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Mr
Sanjeev Saxena
Chairman & CEO Actis Biologics
The author brings over 22 years of experience in bio-pharmaceutical
industry. Mr Saxena founded Actis Biologics in California in 2003 with
well-known scientist Dr Dave Toman. Then, he founded Actis Biologics in
Mumbai in 2005. He further expanded the group to Malaysia by forming
Actis Biologics Malaysia in 2007. He also founded ProGenix Biotech in
California and Sepragen Corporation in the US.
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While the much-awaited economic recovery was a major let down in the
last couple of years, it is interesting to note that many
biopharmaceutical and biomedical companies reported record-breaking
profits in 2010.
The current year is expected to be very challenging as a result of
patent expiry and impending generic competition from many
pharmaceutical and biotechnology companies. This brings about great
opportunities for the research-based biotech industry. Big pharma
companies have no place to go for innovation, except to acquire smaller
companies who have already taken the risk on new drug development.
Consolidation has accelerated in the last two years because the capital
markets are tough, making M&A an attractive exit strategy for
investors.
Challenges in marketing
Biotechnology companies have their own set of challenges in marketing
drugs by themselves. One of the major issues they face is financing.
The financing they gather goes into the development of various
molecules and, hence, marketing and sales become an issue. Also, the
sales and marketing professionals prefer to be employed by more robust
and well-established brands and companies, so recruitment is a key
issue.
There is also pressure from investors to provide quick returns on
investments and are unwilling to wait for the length of the product
life-cycle. So, the biotech companies are forced to look for partners
in the large pharmaceutical companies, though they are no more or no
less successful than the pharma giants when it comes to drug
development. Presently, it takes 10-to-12 years for a biotech drug to
make it to the market. It is also interesting to note that while the
industry starts with over 10,000 leads, only about 250 make it to the
preclinical stage and only 50 make it to phase I trials, of which only
three to four make it to phase III trials. Out of these promising
molecules, the industry makes a decision on which drug to take forward
into phase III and the market based on market potential, competition
and cost of manufacturing.
While it is true that most phase III molecules work, the market
realities can make a company drop the product from its pipeline. Some
of the phase III drugs are then repositioned as was in the case of
Viagra, for a different indication. Hence, for biotechnology start-ups,
the stakes are extremely high. Large companies have many successful
products in the market. A biotechnology company’s continued existence
depends on the success of those one or two products. Therefore, failure
is much more public and highly scrutinized. It leaves investors and the
public with little or no incentive to remain supportive of the company.
As a result, business development deals or strategic partnerships have
emerged as a vital part of resources that biotech start-ups leverage to
become successful. Pharma MNCs are currently confronted with a number
of blockbuster drugs coming off patent, so corporations are
increasingly looking at biotech start-ups for access to new products to
fulfill their development pipeline. About one-fourth of the new drugs
launched in the past year were the result of collaborations between
companies.
There are three major forms of strategic alliances that biotech firms
can utilize: licensing technology, full collaborations on R&D and
commercialization, and limited agreements on co-marketing or
co-promotion. The benefits go beyond financial resources. For instance,
the pharma companies can provide the biotech companies with development
experience and expertise, regulatory approval support,
commercialization capacity (sales and marketing), and manufacturing
expertise and resources, all of which are essential for the success of
the product in the market.
Need for early involvement
People outside the biotech industry tend to assume that marketing
biotech products is easy because of a built-in demand for cutting-edge
products that extend life or enhance the quality of life. They assume
that the customers will come to their doorstep the minute an exciting
new product gets FDA approval. In fact, the opposite is true. Unlike
funding, where most people agree on its importance for the success or
even the survival of biotech start-ups, the understandings of the
marketer’s role in the company are often mixed. Because most biotech
companies are founded and managed by scientists, marketing is often
introduced late, as if the marketer’s role only becomes important once
the is product is available for sale. We, at Actis, have realized
the importance of marketing and the importance of telling this story
early and, hence, have brought together a diverse group of individuals
to build the company.
There are several reasons why the management should involve marketing
early in the process. First, marketing needs to be involved to better
assess market potential and commercial viability to guide investment
decisions. Based on the analysis of the market size, growth rate, and
unmet medical need, the firm can determine therapeutic areas to focus
on and develop the product to ensure a high commercial potential. In
addition, management should involve marketing in the clinical trial
design process as well to make sure that the end points of the trials
are commercially meaningful. For example, an end point of 15 percent
reduction in cholesterol level would have a very different commercial
implication than the end point of 10 percent reduction on
cardiovascular associated mortality and morbidity events for a
cardiovascular product.
Furthermore, it is important to align the company’s scientific messages
with its marketing messages early in the pre-market process to ensure a
successful launch. It is critical for scientists and management to
start communicating the potential value of a product at conferences and
seminars or though scientific publications before the product launch.
This enables them to get key opinion leaders on board early enough to
build a solid foundation for a successful launch.
The biotech industry today faces a lot of hype and attention and it’s
difficult to combat the over-generalized press. Marketing in
biotechnology needs to foster objectivity, report facts and steer clear
of hype. Truth needs to be communicated to both stakeholders and the
public.
Annual reports are good
story-tellers
So, what is the best vehicle for marketing in life sciences? I
believe, it’s the annual report of the biotech company. Despite the
fact that privately funded life science companies aren’t required to
publish annual reports and despite the fact that most hardcore
biotechnology and life sciences drug development companies — besides
the CROs and the instrument manufacturers — don’t profit until after 10
or more years of trying to develop a successful product, the annual
report gives them a vehicle to communicate their processes and the
investments made in their efforts. It communicates the commitment to
the cause.
Most biotech companies use it as a way to communicate their company’s
story, passion and motivation to succeed. They show the process of what
it takes to make it happen, the larger global benefit of the
contribution. The readers of the report get an appreciation for the
challenge at hand and take a long-term view of the efforts. Hence,
annual reports can be an intelligent and an extremely powerful way to
communicate with your stake-holders, doctors and the media. Smart
companies will even want to use that power more than once a year with
periodic reports focused on portions of their companies’ endeavors.