The Galien Forum USA 2020

The Next 50 Years of Innovation: Where Will It Come From and How Do We Secure It? (CEOs panel)

CEO leadership in the life sciences industry has been sorely tested by the unanticipated arrival of a global pandemic — the most significant public health emergency of the past 100 years.  With few effective drug interventions, and in the absence of any approved vaccine, expectations are high on the industry to innovate around what it says it does best:  developing safe, reliable and accessible medical products that protect lives and prevent future contagion. According to PhRMA, 34 prospective vaccines against COVID-19 are currently being tested along with more than 500 unique drugs designed to disarm the virus and alleviate its symptoms.

While the outcome of this work could pay social dividends for the industry, enhancing its public reputation after years of declining popular support, it also imposes on CEOs the special responsibility of managing those expectations. This includes potentially intervening in the political process to protect the integrity of the independent product approval process, addressing deep-seated misgivings by a substantial portion of the public in the safety of vaccines overall, and establishing a consistent message to the global community on pricing and market access issues now that the pandemic has reinforced the notion that medicines are essential public goods.

All this is occurring in the face of evidence that COVID-19 is slowing industry revenues by limiting the uptake of specialty biologics and chronic care medicines as health care services are redirected to fighting the virus.  Market launches of new drugs are being delayed, supply chains face disruptions across borders and it is harder to execute clinical trials in other therapeutic areas due to the rush to prioritize financial and human capital in response to COVID-19.

Yet pressure has not eased on the demands of industry investors for more top-line growth.  It’s a big ask:  to meet even the modest single-digit projections sought by Wall Street analysts, CEOs of the big pharma players must grow revenues equivalent to those of a mid-size biotech, every year.  Science, however, is becoming steadily more expensive. Advances in understanding the biologic origins of disease reveal almost infinitesimal combinations of genes, proteins and molecules that could lead to druggable cures for the world’s biggest killers. It’s the next frontier of medical discovery, with clinical validation risks and costs that match the potential therapeutic gains for patients in coming decades.

A key strategic challenge for CEOs is that higher R&D costs from this new science is occurring against a backdrop of consolidation among payers. More negotiating leverage for the payer is depleting that mainstay of traditional drug life-cycle management:  regular price increases, often above CPI, for older therapies that companies rely on to subsidize new innovations.  This emerging feature of the medicines pricing landscape will dog US drug-makers for years to come.

What CEOs do today in handing the outcome of a global pandemic will set the stage for industry success for the future. In addition to reputation, the agenda must include finding the right formulas for pricing hundreds of complex new innovations in a way that provides the access that society expects, especially as clinical practice shifts from treatment to prevention and cure.  Others include prioritization of the product portfolio: as favored asset classes in rare diseases and oncology grow increasingly crowded, companies are reconsidering opportunities in large-population chronic conditions like cardiovascular disease.  New technology platforms will change the underlying dynamics and efficiency of biopharma’s single biggest cost driver – the randomized clinical trial – while advances in information processing capabilities like AI result in new therapeutic interventions outside the realm of traditional drug chemistry.

Finally, CEOs will need to help their organizations adapt to what is likely to be a permanently disrupted system of health care.  A realignment of internal behaviors is needed to eliminate silo thinking, particularly in persuading R&D and the commercial business to learn together the new language of value-based payment.  Success for a raft of expensive new gene and cell therapy launches in the coming decade depends on it.

Core Questions for Discussion:

  • Where do you see life sciences innovation taking us over the next 50 years? What breakthroughs are you most excited about?  Describe one or two “game-changing” innovations you foresee and its effect on the world at that time.
  • What current trends will be key to driving the innovation ecosystem necessary to support this future world you envision? What new issues will arise to challenge the role of the industry CEO in maintaining the pace of industry innovation?

Are there challenges that will impede this future scenario?  How can these be overcome?  What do we as an industry and society need to do in the next five or ten years to realize our bet on a future of progress in medicine and health?

Sue Desmond-Hellmann, former Chief Executive Officer, Bill and Melinda Gates Foundation
Michael Rosenblatt, Chief Medical Officer, Flagship Pioneering

Ken Frazier, Chairman and Chief Executive Officer, Merck & Co.
Elizabeth Nabel, President, Brigham Health
Michel Vounatsos, Chief Executive Officer, Biogen Inc.