How to Have a Rich Pipeline of Products and Attract the Employer of Choice
With all of the drama surrounding Novartis and Diovan, it seems that we’re saying “sayonara” to the days of pharma blockbusters and moving on to a new chapter, one perhaps that will be written by specialty pharma. Japan’s Ministry of Health, Labour and Welfare committee recently released an interim report on the falsification of clinical research data involving Diovan, and although we don’t yet know whether Novartis is actually responsible for manipulating research results, this is certainly a sad turn of events for one of the most respected foreign pharmaceutical companies in Japan. Diovan almost single-handedly built the Swiss giant’s Japanese subsidiary in the hills of Azabu-Jūban. With the sales of Crestor, Diovan, Lipitor, Micardis, Blopress, and Tracleer all likely to fall off the patent cliff in the not-too-distant future, big pharma is scrambling to set up long-listed product divisions and establish branded generics.
Today, the sun is shining on specialty pharma. In fact, 2010–2019 is shaping up to be the decade of specialty pharma. The success stories of Alexion, Celgene, and Biogen Idec are only precursors to the next generation of specialty pharma companies. Shire, Gilead, ARIAD, and Leo Pharma have all planted their flags in the soil of the world’s second largest pharmaceutical market. Alexion is a strong example of a specialty care pharma company that is doing very well in Japan. Alexion president Herman Strenger explains,
“Alexion is developing and delivering life-transforming therapies for patients with severe and life-threatening disorders that are also ultra-rare. The only product Soliris has been approved in two indications, PNH (paroxysmal nocturnal hemoglobinuria) and aHUS (atypical hemolytic uremic syndrome). Both diseases are debilitating and life-threatening and patients were left without any effective treatment options. With the availability of Soliris, the outlook for patients has changed dramatically.”
The pharmaceutical market has also changed dramatically over the past 10 years. Many of the major companies have offered early retirement packages and are continuing to cut costs. Generics are slowly gaining strength in the local market, and while this may not be occurring at the same level as in other markets, it’s a trend that will continue. There was a time when Japanese subsidiaries could be insulated from the pressures facing global markets to some degree, but this is no longer the case, and business models are changing to accommodate the new reality. The winners of the future appear to be the companies catering to unmet patient needs, such as Ikaria (now a part of Mallinckrodt), which develops biotherapeutic solutions, nitric oxide for inhalation, and a vasodilator that treats hypoxic respiratory failure with concurrent pulmonary hypertension in neonates. According to Chris Hartz, Ikaria’s vice president and general manager:
Ikaria is a critical care company that has been operating in Japan since 2009, providing a unique product—a drug/device/service package, called INOtherapy®—to hospitals throughout the country. The drug product, INOflo®, is the only drug approved by the Japanese Ministry of Health, Labour and Welfare for hypoxic respiratory failure, and the offering provides neonatologists with a complete package to ensure this therapy is reliably delivered to Japanese infants born with this condition. We are proud of our excellent product and our ability to impact the lives of infants in Japan.
Ikaria is swimming in a “blue ocean.” Blue ocean strategy suggests that organizations should create new demand in an uncontested market space, or a “blue ocean,” rather than compete head-to-head with other suppliers in an existing industry with heavy competition—a “red ocean.” Opportunities are bountiful for candidates too. Those candidates who have specialty pharma experience or expertise in these companies’ core functions will benefit the most. Big is not always best, and while many candidates have historically favored larger companies for their stability, perspectives are changing as it becomes clear that the light at the end of the tunnel is not the next diabetes drug but a drug treating a rare form of cancer or orphan disease (i.e., a condition that affects fewer than 200,000 people). Moreover, while big pharma will always be on the lookout for exciting biotechs and specialty pharma businesses, fears about smaller companies being acquired and restructured haven’t been realized. In smaller companies, investors and senior managers tend to have more faith in their products and prefer leaner business models, meaning that big pharma acquisition offers little benefit, and it’s often better to go it alone. For a success story showing the viability of specialty care businesses, look no further than Biogen Idec Japan. When Morunda director Michael Huberts first began to work with the firm in 2006, some candidates resisted due to fears of Biogen Idec’s long-term prospects. A common refrain at the time was, “They’ll soon be bought by X company or Y company.” This certainly wasn’t helped by the presence of billionaire investor/activist Carl Icahn who, at the time, owned roughly 8% of the company’s stock and was consistently pushing for it to find potential suitors. So what happened to the brave candidates that made the move to the company? Biogen Idec has grown from strength to strength, both globally and in Japan, where it has doubled in size. The company has a rich pipeline of products that tailor perfectly to patient needs and is now a highly attractive employer of choice in the Japanese market.