innovation in pharma - challenges and opportunities - 3 may 2016

WWW.INNOVATIONLEADERS.ORG

Innova&oninPharma:ChallengesandOpportuni2es

DrTimJones

Copenhagen|3May2015


Thistalkprovidesanoverviewofsixarenasofrelevancetoimprovedinnova&onperformanceinthepharmasector

TheChangingPharmaInnova&onLandscape•  Theprimarydriversofchangeforpharmaceu2calinnova2onWhoarethebestatInnova&on?•  Mul2pledifferentviewsofwhoismostinnova2veThePhramaInnova&onLeaders•  OurviewofwhoarethecompaniesweshouldbewatchingandlearningfromInnova&onImplica&ons•  Insightsfromleadingprac2cetodaySomeInsightsfromOtherSectors•  ExamplesofhowothersaremovingthedialConclusion:ProgressbutMoreOpportunity•  Ques2onsandchallengesforthefuture


TheChangingPharmaInnova&onLandscape


Asasectorpharmaceu&calsisfacingfourprimarydriversofsectorchange,allofwhichimpactthewayitinnovates

Shareholderdemandtomaintainprofits

PressuretoreduceR&Dexpenditure

Fragmenta2onofsectorandcapabili2es

Increasedcollabora2onandopeninnova2on


Tradi2onalPharmaFocus

Recently,theInnova&onfocusformanycompanieshasbeenoppositetotheirmaincustomers’longtermtargets

HealthLiving Preven&on Chronic Severe Cri&cal Death

PublicPolicyshiLstowellnessandpreven&on

Pharmafocusesonlowervolume,higherpricedcri&calmedica&on

GovernmentAgenda Innova2veRx

Source:StrategicNorth

WELLNESS ILLNESS


AsR&Dspendincreases,newdrugapprovalsarenowrisingbuttherearegrowingconcernsabouthowtosustainthis

Source:h/p://info.evaluategroup.com/rs/607-YGS-364/images/wp15.pdf


Improvingperformancehasbeenfocusedonfourprimaryleverswithraisingoutcomesimpactnowaddedtothemix

Source:PWC


Toimproveinnova&onperformanceweneedtoagreetheissuesandunderstandwhatop&onsmaybemosteffec&ve

CoreIssues:

•  Risinghealthcarecosts(>10%GDP)

•  Drugdevelopmentnowover$4bn

•  Customerexpecta&onsofvalue

•  Businessmodelsforgrowthmarkets

•  70%costsduetoHONDAs(Hypertensive,obese,non-compliant,diabe&c,asthma&cs)

•  Last70oncologydrugshaveaddedmedian6weeksofextralife

MainOp0onsToDate:

•  Greatercollabora&onandsharing

•  Moredata,analy&csanddiagnos&cs

•  Real-worlddataondrugoutcomes

•  LeveragethewiderR&Dnetwork

•  Premiumofpersonalisa&on

•  Morefocusonafewbigbets

We must recognise who are the most effective innovators and why so new approaches can be applied


WhoarethebestatInnova&on?


Iden&fyingthemostinnova&vepharmacompanyiscomplexastherearemul&pleviewsvyingfora^en&on

Examplesinclude:

•  R&DSpend

•  Patents

•  Execu&veOpinion

•  SalesGrowth

•  %SalesfromRecentLaunches

•  NCEvs.Biologicsvs.SmallMoleculePor`olio

•  PressandPR


TopR&DSpenders2016(PWC)focusesonthelargestfirms

#5 Roche

#9 Novar&s

#10 Johnson&Johnson

#11 Pfizer

#14 Merck

#16 Sanofi-Aven&s

#19 GSK

#20 AstraZeneca

Source:h/p://www.strategy-business.com/feature/00370?gko=e606a


MostInnova&ve(Forbes)-Salesgrowth/innova&onpremium

#3 AlexionPharmaceu&cals

#4 RegeneronPharmaceu&cals

#7 Incyte

#10 BioMarinPharmaceu&cal

#15 VertexPhamaceu&cals

#12 AspenPharmacare

#20 ShanghaiRAASBloodProducts

#31 ValeantPharmaceu&cals

#40 Perrigo

Source:h/p://www.forbes.com/innovaMve-companies/list/


MostInnova&ve(EvaluatePharma)–%Salesinlast5yrs

Source:h/p://info.evaluategroup.com/rs/607-YGS-364/images/wp15.pdf

1.  BristolMyers

2.  JohnsonandJohnson

3.  GSK

4.  Bayer

5.  AstraZeneca

6.  Abbvie

7.  Roche

8.  Sanofi

9.  Pfizer

10.  Novar&s


BCG’sMostInnova&veCompanies2016(execsurvey)

#8 Gilead

#11 Bayer

#17 Biogen

#20 JohnsonandJohnson

#24 Amgen

#30 Roche

#44 Pfizer

Source:h/ps://www.bcgperspecMves.com/most-innovaMve-companies-2015/


Top10by#Patents(MarksClerk)

1.  JohnsonandJohnson

2.  Novar&s

3.  Bayer

4.  Roche

5.  Pfizer

6.  Sanofi

7.  Merck

8.  GSK

9.  AstraZeneca

10.  EliLillySource:h/p://www.marks-clerk.com


BloombergIntelligence(Por`olioview)

Company NCE Biologics SmallMolecules Innova&onScore

BristolMyers 6 3 3 30.0

Roche 9 7 2 28.7

AstraZeneca 14 5 9 24.1

AbbVie 6 1 5 23.7

GSK 10 4 6 22.9

Sanofi 12 8 4 21.0

Novar&s 18 5 13 19.9

EliLilly 10 7 3 19.5

Merck 20 8 12 18.9

NovoNordisk 5 2 3 18.4

J&J 3 2 1 18.3

Pfizer 11 4 7 16.5

Bayer 3 1 2 9.3

Source:h/p://www.bloomberg.com/professional/blog/emea-pharmaceuMcals-outlook-2015/


FastCompanyMostInnova&veCompanies(Press/PR)

#16Novocure

#17Bristol-MyersSquibb

#18Amgen

EmeraldTherapeu&cs

Enteromedics

CorgenixMedicalCorp

Source:http://www.fastcompany.com/most-innovative-companies


Theseperspec&vesprovideindividualpiecesofthepuzzlebutnonegiveaholis&cviewoninnova&onperformance

CompanyCapabili&es

Innova&onInput Innova&onOutput

CompanyData

ExternalPercep&ons


ThePharmaInnova&onLeaders


Since1998,wehavebeenanalyzingandsharingaviewofinnova&onprowessinthepharmaceu&calsector


FortheInnova&onLeadersanalysis,welookatara&oofinnova&onimpacttotheresourcesbeingdeployed

Eachalgorithmisbasedon: Innova&onOutput

Innova&onInput

CompanyCapabili&es

Innova&onInput Innova&onOutput

Together this provides what we believe to be the most accurate assessment of current innovation impact


Ourmodelanalysesthe1500largestcompaniesin25sectorsandsystema&callyselectsthetopinnovators

25Innova2onLeaders

Singlecompanyforeachsector

75Companies

25Sectors1500Companies

Largestcompaniesacross25sectors

25mostinnova2on-focusedsectors

Top3companiespersector

22

Quan2ta2veAnalysisThroughoutProcess


Since2002,apor`oliobasedontheInnova&onLeadersanalysisoutperformedmajorindicesbyasignificantmargin

CompoundAnnualGrowthRate:14%,StdDev:20%,Alpha:12,Beta:0.74


2015/6Innova&onLeadersanalysisprovidesadifferentviewofwhoarethemosteffec&veinnovatorsinpharma

1 Gilead

2 AbbVie

3 JohnsonandJohnson

4 Biogen

5 Amgen

6 Roche

7 NovoNordisk

8 Sanofi

9 Merck

10 Novar2s

11 BristolMyers

12 Pfizer

13 EliLilly

14 GSK

15 AstraZeneca0.00# 20.00# 40.00# 60.00# 80.00# 100.00# 120.00#

AbbVie#

Amgen#

Astra#Zeneca#

Biogen#

Bristol#Myers#

Eli#Lilly#

Gilead#

GSK#

Johnson#and#Johnson#

Merck#

NovarGs#

Novo#Nordisk#

Pfizer#

Roche#

Sanofi#

2012#

2013#

2014#

2015#

Pharmaceu&cals:Innova&onLeadersAnalysis2012-2015


Innova&onImplica&ons


Acrossleadingpharmacompanieswecanseeanumberofinnova&onshiLsalreadytakingplacetovarieddegrees

Broadeningaccess

•  Rethinkingpricingandusinggenericspartnershipsmoreproac&vely

Increasingcollabora0on

•  Don’tdoeverythinginternally–widespreadadop&onofopeninnova&on

Predic0vedataanalysis

•  Integra&nggenomics,gene&cs,longitudinalandphenotypicaldata

OpeningupofIP

•  Sharing‘failed’moleculedatawithacademiaandpublicdepositories

Businessmodelinnova0on

•  Embracingmobilepla`ormsformonitoring,diagnos&csandadvice


SomeInsightsfromOtherSectors


Access:Narayanahasprovenits$1500cardiacsurgerymodelinIndiaandisnowtakingthisinterna&onally


DeeperCollabora0on:TheSunShotprojectharnessedmasscollabora&onandinnova&onprizestoaccelerateprogress


Predic0on:TheLAPDcombinesmul&plepublicandprivatedatasetstopredictwherecrimeismostlikelytohappen


IP:Facedwithlimitstoreach,standard-serngviapatentpoolsandsharedIPisbecomingamodelforC21stIP


Businessmodels:Anumberofalterna&veapproachestosuccessfulvaluecrea&onhavebeenproveninrecentyears

Licensing/sharingIPacrossthewholeindustry

Payingforoutcome(powerbythehour)nottheproduct

Usingreal-&medynamicpricingtoop&misedemand

Crea&ngcommercial,focusedmass-collabora&onpla`orms


Conclusion:ProgressbutMoreOpportunity


Whilerecentmoveshavehelpedimprovesomeapproachestopharmainnova&on,therearemoreopportuni&esahead

•  FacedwiththeR&Dproduc&vitycrisis,someinthesectorhaveresponded

•  Moreopeninnova&onandwidercollabora&onaregainingtrac&on

•  Emergingtechnologiesindataanalysisandgenomicswillhaveimpact

BUT

•  Comparedtoothersectors,thefailureratesares&llshockingtomany

•  Averagecostpermoleculeiswayover$4bn

•  Theprevailingleadershipmindsetiss&lllargelybasedonC20thprac&ces

•  Asustainablebusinessmodelforpreven&onisyettoemerge

•  Whenwillthethe‘decadeofvaccines’occur?

•  Newmodelsproveninotherindustriesareyettobeadoptedandadapted


FurtherInforma&on


Formoreinforma&ononthisanalysis

Websites:

Innova2onLeaders www.innova2onleaders.org

GrowthChampions www.growthchampions.org

Twi^er: @innova2onldrs

Slideshare: hbp://www.slideshare.net/2mjones72

Dr.TimJones&m.jones@innova&onleaders.org+44780175505484BrookStreetLondonW1K5EH


Innova&oninPharma:ChallengesandOpportuni2es

DrTimJones

Copenhagen|3May2015

innovation in pharma - challenges and opportunities - 3 may 2016

Health & Medicine