Posts Tagged IP

Lean Drug Development Model based on Operational Efficiency & Shared Risk

Lean Drug Development Model based on Operational Efficiency & Shared Risk

Madhav Reddy, founder of Maya Clinicals, a Northern California based CRO, talked about a novel risk sharing, open model of drug development at . This new, lean drug development model sidesteps the traditional development paths and avoids committing large blocks of capital before human efficacy is proven.

No one can deny that the drug development process needs an overhaul. It takes 9 therapeutics in phase 1 to get 1 to market and number of novel drugs coming out has been flat, though expenses keep climbing up. Perhaps the big pharma overspends or relied too heavily in the past, on block busters or FDA needs to change the risk tolerance profile; but something needs to be done, whilst keeping in mind that drug development ultimately depends on basic science, said Reddy. Different models for more efficient drug development, are explored that include, university collaborations, orphan indications, strategic relationships, biomarkers, soft ware modeling, genomics, high throughput screening and so on.

What we need is breakthrough in basic science or a new operating model and an ability to get toxicity and efficacy data to push R&D productivity, at lower cost. There is no shortage of IP and big Pharma also excels at commercializing. But the so called valley of death that sucks up resources, is right in between the IP and commercialization, said Reddy. Before spending large blocks of cash, people want to see proof of efficiency and safety. Smaller companies often do not have adequate resources to execute these studies fully. Also, their resources get divided among their core focus and other tangential concerns like fundraising, team assembly and so on. While the big pharma has the resources, a problem is that a project with gravity sucks in the resources and many early stage compounds are dropped before they are fully investigated, in the early stage.

Reddy said, his new model for quick turn drug development addresses both the lack of parallelism at big pharmaceutical companies and the resource limitations of start-up companies. Maya Clinicals is a CRO, deeply focused on clinical trials and related logistics and is based on an operational platform with all the crucial pieces required for success. They are asking biotech companies to focus on their core strength, their compound and Maya would push it through, with efficient use of infrastructure, shorter startup and execution, efficiency in distributed setup, and geographic savings. Besides doing this in a fee for service model, Maya is also willing to share the risk and participate in the upside. Utilizing Maya’s operational efficiency, and equity sharing model a development program can be brought down to 1/10 of the traditional cost. Compared to the traditional model however, the owners of the compound will have to give up a large portion of the equity in return for the increased speed and lower development cost.

With this new model, Maya Clinicals is counting on boosting its pipeline, run parallel programs in identical indications, and overcoming the limitations of startup model, and get the upside from equity sharing based on its operational efficiency. Maya is not counting on its ability to pick compounds at this stage. Instead, Maya is picking proven entrepreneurs and then relying on mathematical probabilities of success. Maya does not have a preference but indicated that that re-purposed compounds, and those targeting infectious diseases will be quickest. Maya is clear however, that its core ability is not in choosing a compound but in pushing it through and getting a faster idea of its probability of success, based on basic science. The talk was followed by Q&A.

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Challenges and tips for expanding business in China by Matt Levy at, February 14, 2012

Matt Levy, President,, discussed challenges and shared some insights and strategies for expanding business in China. China represents a huge manufacturing market for US multi-national corporations. China represents $14 Billion of medical device market and is expected to expand to $50 Billion by 2020.  Levy shared his 5-step commercialization plan as outlined below.

Step one should focus on customer centric, as opposed to product-centric strategy.  The company should have a US presence in the market, have the resources to establish the necessary infrastructure in China, have filed patent and trademark in China, have an international brand recognition, and have knowledge and expertise to do business in china or know where to seek help, prior to expanding the business in China.

Step two should focus on market research from secondary and primary sources, including expert interviews with current customers, distributors, KOLs, competitive overview of international and local competitors, delineate sustainable competitive advantage, and plan a visit to China.  A visit to China will accelerate the learning process tremendously, said Levy.

Levy proposed that step three is focused on developing a plan which should includes two elements, operation plan and marketing plan.  Operational plan should begin with selecting a proper entity, whether it is a rep office, a joint venture, or a wholly owned foreign entity.  Each of these have pros and cons which should be carefully considered.  Next step would be to establish US logistics including accounting, shipping, order processing and legal elements.  That should follow with establishing China logistics including office location, administrative aspects, organizational structure, field service and technical support elements, and recruitment of staff.  Levy shared insights on each of these aspects.  The operational plan should also include defining financial investment based on advice from local market expert.   The marketing plan should include product elements like patent filings, supplier sources, software aspects and manuals.  Distribution elements of the marketing plan should include consideration regarding whether it is through direct sales, or national or regional and/or hybrid distributors.  “Don’t ever sign a long-term exclusivity agreement with a distributor”, cautioned, Levy.  Finally, the brand building aspect of the marketing plan should include aspects regarding market segmentation, translating collateral, event planning, and customer identification.  And finally, the pricing strategy should be considered carefully.

Step four would focus on market execution with focus on brand building.  Chinese product name and key marketing message should be carefully selected followed by sales training and collateral development.  Early adapters and KOLs should be identified and marketing communication plan should be developed.

Finally, step five is about renewing and refining which should be based upon communication from customers, distributors, complete review of China’s growth metrices, it’s evolving compliance policy, and due consideration for high growth environment that is constantly evolving in dynamic China.

Levy discussed further details including considering cultural differences, regulatory climate, and IP protection.  Culturally, there is a lot of corruption ingrained in China and he advised not be naïve about it.  There is also lot of corner cutting which could be an issue for clinical trails, regulatory approval etc. later on.  Also the negotiation style is different, where frequently signing of a contract often signals the beginning of negotiation, rather than an end.  Work ethic, social norms, management style etc. are all practiced differently inChina, compared to theUS.  Regulatory climate is constantly evolving.  IP protection is an issue that should be carefully considered because enforcement does not widely exist. On the other hand, companies can loose IP, even without entering China, said Levy.

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