Extract
Dire predictions about the pharmaceutical industry have been made before. Indeed, they're made so often it's begun to resemble a chorus in a Greek tragedy: The industry is in trouble, really big trouble. The pipeline is dry, share value performance poor, sales and marketing spending on the rise, legal and regulatory constraints are tightening, and its image...well, think tobacco industry.
And yet everything stays the same.
Bring on the consultants
Given the industry is at such a pivotal point, time seems ripe for consultants. Who better to bring a fresh perspective? And so Consultants Confidential tracked down some of the best life sciences consultants in the business, representing a variety of different practice areas.
Dan Walsh - PA Consulting Group
The best consulting has a point of view. We don't earn our money if we don't come to the table having listened to the data with that point of view.
At that point, all ideas are good ideas. What I mean is an agnosticism about the industry, about any particular value proposition—be it a particular drug, a therapeutic area, an organizational construct, or a partnership construct. It's best not to take the proposition at face value. The best consultancies are able to bring a healthy level of skepticism and then subject it to rigorous analytics.
Forced mutation
The industry, in general, is coming to a crisis point. To use a biological analogy—we've got evolution that's being forced by a mutation. The environment has changed. There is no longer the attitude of: science at all costs; we're the only players in the game so we can take our time. Fact is, the new reality today will be the old reality tomorrow.
Tachi Yamada was interviewed last month at the Clinton Global Initiative. He used to work at GSK, where he headed up R&D, and now he works for the Gates Foundation running their global health program. So he's flipped completely to the public health side of the spectrum. He said pharma was an industry where it was almost too easy to be successful—it lost contact with the people it was supposed to serve. And at the end of the day, it's still about unmet medical needs. It's not lifestyle marketing, to use a term. He believes the next generation of pharma execs have to look at the world differently so that it's about what the outcome is for the customer or for the patient. Are you curing disease? Are you sustaining life? Are you improving the quality of life? Is there a different way of calculating the economics of it from blockbuster revenues to sustainability of the entire suite of things you're doing in that disease state. Of course, he's got a bias.
Still, he talked about some of the new realities: compulsory licensing in emerging markets, where you're not actually going to get all the patent protection you once would have had. If a drug is for HIV/AIDS or for antivirus or for malaria or pandemic flu, half of the countries in the world are going to abrogate your patents and let generic products be put on the market. So you better get in front of that and find ways of making that economically viable and rational. Plan for it as opposed to fighting it.
Similarly, from my point of view, the United States is going to be facing a new reimbursement reality over the next eight years. The question then is: What is the best way to get out in front of those new models? It's inevitably going to impact the per-dose price of new drugs. Because if you're not counting on the blockbusters to run your business, you still can have sustainable profits without necessarily looking for the highest reimbursement.
Engaging players
The trendsetters in the industry will be the ones engaging with the payers, be it CMS or the private companies, and negotiating prices. That's hampered, now, in some respects, by government bureaucracy and by a not completely irrational suspicion on the part of the industry. We need to find a way to bridge that gap to get those collaborations working.
As far as I'm concerned, the most immediate issue is going to be related to the reimbursement crisis. A new balance needs to be struck in pricing and reimbursement that is more sophisticated than it has been in the past and that isn't a profit- or a margin-maximization strategy, which arguably is what you do when you price high and then let the market erode you.
Helping clients create value
How to create value for your client in going to market involves two tactics:
- Develop implementable strategies for solving problems as opposed to just white paper strategy.
- Manage uncertainty and risk. To paraphrase the former defense secretary, uncertainty is what you don't know you don't know, where risk is the known unknown. And risk can be quantified, and it can be managed. Unknowns, if left as unknowns, come back and become business destroyers.
