Challenged by reduced R&D productivity among large pharmaceutical companies and pricing pressures, slower growth is projected for the pharmaceutical industry in developed countries as growth in emerging markets moderates. So what is on the horizon, and what do pharmaceutical industry executives see? The DCAT Week ’18 education programs provided insight into the key trends shaping the performance of the industry.

The global pharmaceutical industry is projected to increase at a compound annual growth rate (CAGR) of between 3% to 6% in the five-year forecast period from 2016 to 2021, according to an analysis from IQVIA (formerly QuintilesIMS) with the US, the largest pharmaceutical market, growing between 2% and 5%. In the US, moderate recovery is expected in 2018 but price-driven growth remains weak. On a global level, continual challenges to R&D productivity remain, but specialty drugs and biologics are increasing their global market share.

Pharma industry outlook

Graham Lewis Vice President Global Pharma Strategy IQVIA (formerly QuintilesIMS)

Graham Lewis, Vice President of Global Pharma Strategy, IQVIA, offered a view of the current performance of the pharmaceutical industry and projections for future performance at the Pharma Industry Outlook education program at DCAT Week ’18, which was held March 19–22, 2018 in New York. Lewis provided detailed market data on the global pharmaceutical market as a whole, in developed markets (the US, Western Europe, and Japan) and emerging markets (BRIC [Brazil, Russia, India and China]) and other emerging markets. He provided the key issues impacting pharmaceutical innovation, including trends among the large pharmaceutical companies and smaller innovator companies. He further outlined the leading therapeutic areas on a global basis and key trends influencing these therapeutic sectors and the product mix between small molecules and biologics and the rise of niche therapies. He also analyzed the generic-drug market by examining generic-drug utilization across developed and emerging markets and related issues, such as pricing. He concluded with a look at key macro issues in the healthcare market influencing the pharmaceutical industry, including the use of real-world evidence in pharmaceutical regulation, the use of mobile apps and other digital technologies in treatments, and a move to outcome-based contracts in the payer environment. A detailed summary of these market trends with related data will be provided in a future DCAT Value Chain Insights article.

Robert Armstrong, PhD CEO Boston Pharmaceuticals

Improving productivity in research and development (R&D) is an ongoing challenge for the industry, so how can that be addressed? How can R&D business models evolve, and what broader external issues are at play? In an Executive Forum at the DCAT Week education program, Pharma Industry Outlook, Robert Armstrong, PhD and chief executive officer (CEO) of Boston Pharmaceuticals, addressed those issues. Dr. Armstrong co-founded Boston Pharmaceuticals, a clinical-stage biopharmaceutical company, with Christopher Viehbacher, the current Executive Chairman of Boston Pharmaceuticals, Managing Partner of Gurnet Point Capital, and former head of Sanofi. With over 20 years of experience working in R&D, which included leadership positions in Amgen and Eli Lilly and Company, Dr. Armstrong has been involved in the discovery and clinical development of programs across multiple disease areas.

Dr. Armstrong brought a unique perspective to these issues with experience in leading R&D with large pharmaceutical companies and now with an emerging pharmaceutical company in Boston Pharmaceuticals. He created and led the small-molecule R&D organization at Amgen and subsequently co-led research at Eli Lilly and Company as Vice President of Global Medicinal Chemistry, was head of the company’s translational medicine group, Chorus, and was Vice President of Global External R&D. Now as CEO at Boston Pharmaceuticals, he is employing a partnership and financing model to acquire or license drug candidates from other pharmaceutical companies and is seeking to build a diversified portfolio of more than 20 molecules across multiple therapeutic areas and modalities.

Executive insights

Given these market trends, how are pharmaceutical companies responding and what do pharmaceutical industry executives see as the salient issues impacting the industry? To gain these perspectives, DCAT Week ’18 featured two new education programs: Executive Insights: Drug Development and Product Innovation and Executive Insights: Manufacturing and Supply.

The program, Executive Insights: Drug Development and Product Innovation gained the perspectives of senior pharmaceutical executives on the current and future direction of R&D and product innovation by examining evolving R&D business models, collaboration strategies, and the role of precision/personalized medicine in current and future new product development. Offering the view from a start-up company was Vivek Ramaswamy, CEO and founder of Roivant Sciences, a New York-based healthcare company. Cited by Forbes as one of the leading entrepreneurs under forty, Ramaswamy is leading a family of companies that include multiple wholly owned or majority-owned biopharmaceutical subsidiaries, each focused on a different disease area. Roivant, which employs a “hub and spoke” model for R&D, has 16 drugs in its collective pipeline, and the company has raised more than $2.5 billion in capital to date to fund clinical programs and pursue adjacent business opportunities in healthcare. Zhen Su, MD, MBA, Chief Medical Officer, North America, EMD Serono, the biopharmaceutical business of Merck KGaA in the US and Canada, shared his views on the current and future role of precision/personalized medicines and both the opportunities and challenges from both a science and business perspective. Ioannis Sapountzis, PhD, US Head, Business Development & Licensing & Specialty Pharma, Boehringer Ingelheim, provided a view on how external partnerships and collaboration strategies in R&D are evolving. And, Anne McDonald Pritchett, PhD, Senior Vce President, Pharmaceutical Research and Manufacturers of America (PhRMA), provided insight into the key developments and policy issues impacting pharmaceutical/biopharmaceutical innovation. A detailed summary of this program will be provided in a future DCAT Value Chain Insights article.

Vivek Ramaswamy CEO Roivant Sciences	Zhen Su, MD, MBA  Chief Medical Officer, North America EMD Serono	Ioannis Sapountzis, PhD US Head, Business Development & Licensing & Specialty Pharma Boehringer Ingelheim	Anne McDonald Pritchett, PhD Senior Vice President Pharmaceutical Research and Manufacturers of America (PhRMA)

Manufacturing and supply is impacted by new product development in terms of the type of drugs/therapies being produced (i.e., small molecules, biologics or other modalities, such as cell therapies), volume requirements (larger-volume drugs such as in primary care drugs versus smaller volumes with specialty or orphan drugs), and the manufacturing technologies available to produce these drugs. All of these issues factor into make–versus–buy decisions of using external or internal capacity, and if partnering, how to best manage those relationships. The Executive Insights: Manufacturing and Supply education program at DCAT Week ’18 addressed those issues. Remo Colarusso, Vice President, Janssen Supply Chain, Johnson & Johnson, who provided the view of a large pharmaceutical company managing a large global supply network. He leads more than 10,000 employees working in 18 pharmaceutical, biologic, and chemical manufacturing sites globally. Joanne Beck, PhD, Executive Vice President, Global Pharmaceutical Development and Operations, Celgene, provided particular perspective in managing supply for multiple modalities based on the company’s product portfolio (small molecules, biologics, and chimeric antigen receptor (CAR) T-cell therapies) as well as in assessing and integrating acquisitions in the company’s supply network. And Patricia N. Hurter, PhD, Senior Vice President, Pharmaceutical & Preclinical Sciences, Vertex Pharmaceuticals, shared her company’s experience in its decision and implementation of using continuous manufacturing in both drug-substance and drug-product manufacturing. A detailed summary of this program will be provided in a future DCAT Value Chain Insights article.

Remo Colarusso Vice President, Janssen Supply Chain Johnson & Johnson	Joanne Beck, PhD Executive Vice President, Global Pharmaceutical Development and Operations Celgene	Patricia N. Hurter, PhD Senior Vice President, Pharmaceutical & Preclinical Sciences Vertex Pharmaceuticals

Best practices

As product complexity increases, so do the requirements in sourcing and selection and management of contract development and manufacturing organizations (CDMOs) and contract manufacturing organizations. The DCAT Week ’18 education program, Innovation in Sourcing and Procurement provided case examples and lessons learned in collaborative approaches to sourcing and supplier relationship management. Jeroen Dubois, Director, Advanced Sourcing and Innovation, Small Molecules, Janssen Supply Chain Procurement, Johnson & Johnson, provided his company’s experience of using an advanced sourcing and innovation team to achieve benefits in terms of risk mitigation and value creation by optimizing technology scouting and engaging with the right suppliers at the right point in time in drug development. He shared his company’s experience in applying a phase-dependent development approach aligned with commercial category strategies and explained the role that Procurement played to bring about innovation. Melanie Miller, PhD, Head of R&D External Manufacturing, Product Development, Global Product Development & Supply, Bristol-Myers Squibb, outlined innovative approaches the company is using in working with external manufacturing partners, including in project management and organizational frameworks. Also, Saurabh Goyal, Associate Partner, McKinsey & Company, provided an out-of-industry view on innovative approaches in supplier relationship management, including collaboration strategies between customer and supplier and new ways to manage the relationship, such as collaborative supply-chain planning. A detailed summary of this program will be provided in a future DCAT Value Chain Insights article.

Jeroen Dubois Director, Advanced Sourcing and Innovation Janssen Supply Chain Johnson & Johnson	Melanie Miller, PhD Head of R&D External  Manufacturing, Product  Development and Global Product Development & Supply Bristol-Myers Squibb	Saurabh Goyal Associate Partner  McKinsey & Company

Partnership strategies are particularly important for emerging pharmaceutical companies, which rely strongly on their contract service providers in development and manufacturing to move their drug candidates through pipelines. For emerging pharmaceutical companies that are start-ups or companies with a fewer number of drug candidates, delivering on key milestones requires an effective supply strategy to avoid delays in development and cost overtures and for meeting investors’ expectations. The DCAT Week ’18 education program, Emerging Pharma: Strategies for Optimizing Manufacturing and Supply addressed key issues in CDMO/CMO selection and management. James Kanter, Senior Director, API Engineering, Ardelyx, a late-stage clinical pharmaceutical company, shared lessons learned for selecting the right development and launch partner in terms of scale, capabilities, and phase of development and best practices in supplier relationship management when working with CDMOs and CMOs. Michael Rosenfelder, Director of Business Development, Merck Manufacturing Division (MMD) and Head of MMD’s Global Supply Business Development Vaccine Therapeutic Area Group, Merck & Co., Inc., provided the perspective of a large pharmaceutical company on manufacturing considerations in due diligence in partnering through licensing deals and acquisitions. He offered practical insight on manufacturing assessments made in due diligence, including risk evaluation, and the issues considered in contract assumption in external development and manufacturing. A detailed summary of this program will be provided in a future DCAT Value Chain Insights article.

James Kanter Senior Director, API Engineering Ardelyx	Michael Rosenfelder Director, Business Development Merck Manufacturing Division (MMD) and Head of MMD’s Global Supply Business Development GSBD Vaccine Therapeutic Area Group Merck & Co., Inc.