Biotech segment of life Sciences industry in and around Silicon Valley constitutes about 1,400+ companies, a few private research institutes and various regional universities. BayBio Organization www.baybio.org found in 1989, focuses on supporting innovation, entrepreneurship, workforce development and education in this industry. The annual flagship event, the Baybio Annual Conference was expanded this year into a two day event, packed with inspiring keynotes followed by several simultaneous tracks. Below are summaries from a sampling of keynotes and sessions.
Keynote Dr. Jorg Reinhardt, Bayer Healthcare
Dr. Jorg Reinhardt, Chairman of the Board of Management at Bayer Healthcare, began the session with keynote focused on the theme of emerging trends in biopharmaceutical partnering. As the world of healthcare is changing, costs are going up, and patients are becoming demanding, there is a need to build more comprehensive franchise models, said Reinhardt. Healthcare companies will have to learn to focus on outcomes as the end goal rather than product development. Emerging markets are contributing up to 50% of growth with diverse demands and market specifications. Innovative changes in healthcare will require new business models with integrated service offerings combining products with service and will need to foster partnerships with IT, Retail, and even financial side. Biotech will have to develop broader perspective and focus on strategic aspects of partnerships. Summarizing the talk, Reinhardt noted that biotech and pharma industry will overcome productivity challenges with effective partnership models that integrate diverse disciplines and align the resources to optimize patient outcomes.
The Promise of Emerging Markets
This sessions focusing on Emerging Markets was moderated by Min Cui, Principal at Bay City Capital. Cui began the session with the stark reminder and numbers signifying the slowdown in the mature markets as emerging markets are growing steadily. Chinaalone will be $60-75B market by 2013, said Cui, asking the panelists how we can take advantage of that opportunity. Maag, President of Novartis Diagnostics suggested that companies begin to understand a very different view of partnership and understand it is all about speed to market. Maag also emphasized innovation for diseases central to emerging markets like Dengue. Sharing her many slides, Hongbo Lu, Senior Research Analyst for China Healthcare, Piper Jaffrey Co, made a strong case for the rapid growth ofChinamarket. Demographic shift in these markets including rapid rate of obesity and growth of mid-tier market with increasing disposable income signifies growth and need newer therapies in these markets, said Lu. She suggested that MNCs find local partners to create a win-win situation. Eric Easom, Project Leader for Neglected Diseases at Anacor Pharmaceuticals also drew attention to the need for thus far neglected diseases in developing countries, including River Blindness, Elephantiasis, Malaria, and TB. While there was not a lot of return on investment until now, things are changing rapidly, said Easom. Anacor has molecules currently in the pipeline targeted towards Malaria. Guo Liang Yu, President & CEO of Epitomics, noted on emerging markets during the last 10 years was on making things cheaper, coming 10 years will focus on tapping emerging markets on innovation, and the 10 years after that the focus will be leveraging access to the ballooning emerging markets. Alex Wu, CEO of Crown Bioscience agreed that the CROs in emerging markets are now more sophisticated and offer strategic partnership, deliver strategic value and are innovation driven.
Inside the VC Thought Process
The key question that every biotech is asking today is what is going on in the head of the VC and how to make the right impression and address the investor’s needs in this market. Arman Pahlavan, Partner with Squire, Sanders & Dempsey moderated this panel represented by various investor groups. Vaughn Mailian, Managing Director at MPM Capital opined that CEO’s focus may be on building enterprise but as investors, their focus is on making money and the team has to show the road to the money. Gaurav Aggarwal, Partner with Panorama Capital, emphasized that commercial skills of the management team are closely scrutinized to help answer questions regarding whether or not the team can lead to commercial success and the CEO has the capability to raise funds and put on a sales force, if required. Panorama is focusing on therapeutics although Aggarwal cautioned that it requires large studies to prove predictability and it in increasingly becoming a big challenge in terms of cost and reimbursement issues. Srini Akkarju, Managing Director at New Leaf Venture Partners, shared that they focus on diagnostics. The panel then went on to discuss corporate venture groups which are increasingly taking on leadership roles. “Getting big pharma interested in early stage of the venture is a spectacular sign of success”, said Kailian. Kurt Von Emster, Managing Director at venBio, suggested that corporate VC funds are good to consider since they are less focused on evaluation and provide real partnering assistance.
Product Launch – An Integrated Approach to Success
Life science industry with innovative pipelines leading to products with commercial value is increasingly finding that fewer therapeutic compounds are meeting analysts’ revenue expectations and products are missing their first year projections with less than 25% of compounds rebounding to initial forecasts within four years as opposed to 60% for their counterparts with successful launch years. Product launch must be efficiently and effectively executed for a lasting positive impact. Panel moderated by Rachael Lester, Senior Manager at Health Sciences and Government at Deloitte discussed ideas for effective product launch planning. Lester shared key statistics on several trends impacting product launch planning and asked the panel their thoughts on which trends are most significant in their impact on product launches and the best way to meet the challenges. Alan Hirshman, Senior Principal of Commercial Effectiveness at Global Management Consulting Group, IMS Health, shared that stakeholders and drivers are changing very fast and lot of pieces should be taken into consideration in the early part of the launch process. It is important to be clear regarding the indications that the product is going after, said Hirshman. Audrey Erbes, Principal at Erbes & Associates suggested that it is now critical to do initial market evaluation very early on and suggested using patient data in phase 3 to support claims. Erbes also suggested tapping into social media as one more channel. Timothy Ruane, CEO of InSite Vision Inc. stressed the need for managing internal and external expectations to get away from hockey stick like revenue curves. It is important to use clinical data to build story at the launch, opined Rob Etherington, Senior VP at Actelion Pharmaceuticals. Discussing the importance of social media, Etherington opined that while “the ability to interface with patients pre-launch is great, ability to interface with patient advocacy groups is priceless”. Richard Clark, Partner with Archer Strategy, stressed the need to understand the economic drivers. Panelists went on to share specific product launch examples of both spectacular successes and more challenging launches. It became clearly evident that integrated planning is critical to garnering market share at product launch.