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Innovation in pharma - Challenges and Opportunities - 3 May 2016


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A talk in Copenhagen sharing the latest innovation leaders analysis on the pharmaceutical sector and highlighting opportunities and challenges in pharma from an innovation perspective. This builds on previous research and analysis and aims to share insights from within the sector and link to examples from other industries where similar issues have been progressed.

Published in: Health & Medicine
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Innovation in pharma - Challenges and Opportunities - 3 May 2016

  1. 1. WWW.INNOVATIONLEADERS.ORG Innova&on in Pharma: Challenges and Opportuni2es Dr Tim Jones Copenhagen | 3 May 2015
  2. 2. WWW.INNOVATIONLEADERS.ORG This talk provides an overview of six arenas of relevance to improved innova&on performance in the pharma sector The Changing Pharma Innova&on Landscape •  The primary drivers of change for pharmaceu2cal innova2on Who are the best at Innova&on? •  Mul2ple different views of who is most innova2ve The Phrama Innova&on Leaders •  Our view of who are the companies we should be watching and learning from Innova&on Implica&ons •  Insights from leading prac2ce today Some Insights from Other Sectors •  Examples of how others are moving the dial Conclusion: Progress but More Opportunity •  Ques2ons and challenges for the future
  3. 3. WWW.INNOVATIONLEADERS.ORG The Changing Pharma Innova&on Landscape
  4. 4. WWW.INNOVATIONLEADERS.ORG As a sector pharmaceu&cals is facing four primary drivers of sector change, all of which impact the way it innovates Shareholder demand to maintain profits Pressure to reduce R&D expenditure Fragmenta2on of sector and capabili2es Increased collabora2on and open innova2on
  5. 5. WWW.INNOVATIONLEADERS.ORG Tradi2onal Pharma Focus Recently, the Innova&on focus for many companies has been opposite to their main customers’ long term targets Health Living Preven&on Chronic Severe Cri&cal Death Public Policy shiLs to wellness and preven&on Pharma focuses on lower volume, higher priced cri&cal medica&on Government Agenda Innova2ve Rx Source: Strategic North WELLNESS ILLNESS
  6. 6. WWW.INNOVATIONLEADERS.ORG As R&D spend increases, new drug approvals are now rising but there are growing concerns about how to sustain this Source: h/p://
  7. 7. WWW.INNOVATIONLEADERS.ORG Improving performance has been focused on four primary levers with raising outcomes impact now added to the mix Source: PWC
  8. 8. WWW.INNOVATIONLEADERS.ORG To improve innova&on performance we need to agree the issues and understand what op&ons may be most effec&ve Core Issues: •  Rising healthcare costs (>10% GDP) •  Drug development now over $4bn •  Customer expecta&ons of value •  Business models for growth markets •  70% costs due to HONDAs (Hypertensive, obese, non- compliant, diabe&c, asthma&cs) •  Last 70 oncology drugs have added median 6 weeks of extra life Main Op0ons To Date: •  Greater collabora&on and sharing •  More data, analy&cs and diagnos&cs •  Real-world data on drug outcomes •  Leverage the wider R&D network •  Premium of personalisa&on •  More focus on a few big bets We must recognise who are the most effective innovators and why so new approaches can be applied
  9. 9. WWW.INNOVATIONLEADERS.ORG Who are the best at Innova&on?
  10. 10. WWW.INNOVATIONLEADERS.ORG Iden&fying the most innova&ve pharma company is complex as there are mul&ple views vying for a^en&on Examples include: •  R&D Spend •  Patents •  Execu&ve Opinion •  Sales Growth •  % Sales from Recent Launches •  NCE vs. Biologics vs. Small Molecule Por`olio •  Press and PR
  11. 11. WWW.INNOVATIONLEADERS.ORG Top R&D Spenders 2016 (PWC) focuses on the largest firms #5 Roche #9 Novar&s #10 Johnson & Johnson #11 Pfizer #14 Merck #16 Sanofi-Aven&s #19 GSK #20 Astra Zeneca Source: h/p://
  12. 12. WWW.INNOVATIONLEADERS.ORG Most Innova&ve (Forbes) - Sales growth / innova&on premium #3 Alexion Pharmaceu&cals #4 Regeneron Pharmaceu&cals #7 Incyte #10 BioMarin Pharmaceu&cal #15 Vertex Phamaceu&cals #12 Aspen Pharmacare #20 Shanghai RAAS Blood Products #31 Valeant Pharmaceu&cals #40 Perrigo Source: h/p://
  13. 13. WWW.INNOVATIONLEADERS.ORG Most Innova&ve (EvaluatePharma) – % Sales in last 5yrs Source: h/p:// 1.  Bristol Myers 2.  Johnson and Johnson 3.  GSK 4.  Bayer 5.  Astra Zeneca 6.  Abbvie 7.  Roche 8.  Sanofi 9.  Pfizer 10.  Novar&s
  14. 14. WWW.INNOVATIONLEADERS.ORG BCG’s Most Innova&ve Companies 2016 (exec survey) #8 Gilead #11 Bayer #17 Biogen #20 Johnson and Johnson #24 Amgen #30 Roche #44 Pfizer Source: h/ps://
  15. 15. WWW.INNOVATIONLEADERS.ORG Top 10 by #Patents (Marks Clerk) 1.  Johnson and Johnson 2.  Novar&s 3.  Bayer 4.  Roche 5.  Pfizer 6.  Sanofi 7.  Merck 8.  GSK 9.  Astra Zeneca 10.  Eli Lilly Source: h/p://
  16. 16. WWW.INNOVATIONLEADERS.ORG Bloomberg Intelligence (Por`olio view) Company NCE Biologics Small Molecules Innova&on Score Bristol Myers 6 3 3 30.0 Roche 9 7 2 28.7 Astra Zeneca 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 Eli Lilly 10 7 3 19.5 Merck 20 8 12 18.9 Novo Nordisk 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://
  17. 17. WWW.INNOVATIONLEADERS.ORG Fast Company Most Innova&ve Companies (Press / PR) #16 Novocure #17 Bristol-Myers Squibb #18 Amgen Emerald Therapeu&cs Enteromedics Corgenix Medical Corp Source:
  18. 18. WWW.INNOVATIONLEADERS.ORG These perspec&ves provide individual pieces of the puzzle but none give a holis&c view on innova&on performance Company Capabili&es Innova&on Input Innova&on Output Company Data External Percep&ons
  19. 19. WWW.INNOVATIONLEADERS.ORG The Pharma Innova&on Leaders
  20. 20. WWW.INNOVATIONLEADERS.ORG Since 1998, we have been analyzing and sharing a view of innova&on prowess in the pharmaceu&cal sector
  21. 21. WWW.INNOVATIONLEADERS.ORG For the Innova&on Leaders analysis, we look at a ra&o of innova&on impact to the resources being deployed Each algorithm is based on: Innova&on Output Innova&on Input Company Capabili&es Innova&on Input Innova&on Output Together this provides what we believe to be the most accurate assessment of current innovation impact
  22. 22. WWW.INNOVATIONLEADERS.ORG Our model analyses the 1500 largest companies in 25 sectors and systema&cally selects the top innovators 25 Innova2on Leaders Single company for each sector 75 Companies 25 Sectors 1500 Companies Largest companies across 25 sectors 25 most innova2on- focused sectors Top 3 companies per sector 22 Quan2ta2ve Analysis Throughout Process
  23. 23. WWW.INNOVATIONLEADERS.ORG Since 2002, a por`olio based on the Innova&on Leaders analysis outperformed major indices by a significant margin Compound Annual Growth Rate: 14%, Std Dev: 20%, Alpha: 12, Beta: 0.74
  24. 24. WWW.INNOVATIONLEADERS.ORG 2015/6 Innova&on Leaders analysis provides a different view of who are the most effec&ve innovators in pharma 1 Gilead 2 AbbVie 3 Johnson and Johnson 4 Biogen 5 Amgen 6 Roche 7 Novo Nordisk 8 Sanofi 9 Merck 10 Novar2s 11 Bristol Myers 12 Pfizer 13 Eli Lilly 14 GSK 15 Astra Zeneca 0.00# 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&on Leaders Analysis 2012-2015
  25. 25. WWW.INNOVATIONLEADERS.ORG Innova&on Implica&ons
  26. 26. WWW.INNOVATIONLEADERS.ORG Across leading pharma companies we can see a number of innova&on shiLs already taking place to varied degrees Broadening access •  Rethinking pricing and using generics partnerships more proac&vely Increasing collabora0on •  Don’t do everything internally – widespread adop&on of open innova&on Predic0ve data analysis •  Integra&ng genomics, gene&cs, longitudinal and phenotypical data Opening up of IP •  Sharing ‘failed’ molecule data with academia and public depositories Business model innova0on •  Embracing mobile pla`orms for monitoring, diagnos&cs and advice
  27. 27. WWW.INNOVATIONLEADERS.ORG Some Insights from Other Sectors
  28. 28. WWW.INNOVATIONLEADERS.ORG Access: Narayana has proven its $1500 cardiac surgery model in India and is now taking this interna&onally
  29. 29. WWW.INNOVATIONLEADERS.ORG Deeper Collabora0on: The SunShot project harnessed mass collabora&on and innova&on prizes to accelerate progress
  30. 30. WWW.INNOVATIONLEADERS.ORG Predic0on: The LAPD combines mul&ple public and private data sets to predict where crime is most likely to happen
  31. 31. WWW.INNOVATIONLEADERS.ORG IP: Faced with limits to reach, standard-serng via patent pools and shared IP is becoming a model for C21st IP
  32. 32. WWW.INNOVATIONLEADERS.ORG Business models: A number of alterna&ve approaches to successful value crea&on have been proven in recent years Licensing / sharing IP across the whole industry Paying for outcome (power by the hour) not the product Using real-&me dynamic pricing to op&mise demand Crea&ng commercial, focused mass-collabora&on pla`orms
  33. 33. WWW.INNOVATIONLEADERS.ORG Conclusion: Progress but More Opportunity
  34. 34. WWW.INNOVATIONLEADERS.ORG While recent moves have helped improve some approaches to pharma innova&on, there are more opportuni&es ahead •  Faced with the R&D produc&vity crisis, some in the sector have responded •  More open innova&on and wider collabora&on are gaining trac&on •  Emerging technologies in data analysis and genomics will have impact BUT •  Compared to other sectors, the failure rates are s&ll shocking to many •  Average cost per molecule is way over $4bn •  The prevailing leadership mindset is s&ll largely based on C20th prac&ces •  A sustainable business model for preven&on is yet to emerge •  When will the the ‘decade of vaccines’ occur? •  New models proven in other industries are yet to be adopted and adapted
  35. 35. WWW.INNOVATIONLEADERS.ORG Further Informa&on
  36. 36. WWW.INNOVATIONLEADERS.ORG For more informa&on on this analysis Websites: Innova2on Leaders Growth Champions Twi^er: @innova2onldrs Slideshare: hbp:// Dr. Tim Jones &m.jones@innova& +44 780 1755054 84 Brook Street London W1K 5EH
  37. 37. WWW.INNOVATIONLEADERS.ORG Innova&on in Pharma: Challenges and Opportuni2es Dr Tim Jones Copenhagen | 3 May 2015