Amidst advances in science and technology, changing global healthcare markets and patient needs, the pharma and biopharmaceutical industry’s R&D efforts and business models continue to evolve.  
 
Among the trends and changes within the industry, specialty pharma is growing, representing a significant number of drug product approvals in the U.S. As such, pharma companies increasingly need to diversify their portfolios to remain competitive. Also, pharma companies have to go beyond proving efficacy to justify reimbursement by payers, and global markets bring disparate regulations and healthcare systems, which in turn adds to R&D timelines and costs.
 
These variables create new objectives for the industry as well as challenges and costs. As a result, numerous M&A’s and divestitures have taken place as pharma companies look to realign strategy, grow revenue streams and reduce escalating expenditures.
 
John Corcoran, president and founder of Trinity Partners discusses these new challenges and where the biggest opportunities for pharma/biopharma lie. –KB
 
Kristin Brooks: Please provide a brief background on Trinity Partners and your role at the company.
 
John Corcoran: Trinity Partners is a global life sciences consultancy. We recently celebrated our 20th anniversary. Trinity works with a mix of small, medium and large pharmaceutical companies, as well as startups, most heavily weighted in the specialty pharmaceuticals space. We also work with medical device companies and diagnostics providers.
 
Trinity is headquartered just outside of Boston in Waltham, MA, with additional locations in New York and San Francisco. We also recently opened an office in Princeton, NJ, to better serve our client base in the Mid-Atlantic region. The firm has approximately 150 employees.
 
Trinity’s sole focus is within lifes ciences. Trinity is not just focused on the commercial side but clinical as well, combining a mix of strategy, data, and data analytics.
 
As President, a portion of my role involves monitoring the actively dynamic and changing healthcare market, with a focus on payers and patients. The healthcare space is ever-evolving, and I’m continually interested in how developments and changes will affect clients, payers and patients.
 
KB: What pharma/biopharma trends are you seeing and where do you think the biggest opportunities lie?
 
JC: There are several trends that are most acute.
 
The demand for pharmaceutical intervention will continue to remain strong and unabated. On the demographic side, people are living longer – the average life expectancy for a female in the United States is just over 81 years old, with males at 76 years. The front end of the baby boomers (people born in 1946 or later) are now at 70 years old. As this large segment of the population is getting older and living longer, and not being replaced commensurately with as many young people, increased demand is being placed on the healthcare system. This is one of the underlying challenges of the Affordable Care Act.
 
There has also been an increase in the amount of obesity in the U.S. We’re seeing the effects in categories like diabetes, particularly type 2, and cardiovascular disease. These and other similar afflictions are putting increased cost pressure into the market.
 
An emerging and more defined specialty pharma market
For some time, pharma and life sciences has been moving away from a reliance on “blockbuster” pharmaceuticals. These include what you’d refer to as the “household name” kind of products, such as Nexium or Lipitor. Most of these products remain viable in generic forms, but in most cases, they have not been replaced by other blockbuster products. As a result, in most cases, what’s emerging is a more defined specialty pharmaceutical market. Half of the approvals in the country right now are for specialty products; by 2020, half of the entire U.S. market for pharmaceuticals will be specialty pharmaceutical products.
 
Increasingly global pharmaceutical market
To thrive in emerging markets in Central and Eastern Europe, as well as the Middle East, Africa, Central and South America, pharma companies must deal with a myriad of different healthcare systems. Many of these are national payer systems, which respond and act much differently than the United States. In addition, Brexit (the impact of which hasn’t been fully assimilated, since it hasn’t fully occurred yet) will be game-changing for the European market.
 
The healthcare system and expenditures for healthcare have to be managed down
A number of insurers are opting out of the Affordable Care Act because of losses. From the standpoint of insurers, healthcare really has two sides: delivery and access; cost. The Affordable Care Act is clearly targeted at delivery and access. The Affordable Care Act has been successful in reducing the number of people without insurance, however the jury is still out on whether or not it has – or can – reduce costs.
 
In the past, a biologic had to have a superior efficacy to justify reimbursement. Now, it has to have a full cost-effectiveness value proposition attached to it. Insurers will pay for products, provided there is a demonstrated benefit and outcome that’s positive, but, historically, pharmaceutical products have not been sold strictly on that basis.
 
To ensure reimbursement today, pharmaceutical manufacturers must have significant information to inform cost-effectiveness value conversations, with both payers and physicians demonstrating the value proposition. That is how products are going to be sold de facto moving forward in the future. There’s no other option.
 
Alzheimer’s will increase as a societal and public health challenge
Another trend that is directly correlated with the country’s aging population is the incidence and prevalence of Alzheimer’s disease, which we’re just starting to feel the full effects of. This is a category that is among the highest relative to R&D expenditure, however there have unfortunately not been very many successful trials or pharmaceutical outcomes, so most of the spend is R&D, and most of the expenditure is in treatment that’s non-pharmaceutical. We hope that there will be pharmaceutical intervention for this expanding population of people with AD.
 
KB: What are the biggest industry challenges you are seeing?
 
JC: With big pharma, there is an ongoing pressure to reduce costs and maintain or increase shareholder value. This is all being done in an environment where the mix of products is changing. Companies that are slow to adapt will struggle, while companies that are faster and more nimble will be able to make these changes more easily.
 
What we’ll see among both fast and slow companies is an increase in divestiture of non-core products –
that is, products that are outside the core therapeutic categories they’ve decided to focus on. We’ll increasingly see divestiture of slow-growth and end-of-life products.
 
Consistent with this focus on core assets, M&A activity will be increasingly targeted. The ability to finance and the capacity to transact deals is still there, however there are fewer candidates – essentially, a dwindling supply of companies that meet the criteria of being a match to therapeutic needs. That will probably put a bit of a crimp in M&A activity within pharma. There’s not a shortage within M&A and L&A, the demand for assets is as strong as ever, and the amount of spending that pharma will have to do within R&D will not diminish. It will be increasingly difficult for companies to cut costs internally, yet spend liberally on R&D and translate that into shareholder value.
 
KB: Do you anticipate these challenges will remain at the forefront for pharma companies?

JC: The specialty pharmaceutical and epidemiological population demographic trends are most assuredly not changing. We’re in the early stages of those areas; this will continue to be an opportunity for pharma companies, as these populations will need higher amounts of pharmaceutical interventions.
 
It’s also going to put an enormous cost pressure on the U.S. health care system, the dimensions of which are not fully sorted out. Pharma can be a big part of that solution. Though it’s not a majority of health care spend, pharma is a significant part of it, and it’s increasing. Companies are going to be rewarded in the future by being able to show the end-to-end value proposition of products – that is, products that are not necessarily superior from an efficacy standpoint but are net positive to the healthcare system. This makes pharma part of the solution, not part of the problem.
 
KB: What specialized capabilities will drive the market in the next few years?
 
JC: With this new generation of products, it can be difficult to size the market, forecast and price correctly. Given the increased focus on pharmaceutical pricing, companies absolutely want to get that right.
 
Pricing opens the door to the whole outcomes and value conversation. Companies must have a more integrated view of commercialization. Pharmaceutical companies must focus more heavily on launch planning and forecasting. To help ensure success, they should work with partners that can obtain insight from physicians, payers and patients to create a more holistic view of the market and its size. Pharmaceutical forecasting is challenging – there are always things that people miss.
 
Companies may involve partners on the commercial side as far out as two years before expected approval, just because there are so many activities that need to be done that are not strictly formulaic and don’t adhere to any kind of checklist.
 
Each situation is a little bit different. An important consideration is whether a new product is a new class of pharmaceutical, or a follow-on product? For new products coming in to market, oftentimes the whole infrastructure has to be put in place, from the scientific to the medical side. As a result, we’re seeing within many pharmaceutical clients that the internal distance between the organization, R&D, and medical affairs is shrinking. Organizations are less siloed, data requirements are flowing more end to end, with the caveat that there are certain pieces of information that can’t flow seamlessly across the organization due to regulatory and compliance constraints.
 
From the standpoint of a company that’s about to commercialize their first product, an enormous amount has typically gone into the process, from both an R&D standpoint and a medical affairs capacity. Figuring out the type of commercial assets that need to be deployed is challenging enough.
 
It is important to know day one post-approval what kinds of data sets and insights are needed to measure success. These are not based on prescription volumes – instead, you’re looking at dosing and the duration of product, the nature of the infusion and reimbursement.

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John E. Corcoran is the founder and President of Trinity Partners, LLC, a Waltham, Massachusetts-based holding company focused on life sciences. Organized in 1996, Trinity provides strategic consulting services to the pharmaceutical and biotech industry. Trinity has expertise in all major therapeutic areas with particular focus on oncology, CNS, infectious disease, HIV/AIDS, and cardiovascular. The firm has extensive international experience with assignments throughout North America and Europe for approximately 100 clients. The firm participates in upwards of 400 projects annually.