Adapt or die time for UK pharma

Paul Tunnah interviews Mike Sanvoisin

IMS Health

NHS reform might seem like an issue local to the UK, but the world is watching with interest to see how pharma reacts. Under a barrage of criticism from healthcare providers, the government has taken a momentary pause for consultation in implementing the most radical overhaul of the NHS since its inception, but there is a sense of calm before the storm. The move towards devolving power back to the physician on the front line is intended to hand control of the budget back to those who are closest to the patient, with a view to improving the overall standard of care. However, for pharma it means an era of great uncertainty as it struggles to ascertain who its new customers will be, how they will operate and what is required to demonstrate the value of its medicines.

"...for pharma it means an era of great uncertainty as it struggles to ascertain who its new customers will be, how they will operate and what is required to demonstrate the value of its medicines."

We thought it might be useful to get a local perspective on the challenges of the UK market and what these changes mean for pharma. Mike Sanvoisin, Managing Director of IMS Health, spoke to pharmaphorum to share his thoughts on where pharma is right now, what to expect in the next few years and where it needs to refocus its efforts in order to demonstrate value and succeed in the healthcare system post these changes. The UK has always presented unique challenges as a market, but if pharma can adapt and get it right here then the lessons could resonate globally. Get it wrong and the UK is going to be a very tough place to play in the near future.

To listen to the full interview, please click on the play button below, with a shortened transcript of some edited highlights shown in print below.

Interview summary

PT: Hello Mike and thanks for joining me today. Now, 2010 was a tough year for many industries, so how did pharma perform?

MS: UK pharma has had a good year actually, growing at around 3.8% in value, which is a very good performance if you benchmark it against any other industry. That was mainly driven by specialty care – 7.7% of that growth was from oncology and specialty care overall drove 90% of the growth. Primary care was basically flat, growing at 0.4% mainly from the diabetes area and respiratory. Seventy-five percent of the volume growth came from generics. However, these figures do reflect some of the challenges that pharma is now facing with the declining impact of launches, the dramatic shift in stakeholder power and also the early impact of the government changes.

"UK pharma has had a good year actually, growing at around 3.8% in value, which is a very good performance if you benchmark it against any other industry."

PT: What kind of growth do you see for pharma in 2011 and where do you see the real opportunity areas?

MS: In terms of overall growth, I see a flat market or maybe even a slight decline in the 2011 to 2012 timeframe, due to the impact of the NHS reforms. The changeover to a value-based pricing mechanism, potentially in 2013, is going to cause uncertainty and we've got a lot of patent expiries coming up in the next couple of years which will certainly drive down growth. However, moving out to 2014 I do see a lot of opportunity. A lot of primary care portfolios are coming through in that timescale and if pharma companies have the right launch strategies and can work with the government on value-based pricing, then they can really maximise the potential of these new products. So I am confident that in the medium term growth will return and the UK will continue to be a vibrant market for pharma, despite these challenges.

PT: How do you think pharma can best realise these opportunities?

MS: The commercial model will need to change – the way people are incentivised and how they view the market must focus around outcomes moving forward. This is the bedrock of value-based pricing, the impact of new drugs from an outcomes point of view is the way the government wants to shape the NHS and pharma needs to understand what impact that will have on the commercial model, but there are some real opportunities here because the NHS changes are far from certain. If pharma engages in the right conversations and leads the thinking in this area it can drive some unique collaboration with the NHS. Then pharma companies need to look at themselves internally to make sure they understand the new environment, the shift away from PCTs [primary care trusts] to GP consortia, the new individual stakeholders and how to engage with them. All of these things are still wide open, but pharma needs to scenario plan and, whilst we don’t have all the facts and figures right now, it’s about how to collaborate and change your operational model to meet future needs.

PT: With all that uncertainty, what kind of NHS structure do you think we will end up with in the UK?

MS: Well, the outline structure seems to be pretty much there, but I know we have had a recent pause in the progression of the NHS reform bill through parliament. I don’t think there will be big structural changes to what was proposed and the decision making powers will still be pushed down towards the GP. There may be other people involved in decision making too and there’s talk of having more hospital personnel on those panels, or members of local government. But the GPs will be on the front line, so pharma needs to start thinking about who these new stakeholders are, what information they need, how they want to be approached and what partnership model they want to help them achieve their goals – looking at it wider than the clinical benefit of the drug. Things like reducing hospital admissions and reducing social care need to be taken into account. So your business model must adapt to both communicate your messages and understand how to modify your trials. There have already been some good examples where pharma has worked with the NHS, for example in COPD there has been a lot of good work in reducing hospital admissions. The structure is pretty much set, but how it’s implemented might change so the right thing for pharma to do is model different scenarios and plan ahead.

"We have all got to evolve in this new environment, whichever part of the healthcare system that you work in, to really understand the new demands within the NHS and how to add value."

PT: How do you see this changing the way that critical service providers work with their pharma clients?

MS: We have all got to evolve in this new environment, whichever part of the healthcare system that you work in, to really understand the new demands within the NHS and how to add value. With a big focus on outcomes, where that type of information is not readily available or collected in the right format, there are a lot of things we can do working with the NHS and pharma to enable that to happen. Outcomes data is, by its nature, very different across different therapy areas and some is publically available whilst other information is restricted, so bringing it together to provide insight is going to be critical. Operating in a value-based pricing environment understanding outcomes in its broadest context is going to be critical. Pharma needs to make arguments up front in terms of the benefit of any new launches and also be able to measure performance against those arguments to ensure that once a price and prescribing mechanism is agreed it is carried through by the NHS. There have been a lot of reports recently where drugs get NICE approval but there’s still a lack of uptake and regional variation, so pharma needs to make sure its case is driven through the NHS. Understanding all of these different dynamics will be critical moving forward.

PT: Do you think pharma is ready for this challenge?

MS: Probably not right now, but over the next two years a lot of work will be done to understand this new environment. There are some big topics to be grappled with and the industry and the NHS need to agree what outcomes actually means and what benchmarks will be used to define good and bad. Pharma obviously wants to know that as quickly as possible to make sure that it is investing in the right areas. So, the next couple of years are a real opportunity to test this partnership principle and ensure it can deliver benefit for the patients, which is where we need to make sure we focus.

About the interviewee:

Mike Sanvoisin joined IMS Health in 2002 where he has worked across many areas including various account positions across both the UK and Europe, Sales Director for the UK, Director of Business Line Management and Supplier Services and more recently as General Manager of IMS UK, Ireland and South Africa.

He has an extremely wide and varied experience of both country and headquarter pharmaceutical operations, more recently Mike has worked with leading UK pharmaceutical companies on their evolving business requirements and has been integral in adapting IMS business to the fast-changing market, developing new innovative ways of adding insight and strategic thinking to the pharmaceutical market. Mike has spoken at several events to key healthcare stakeholders and been quoted in industry press about the key challenges that the UK face particularly in today's environment.

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