2010: A pharma odyssey

Paul Tunnah

pharmaphorum

Well, that’s it for another year – it’s all over bar one last party and then off we go into January to kick things off again. As usual, I wanted to summarise a few of my key stories from the last twelve months and invite comments from our readers on your own favourite highlights.

Firstly, you may think that the title is just a bad play on words. But actually, and with apologies to the late, great Arthur C Clarke, I believe it has some real resonance with what pharma has experienced over the course of the year. The Merriam-Webster online dictionary has two descriptions for the word “odyssey”, the first of which is:

• “a long wandering or voyage usually marked by many changes of fortune.”

The second description we’ll come onto later, but there has certainly been much change of fortune for pharma throughout 2010. Here’s my top five stories for the year...

1. AstraZeneca announces job cuts (January)

We hadn’t even escaped January before AstraZeneca announced a further 8,000 job cuts on top of the 15,000 announced in 2009. The move came as AstraZeneca assessed the scale of the challenge ahead of it and the expected loss of earnings due to the impending patent cliff, leading to this further 12% cut in staff in a bid to achieve over £1bn of cost savings by 2014.

"...many will view it as the year where the final coup de gras was delivered to the traditional sales model of representative detailing."

In fairness to AstraZeneca, it was just the first major pharma company to announce significant job cuts in 2010, with most of its rivals following suit throughout a year. However, it set the tone for a year which has seen over 50,000 industry jobs go as the industry strove to adapt to the new business environment.¹

So what?

When we look back on 2010, I would venture that many will view it as the year where the final coup de gras was delivered to the traditional sales model of representative detailing. Across all the major markets, pharma is adapting in pursuit of deeper stakeholder engagement to demonstrate the true value of its medicines, the didactic push-selling rep wars are truly over.

2. UK government NHS White Paper (July)

In July, the new UK coalition government unveiled its much anticipated White Paper on reforming the National Health Service (NHS). Health Secretary Andrew Lansley revealed his intention to see the NHS undergo arguably the most dramatic changes since its inception, with the proposed abolition of the Primary Care Trust (PCT) regional decision making bodies and spending power instead being handed back to the doctors.

Assuming all moves ahead as planned then control of around £80bn, the majority of the NHS budget, will move into the hands of the GPs who will be clustered together in local consortia. It’s not going to happen overnight, but by 2013 we should be almost there and pharma will have a very different group of stakeholders to play with. The benefits – decision making being closer to the patient, the potential drawbacks – will GPs be too close to the patient to make decisions in the interests of the national picture?

So what?

I’d be the first to recognise that we’re quite a small island here in the UK and not one of the biggest markets in the world of pharma. However, every government is looking at ways to reduce spend and high-priced drugs are definitely in the firing line, even if they deliver value for certain patients. If this model works in the UK, expect other countries to take note and pharma to adapt accordingly. Watch this space!

3. Roche unveils its social media guidelines (August)

It seems like pharma has started to take social media very seriously in 2010, with the regulatory bodies starting to take note. The US Food and Drug Administration (FDA) has been promising us guidelines on how the industry can use social media all year, only recently admitting its Christmas deadline was not realistic for providing such formal guidance.

Meanwhile, pharma has dabbled in different digital channels that allow direct engagement with others, albeit cautiously due to complexities around avoiding direct-to-patient promotion in many markets and the need to comply with strict adverse event monitoring rules.

"It seems like pharma has started to take social media very seriously in 2010, with the regulatory bodies starting to take note."

However, Roche was the first major pharma company to break cover in August and issue its own guidelines around how social media should be used by its employees, whether they are acting in a personal or professional manner. Are its guidelines perfect? Probably not, but full marks for being bold enough to take the first step – and other big pharma are now following on.

So what?

Like it or loathe it we work in heavily regulated industry, and for good reason. There is no doubt social media is going to be a very powerful and useful tool for pharma, healthcare providers and patients if used in the right way, but pharma needs clear rules of engagement. Expect more from other pharma companies and the regulators soon and a resultant opening of the floodgates to the industry’s involvement in this space.

4. Avandia market withdrawal (September)

In September, regulators ordered the withdrawal of GlaxoSmithKline’s diabetes drug Avandia (rosiglitazone) from the European market. The US stopped short of doing the same, but insisted that both doctors and patients would need to sign consent forms making them aware of the safety risks before Avandia could be prescribed.

These announcements, and similar ones in other countries, followed a long inquiry after a finance committee of the US Senate concluded that GlaxoSmithKline had been aware of the risk of increased heart attacks from taking Avandia as early as 2004. FDA scientist David Graham published a paper in June 2010 suggesting that Avandia could have caused as many as 100,000 severe cardiovascular events and the media quickly saw a big story.

However, GlaxoSmithKline has consistently defended the safety record regarding Avandia and its level of disclosure around such risks, vehemently denying such accusations.

So what?

The really interesting thing here for me is not the matter of whether Avandia should be prescribed or not, but the way in which such a media storm was whipped up around this, almost certainly having some bearing on the outcome. Experiences such as this, in addition to new legal compliance regulations, will lead to greater transparency from pharma and a more upfront media-savvy approach to dealing with such potential issues.

5. Kindler relinquishes top job at Pfizer (December)

The CEO of the world’s largest drugmaker, Pfizer, announced his surprise retirement earlier this month. Jeffrey Kindler, 55, stated that it was in order to “recharge my batteries, spend some rare time with my family, and prepare for the next challenge in my career”. He was immediately replaced by the Global Head of Pharmaceuticals, Ian Read.

Whether you believe Kindler’s story that it was a decision of his own making due to the enormous pressures placed on his personal life or the view of some analysts that he was pushed out the door, it illustrates all too clearly the tremendous pressure on top execs in pharma at the moment. The announcement in September by Genzyme CEO Henri Termeer that he will also step down next year could also be in part due to the pressures of the job, after manufacturing difficulties early in the year and a boardroom battle with billionaire investor Carl Icahn.

(As a side note, it was sad to also hear of the death of Cephalon Founder and CEO, Frank Baldino Jr, in December after a long battle with cancer. He will be remembered as a leading pioneer in the biotechnology space.)

"Expect to see more fallout from global leadership teams in pharma over the next twelve months and more influx of skills from outside pharma..."

Pharma is relatively recession proof and remains a business with margins that many other industries would dream of. However, the rate of change at the moment for the industry is massive, faced by the perfect storm of declining innovation, the patent cliff and increased cost containment. But the shareholders expect the same strong results and the pressure mounts.

So what?

It’s not going to get any easier in 2011 for pharma. For top leaders to ensure their business is successful, they will need a clear vision and the right team to help them implement it. Expect to see more fallout from global leadership teams in pharma over the next twelve months and more influx of skills from outside pharma, bringing a fresh perspective and experience from sectors that have already faced similar challenges historically.

What does this mean for 2011?

Sadly, I still haven’t got that crystal ball to work so can’t tell you exactly what 2011 has in store for pharma. However, every story above illustrates a challenge pharma is facing – but each one also represents an opportunity. The past couple of years seem to have been full of such painful stories for the industry, but lessons are being learned and changes are being made.

As for that second definition I promised you, an “odyssey” can also be described as:

• “an intellectual or spiritual wandering or quest.”

Well, there’s no doubt the world of pharma contains a tremendous amount of intellect, both scientific and commercial. If it can combine that with the right spirit then 2011 could be a real year of progress for the industry.

Wishing you all a happy and prosperous New Year!

References:

1. FiercePharma story citing Challenger, Gray and Christmas: http://www.fiercepharma.com/story/2010-pharma-job-cuts-cross-50k-mark/2010-12-01

About the author:

Paul Tunnah is Founder and Managing Director of pharmaphorum, the online information, discussion and networking site for pharma executives. For queries he can be reached through the site contact form.

What were your pharma highlights of 2010?