The Changing Face of the
Biopharmaceutical Industry—
Creating a Culture of Innovation
Dr. Bahija Jallal
Executive Vice President
Research and Development
Agenda
Industry Challenges
Identity Crisis
Innovation: The Path Forward
2
Industry Challenges
Negative Perception
Cycle time
Costs / ROI
Competition
Shareholder Pressures
Payer expectations
Patent cliff
Disease challenges
Regulatory Environment
Negative Perception
Harris Survey of Industries that are “Trustworthy” and “Honest”
Source: The Harris Poll, December 15, 2011,
More Stringent Regulatory Requirements
Differentiation
Efficacy
Safety
5
Reimbursement Challenges
 Changing Reimbursement Models
– Value-Based Pricing (UK)
– Comparative Effectiveness
6
Government Spending Cuts
Hit Drug Prices Hard
Italy introduced temporary price cuts
Germany increased the mandatory rebates imposed
on pharmaceutical companies to 10 percent from 6
percent
China cut prices an average of 19 percent on more
than 150 drugs
Turkey imposed 11 to 23 percent price cuts on
prescription drugs
Spain is requiring doctors to prescribe generic drugs
rather than brand names
7
Measuring Productivity
R&D Productivity =
Number of Approvals
R&D Spend
8
High Denominator in the Productivity Equation
1 Lagging five-year average includes NCEs and BLAs. BLAs included 1986 onward; biologics approvals in prior years assumed to be negligible
2 PhRMA members only (~40 leading pharmacos)
R&D Productivity
Rising cost of drug
development
Declining productivity
Why?
The science has never been better.
10
The Industry Faces an Identity Crisis
Yesterday’s Pharma
• Blockbuster
Drugs
• Industrialized
Research
• Scale-driven
Processes
Today’s BioPharma
• Personalized
Medicine
• Depth of
Understanding
• Nimble
Processes
Built around a “technology”
versus
Built around a “concept”
11
Solutions
Diversify
Innovate
• OTC
• Generics
• Biosimilars
Restructure
Emerging
Market
Growth
12
Innovation: Back to the Basics
Best Science
Best Scientists
Business
Focus
13
in·no·va·tion noun
\i-nə-vā-shən\
1: the introduction of something new
2: a new idea, method, or device : novelty
Innovation can’t be engineered or mandated,
but you can increase the odds of it happening.
An Innovation-Inspiring Environment
• Encourages diversity of ideas
• Supports experimentation
• Encourages risk-taking
Culture of Collaboration
Accessing the best science
wherever it lives.
How We Collaborate
M&A
Licensing
Academic
Partnerships
MediVentures
Incubators
50%
of programs
are
collaborations
Alliances
Partnering
At MedImmune, We Favor Collaborations Where Goals,
Risks and Rewards Are Shared
The Old Model
• No strings attached
funding
• High risk, “blue
skies” projects
• Endowments
• And increasingly…
• Pay to “access”
university network
• Unrealistic IP
positions
The New Model
• Focus on disease
mechanisms
• Shared goals and
objectives
• Complementary skill
base
• Jointly funded by
academia and industry
• Shared risks and
rewards
• True “collaboration”
Example: MedImmune / INSERM collaboration
 Industry first
 Strong contributions from partners
1
Lille
1
– Inserm—unique science, technology
& IP
1
1
4
1
1
6
4
1
1
1
1
Caen
1
1
1
1
1
Rennes
1
1
1
Tours
1
1
Rouen1
Paris
Orléans
2
1
1
1
1
1
1
Dijon
Nantes
1
Poitiers
1
Reims
Na
ncyStrasbourg
1 1
1
1
Bordeaux
1
1
1
1
1
Clermont- Lyon
Grenoble
Ferrand
1 1 1
1
1
Toulouse
1 1
 Joint PI collaborative relationship
1
1
1
1
1
1
– MedImmune—complimentary
science, technology, IP &
investment
Montpellier RoussetNice
Marseille
1
1
1
1
2
1
 Long-term science-focused
collaboration
Partnerships & Collaborations
20
Example: Peer to Peer Collaborations
 Respiratory assets
 Industry first
 Jointly develop and
commercialize clinical-stage
Inflammation Portfolio
 Oncology asset
 Developing proven asset
 Utilize translational
medicine / right clinical
population to unlock
potential of asset
Publications & Patents As A Foundation
 Peer reviewed manuscripts
…foster highest quality science
 Conference posters, abstracts, presentations
…create connections, new ideas, relationships
 Review articles & book chapters
…further scientific knowledge, understanding
 Patent filings
…bring focus to intellectual property, importance of invention
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Always Follow the Science
Fostering Innovation
and Dedication to
Robust Science
Managing the
Business Realities
People and Leadership
Foresight to Think 10 Years Ahead
 Anticipate the needs of patients – 10 years from now
 Anticipate the market – 10 years from now
 Anticipate the regulatory landscape – 10 years from now
25
Those Who Innovate Survive
1990
2012
26
Questions & Discussion
Shareholder Pressures
“I don’t see pharmaceutical shares outperforming.
Buying a drug stock is buying a pretty big risk
these days.”
Chief Investment Officer of a Major European Investment Firm
(Bloomberg.com)
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