So You Want To Be a Drug (and/or Medical Device) Lord
Or 'How to determine the vision for your life sciences venture'
tl;dr-
Fundamentally, the ‘job’ of a life science company is to create & make available a process that moves patients from a state of poor health to a state of better health-
Generally in the form of an experience a patient has with a product (i.e. pharmaceutical treatment) or a product-supported service (i.e. a surgery supported by a medical device);
Designed either standalone (i.e. traditional pharmaceutical commercialization strategy) or in collaboration (i.e. Lilly partnership with Sidekick)
This job is accomplished through four sub-jobs, expressed traditionally as the life sciences value chain:
Sub-job A: Identify potential product-market fit scenarios that match scientific understanding with unmet clinical & medical need (i.e. traditional R&D innovation, in-licensing new assets & technology, etc.)
Sub-job B: Refine product-market fit scenarios through data generation via clinical trials & other studies; regulatory success effectively is a ‘mandatory validation’ of product-market fit by health authorities prior to availability
Sub-job C: Ensure product availability to patients from manufacturing to distribution to dispensing (i.e. ‘from factory to patient’); often viewed separately as manufacturing and distribution
Sub-job D: Design the patient experience in interacting with the product from care-seeking decision to product accessibility to patient users; traditionally the marketing, sales, and market access commercial functions
Each sub-job can be further divided into more and more granular tasks, which showcase how individual activities contribute overall to a life science company’s strategic plan
The basis of life science company operating models lies who does what jobs, particularly when it comes to the level of ownership & collaboration-
Traditional big pharma (i.e. Novartis, Pfizer, etc.) generally cover all four sub-jobs in-house, with individual components in each sub-job outsourced to different exernal partners; for example, while large pharma owns the manufacturing ‘half’ of Sub-job C, they often rely on a third-party distributor to bring products from factory directly to patients
Smaller biopharma companies that may be more resource constrained often outsource these jobs to external partners; for example, oncology biopharma Shorla Pharma outsources Sub-job D to life science services company EVERSANA
Often, extremely early-stage biopharma companies may only focus on Sub-job A, relying either on future external partnerships or an acquisition for the remaining sub-jobs
For leaders building new life science companies, strategic clarity in who does what jobs is paramount in fostering strategic alignment & focus, ensuring operational excellence, and crafting resonant narratives for fundraising & investor relations
Doing ‘too much’ may result in unfocused organizations that inefficiently leverage available capital & resources - which may serve as a deathknell in the increasingly competitive and evolving healthcare landscape
***
I was inspired to write this after speed-reading the first section of CEO Excellence (which, despite my general apathy for anything related to the big management consulting firms, is actually an easy-to-read & generally helpful collection of stories) & thinking about what I would do if I were advising the Executive Team for a biopharma company. Most of my previous experiences - and seriously, most of the strategic white papers out there - really emphasize things like therapeutic area selection, or digital transformation, or customer centricity but - like literally most of my opinions about the world at large - I’ve always found them somewhat lacking. I suppose much of it is because many of the thought leadership pieces out there don’t really spell out an explicit link between how ‘selecting the right regulatory strategy for your asset’ actually equates to ‘better patient outcomes.’
In short, so much of the thinking out there today in biopharma land (and, arguably, in ‘healthcare land’) is about how to create & launch more ‘stuff’ vs. how to create & launch more of the ‘right stuff.’
Look, I get it. Life science products are financially risky to develop because of (rightfully) high regulatory requirements and because well, biology is complicated. Each successive step in development - preclinical to Phase I, Phase II to Phase III, precommercialization, etc. - is also associated not only with increasing sunk costs (i.e. total dollars ‘in the hole’) but also increasing incremental cost. This coupled with the high variability in life sciences can make any CEO - anyone, really - nervous since you can do everything right - literally everything - and just have it completely fail. While every consulting firm will tell you that this is preventable - and to be honest, they’re right to an extent - the hard truth remains that no amount of preparation can truly derisk an asset - unless, of course, you’re a me-too of some kind or another.
So instead of betting everything on a single spin of the wheel, the industry’s preferred method of hedging risk is portfolio management. After all, if each of your shots has on average 20% (from Phase I) to market authorization, what better way to hedge risk than to have five shots? It could be five indications, or five products - doesn’t matter - because as any quantitatively oriented person will tell you, this is how you do it. This is how you create success in life sciences; by enriching your portfolio with as many options as possible to play the odds & derisk your company overall.
You already know I’m going to tell you some variation of ‘this is wrong.’
To be fair, it isn’t that this approach is wrong per se; it’s that it is optimal when you assume that managing individual asset risk is less capital efficient than managing portfolio risk with multiple shots on goal. After all, if it costs you say, $100 dollars to build a derisked, optimized clinical development plan for Asset A in 1 indication vs. $50 to shot-gun Asset A development across 5 indications vs. $75 dollars to buy Assets A’, A’’, and A’’’, you know what your CFO, shareholders, and Board of Directors will tell you. However, increasingly, managing individual asset risk is becoming more capital efficient due to technology. For example, early stage R&D is increasingly being supported by AI tech, to the point where AI-designed pharmaceuticals are already beginning to enter human trials. This all suggests that, at some point, it becomes more capital efficient to design the right molecule for a given TA / patient up front than a shotgun approach, especially since technology seems to have a habit of driving cost reduction rather quickly.
This future where proactive design & planning is more capital efficient than ‘shotgun’ approaches to portfolio management requires a different set of strategic tools. Rather than thinking about how to maximize productivity in the traditional sense - i.e. ‘number of early-stage assets’ etc. - it becomes necessary to figure out how to maximize product-market fit both on a per-asset level & on a company enterprise level. This is because product-market fit is dependent on more than just ‘patient takes drug = outcomes’ but also on all of the other factors that influence how a product actively brings a patient to a state of better health. The biopharma industry already went through one similar transformation when companies realized market access matters but that’s just the tip of the patient experience iceberg. If this is new thinking to you as a biopharma company, I hate to break it to you but you’re way behind where large ‘oil tanker’ corporations are (see Lilly, AstraZeneca, etc.) who are already figuring out ways on how to interact on that level instead of debating whether they should.
Which brings me to the tl;dr section above. There’s a reason why I chose the Jobs to be Done framework and that’s precisely because it isn’t a question anymore as to what role life science companies should play in today’s world. Gone are the days of ‘we make something, throw it over a wall, and it gets used and we make money.’ Financial value in life sciences - the basis of ‘patient takes X, gets better’ - is increasingly locked behind a myriad of factors influencing their care that necessitate pharma involvement if they hope to preserve their ability to capture that value for their business. Whether biopharma companies are ready or not, the world expects them now to be active stewards in the process of improving a patient’s health from A to B - and they’ll stop paying companies who don’t do enough to meet their expectations.
Of course, if you’re a start-up, no one reasonably expects you to do everything (well, except maybe an overzealous VC investory). But it does mean that you need a crystal clear picture of how your operating model allows you to do the job you’ve been asked to do by the market. Unfortunately, that also means that defaulting to a factory-farm approach in your strategy and resultant storytelling may simply no longer be enough for anything other than a life science venture losing out to more resonant & modern business models. That doesn’t sound like the best outcome for an industry that, regardless of these trends, will remain in desperate need for continuing innovation for the forseeable future.
If nothing else, try and do it for the patients because remember; a patient doesn’t care if you have a huge broad pipeline where one of them might be right at some point in the future.
A patient cares if you have the right product when they need it. In some ways, that’s the job - and it really is that simple.
-WY