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BioPharm talks with Tarja Mottram, CEO of Action for Results, about key business considerations when starting out.
BioPharm International speaks with Tarja Mottram, CEO of Action for Results, regarding some of the deeper business considerations for companies aiming to grow a biopharmaceutical product pipeline. Action for Results is a life sciences-focused consulting company. The company helps to build process capabilities and the practices needed for innovation.
BioPharm: What's your take on the current industry dynamics?
Mottram: R&D productivity, especially in pharma, is way below acceptable. Despite increasing investment, the value generation curves don't seem to be getting much better. We could blame increased complexity—clinical, regulatory, global—or point to advancing technologies, which keep raising the bar. Or, perhaps we need to pause, step back, and look at different ways of working with one another and focus on the industry in a different way.
One thing I'm seeing is a global shift in life sciences from a traditional product development and manufacturing efficiency approach to focusing on evidence-based healthcare outcomes. As a result, the industry is reorganizing itself in the way that it partners with others, and the way that it works with customers and end users. In this time of learning comes opportunity. Some of the old models aren't going to work anymore. New organizations with great collaborative capabilities can really make a difference in this regard.
BioPharm: A lot of industry innovation comes from smaller startups and academic-based companies, and they are looking for ways to move from discovery, through development, and into commercialization. Business models and plans are key to their success. What has been your experience in working with early-stage companies?
Mottram: It's an interesting topic. There are traditional maturity models that many consulting companies are offering to go from maturity level 1 to 2 to 3 and so forth, but I find it difficult to follow a maturity model and say, 'Okay, if you do these three steps, you're going to be golden.' There is wisdom in the maturity models, but it's important to customize the journey.
Take this example, which must be considered from two different dimensions. One dimension is the experience level or the maturity of the company in product delivery. Has the company actually put a product out to the marketplace, or has it already put two or three or four products out to the marketplace? At a personnel level, if the company is about to launch its first product, is there anyone with experience in product delivery leading the group?
The other dimension is the pipeline, that is, the company's volume or capacity to deliver. At the beginning, when there's no product out in the market, the company tends to operate in a free-style entrepreneurial environment. Everybody pulls together to get the funding and other things the company needs, when it needs them.
As the organization becomes successful, the commercial pressure settles in. Often, in that excitement, the smaller companies or the medium-sized companies tend to lose sight of the fact that they have to start building capability—what was easy to do with one or two products has to be repeatable and sustainable over a portfolio of products.
The shift needs to be systemically thought through and put in place. Some companies set a series of milestones and maybe yell a little harder to make sure those milestones are met. The company keeps meeting their milestone miracles, but at some point, the organization reaches its limit, especially if it moves from one site to multiple sites. When complexity increases, the realization sets in that the basic capabilities—the real foundation for growth—may be missing.
Small companies can learn a lot from others who've already been there. This knowledge exchange can create a better balance from the start as the company maps out what it needs to do to get ready for growth.
BioPharm: How can a start-up company best digest this type of long-term view?
Mottram: Building strategic capability is a key, not just for small companies but also for the larger companies. We tend to be reactive by nature, especially in this industry. So if you are a start-up company, first understand where you fall within the industry and what problems your product can solve that others cannot. Think about the product's life cycle. It can take several years and lots of investment to move forward. How will you create value? This thought process demands a longer-term view—even for just one product. Companies need to think about what the world will be like by the time their product reaches the marketplace.
So, how do you create those sensing mechanisms in your organization that allow you to maintain a long-term view? If you start differentiating between winning companies and average companies, then long-term views become even more important. Winning companies are measured by their sustainability (i.e., the ratio between their R&D investment and the number of products that go to market).
Winning companies are distinctly different from average companies. They don't just invest in traditional market research. They invest in building top scientific leadership, capable of deep thought around what the future will hold; they bring customer and clinical insights together to address unmet needs. But, they don't jump into responding to an unmet need. Instead, they think thoroughly about what is needed and where their strength lies. This is an important element of success because when we talk about sustainable value over time, ultimately, the value is measured by the healthcare outcomes generated for the healthcare system.
For the business, the value also lies in what the business can produce in a successful way, so that it can stay in business. It therefore becomes important to marry the science and the business inside the company for a longer-term view and to become much more targeted in thought process and strategic thinking.
At this stage, the company should no longer be focusing on launching the next product, but rather, about what the impact of that product will be. This approach forces a portfolio view—even within a therapeutic area.
BioPharm: Introducing a business element to the R&D side can be complex. How can a company marry these two things together, as you mentioned, and demonstrate that both remain efficient?
Mottram: At the front end of the product development or innovation cycle, the focus is on finding the right product candidate to meet certain unmet needs in the market. Those needs should be driven by a clinical-need and market perspective because there are a million companies potentially trying to go after the same need. How do you make that area yours? What's the opportunity? What outcomes are possible? In the end, science rules.
By that, I mean it's not just about science. But if a company doesn't get it right, doesn't get that scientific foundation right upfront, then it won't find a way to differentiate itself in a truly affective way. Different factors come in to play, including understanding what clear success criteria looks like, evaluating risk tolerance, accelerating the proof of concept, and more. That's how the foundation is set. It needs to be scientifically sound.
Business comes into that discussion because, obviously, the company needs to validate the proposed need and commercial value. But I would suggest that it's not until a company gets through that early process, that the focus starts shifting. The science doesn't go away, but at some point, the company starts to think about making major investments. The closer one gets to clinical trials, those investments get bigger and bigger.
Here, the business plays a much larger part in driving the right value along with the right medical outcomes. The other way to think about this stage is that that there is an increased focus in efficiency as a company goes through development; this phase introduces a new business element into the review and governance process.
Finally, if the company reaches commercialization, it needs to shift its attention to optimizing the impact of its product in the marketplace. It's important to understand these different stages, and to understand that they're integrated.
Start with the end in mind and what your company is trying to achieve in the marketplace. Be clear about the scientific opportunity. Based on that information, define the best development and commercialization path. That's what marrying business and science is all about.
This article is Part 1 of 2. Part 2 will appear in the May 2012 issue. You can listen to the full interview with Mottram as a podcast online at: www.biopharminternational.com and click on Drug Development Basic Training.