang Yi Wang,

Chairperson & CEO,

United Biomedical

Asia, Inc.


taiwan report



and Taiwan signed in 2010, has lowered trade barriers and

opened the door for broader collaboration with a country that

IMS estimates will become the world’s second largest pharma

market by 2015. “If Taiwanese companies develop a new mol-

ecule for a condition with high prevalence in Asia, why not

beneft a larger population?,” DCB’s Lee points out.

Investors smell an opportunity. “In the past,” Lee says,

“we were missing a crucial element of our ecosystem: fnanc-

ing. Now, because of the health of our capital market, venture

capitalists are quite willing to come on board because they see

an exit: sell the shares when companies foat their stock on

the public market. If Initial Public Offerings (IPOs) weren’t

so feasible in Taiwan at the moment, investors would be very

reluctant to participate in the long-term play that is biotech.”

eCFA: Just thAt—A FrAmework

Call it a promise. Taiwanese companies report that just be-

cause ECFA is in place doesn’t mean working with the jugger-

naut is straightforward.

Christopher Tsai, whose blood banking and genetic testing

company Bionet has successfully penetrated China, isn’t par-

ticularly bullish. When asked whether China is an easy market

for a neighbor with a shared heritage, Tsai offers mixed feel-

ings: “Is it easier for Taiwanese companies to do business

in China than it might be for companies with less cultural,

geographical, and political proximity? Absolutely. But that

doesn’t mean we have a free ticket. Penetrating China is still

very, very diffcult.”

For instance, three years after ECFA was put is in place,

pharmaceutical and med tech manufacturers in Taiwan still

need a separate license to sell their products in China, which is

not the case for Chinese healthcare products entering Taiwan.

As the chairman of the medical diagnostics company General

Biologics Corp, T.C. Lin, reports, “Today, it is not easy to get

licenses in China for our products, particularly with the furor

surrounding recent Big Pharma scandals in the country. The

Taiwan government is pushing for mutual recognition, and

producers on this side of the strait are eagerly anticipating a

change.” For those that rely heavily on the mainland, a China-

based manufacturing plant is often the best bet for now.

And yet, Taiwan has high hopes that this and other barriers

will come down one by one as ECFA gains steam. One particu-

lar focus area for cooperation is clinical research. The Taiwan

Food and Drug Administration (TFDA), which—crucially—is

by all accounts an excellent regulator, is working in concert

with the China Food & Drug Administration (CFDA) to pave

the way for what Taigen chair Ming-Chu Hsu calls a “faster,”

“lower cost” paradigm for reaching the Greater China market

with innovation.

Taigen, a drug development company that is at the New

Drug Application (NDA) stage with its diabetes-focused prod-

uct Nemonoxacin, is expected to release Taiwan’s frst innova-

tive drug capable of meeting the CFDA’s Category 1.1 New

Drug requirements. The company is participating in a clinical

trial pilot program with a handful of other late-stage peers.

Industry stakeholders hope the program will lead to broad

harmonization of protocols and mutual data recognition. The

“ultimate goal,” says Parexel’s Albert Liou, is that “any new

drug will be simultaneously approved in Taiwan and China.”

The typical model may look something like this: compa-

nies will conduct Phase I and Phase II trials in Taiwan, where

today the IP protection is more stringent, the clinical trial

From left: Christopher Tsai, CEO, Bionet Corp; T.C. Lin, Chairman

& President, General Biologicals Corporation; Ming-Chu Hsu,

Chairman and CEO, TaiGen Biotechnology

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taiwan report



authorization process

is faster (two to three

months in Taiwan, ver-

sus 12 to 24 months

in China), the patient

protection system is

mature, and there are

a number of great hos-

pitals and researchers.

“Ideally,” says Liou,

“Chinese authorities

will accept this data,

and Phase III trials will

take place in Taiwan

and China, with an eye

toward simultaneous

NDA flings.”

Some remain skepti-

cal. Fang-Yue Lin, the

superintendent of Tai-

pei Veterans General

Hospital (TVGH), a

major clinical research

Ex-Genentech veterans Racho

Jordanov and Rose Lin co-found-

ed the drug development servic-

es startup JHL Biotech in 2012.

In their frst round of fnancing,

they raised more money than

the Genentech IPO!

Why headquarter this company in

Taiwan?

Firstly, Taiwan is in Asia—and

this region is where the growth is.

Within Asia, Taiwan has a num-

ber of advantages for us. First of

all, it has wonderful science and

a great entrepreneurial spirit.

They understand technology, and

they understand manufacturing.

Taiwan also respects intellectual

property, and has excellent sup-

port for clinical trials.

What gap can you fll in the market?

Most countries in this region have

the same issue: they cannot af-

ford Western drug prices, and while

they have the science and the

funds to make drugs themselves,

they lack technical understanding.

That is something we can provide

in both biosimilar and new drug

development.

What’s next for JHL?

Our dream has always been to cre-

ate what we call our ‘solar system’:

a technology center in Taiwan, with

manufacturing companies spread

around China and Southeast Asia.

We are already putting the largest

single-use biopharma factory in the

world in China—but we won’t stop

there.

The startup

Racho Jordanov,

President & CEO,

JHL Biotech

Rose Lin, General

Manager, JHL Biotech



taiwan report

pharmaboardroom.com


center in Taiwan, remarks, “It would re-

quire a lot of ‘advantage sharing’ for Chi-

na to accept clinical trial results obtained

in Taiwan—and in my personal opinion,

it will be very diffcult to persuade the

Chinese on this point.” Industry leaders

point to the fact that similar agreements

with Hong Kong have looked great on pa-

per but meant less in practice.

Liou is more optimistic. “I think the

model will work, and eventually, it will

work quite smoothly,” he says. He doesn’t

believe that Hong Kong is a fair compari-

son. After all, both men agree on one thing: as Lin puts it, Tai-

wan has a “very robust” indigenous pharmaceutical industry,

with “many new drugs” under development—“something that

differentiates this country from its neighbors.” Liou observes

that the government has a vested interest in seeing this indus-

try succeed, and will work hard to fnd a way to penetrate

Taiwan’s biggest potential market.

Moreover, although currently only local companies are

involved in the clinical pilot program with the mainland, it

is feasible that once the kinks are worked out, benefts will

extend to multinationals too. Lin, whose

hospital has a research cooperation

agreement with GSK, has a confdent

partner on his hands. GSK’s local general

manager, Thomas Willemsen, says, “Tai-

wan remains one of the best R&D loca-

tions in the Asia Pacifc region, despite its

relatively small market size. And in addi-

tion to being a good research platform,

Taiwan is also the perfect epidemiologi-

cal environment for proof of concept or

early phase trials for products destined

for the Chinese market.”

ECFA, as the name implies, is just that—a framework. It’s

up to the stakeholders to bring real cases through.

the enAbler

The buck doesn’t stop at R&D. In Taiwan, the saying goes

that from a strategic standpoint, the fastest route to Beijing

is through Taipei. Marietta Wu, who heads the Taiwan sub-

sidiary of US-based venture capital frm Burrill and Com-

pany, calls the country an “enabler.” An enabler for large

From left: Thomas Willemsen, Vice

President and General Manager, GSK;

Fang-Yue Lin, Superintendent, Taipei

Veterans General Hospital

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Project Management

CMC

Development

Nonclinical

Material Supply

Clinical

Material Supply

Regulatory

Support


taiwan report



multinationals, but principally an enabler for the second tier:

small to mid-size biotechs.

“When these companies attempt to penetrate the Chinese

market, they inevitably face various hurdles,” says Wu. “Espe-

cially now that ECFA is in place, Taiwanese partners can serve

as a springboard. Taiwan understands Western business prac-

tices, can offer a strong talent pool to the industry, and also

has very strong IP protection and transparent governance—all

issues that Western companies care about deeply.”

One common approach for international companies, ac-

cording to Audrey Tseng, deputy chairman at PwC Taiwan is

to “undertake R&D in Taiwan and use China for market and

commercial purposes”.

For companies moving from East to West, it may be that the

fastest route to Washington is through Taipei as well. Wu men-

tions a China-based Burrill portfolio company that is looking

to establish an operation

in Taiwan. Why? Wu

explains, “As the com-

pany has grown and

established itself in the

Chinese market, it has

decided to try to reach

the US. They found

that Taiwan is a great

place to do clinical stud-

ies, and a great place to

bridge to the West.”

Taiwan is known for meeting international standards at a

time when China still lags behind. “A good partnership in Tai-

wan can enable a Chinese company to attain US FDA compli-

ance. FDA certifcation is a long process—having an already-

certifed Taiwanese partner can help them to climb that ladder

much faster,” Wu says. Where once Taiwan outsourced to

China for low-value manufacturing, China is increasingly out-

sourcing to Taiwan when it needs to climb up the value chain.

need Fuel? GAs up At the GretAi

“Perhaps the most profound change in the industry has been

the ascent of biotech companies pursuing an IPO,” says Au-

drey Tseng, deputy chairman at PwC Taiwan. “By pursuing

this capital raising path, many companies have reaped the

rewards. As a result of the sector’s development and

Taiwan’s unique stock trading environment, there has

been a conspicuous shift in investment capital from

the ICT sector and towards the biotech arena.”

ASLAN, a Singapore-based virtual drug develop-

ment company, took the decision to set up an offce in

Taipei. Its CEO Carl Firth says he and his team came

for the forward-thinking clinical environment—but

they don’t mind the fnancing options either.

Firth says, “Look at the number of venture funds

that exist in Taiwan. There may well be hundreds!

Many are now actively looking for a piece of the pie

in biotech. At the same time, we have the ‘Mom and

Pop’ investors sitting at home and thinking that they

want a bit of risk in their stock portfolio, and don’t

just want to buy into blue chips. A younger, up and

coming biotech company can look quite appealing. Fi-

nally, we have big corporates that have set up venture

funds. YFY—a paper conglomerate that set up YFY

Biotech Management Company—is a good example.

These funds have an appetite for risk that is quite

unique in Asia Pacifc.”

As the ICT sector has matured, investors are

looking for a new outlet. Lai-Shou Su, deputy ex-

ecutive secretary of the state-controlled National

Number of compounds that have reached Phase I: 17*

Number of compounds that have reached Phase II and III: 73*

Number of compounds that have reached NDA stage: 6*

Percentage of compounds applied for IND with U.S. FDA: 45%**

*Source: Biotechnology & Pharmaceutical Industries Promotion Offce, Ministry of

Economic Affairs, April 2013

**Source: Department of Industrial Information, Development Center for Biotechnol-

ogy, December 2012

Drug Development in Taiwan

Small molecules47%

Others1%

Biologics23%

Botanics32%

From left: Marietta Wu, Managing Director Taiwan, Burrill & Company; Audrey Tseng, Deputy Chairman,

PwC; Carl Firth, CEO, ASLAN Pharmaceuticals; Hong-Jen Chang, Chairman & CEO, YFY Biotech Management

Company; Lai-Shou Su, Deputy Executive Secretary, National Development Fund, Executive Yuan



taiwan report

pharmaboardroom.com


Development Fund (NDF), says

that the Ministry of Economic

Affairs recognized the waning

opportunities in Taiwan’s prize

industry, and looked toward in-

cubation. “For the past thirty

years, this country has been very

successful in semiconductors,”

he reports. “But increasingly,

the proft margins in this feld

are shrinking. Meanwhile, in the

year 2000, the human genome

was sequenced—and like many

other countries, Taiwan became

very excited about the future of

biotech. The sector was chosen

as an important driver in the

diversifcation of our economy

away from high tech.”

Refecting on his place in the

ecosystem, Su says, “the reason

the government created this

fund is to help build new indus-

tries from the ground up, when

there is not yet much guaran-

tee of success. In this way, the private sector can build conf-

dence.” The NDF must “set the fre—then others will join in

by throwing more kindling!”

Among the private sector, the fre is now raging. According

to the Market Post Observation System of the Taiwan Stock

Exchange, the market capitalization of listed and over-the-

counter (OTC) biotech companies in Taiwan has grown an

astounding 520% in the last four years alone, from USD 2.5

billion in January 2009 to USD 15.7 billion in March 2013.

Of course, biotech tends to be a much longer-term play than

high tech. Investors have had to taper their expectations. Be-

fore the mentality shifted, many of the early-mover companies

had to demonstrate steady revenues before they could get into

the larger rounds of fnancing. But increasingly, companies

are able to sell the dream: “Some time ago,” reports Lee-Chen

Liu, president and CEO of the startup EirGenix, “investors

in Taiwan would always ask if they could see a return within

two or three years. Now, they ask about the product, and the

potential. Now, they seem willing to wait.”

EirGenix recently bought DCB’s biopharmaceutical pilot

plant facility, with an eye toward providing contract development

and manufacturing services (CDMO) to the world. “Our experi-

ence was quite remarkable,” Liu says. “We raised USD 18 million

in just two months. Our investors include active pharmaceutical

ingredient (API) producer Formosa Laboratories—which owns

20 percent of the company—venture capital frms, and banks. I

have never seen a fundraising round go this fast in the US.”

Total number of listed and OTC biotech companies in 2012: 71 (up from 13 in 2011)

Total revenues of companies in 2012: USD 3.31 billion (up 27% from 2011)

Total market capitalization of companies in 2012: USD 13.86 billion

Total market capitalization of companies in April 2013: USD 15.7 billion

Market cap growth, January 2009 – April 2013: 520%

Source: Market Observation Post System, Taiwan Stock Exchange, April 2013

Biotechnology Industry Market Capitalization, 2007–2013

16.00

14.00

12.00

10.00

8.00

6.00

4.00

2.00

0.00

2007 2008 2009 2010 2011 2012

Billion U

SD

200

160

120

80

40

0

13.86

3.51

371.43

No. of com

panie

s

Total revenue

Total market value

No. of listed companies

71

3.31


taiwan report



When it is ready, EirGenix will have

a great option for going public: the Gre-

Tai Securities Market (GTSM). Built

with small and medium enterprises

(SMEs) in mind—helping Taiwan’s

economy to develop the “Taiwan way”

says GreTai chairman Sou-Shan Wu—

the multifunction GreTai offers both

listed and over-the-counter (OTC) trad-

ing, tailored for companies that are part

of emerging industries.

Biotech has taken over the exchange.

At the time of writing, the top three

stocks traded on GreTai’s ‘emerging,’ or

OTC, market, are Taigen, TWi Pharma,

and OBI; Mycenax is 6th: all pharma

companies. Meanwhile, the biotechnol-

ogy and healthcare index leads GTSM

listed stock categories, more than dou-

bling the numbers put up by the major-

ity of other sectors. In 2012, more bio-

techs went public in Taiwan—13—than

companies from any other industry.

bubble, bubble, toil And trouble

Are we looking at a bubble? Wu is frank:

we are. “I think more than 30

percent of the biotech compa-

nies trading on the GTSM are

overvalued,” he says. “The

GTSM has a higher average

turnover ratio, and higher av-

erage P/E ratio, than the ex-

changes you will fnd in places

like Shanghai, New York, To-

kyo, or even Seoul. The ratios

for biotech are higher still.

Based on the numbers, no one

can say this isn’t a bubble in the truest

sense of the word.”

Dr. Soo, managing director of the Su-

pra Integration and Incubation Center

(Si2C), is equally candid: “The environ-

ment is starting to overheat. The prob-

lem is that this shooting star might have

promoted a short-term investment strat-

egy which is antithetical to the interests

of the development of the industry. We

need to address this danger.”

“And yet,” Wu continues,

“we need that bubble to grow.

Moreover, I would say the

bubble is still under control.

Why? First, we have more NT

dollars circulating in Taiwan

today than in years past—for

better or worse, this is a result

of the low interest rates we

have today.

The second reason is this

dream is a good one. Look

at how many people there are in China

that need safe drugs.”

Still, investors would do well to ex-

ercise caution. Tsu-Der Lee, chairman

of Taipei Medical University, says of the

state of the public market, “In a hurri-

cane, even a turkey can fy!”

For now, some companies are opting

Soushan Wu,

Chairman, GreTai

Securities Market

TWi Pharmaceuticals, Inc.3F, No. 41, Lane 221, Kang Chien Rd., Nei Hu Dist.

Tel: 886-2-26573350Fax: [email protected]

Innovation, Integrity and Integration

TWi Pharmaceuticals, Inc., headquartered in Taipei, Taiwan, is a technology-based specialty pharmaceutical company focusing on the development and commercialization of high barrier generic prescription products and branded drugs.



taiwan report

pharmaboardroom.com


for a more traditional approach. TWi

Pharmaceuticals, a US-focused generics

company, presents itself to investors frst

and foremost as a business that cares

about the bottom line.

Calvin Chen, the company’s presi-

dent, reports, “We told our underwrit-

ers and analysts not to look at us as a

pharma company, but rather as a proft-

driven business, regardless of our sector.

Better to compare us to the IT industry!

In fact, IT companies’ proft margins

typically approach 20-30 percent, while

ours is closer to 60 or 70. We believe

that revenues, rather than story, should

drive up the valuation of a company.”

Chen has a few words of caution.

“The market is quite hot right now,” he

says, “and my background as a venture

capitalist makes me look at the situation

with a bit of concern. Certain Taiwanese

drug development companies have out-

licensed their compounds to US compa-

nies, and now their market cap is equal

or greater than that of their US partners.

“That seems very strange to me. In my

experience, unless a US biotech can sell

its own product—unless they have the

capabilities of a Celgene or an Amgen—

they cannot become very proftable. The

reason US investors recognize the value

of smaller biotechs is because the typical

expectation for these companies is that a

larger player will acquire them. For the

investor, it’s almost like buying an op-

tion. But I wonder about the biotechs

in Taiwan. What is the ultimate exit for

their investors? We haven’t seen any such

acquisitions in this country yet.

“Local investors may not be sophis-

ticated enough today. I wonder, when

reality hits, what their reaction will be.”

Perhaps the market and its investors

could use a bit more education, and a

bit more experience. Indeed, implant-

ing a new thought process is at the heart

of Si2C’s strategy. “It is critical that the

government, academic institutions and

investors reaffrm a stable, long-term in-

vestment approach and do not panic and

fee at the frst sign of diffculty,” says Dr

Soo. “Staying true to that approach will

insert confdence and faith and stability

in the system, and in the process, avert-

ing a psychologically driven run on the

exchange.”

FindinG A niChe

Hsing-Jien Kung, president of Taiwan’s

National Health Research Institutes,

believes that “instead of developing

along the same lines as the industry in

the US,” Taiwan should “look to po-

sition itself as a niche player, that can

offer innovative solutions to larger

countries.”

Rongjin Lin, chairman of TTY Bio-

pharm, perhaps the most pioneering and

internationally successful of Taiwan’s

‘old guard’ of generics companies, puts

it more succinctly. He tells his peers in

the industry, “Find a cost advantage, or

fnd a niche!”

From left: Lee-Cheng Liu, President & CEO, Eirgenix; C.Y. Cheng, President, Formosa

Laboratories; Whaijen Soo, Managing Director, SI²C; Tsu-Der Lee, Chairman, Board of

Trustees, Taipei Medical University

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Email: [email protected] Contact Person: Freia Wei


taiwan report



Costs in Taiwan aren’t too bad, with

a corporate tax rate of 17 percent and la-

bor outlays that the industry reports are

stable relative to China’s more infation-

ary environment. But Taiwan’s generic

industry, populated by SMEs who in this

small, M&A-averse market may form

consortia but not mega-companies, lacks

the scale and vertical integration to play

the commodity game.

Taiwan has opted for a niche.

Charles Lin of US-focused generics

producer Lotus Pharmaceuticals reports, “We have focused

on so-called ‘multiple barrier’ products—products that are

diffcult to produce, and therefore represent signifcant bar-

riers to entry: formulation barriers, potency barriers, bio-

equivalence barriers, and so on. We have partnered with

strong local API producers like Formosa Laboratories,

which are also capable of operating on this level. Our strat-

egy is to avoid competition, rather than meet other compa-

nies head-on.”

Charles Lin hopes that this strategy

will be his entry ticket to the global mar-

ket—especially the US. He says that Lo-

tus doesn’t want to be a ‘local’ company

anymore. Like many of its peers, Lotus

sees diminishing returns from its tradi-

tional Taiwan-based business, and is con-

strained by the size of the market even on

good years. “Most of us are trying to go

global, but the problem is in the capabil-

ity. Only two or three local generics com-

panies, ourselves included, are actively

pursuing an international agenda,” says Lin.

Even when they reach the international stage with a high-

barrier product, the future may be uncertain. Rongjin Lin

believes, “After 2015, ‘diffcult’ generics will become ‘simple’

generics again! So even here, Taiwan has only a very small

window to compete.” Recently, TTY has jumped to develop-

ing patented drugs, following a progression that started with

medium-barrier generics in Taiwan, moved to high-barrier

generics internationally, and will culminate with incremental

From left: Calvin Chen, President, TWi

Pharmaceuticals; Rongjin Lin, Chairman,

TTY Biopharm



taiwan report

pharmaboardroom.com


innovation and then “truly” innovative

products by 2020—the “only way for us

to survive,” says TTY’s chairman.

Developing an innovative pipeline

while pursuing shorter-term gains is a

popular approach in Taiwan, especially

given the cultural proclivity for safer bets

that investors are only now shedding. For

instance, Taiwan Advance Biopharma-

ceutical Inc. (TABP), founded in 2000 as

the frst DCB spin-off, laid a foundation

with businesses like food testing. Today,

it is on its way to transforming into a bio-

pharmaceutical company.

Like its generics-focused peers, TABP takes a niche strategy.

Wen-Lung Su, Chairman, explains, “Our strategy is based on

collaboration rather than competition. Our development ef-

forts are currently focused on oncology, and today, the global

cancer drug market is worth tens of billions of USD. If all play-

ers in this feld adopted a competitive policy, then the current

market environment—wherein the large players make billions,

and the small players make very little—will never change. On

the other hand, if smaller companies shift their approach and

collaborate to expand the market, to the scale of hundreds

of billions of USD, then these partners can share the profts

from a new and larger pie.” True its strategy, TABP’s lead drug

Picture of National Health Research Institutes (NHRI) facilities

Hsing-Jien Kung,

President, National

Health Research

Institutes


taiwan report



candidate will look to complement, rather than compete with,

an Amgen oncology drug.

For many Taiwanese drug developers, the right niche is to

apply a unique technology platform to an acquire-and-develop

model, with an eye toward generating ‘me-better’ compounds

for Asia-prevalent diseases. Perhaps the most prominent cham-

pion of this approach is Taiwan Liposome Company (TLC),

which completed an IPO on the GreTai last year.

George Yeh, the company’s president, speaks of a ‘vacuum

area’: “TLC’s approach is based on creating value-added prod-

ucts. We do not look to develop frst-in-class or best-in-class

molecules. Instead, we innovate in areas like drug delivery. For

example: can our delivery system turn a daily dosage drug into

a weekly dosage drug?

“Such products typically will generate yearly global sales of

400-500 million USD, which I call the ‘vacuum area.’ At one

end of the vacuum you have the top twenty companies, which

are hunting for the next game changing, billion-plus block-

buster. At the other end you have small, localized generics

companies looking to enter the market quickly, with products

that can generate peak sales of 100-200* million USD. Due

to their lack of technical expertise, the small generics players

cannot enter the vacuum area; Big Pharma, on the other hand,

isn’t very interested in it. As such, this third, value-added ap-

proach comes in under the radar, and is perfectly tailored

for emerging markets—notably China—that are looking for

discounted innovation.”

Other companies are using their unique technologies to

establish a foundation in service provision that can help

fuel the development of their own drugs. This is the route

taken by EirGenix, as well as a Rongjin Lin’s TTY invested

company, Mycenax Biotech. Both have focused on the bio-

pharmaceutical space.

“CDMO service provides us not only revenue, but also new

opportunities,” explains Karen Wen, Mycenax’s president.

“We hope to make long-term relationships with our clients.

Later along the road, we hope that with some of them, we

can launch shared investment projects, and plan a long pipe-

line together”—particularly in an area like biosimilars, where

Taiwan hopes to establish a competitive edge. Mycenax’s

TuNEX, now in Phase III, should be Taiwan’s frst commer-

cialized biosimilar.

When the pipeline is ready, the typical strategy for Taiwan’s

biotechs is to market or co-market in Taiwan and China, and

out-license elsewhere. But some are bolder: TWi, for instance,

which will start with generics but has long-term plans for in-

novation, plans to use its IPO capital to buy into a sales and

marketing operation in the US.

In a market where many compa-

nies are still only selling a promise,

API producer ScinoPharm is selling

products—very successfully. Val-

ued at USD 1.76 billion as of July

2013, making it the largest biotech

company in Taiwan, ScinoPharm is

emerging as a leader on the global

stage. By the numbers:

Founded: 1997

Revenues: USD 154.8 million in

2012, relative to USD 133.87 mil-

lion in 2011

Sales by region: 50 percent in US and Canada, 20

percent in the EU, remainder in Asia Pacifc

Number of customers: Over 300, including names like

Teva and Sandoz

Facilities: Over 450 cubic meters of combined reactor

volume in Taiwan and China, with approval in place or

coming from US FDA, EMA, Japanese PMDA, and oth-

ers; 200 + GMP audits by customers in Taiwan

In 2011, 65% of the APIs exported from Taiwan were

made by ScinoPharm. The company is now leveraging

this core competency to move into areas like formula-

tion, and even drug marketing and eventually new drug

development. Why not rest on its laurels? Jo Shen,

president and CEO, says, “Why should we sit still? Why

should we not keep climbing? We have people that are

smart, energetic, and capable. And we have the cus-

tomers: perhaps our most valuable asset. Any product

that comes out of our door has a built-in audience of

300 of the best companies in the business.

“Look at 7-Eleven in Taiwan. There are more than

four or fve thousand of these stores throughout the

country. If you want to sell your candy in 7-Eleven, you

have to pay the company a substantial fee to reach

the shelf, because the minute your product is on that

shelf, poof! It fies off in huge numbers. We have the

distribution channels. What we need now is to create

more products. Of course, we need strong leadership

regarding the direction we take—time is the one thing

you can never get back.”

ScinoPharm: By the numbers

Jo Shen, President

& CEO, ScinoPharm

From left: Karen Wen, President, Mycenax Biotech Inc.; Wen Lung

Su, Chairman, Taiwan Advance Bio-Pharmaceutical Inc.; George Yeh,

President, Taiwan Liposome Company



taiwan report

pharmaboardroom.com


speCiAl look:

inside the loCAl mArket

According to IMS

data, the Taiwan

pharma market

experienced its

frst contraction in

20 years in 2012.

Growth in this

USD 4.5 billion

market was nega-

tive at 0.9 percent,

and the hospital

segment, which is particularly affected

by Taiwan’s reimbursement system, ex-

perienced a 2.3 percent decline.

Taiwan is a reimbursed market with

a single-payer framework covering 99.8

percent of the population. GDP spent on

healthcare, meanwhile, is only about 6.6

percent (Ministry of Health and Welfare

(MOHW)). For Chih-Ping Yang, presi-

dent of the International Research-Based

Pharmaceutical Manufacturers’ Asso-

ciation (IRPMA), the unifying body for

multinational pharma organizations in

Rongjin Lin, Chairman, TTY Biopharm: Absolutely not! A

number of companies in the market are, say, happy to have

fnally reached Phase II in their drug development effort.

So what? Out of every 10,000 compounds researched,

perhaps fve reach the market—and out of every ten prod-

ucts that successfully reach the market, perhaps two make

real money. But the public doesn’t always realize that. They

don’t think about whether certain products have the right

pharmaco-economics behind them or not. Phase II is a

long way from monetization.

During the IPO announcement for an invested compa-

ny of mine, Pharma Engine, someone asked me how he

should invest in the project. I told him he could never be

sure to win! Even a PHD holder cannot be sure. You have to

gamble. As for myself, why did I gamble on Pharma Engine?

Because it has the right leader, and the right team. Its data

is good. After that, I have to roll the dice.

Jen Chen, Chairman, Genovate: I currently see Taiwan

as a small tiger in the global pharmaceutical industry. This

is not because of the IPO opportunities here, but rather, the

potential to see a blockbuster developed here in the near

future. Big drugs are how a country becomes famous in the

pharmaceutical world, and gains access to the ‘country

club’ of big names, just has Belgium has done through the

success of UCB.

I haven’t yet seen a drug under development in Taiwan

that has the potential to give us access to the country

club, but some years from now, I think that will change.

C.Y.Cheng, Chairman, Formosa Laboratories: We are

not quite there yet. Our inherent weakness is that we are

small. We hope the industry and the government can work

together to make this island more modern, and more in-

ternational. We hope that Taiwan can do better in the edu-

cational system, which does not do enough to teach our

young people concrete industrial skills. We hope that we

can attract more foreign talent, and more foreign money.

It is also important that we fnd our identity, and we

should start with our political identity. We cannot depend

too much on China. If we talk about ‘Taiwan Inc.’, we frst

have to fgure out exactly what it is that we’re talking about.

Time to Celebrate for Taiwan Inc.?

Alex Ho, General

Manager, IMS

Value-chain capability building and sourcing of best possible technologies Funding mechanisms to support efficient R&D and tech transfer activities Connection and collaboration with China, Asia Pacific and global network New talents through training and recruiting Mission oriented bio park with “One-Stop Shop” ecosystems

2Si C as a promoter:We want to enter the business and value chain of the biotechnology industry

for Taiwan to be recognized as a regional leader and a global player.

Supra Integration and Incubation Center Si²C

Branding

Taiwan

Rm.245, Greenhouse Bldg, 128 Academia Road,

Sec.2, Nankang, Taipei 115, Taiwan, R.O.C

Tel: 886-2-27875209　 Fax: 886-2-27875207


taiwan report



Top 20 list of Multinational companies

Ranking in 2012

ManufacturerSales Value

(US$ Million)

1 PFIZER 428.0

2 NOVARTIS 304.3

3 MERCK SHARP& DOHME 259.5

4 ROCHE 258.1

5 SANOFI 246.2

6 GLAXOSMITHKLINE 197.1

7 ASTRAZENECA 191.2

8 BAYER 131.3

9 LILLY 126.9

10 BRISTOL-M & SQUIBB 105.0

11 TAKEDA 84.1

12 ABBOTT 80.1

13 JANSSEN-CILAG 80.1

14 NOVO NORDISK 79.6

15 ASTELLAS PHARMA 73.7

16 BAXTER HEALTHCARE 68.4

17 BOEHRINGER ING 59.5

18 MERCK SERONO 59.1

19 DAIICHI SANKYO 49.4

20 OTSUKA 36.0

Source: IMS Audit 4Q 2012

Top 20 list of local companies

Ranking in 2012

ManufacturerSales Value

(US$ Million)

1 YUNG SHIN 99.6

2 C.C.P.C 91.3

3 TUNG YANG 89.3

4 STANDARD 62.7

5 SINTONG 46.2

6 ORIENT EUROPHARMA 39.2

7 SYNMOSA BIOPHARMA 30.5

8 SINPHAR 29.0

9 NANG KUANG 25.0

10 GENOVATE 22.8

11 KINGDOM 22.5

12 SWISS 22.3

13 WEIDAR 18.1

14 LOTUS PHARMA. 17.7

15 U CHU 17.7

16 EVEREST PHARM 16.8

17 PEI LI 16.0

18 PURZER 15.0

19 CENTER 13.9

20 PANION & BF LAB. 13.2

Source: IMS Audit 4Q 2012

Taiwan Advance Bio-Pharmaceutical Inc.12F., No.25, Ln. 169, Kangning St., Xizhi Dist.,

New Taipei City 221, Taiwan

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FAX：886-2-2692-6229

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Taiwan, the math is simple: “Yes, our current system covers

over 99 percent of the population. But do we want hamburger,

or steak? Do we want patients with treatable diseases to go

without help because the state cannot afford their medicine?

Everybody wants steak, but the national health insurance

(NHI) system has barely enough money to offer our people

hamburger. We have to pay more for steak: it’s that simple.”

Dr. Yu-Ray Chen, chairman of the steering committee at

Chang Gung Memorial Hospital, echoes Yang’s sentiment.

“The population needs educating on this issue to understand

that quality services need to be f nanced. There is no such

thing as a free lunch. The system should not be exploited. In

Taiwan, despite a golden era of public healthiness, inpatient

and outpatient appointments are growing annually. It is the

politicians’ responsibility to educate the people and help them

to understand that healthcare resources are f nite and should

be used appropriately.”

The 2012 contraction of the market was the product of the

seventh biennial round of price cuts under a mechanism called

the Price-Volume Survey (PVS), introduced after the Bureau

From left: Maoting Shen, Director of the Pharmaceutical and

Medical Reviews, BNHI; Wen-ta Chiu, Ministry of Health and

Welfare; Yu-Ray Chen, Chairman of Steering Committee, Chang

Gung Memorial Hospital

Today, the Taiwanese market is

extremely diff cult. Prices are con-

stantly decreasing, more compa-

nies compete for market share

every year, and product life cycles

are becoming shorter. We have to

put our full efforts into every ac-

tion we take, every single day. –

Mark Lee, vice chairman of local

distributor Morris Enterprise

The perspective from:

Mark Lee, Vice

Chairman of the

Board, Morris

Enterprise


taiwan report



of National Health Insurance (BNHI) experienced its frst

defcit. Alex Ho, general manager of IMS Health Taiwan, says

that the bureau “tried everything it could to control spending.

One of their major tactics was to reduce drug prices—and they

have employed this tactic continually ever since.”

“Ideally,” says Ho, the impact of price cuts “would be offset

by the introduction of new products. However, getting products

to the market has been quite diffcult in Taiwan. The BNHI has

not only cut the prices of existing products, but also delayed

and heavily controlled the reimbursement of innovative drugs.”

On January 1, 2013, Taiwan’s Second Generation National

Health Insurance Act came into force: the frst major overhaul

of the system since it was introduced in 1995. According to

Taiwan’s minister of health and welfare, Wen-ta Chiu, one of

the aims of the reform was to “release some of the pressure the

system has put on pharmaceutical companies.”

Chiu says that he understands the diffculties these com-

panies have faced in this market in recent years. “It is for this

reason,” he says, “that as part of second generation NHI, we

have looked to increase premium payments. Medical expendi-

tures as a percentage of GDP will increase 0.2 or 0.3 percent

by the end of this year.”

Bringing more money into the system is something the in-

dustry has been clamoring for, but other reforms are a mixed

bag. For one, the newly formed Pharmaceutical Beneft and

Reimbursement Scheme (PBRS) committee, responsible for re-

imbursement decisions, has introduced patients into the deci-

sion-making process: something Ho expects will further delay

product launches. In 2013, the number of new drugs approved

in Taiwan may be as much as 50-70 percent less than 2012.

The PVS system will be replaced by a Drug Expenditure

Target (DET): a virtual budget given to the industry based on

a growth rate that is decided by the National Health Insurance

Committee. There will be no price cuts in 2013; in 2014, should

costs exceed the target, the market will experience another round

From left: Chih-Ping Yang, President, IRPMA; Heather Lin, COO,

IRPMA; Christian Macher, Country President, AstraZeneca

Lotus Pharmaceutical Co., Ltd.

No. 30, Chenggong 1st Rd., Nantou City, Nantou County 540, Taiwan (ROC)11F, No. 200 Sec.1, Fuxing S. Rd., Daan District, Taipei City 106, Taiwan (ROC)

[email protected]

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taiwan report

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of cuts. And so forth. According to

the predicted mechanism of action,

GSK’s Thomas Willemsen expects

some immediate relief. “But,” he

says, “my overall prediction is that it

will boil down to roughly the same

impact over time.”

The most problematic new re-

form is perhaps the so-called ‘Ar-

ticle 46’, which looks to introduce

immediate price cuts for products

that are going off patent.

Heather Lin, chief operating

offcer of the IRPMA, is worried.

“One thing that innovative com-

panies could rely on under the pre-

vious system was that they would

have a relatively long lifecycle com-

pared to other markets, as originator drugs would maintain

good market share and proftability even after they went off

patent. Article 46 means that this proft will now be slashed.

Given that the price for innovative drugs entering Taiwan is

50% less than the international median, and the fact that it

can take up to two years for a drug to be listed in Taiwanese

hospitals, this now means that there is a very short and unprof-

itable window for selling innovative drugs in Taiwan.”

What to do? A strong innovative pipeline is a great asset.

After that, it’s “launch and see,” says Christian Macher, gen-

eral manager of AstraZeneca: “The only way you can survive

here is if you have a lot of innovation, because then you don’t

have to compete with generics. You get a lower price for your

drug, but no one else can promote the product. Then you just

have to see how you make it through the changes in the health-

care system with your mature products.”

Life is also easier for generics companies, many of whom are

locals. IMS data shows that although the generic penetration

rate in Taiwan is relatively low—around 22.9 percent—and

has been decreasing at a compound annual growth rate

(CAGR) of negative 4.6 percent between 2008 and 2012, the

majority of generics producers grew their businesses in 2012,

despite facing the same price cuts as innovators did in 2011.

Many innovators are losing key patents, and as Lin noted, Tai-

wan is less and less a market where mature products can enjoy

a long life cycle.

Its healthcare system strapped for cash, Taiwan has intro-

duced a number of incentives for generics companies, includ-

ing rewards for upgrading to PIC/S GMP. The benefts extend

to multinational generics players as well: “Since 2010, the

BNHI has announced new initiatives to encourage generic sup-

pliers, both domestic and foreign,” reports Hospira Country

Manager Mark Yang. “Today, if generic companies can dem-

onstrate global-standard manufacturing quality—i.e., PIC/S

GMP compliance—then they will be awarded premium pric-

ing in Taiwan.

“This is not just talk. The BNHI means business, and has

followed through on its promise: one of our own molecules

now enjoys premium pricing, after its manufacturing site was

Overall market growth statistics 2007-2017

3,654

4,512

5,916

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

US$ m

illion

Source: IMS Audit 4Q 2012 & market prognosis 2013-2017

2Q07Ð12 CAGR: +3.58%

2012Ð2017 CAGR: +4.62%


taiwan report



granted PIQ/S GMP certifcation. Our team is currently pre-

paring the ground for further molecule launches that can take

advantage of these benefts.”

Yang also hedges his bets with a strong focus on medical

devices, and some business in the oft-neglected self-pay seg-

ment: “As a supplier in this marketplace, you have to manage

your reimbursement business very carefully. However, if at the

same time you can introduce the right products on the self-pay

side, you will fnd that you have a good combination: you will

mitigate the risks of the reimbursement market, where you will

face price cuts and heavy competition. If you have the portfolio

to play in the self-pay segment in Taiwan, you should.”

This is a call that is well heard by local distributor Uni-

Pharma. Terry Lin and Freia Wei, General Manager and Senior

Consultant, report, “Uni-Pharma was founded shortly after the

creation of the national health insurance (NHI) system—but

actually, the majority of our products are not reimbursed. Until

recently, it was the state’s policy to cut reimbursement prices

every two years! We decided to develop the self-pay market,

and our business has concentrated on this segment since 2005.

Less that ten percent of our products are reimbursed today.

“We also began to focus more on medical devices, because

we fnd that the entrance barriers are considerably lower. Med

tech currently accounts for nearly 90 percent of our revenues.”

Now, the company is looking to leverage its market knowl-

edge to diversify beyond distribution to the introduction of its

own branded line of diagnostics. With license in hand for a

cancer-detection device, Uni-Pharma has formed a partnership

to manufacture and market products for the regional market-

place and beyond: “We saw that there was a constraint on the

pharmaceutical industry, so we moved from pharma products

to medical devices and diagnostics. But we also want to build a

foundation for the long-term. The distribution business can be

diffcult to sustain: after all, the principal can always revoke the

product rights if they chose!”

From left: Freia Wei, Senior Consultant, Unipharma; Terri Lin,

General Manager, Unipharma; Mark Yang, Country Manager,

Hospira

Hospira is a global specialty pharmaceutical and medication delivery company driven by its vision of Advancing Wellness™. Bringing proven leadership and experience, Hospira provides solutions to help improve the productivity, safety and effectiveness of patient care.

18F, 333 Tun Hwa S. Road. Section 2, Taipei 106, TaiwanT +886 2 8176 8888

www.hospira.com.tw

advancing wellness


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Back Page

Top MedicalInnovations for 2014At the conclusion of the Cleveland Clinic’s Medical Innovations Summit each year, 10 innovative

technologies are unveiled before the audience, and designated as new and revolutionary tools for

the treatment of disease and disability. Selections for the Top 10 are chosen by way of a process

that includes personal interviews with over 100 senior Cleveland Clinic physicians. Here are a few

of the technologies that made the cut for 2014. By Ben Comer, Senior Editor

Photo credits: Thinkstock and Second Sight Medical Products

Relaxin foR acute

heaRt failRe

Top 10 Ranking: #7

WhaT iT’s foR:

DRamatically impRoving

health outcomes in

heaRt failuRe patients

Why it’s needed: Heart failure is the

number one cause of hospital admission.

One in five patients with heart failure are

readmitted to the hostpital within 30 days,

and 10 percent die during the same period.

How it works: In women, relaxin-2, a

naturally-occuring hormone, helps loosen

tissues in the reproductive organs and

pelvic ligaments to help prepare for child-

birth. In heart failure, Novartis’s serelaxin,

a synthetic version of relaxin-2, functions

as a vasodilator with anti-inflammatory

properties capable of increasing blood

flow in the body, which helps a poorly

functioning heart work more effectively.

It also prevents organ damage related to

reduced blood flow in the kidneys and liv-

er, and helps resolve fluid buildup in the

lungs. Phase III data from the serelaxin

trial reported a reduction in death rates

by 37 percent, six months after therapy.

If approved, serelaxin will become the

first meaningful treatment for heart fail-

ure in two decades.

Responsive

neuRostimulatoR

foR intRactable

epilepsy

Top 10 Ranking: #3

WhaT iT’s foR:

significant

fRequency

ReDuction of

epileptic seizuRes

Why it’s needed: Roughly one million

Americans have epileptic seizures that won’t

respond to therapy or medication.

How it works: A neurological device is surgi-

cally implanted under the skin. Once implanted,

the device records electrocorticographic (ECog)

patterns through leads containing electrodes

that are placed at the patient’s seizure focus in

the brain, or on the surface of the brain where

seizures start. When detection thresholds are

met, the device delivers short electrical pulses

to interrupt the triggers before any seizure symp-

toms can occur. In a pivotal clinical study, the

device reduced seizure frequency by 40 percent,

compared to a 17 percent reduction in a placebo

group. Long-term results demonstrated sustained

improvements in seizure frequency post-implant.

Additionally, physicians can use the data captured

by the device to customize the system’s electrical

impulses for individual patients.

fecal micRobiota

tRansplantation

Top 10 Ranking: #6

WhaT iT’s foR: safe anD

effective tReatment

of DangeRous c.Diff

infections

Why it’s needed: Half a million cases of

C.diff are reported in the United States

annually, along with 15,000 deaths.

How it works: The human gut con-

tains more bacterial DNA than human

DNA, and the stool is biologically ac-

tive. In fecal microbiota transplanta-

tion, C.diff patients that don’t respond

to antibiotic therapy, a colonoscopy or

enema is used to transfer a liquid sus-

pension made from a healthy person’s

fecal matter into a sick person’s colon,

in order to restore bacterial balance

and cure C.diff. Results of the proce-

dure have been extraordinary, with

some patients being cured of their

symptoms within 24 hours, with no

recurrences. The procedure may also

be effective in treating inflammatory

bowel disease and other nongastroin-

testinal conditions, like Parkinson’s.

Retinal

pRosthesis

Top 10

Ranking: #1

WhaT iT’s foR:

RestoRation

of sight

Why it’s needed: More than 100,000 people

in the United States have retinitis pigmentosa,

a disease that leads to blindness. Until re-

cently, there has been no effective treatment.

How it works: The Argus Retinal Prosthe-

sis, approved in the United States in 2013,

combines a surgically implanted 60-elec-

trode retinal prosthesis that receives signals

from a pair of external video camera-en-

abled glasses with a video processing unit

that is worn at the waist or carried. The reti-

nal system works when the video unit trans-

forms images from the miniature camera into

electronic data that is wirelessly transmitted

to the device in the eye, which contains an

antenna and electrodes that replace the

degenerated cells in the retina. At that point,

the data are transformed into small electrical

impulses that stimulate the retina’s remaining

inner neurons. Also known as the “bionic eye,”

some blind patients have been able to read

the blind chart using the prosthesis.


More 2013 IIHS Top Safety Picks than any other brand.1

IIHS

Longest lasting vehicles of any full-line automotive manufacturer.2

Polk

Best retained value of any full-line car manufacturer on the road today.3

IntelliChoice

More vehicles named in the Cars.com American-Made Index’s Top 10 than any other brand.4

Cars.com

Best Resale Value of all brands for 2013.5

Kelley Blue Book’s KBB.com

Time and again, the critics have spoken, and their message is always the same: For all your Fleet Vehicle

needs, you can’t beat a Toyota. Call 1-800-732-2798 or visit fleet.toyota.com for more information.

But it sure feels like it around here.

Praise like thisdoesn’t come aroundevery day.

Prototypes shown with options. Production models will vary. 1. For more details on 2013 Top Safety Pick Awards, see www.iihs.org. 2. Longevity based on Polk U.S.

Vehicles In Operation registration statistics MY 1987-2012 as of October 2012. Full-line manufacturer based on car, SUV, minivan, compact and full-size pickup.

3. 2013 IntelliChoice, www.IntelliChoice.com; Popular Brand. Based on 2013 model year study. 4. For more information about the 2013 American-Made Index, visit

Cars.com. 5. Vehicle’s projected resale value is specific to the 2013 model year. For more information, visit Kelley Blue Book’s KBB.com. Kelley Blue Book is a

registered trademark of Kelley Blue Book Co., Inc. ©2013 Toyota Motor Sales, U.S.A., Inc.


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