Hundreds of attendees turned out to glean insights from findings outlined in Ernst & Young LLP’s (EY) 27th annual report on the biotechnology industry – Beyond borders: matters of evidence – officially launched at Tuesday morning’s Super Session at the 2013 BIO International Convention.
The report was presented by Glen Giovannetti and Gautam Jaggi of EY’s Global Life Sciences Center, and the Super Session featured a panel of industry leaders, including: Brian Edelman, VP, Corporate Finance and Investment Banking, Eli Lilly and Company; Annalisa Jenkins, MBBS, MRCP, Head, Global Development and Medical, Merck Serono; Denise Pollard-Knight, Managing Partner, Phase4 Ventures Limited; and Richard Pops, Chairman, President and Chief Executive Officer, Alkermes.
To kick it off, Mr. Giovannetti summarized some of the report’s notable statistics and trends. He shared that companies located in the industry’s established biotech centers (the US, Europe, Canada and Australia) had revenues of US$89.8 billion in 2012, up eight percent from 2011. He also noted that net incomes increased by US$1.4 billion to US$5.2 billion year over year, due in large part to revenue growth and R&D cutbacks. In addition to these positive trends, Mr. Giovannetti also said that total investment in R&D has failed to track with increases in revenue growth, which he called a “troubling bellwether.”
Mr. Jaggi then spoke to the biotech industry’s “implementation gap” whereby companies are not demonstrating the value of products currently in development, due to a stronger focus on “efficiency matters” in clinical trials over “evidence matters.” Additionally, Mr. Jaggi spoke about the decrease in overall biotech funding due to a reduction in debt funding and a lukewarm IPO environment. In the face of these challenges, Mr. Jaggi provided attendees with recommendations to help increase their focus on demonstrating product value with guiding principles that ranged from understanding the current standards of care and value pathways, designing relevant clinical trials, identifying new solutions for value leakage, and defending products after their launches.
In addition to the actual findings, the panelists engaged in a lively discussion that largely focused on how biopharma and VC firms can demonstrate and determine value earlier in the drug development process. For example, Mr. Edelman said he views value from an acquisition perspective, and that in the past few years, he has seen companies with great science and IP that have failed in the areas of pricing, market access and reimbursement. Ms. Jenkins said three questions she always asks early on are whether a particular drug will work, whether its benefits outweigh its risks, and whether the drug would have a differentiated profile. Mr. Pops said one of the challenges the industry faces is the lack of agreement about what value is, and how it is measured. Additionally, the panelists touched on opportunities as biopharma firms expand their reach into new disease areas. Ms. Pollard-Knight noted that it’s difficult to finance emerging companies that are focused on chronic diseases at the current time, whereas it’s easier to finance companies that are focused more on rare diseases.
To wrap up the discussion, the panelists provided their thoughts on where partnering comes into the value equation, and interest in precompetitive collaboration was raised as something they would like to see more of within the industry. Mr. Pops concluded the Session by stressing the importance of advocating for the voices of patients – as patients are now advocating for themselves – and how it is paramount to listen to their voices early on in the process.