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Pharma trax Sales, marketing, And R&D Trends affecting the healthcare industry The Changing Pharma Market Demographic trends present an opportunity for drug companies to target a growing patient pool with a growing demand for therapeutics across various diseases. This is one of the conclusions reached in a recent report by Navigant Consulting Inc. The report, The Changing Pharmaceutical Market: Strategies for Profitable Growth in a Maturing Market, finds that the demand for healthcare will increase dramatically during the next decade as an aging population and obesity are the new population realities. At the same time, the current market environment, pricing, regulatory, and generic pressures put profit growth at risk, the report says. Because of these pressures, researchers from Navigant say pharma companies will have to adjust their business models to fit the changing marketplace. The business models of brand manufacturers must adapt for growth by moving away from the blockbuster model, realizing and leveraging internal strengths, and effectively in-licensing products. Struggles for profits forced many companies to cut costs in 2003, leading to mergers and acquisitions. Investors and analysts, however, question the sustainability of a strategy that relies on consolidation. They also predict that drug developers will begin to produce a greater number of novel compounds, many of which will target more focused opportunities. Two of these areas are in drugs to treat obesity and diseases associated with aging. Growth in disorders associated with these conditions (i.e., diabetes, GI, and cardiovascular diseases) can be expected. Physicians’ Awareness of Patient-Assistance Programs Grows Twice the number of physicians were aware of the PhRMA Patient Assistance Directory after a 10-month advertising campaign that targeted practicing psychiatrists, neurologists, pulmonary disease specialists, and oncologists. This is the finding a new e-mail survey conducted by the Coalition for Healthcare Communication. Compiled by Pharmaceutical Research and Manufacturers of America (PhRMA), the directory details programs offered by 53 member pharmaceutical companies. Pharma companies have developed these programs to meet the needs of patients who have no prescription coverage. Currently, more than 6.2 million patients without prescription drug coverage are receiving free prescription medications through their physicians by applying to these programs. “Our initial research showed that most physicians were unaware of patient-assistance programs, even though they have been in place for more than a decade,” says Jack Angel, executive director of the coalition. “This ad campaign will allow physicians to help more patients receive the treatment they need.” Benchmark results conducted before the campaign showed that 24% of physicians were aware of the PhRMA directory. This figure nearly doubled to 45% following the 10-month advertising campaign by the coalition. In addition to measuring the impact of the current advertising campaign, the study also measured physicians’ attitudes toward the pharmaceutical industry in other areas. Among the findings: • Physicians gave the pharmaceutical industry high marks in prescription drug research and development, improving patients’ quality of life, and increasing life expectancy. • Physicians gave the industry low marks for failing to explain the high cost of prescription drugs to the public. Functional Genomics Improves Drug Discovery Functional genomics and proteomics have been quite successful in identifying functions of potential therapeutic targets such as encoded proteins. In fact, the possibilities of identifying more than 10,000 novel target antigens in the human genome opens up exciting opportunities for the discovery of new drugs and therapeutic molecules, according to recent analysis by Frost & Sullivan. “As opposed to conventional sequence homology, functional genomics adds structure-based predictions to locate gene sequences with assigned and confirmed functions,” explains Rajaram Sankaran, an analyst with Frost & Sullivan. “It simultaneously sifts through well-established targets to detect critical therapeutic targets.” Additionally, functional genomics opens up the possibilities of genetically demarcating patients and predicting individual responses to drugs. This permits customized medications and dosages that improve treatment safety and efficacy in areas such as neuropsychiatry, cardiovascular medicine, endocrinology, and oncology. An increasing number of new molecular entities (NMEs) are entering clinical trials and, by 2008, a 65% increase in NMEs is expected, according to Frost researchers. But almost 30% of NMEs fail to clear Phase I clinical testing because of preclinical animal and ex vivo models, which provide inaccurate human pharmacokinetic (PK) and absorption, distribution, metabolism, and excretion (ADME) data. Human targets, on the other hand, offer a holistic view of expected drug performance and improve efficacy and safety of the final drug. Following this trend, micro-dosing provides faster human bioavailability data. The significant time, cost, and material savings allow quick and simple screening of drug candidates. This ensures that optimal drug candidates qualify for Phase I clinical development. Innovative use of nanotechnology may also improve the pharmacokinetics by increasing solubility, absorption, and bioavailability of active pharmaceutical ingredients. For instance, custom-wrapping active compounds with polymers creates novel inclusion complexes of water-insoluble or water-soluble compounds. This also reduces toxicity, while opening up new routes for drug administration. Curbing side effects is another issue entering drug-development considerations. The urgency to alleviate side effects can be particularly valid in the case of lifetime illnesses such as schizophrenia that require long-term antipsychotic treatment. International Pricing and Reimbursement Trends Every government wants to ensure that its finite healthcare resources are used most efficiently. Healthcare policy making and spending are likely to increasingly target clinical priority areas, the diseases that impose the greatest burden on society, such as cancer, coronary heart disease, diabetes, and psychiatric disorders, according to a recent report by Decision Resources Inc. The European Union has acknowledged these priorities in its proposal registration for all new medicines. Other governments could decide to embrace full pharmacoeconomic evaluations in the future, and many will continue to argue that maximizing the use of generics saves money that can help fund more costly new therapies, according to the report. The U.S. generic market is mature, and the E.U.’s pharmaceutical reform promises to stimulate the generics market by introducing European reference products and allowing generics manufacturers to begin developing generics after originator brands have had eight years of data protection. The report, International Review of Pharmacoeconomics, Pricing, and Reimbursement News in the Second Half of 2003, discusses the measures that healthcare payers are using to curb their drug expenditures and improve patient access to medications. The report also looked at pricing issues and found a growing cultural divide is becoming apparent in drug-pricing policy. The United States and the United Kingdom favor deregulation in pharma pricing, while governments in continental Europe and Japan appear to want to tighten their grip on drug prices. The governments of France, Germany, Spain, and Italy have introduced or extended reference pricing and imposed substantial rebates on the pharmaceutical industries in their countries. Additionally, the report found that governments and other healthcare payers will focus increasingly on therapeutic innovation and will compare new therapies against established treatments. Germany is about to establish an Institute for Quality and Economy in the Health Care System; France intends to broaden the Transparency Commission’s role to provide better guidance on the most important new therapies; and Italy’s new medicines agency will compare the clinical effectiveness of new drugs. Customer Outreach is Key to Compliance The pharmaceutical industry faces several obstacles to continued prosperity, including declining pipelines, patent expirations, changes in healthcare economics and therapeutics, and political pressures. At the same time, the effectiveness of current sales methods is diminishing. In light of market changes, nonsales outreach to healthy consumers and physicians can go a long way to extend brand recognition, according to a recent report by Cutting Edge Information. Customer attrition through noncompliance is an ongoing challenge for all pharmaceutical companies. Patients who comply with proper medication dosing and treatment regimens decrease costs associated with conditions. Compliance, disease management, and customer-outreach initiatives can extend the role of marketing and product management, finds the report, titled Pharmaceutical Patient Compliance and Disease Management. Technology, mature markets, and a thirst for continued growth have turned the industry toward consumer-oriented strategies, programs, and philosophies. But no single pharmaceutical company has mastered compliance, disease management, or other customer-focused tactics, according to this research. At present, disease-management and consumer-outreach programs form the bulk of the industry’s efforts to build nonphysician customer relationships. A wave of disease-management programs are forming as companies seek ways to build relationships with physicians and patients. Disease-management programs are a natural outgrowth of compliance efforts. These programs expand patient efforts to include life-style improvements such as better diet, increased exercise, and other factors that may affect the patient’s well-being. Disease-management programs often take the form of Websites that offer interactive tools for health management. Offerings include symptom diaries, exercise regimens, and support groups. More sophisticated management tools include medical devices and software programs that monitor patient conditions. Our initial research showed that most physicians were unaware of the pharma industry’s patient-assistance programs, even though they have been in place for more than a decade. Jack Angel future product directions Investment in technological advances: New technologies will be used to introduce qualified novel products to drive long-term revenue growth. Limited successes for high-throughput and high-content automation: Limitations that have hindered the use of high-throughput screening and automation are being overcome, but these research methods must still be approached cautiously. Higher degree of specificity for new therapies: Drug developers will focus on therapeutics that are more specific, leading to better efficacy and side-effect profiles, but may have smaller patient populations. Source: Navigant Consulting Inc., Chicago (formerly Front Line Strategic Consulting Inc.). For more information, visit navigantconsulting.com. ACTION ITEMS FOR ACHIEVING COMPLIANCE Pharmaceutical companies must develop methods to provide online Web-based data to offline patients where appropriate to provide increased functionality and interactivity. Consider factors such as a patient’s age or treatment regimen to develop more personalized compliance tools. Invest in telemedicine and online disease-management programs to improve overall compliance. Source: Cutting Edge Information, Durham, N.C. For more information, visit cuttingedgeinfo.com. Follow up The Coalition for Healthcare Communication, Greenwich, Conn., is a nonprofit organization of healthcare, publishing, advertising, and public relations associations that promotes the free exchange of scientific and medical communications. For more information, visit cohealthcom.org. Cutting Edge Information, Durham, N.C., provides innovative, implementable research and consulting to the pharmaceutical and financial services industries. For more information, visit cuttingedgeinfo.com. Decision Resources inc., Waltham, Mass., provides research publications, advisory services, and consulting designed to help clients shape strategy, allocate resources, and master their chosen markets. For more information, visit decisionresources.com. frost & Sullivan, San Antonio, Texas, is an international growth consultancy and has been supporting clients’ expansion for more than four decades. For more information, visit frost.com. Navigant Consulting Inc., Chicago, (formerly Front Line Strategic Consulting Inc.) is a specialized independent consulting firm providing litigation, financial services, healthcare, energy, and operational consulting services to government agencies, legal counsel, and large companies facing the challenges of uncertainty, risk, distress, and significant change. For more information, visit navigantconsulting.com.