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Bchb 566 class1 overview 040116
- 1. Overview of DrugDevelopment: Discovery to Post-Approval Georgetown University Medical Center BCHB 566 April 1, 2016 Stephen J. Sullivan CRO Advisors LLC
- 2. 04/30/16 CRO AdvisorsLLC 2 Course Objectives Understand the complete process to help you: make good career choices, know how to contribute, relate to co-workers in adjacent functions, maximize your contribution to the firm Develop the perspective needed to serve the drug industry as a service provider, financier, consultant or board member Develop the insight required to help improve the process Understand the terms, nomenclature, and demarcation lines for this complex process Develop a working knowledge of current issues in drug dev Help you become an informed investor
- 3. Course Outline Section1- Overview and key issues, Today Section 2- Drug Discovery. Today Section 3- Pre-clinical, Safety, Mfg.- Sat. 4/2 Section 4- Clinical Development- Sat. 4/2 Section 5- The Regulatory Process- Fri. 4/8 Section 6- Commercialization, Post-approval- Fri. 4/8 Section 7- What lies ahead? –Sat. 4/9 04/30/16 CRO Advisors LLC 3
- 4. 04/30/16 CRO AdvisorsLLC 4 Course Requirements Participation – requires being here – 15% Case assignment – 35% Final Exam: 50%
- 5. We are ingood company! 04/30/16 CRO Advisors LLC 5 Developed by Eli Lilly & Co. Available 4/2016 Developed by Terrapin offered 9/2015
- 6. Why this course? 10,000’deep, 2’ wide Perspective Need for fresh eyes Massive industry Infinite choices Lots of issues 04/30/16 CRO Advisors LLC 6
- 7. What is abiotechnology company? 04/30/16 CRO Advisors LLC 7 Traditional Biotech Evolving Biotech Medium & Large Pharma Amgen Genentech Large Molecules Small Biopharma SM and LM Combinations Top 50 Pharma
- 8. R&D spending growth 8 04/30/16 YOY % 15 10 5 0 Total Pharma 2.5% Top 10 Biotech 15% Small-Medium Pharma / Biotech 9% 2009 2010 2011 2012 2013 2014 2015
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- 10. 04/30/16 CRO AdvisorsLLC 10 My perspective…………. Founder of CRO Advisors LLC, consulting firm to outsourced pharma service providers across the DD continuum CEO of a large private equity owned CRO CEO of a NASDAQ early gene expression company CCO of a NASDAQ generic pharma Group President NYSE company (several divisions) VP / GM of a billion dollar unit of a Fortune 50 20 years as Adjunct in top MBA program (Kellogg) US Marine Officer
- 11. 04/30/16 CRO AdvisorsLLC 11 CRO Advisors LLC perspective Discovery Pre-Clinical Phase I Phase II Phase III Phase IV Clinical Support Services Logistics / Packaging / Related 2 Boards 2 Boards 1 Board Clients: 45% Private equity 45% Pharma Services 10% other investors 50 M&A projects 5 M&A projects 3 M&A projects Negotiating with Powerful Buyers Workshops 6 M&A projects
- 12. 04/30/16 CRO AdvisorsLLC 12 “All generalizations are false, including this one.” Mark Twain
- 13. 04/30/16 CRO AdvisorsLLC 13 All generalizations are false…… R & D spending growth 0% or 15% Revenue growth 0% or 15% Therapeutic areas (5)% or 17% Drugs in development 1% or 8% Employees (1)% or 13%
- 14. 04/30/16 CRO AdvisorsLLC 14
- 15. 04/30/16 CRO AdvisorsLLC 15 Source: Pharmaceutical Industry Profile 2008 (PhRMA, March 2008, p.4) $31 billion 12 billion $71 billion $26 billion $141 Billion Year 0 5 7 9 11 13
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- 19. BioPharma Income Statement 19 Revenue100 Cost of Goods 15 Gross Profit 85 Operating Expenses: R&D 20 S&M 30 G&A 5 Operating Income 30 Revenue 100 Cost of Goods Gross Profit 99 Operating Expenses: R&D &D 27 S&M 34 G&A Operating Income 39 Revenue 5 Cost of Goods 1 Gross Profit 4 Operating Expenses: R&D 160 S&M 15 G&A Operating Income (141) Top 10 Pharma Commercial Biotech Development Biotech
- 20. 04/30/16 CRO AdvisorsLLC 20
- 21. 04/30/16 CRO AdvisorsLLC 21 Pharma / Biotech in context Healthcare approaching 20% of GDP in the US Drugs are about 10% of healthcare 88% of prescriptions are generic drugs— 28% of revenue Ethical / specialty drugs continue to be the lion’s share of the market BioPharma Research is 20% of US industry research
- 22. 04/30/16 CRO AdvisorsLLC 22 Critical challenges for the drug industry R&D Productivity ROIC for the industry declining Prices of specialty drugs rising rapidly US prices are often 2-3x the ROW Payers and reimbursement The image of the industry is low………….
- 23. 04/30/16 CRO AdvisorsLLC 23 40 years of prosperity 1970 1975 1980 1985 1990 1995 2000 2005 2010 2012 2013 800 700 600 500 400 300 200 1982-83 DRGs 1994- Clintons attempt to nationalize HC Revenue Billions R & D Spending 150 120 100 70 50
- 24. 04/30/16 CRO AdvisorsLLC 24 Drug Classifications Traditional or “ethical” drugs chemically derived otherwise called Small Molecule drugs Biologics from living organisms (often called Large Molecules) Generics Specialty Drugs Orphan Drugs Biosimilars
- 25. R&D Productivity: Isit really improving? The case for: FDA approvals # of blockbusters Targeted therapies Robust biotech market Huge profits The case against: Cost per new $2.6 BN 62% of Big pharma launches from elsewhere Corporate Integrity Agreements (CIAs) Inexplicably high prices 04/30/16 CRO Advisors LLC 25
- 26. 04/30/16 CRO AdvisorsLLC 26 Source: Pharmaceutical Industry Profile 2008 (PhRMA, March 2008, p.4) $31 billion 12 billion $71 billion $26 billion $141 Billion Year 0 5 7 9 11 13
- 27. Industry Benchmarks -2015 Average Benchmarks R&D cost allocation R&D Cycle times Discovery to 1st tox dose 26% 34% Preclincal to Phase II 29% 39% Phase III and submission 46% 27% 04/30/16 CRO Advisors LLC 27 Source: Deloitte LLP and Global Data proprietary data, Measuring the Return from Pharmaceutical Innovation 2015. p. 28.
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- 30. Eroom’s Law* *Nature ReviewsDrug Discovery, “Diagnosing the decline in pharmaceutical R&D efficiency” pp191-200, March 2012 The number of new drugs approved per billion of R&D spending has halved every 9 years since 1950.
- 31. 04/30/16 CRO AdvisorsLLC 31 Quantifying the damage: Oliver Wyman* The Age of Abundance $275M The Age of Scarcity $75M *Source: “Beyond the Shadow of a Drought: The need for a new mindset in Pharma R&D, Oliver Wyman Point of View, November,2011
- 32. 04/30/16 Confidential CROAdvisors LLC 32 Era of abundance----Era of scarcity-----Era of superabund. 35 43 35 2011 2012 2013 2014 2015 50 DEMOCRATS REPUBLICANS DEMOCRATS 57 Clinton Bush Obama 40 per yr. 23 per yr. 42 per yr.
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- 35. Non--Responders Common andCostly Source: George Poste GAvastin Rituxan Herceptin Revlimid Gleevec Taxotere Alimta Gemzar Tarceva Femara Erbitux Velcade Xeloda Arimidex Leuplin R $3.059B $2.466B $1.526B $1.373B $1.285B $1.042B $975M $723M $661M $650M $646M $598M $508M $393M $483M Responder Non-responder Sources: Individual drug labels, FDA Market and Product Forecast, Top 20 Oncology Therapy Brands, DataMonitor 2011
- 36. Personalized Medicine ImprovingEfficacy in Oncology and other TAs ALK gene Cells expressing CD 304 BRAF Mutation 5% HER-2 HER-2
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- 38. 38 Jobs Created 2000 20032006 2009 2012 2015 Biotech CROs, CMO Big Pharma
- 39. 39 Productivity 2000 2003 20062009 2012 2015 Cost per New Drug 10 year IRR
- 40. 40 Source of innovation 20002003 2006 2009 2012 2015 External 62% Internal
- 41. 04/30/16 CRO AdvisorsLLC 41 Critical challenges for the drug industry R&D Productivity ROIC for the industry declining Prices of specialty drugs rising rapidly US prices are often 2-3x the ROW Payers and reimbursement The image of the industry is low………….
- 42. 04/30/16 CRO AdvisorsLLC 42
- 43. 04/30/16 CRO AdvisorsLLC 43 Intangibles such as key soft skills will be considered Perspective Critical Thinking Skills Values
- 44. 04/30/16 CRO AdvisorsLLC 44 Perspective Critical Thinking Skills Values
- 45. 04/30/16 CRO AdvisorsLLC 45 Perspective Critical Thinking Skills Values Leadership