Comment from Nick Hughes, PA's Head of Life sciences and Healthcare
Nick Hughes puts forward possible ways for the industry to preserve its position and ultimately to thrive. These include:
Smarter R&D: While PA sees significant investment in automation and efficiency initiatives in R&D, we see greater value from organisational and cultural re-alignment around: improved use of in silico prediction; improved knowledge management; better information sharing between projects and across therapy areas; innovations in reward and recognition systems; and clarification of objectives.
Transparency and data sharing for collective advantage: We are already beginning to see publication of clinical trial data by selected companies; this is a clear leadership position and may well earn increased trust and respect. It is not an easy undertaking nor is it without risk but it deserves approval.
Establishing a new contract with regulators: the industry needs new standards by which to facilitate submissions in a common way supported by industry standards. We can already see emergent initiatives in clinical trials and pharmacovigilance with supporting software tools but there is still much to do.
Refocusing the sales force: the balance of purchasing power is shifting inexorably to the payer organisations. Governments all over the world are becoming much more significant consumers. This has profound impacts for how pharma companies will sell their product.
Gaining competitive advantage for a US sales organisation - Developing an innovative technology strategy
PA was engaged by the client to develop a technology strategy and a set of recommendations to support the emerging needs of the sales force. PA used its framework for developing IT strategies and achieved the following:
- PA assisted the client in understanding the current state and performance of technology supporting the sales force
- PA developed a strategy that focused on delivering benefits to the business by ensuring the technology was aligned with the sales force strategy and by reducing overall cost of ownership of technology
- PA developed a roadmap of change and improvements through 2005 to 2007 together with costed project briefs.
Traditional approaches to managing delivery are inadequate in a devolved health service
The UK Government’s strategy for health service reform requires a major step change in the way services are implemented, at the same time as devolving more power and autonomy to those responsible for local delivery. These two requirements pull in different directions. Firstly, faced with the challenge of delivering major change, the natural tendency is to rely on a centrally driven command and control structure. In the right circumstances, this type of delivery structure is very effective and is easily established. It is based on five powerful levers for managing and steering the change programme:
- it is possible to create clear single points of accountability for delivery with direct executive power for decision-making
- personal objectives can be aligned, to ensure that there are no conflicts of interest for stakeholders
- similarly, pay and reward systems can be aligned to the change programme objectives
- if the change environment is in a single organisation, there is likely to be a common culture
- the change leader can intervene directly to correct problems identified– a simple ‘plan, do, monitor, act’ cycle works.
Transforming development productivity through integrated automation
The FDA initiative ‘Process Analytical Technologies’ is slowly gaining ground, which will help bring a revolution in manufacturing and testing processes that ensure product quality. It will encourage faster testing techniques that bring analytical testing ever closer to at-line or on-line testing during product manufacture. In parallel with this, there will always be the need for more off-line testing during Development (eg stability testing) and for the foreseeable future testing for QC release in Manufacturing. There has never been more pressure to transform and optimise these testing processes through the strategic application of automation and new technology.
“So why are there no automated solutions for Development?” complains the VP of a major pharma. “I can go to any show and see stacks of systems for Discovery. I sometimes feel like getting hold of those vendors and shaking them until they tell me why they have nothing for Development.”
Forward-looking pharmaceutical companies are waking up to the benefits of end-to-end automation of Development testing, and are asking why there are no suitable solutions on the market. The answer is that solutions for Development are, in fact, now emerging. These solutions then carry forward to Manufacturing where the burden of scale-up and method transfer is radically reduced.
The strategic impact of transaction costs
With mergers failing to achieve their promise, and driven by the structural reality of the industry, the move to a networked model is already underway. Firms are increasingly partnering with smaller, more specialised providers throughout the value chain to build pipeline and revenues and reduce costs. Firms engage in partnering for a variety of reasons. As the trend towards a networked structure
continues, a restructuring will likely occur in the industry, with firms focusing on a particular part of the value chain, such as discovery, development, and/or commercialisation.
Examples of other industries that have transitioned from vertical integration to focused networks of firms collaborating along the value chain include entertainment (eg motion picture industry), construction (eg the general contractor model), and technology (eg with product manufacturers producing finished goods from commodity components).
While partnering with specialised firms is often more efficient than trying to maintain a fully integrated business model, pharmaceutical firms are finding that developing and managing the partnering and outsourcing arrangements necessary to enable this new networked model requires new capabilities. The challenge the industry has with the networked model is to manage transaction costs.
Strategies to improve R&D productivity
This is the executive summary from the Pharmaceutical Leadership Summit, held by Cambridge Healthtech Institute in collaboration with PA Consulting Group.
The primary issues raised included the unsatisfactory level of R&D productivity and a concern that the negative perception of the industry will bring about unfavourable regulatory and market consequences.
There was broad agreement regarding the macro trends which show declining R&D productivity – measured as the number of NMEs approved/launched relative to the financial investment in life science R&D. Some participants expressed concerns that R&D productivity might have fallen to a level that will no longer be able to sustain the current pharma business model. There was broad agreement that both the sources of the problem and potential solution were in two principal areas: management of R&D operations and advances in the scientific knowledge.
