Session 6: Managing the Pharmaceutical Pipeline I Flashcards
The New Drug Development Process leads to a deconstruction of the pharma value chain what is meant?
see slide 5
The term “New Drug Development Process” refers to the series of steps involved in bringing a new pharmaceutical drug from discovery through clinical trials to market approval. This process typically includes stages such as preclinical research, clinical trials (Phases I, II, and III), regulatory approval, and post-marketing surveillance.
When the phrase “leads to a deconstruction of the pharma value chain” is used in the context of the pharmaceutical industry, it suggests a transformation or restructuring of the traditional processes and relationships within the industry’s value chain. The pharmaceutical value chain involves various stages, including research and development, manufacturing, distribution, marketing, and sales.
Deconstruction in this context implies breaking down or reimagining the traditional linear flow of activities in the value chain. This restructuring can be driven by various factors, such as technological advancements, changes in regulatory environments, shifts in market dynamics, or innovations in drug development approaches.
For example, advancements in personalized medicine, genomics, and digital technologies may lead to a more targeted and efficient drug development process. This could impact traditional approaches to drug discovery, development, and commercialization, potentially altering the roles of different stakeholders in the value chain.
In essence, the “deconstruction” of the pharma value chain reflects the industry’s adaptation to new paradigms and methodologies in drug development, which may result in a more streamlined and innovative approach to bringing new drugs to market.
What is the traditional Value Chain of Pharma companies?
- Development Stage
- Drug Discovery
- Preclinical - drug leads and drug tests
- Clinical Trials - clinical trials l, ll, lll (human)
- Approval lV - Drug
- Marketing or Manufacturing
- Postmarket surviellance Phase lV
- patent management and generics
Business models as a simplified version of Corporate strategy
Deconstruction leads to Value Chain Constellation, Market Power of Innovators vs. Owner of Complimentary Assets which leads to Total Revenue potential with a customer focus as well.
The Pharmaceutical Value chain and advantages for small and innovative firms as well as big Pharma
R&D > Tests > Approval > Mass production of active ingredients > Drug fabrication > Marketing and sales
Advantages for small and innovative firms at the R&D and Test stages (patent filing at R&D stage)
Advantages for Big Pharma at approval, mass production of active ingredient, drug fabrication, and marketing sales stages
It takes between to years for a drug to be approved and successfully comercialize and costing more than 1 billion dollars to do so.
To derive appropriate portfolio strategies pharma companies consider various factors?
- R&D cost control
- Overall R&D risk reduction
- Management of timing and progress of drug projects
- Steer innovation projects & related investments
- R&D management for ROI maximization
3 Key portfolio management steps
- Portfolio Evaluation -
- R&D and commercial teams provide the relevant inputs and estimations
-Portfolio team provides the outputs that include the business valuation and related parameters for further decision making - Portfolio Prioritization - Projects are prioritized based on scientific and commercial opportunity, risk and uncertainty
- Portfolio Optimization -
-Apply predefined selection criteria for decisions to select and advance assets from drug discovery to pre-clinical stage and then to development
-Portfolio optimization should always be a dynamic process with reoccuring evaluation at certain pionts
What is In/Out-licensing?
Other companies have better expertise at leveraging a
drug
* Fear and discomfort about losing control of their drug
assets
* For the decision-Maker e.g CFO out-licensing is a
possible carreer-stopper
* “Big-pharma” or fully integrated Pharma only outlicense non-core assets, i.e., Portfolio mismatches and
differing R&D
strategies*
* Out-licensing utilizes external resources which
promotes the dissemination of technologies and
products.
* Out-licensing considered a difficult task with the necessity of a very thorough and sophisticated contract agreement to fulfill both sides needs
what is In-/OutSourcing
Transfer of processes to another company
In-/Outsourcing driving factors
-Growth aspirations
* Cost cutting
* Restructuring issues
* Global footprint
* Time-to-market
* Reduction of risk
* Reallocation of internal
resources
* Reduction of complexity
In-/Outsourcing Parameters
Market Access:
Regulatory
Financial aspects:
Economic feasibility
Product specifics:
Quantity, portfolio
Technical requirements: Available techniques/capacity
Chemical tradition:
Process commitment
Taxes:
Optimization of tax load
Reasons to backshore off-/
outsourced activities
see slide 19, and 20
What is a strategic Alliance?
Any cooperative effort between two or more independent
organizations to develop, manufacture, or sell products or services
can be horizontal, vertical, or conglomerate
What is the motivation for alliances?
Create economic value by:
* accessing complementary resources and capabilities
* leveraging existing resources and capabilities
An alliance is an organizational form of exchange that:
* should produce a gain from trade due to some
comparative or absolute advantage
Implication: Choose partners that are better at something than you are
(complementary resources)
What Framework is used for assessing alliance fit?
- Strategic fit: Are the objectives compatible? For how long?
Resource fit: Are the partners willing to contribute the
resources and competences necessary for
competitive success? Do they have the resources? - Cultural fit: Can we understand each other and communicate?
Do we share the same business „logic“? - Organizational fit: Can we bring the decision-making and control
mechanisms used by the partner into line - Organizational fit: Can we bring the decision-making and control
mechanisms used by the partner into line?
Comparison between biotechnology and pharmaceutical companies?
Pharmaceutical companies:
+ financial strength
+ regulatory know-how
+ worldwide distribution
Biotechnology companies:
+ research capabilities
+ new technologies
+ competence-destroying innovatio
Accessing biotechnological know-how/capabilities via:
Strategic alliances, Internal development, or M&A
