Meeting Summary by Marla Weingarten

The Canadian pharmaceutical industry today, "is like a roller coaster," declared Ronnie Miller to the 137 members and guests who attended the January, 2008 OPMA dinner meeting. The industry "is going faster and higher and dropping further and faster than ever before," he said.

[You can view Mr. Miller's slideshow here.]

To illustrate the roller coaster analogy, Mr. Miller summarized a recent article he had read, which listed the six key factors that keep a pharmaceutical CEO up at night:
1. Share price.
2. Pipeline vulnerability.
3. Health economic assessments.
4. The ability to sustain attacks from generic companies on intellectual property.
5. Job cuts and restructuring.
6. Relationships with Government.

He pointed out that in Canada there is an extremely rigorous approach to health economic assessments. Also, job security is no longer a given. In Canada, alone, the industry lost 2,500 jobs in 2007.

Market Overview

Over the last 4 to 5 years, the pharmaceutical industry has faced a state of continuous change. Although it is experiencing double digit growth in Asia, Latin America and Eastern Europe, globally, the market is growing at only 6.4%. Growth in both Western Europe and North America has been slowing at an alarming rate. One key reason for this is the fact that many products are losing their patent protection. A recent forecast predicted the industry in Canada could lose as much as $800 million to generics over the next 4 to 5 years. 

Mr. Miller reminded the audience of his previous OPMA dinner presentation in 2005, in which he declared that one of the key growth areas at that time lay in specialty care medicine. The speculation was for a 55/45 split between primary and specialty care products by 2007. Although we are not quite there, he said, the industry is close, with 40% of marketed products now designed for specialty care use. 
 
The biotech industry provides us with a completely different picture.  This business is still growing in the double digits (15.2%) and it is seven times larger than the market was more than 10 years ago. There are several key factors that give rise to this growth in the biotech market:
* A high rate of approvals.
* Premium pricing.
* Government support for the industry.

In Canada, there are over 800 Biotech companies and the top 10 products in this sector are all blockbusters. Mr. Miller remarked how these compounds are becoming the standard of care for diseases like rheumatoid arthritis, and he stated, "[We] need to find the right patients for the right treatments at the right time."

Current Issues

A number of blockbuster drugs will be going off patent in the very near future.   It is estimated that from 2007 to 2012 anywhere from $67 billion to $150 billion in revenue will be lost as a consequence of products losing their patent exclusivity. In addition, generic companies are also growing more assertive in challenging the industry's intellectual property rights. This issue, Mr. Miller declared, is a major topic being discussed within Rx&D.

Another primary concern for Mr. Miller is regulatory challenges. Physicians and patients no longer control the decision making process, he said. Instead, governments, particularly in Canada, have taken charge of this process, basing treatment decisions on cost and not value to the patient. In this current environment, Canada is not the best country in which to attain access to medicines. "We need to put the patient and physician back at the centre of choice. What is good for the patient is good for business."

What does the future hold?

The shift from primary care medicine to specialty care and biologics will continue and become even more commonplace in the future. As well, outsourcing of drug discoveries from smaller shops will occur more routinely. Between 2003 and 2008, the amount of outsourcing grew from 26% to 36% and it is estimated this number will increase to 50% by 2012. 

There will also be a greater number of predictive tests incorporated into drug development.  Markers of this nature, when linked to a product, will help manufacturers provide a strong safety message.

Lastly, Mr. Miller pointed out that in order to compete in the future, it will be necessary for pharmaceutical companies to acquire some biotech business. In fact, Biotech, itself, will require partners to fund the huge cost of product development.   

What We Need To Do As Stakeholders

This industry is experiencing a time of great change and also tremendous opportunity. In Mr. Miller's opinion, the pharmaceutical industry is one of the most talented in the world.  The challenges our organizations face are quite complex. Also, given the nature of our products, there is a level of continuous learning and intellectual stimulation that may not be experienced elsewhere.  

Looking into the future, our speaker shared several key factors he believes will have an impact on our success as an industry.  Implementation of the product launch is critical.  This can be the most significant period of a product's life, as the overall success of a product is often determined within the first 2 to 3 months of launch. "Companies will need to reinvent themselves, and getting the basics right will be absolutely critical."

Mr. Miller emphasized the importance of scrutinizing costs. This industry should be watching the bottom line, as the top line is no longer guaranteed. Another key factor required for success is a company's portfolio strategy. It is imperative that the industry reinvest and improve upon innovations to develop future therapies for the marketplace. There is "a lot of change and a lot of pressure for innovation."

Also, in order for this industry to thrive we need to focus on both internal and external strategic agendas. From an internal point of view, Mr. Miller claimed, "we need to work in partnerships in a way that we have not done before." Externally, it is essential that healthcare be put back in the hands of the patients and physicians and that the industry works on protecting its intellectual property. As such, it will be vital to continue constructive industry-government dialogue.

In concluding his talk, Mr. Miller affirmed that the pharmaceutical industry is a fundamental part of the economy and that we should feel privileged to work in an industry that enhances and saves peoples' lives. He believes that, "We need to be ambassadors for this industry and we need to take our pride in our industry out to the community." He holds a great amount of optimism for the future and declared, "There is a lot of value in what we do and there is a great future in what we do."

About the author:
Marla Weingarten is a marketing consultant, specializing in the Canadian pharmaceutical industry. She can be reached at marla.weingarten@sympatico.ca.