Home Archives 2007 January

Monthly Archives: January 2007

This edition of the Carnival of Biotechnology features a number of posts on distressing industry trends, some enlightening patent discussion, and interesting commentary on issues in commercialization

Industry Trends

Forbes presents Genentech’s Next Act. his dialogue with Genentech’s chief officers acknowledges the longshot Genentech was in its early days and plots the future paths Genentech is pursuing to continue to grow.

The Economist presents Billion dollar pills — a profile of the overhaul transpiring at Pfizer. The magnitude of the hanges taking place at Pfizer, the world’s largest drug company, cast a dark omen over the rest of the industry.

In a departure from the typical “David and Goliath” partnerships between typically small biotech firms and typically large pharmaceutical firms, pharmaceutical giants AstraZeneca and Bristol-Myers Squibb have formed a partnership to develop diabetes drugs. Could this be the start of a new trend? The Mars Blog gives you their take.

Wrapping up M&A activity in 2006, Signals Magazine finds M&As still sizzling.

Regulation and Patents

Fighting Aging has an interesting take on medical tourism. Beyond just offering lower prices due to lower operating costs, Medical Tourism Means Medical Competition because it can also skirt patent and regulatory burdens.

The Patent Baristas ask Is it Worth it for Generics to Challenge Branded Drugs? The case of Apotex’s generic Plavix highlights many of the motivations for generic firms to challenge drug patents, and questions how far a generic firm should press.

An Nobel laureate in economics posts an editorial in the British Medical Journal challenges the belief that intellectual property rights promote innovation in Scrooge and intellectual property rights and proposes “medical prize fund” in place of patents.

Commercialization

The Scientist’s article The trouble with tech transfer examines the issues
impeding the proression of inventions from research laboratories to the marketplace. The vigorous discussion in the comments section complements the article quite well!

In the light of the mass layoffs of sales workers, Pharmamarketing asks and answers the question, Are Sales Reps Necessary?

Guest content from John Avellanet, managing director of Cerulean Associates:

As professionals affiliated with the biotechnology industry, we often forget that many of the struggles faced today have been solved before by other fields and industries. As Ambrose Bierce wrote, “There is nothing new under the sun, but there are lots of old things we don’t know.” The question is, where to look for inspiration?

In the 1970’s, the global automobile industry faced a huge push by consumers and regulators to improve quality and safety. Manufacturing costs skyrocketed. At the same time, up went oil prices, adding a third dimension to the problem: how to improve the fuel efficiency of cars while also improving safety and quality?

There were many strategies to tackle this complex problem (Total Quality Management, for instance), but Toyota found, and was the first to capitalize on, a simple, effective answer: following the Japanese principle of kaizen, continuous improvement, to its logical beginnings, Toyota management and engineers found that the sooner quality and safety were built into the process, the more costs declined. In fact, building quality, safety and efficacy into the product at the early concept, design stage was the most cost-efficient (here I use “efficacy” to capture the concept of fuel efficiency, but also features, passenger room and so forth). This then freed them to play with and innovate on the remaining elements such as style, handling and so on.

Admittedly, the days of the Corolla were numbered, but those early attempts provided Toyota the funding and marketplace stature to build today’s Lexus. In fact, the items that most executives at the time argued were massive hurdles for the industry – quality, safety, efficacy – are now bandied about as competitive qualities. Volvo does not make the most beautiful of cars, but surveys of Volvo owners repeatedly point out the top three answers for why they purchased the Volvo over all other options: safety, followed by efficacy and quality.

In my work helping executives at biotechnology, pharmaceutical and life science firms, I often hear attempts to rationalize away such a comparison with “Yes, but we are talking about hundreds of potential compounds in the early preclinical stage, so that’s not really applicable.” Yet automakers today routinely develop hundreds of concept cars and frequently go on to build many more prototype cars for road testing than any biotech or pharmaceutical firm has new treatments in clinical trials. In fact, the cars you and I will be able to buy seven to ten years from now are currently being tested (along with others that won’t make it) on raceways and simulated town streets and rainstorms right now in Michigan, North Carolina, Japan, Germany and so forth.

Lessons and analogies from other fields and industries can help us reframe the compliance challenges we face and point to ways to reduce costs, boost innovation and improve market success. Ultimately, the biotechnology and pharmaceutical firms that take the most advantage of these will be the ones dominating the industry 25 years from now.

If you’d like to read further examples and applications that might be more suited to the situation you face, I’ve made a number of my published articles available as PDF downloads in the Resource Library of Cerulean Associates.

I welcome your comments, suggestions or questions. Please feel free to contact me at any of the points either on the Cerulean Associates website or within my articles.

I look forward to talking with you.

john

 

Harvard’s Gary Pisano has recently published a book titled Science Business: The Promise, the Reality, and the Future of Biotech in which he assesses the performance of the biotechnology sector and, in finding it lacking, proceeds to recommend a series of suggestions to improve the fundamental architecture of the industry.

While I enjoyed the book and agree with many of the elements, I have some serious reservations about his preliminary analysis and his conclusion that the biotechnology industry has failed to perform. Read my critique and his response in the January edition of the Harvard Business Review.