Biotechs on the Rise
Article Series: Biotech Challenges & Ways to Overcome Them
For biotech companies, the drug development journey is long, and the only constant is change. To support biotech leaders along their journey, we present a series of interviews with Joris Pezzini, Executive Vice President of Biopharma, Alira Health. In this final article of the series, Joris talks about the evolution of biotechs in the face of challenges and the drivers for future success.
As we come to the end of this series of articles dedicated to biotechs, what is on your mind?
Revisiting the different angles of drug development made me realize how demanding and brutal the environment has been for biotech entrepreneurs in the last 24 months. Of course, we’re all aware of that. But when you spend time analyzing Biotech trends, sit with CEOs and board members to precisely understand their challenges and fears, carefully follow the evolution of regulatory and clinical guidelines, and invest resources to better understand pricing and access dynamics across the world, only then do you realize how passionate and driven innovators need to be to succeed in this almost impossible game.
But what I found most interesting during this work is that biotechs in this difficult environment reacted by becoming stronger. Indeed, facing adversity and lack of financing, they went back to the drawing board. They reworked their story, improved their differentiation, better identified patient sub-populations in which they could create higher value, figured out answers early that normally are solved later in development. And this is why I think biotechs are on the rise.
Articles in this series:
- The Biotech Industry Today: What Leaders Need to Know
- Planning: Why It’s Worth the Time for Biotech Companies
- Fundraising: Best Practices in a Challenging Environment
- Execution: How Biotechs Can Plan and Run Successful Clinical Trials
You describe a tough environment for biotechs that surprisingly made most of them stronger. Can you share a bit about the pressures they’ve been under?
Without a doubt, the greatest pressure came from the financing side. Over the past two years, biotechs have struggled to meet their timelines and achieve their ambitions during capital raise processes. Delayed raises often meant companies were forced to save cash and revisit development roadmaps. In this context, inbound pitch traffic increased towards investors, and available time for biotechs to make their case decreased accordingly in most cases.
On the licensing and mergers and acquisitions (M&A) front, partners and buyers have had the upper hand, becoming extremely demanding and rigid. Biotechs had to please partners and buyers at all costs. The bar has been so high that most biotechs did not even pass the first selection filter (due to lack of data, average equity story, perceived lack of management experience, etc.) and were asked to go back to the drawing board.
Operationally, the reality of highly innovative product development is that you must navigate a ship in an unsettled sea. Although enormous progress has been made at regulatory agencies around the world, there is still a clear lack of alignment. Guidelines are always catching up when it comes to innovations. Given the shortage of cash, straightforward and rapid global development is your only option, but that’s difficult to design and implement in the current regulatory and clinical context.
How have biotechs evolved to meet these challenges?
The biggest change I’ve seen is that biotechs have understood the value of taking a holistic approach and have already managed to implement this approach in their organizations. They no longer see themselves as “just” product developers but rather as a group of multi-faceted leaders taking a transversal, programmatic approach to the key tasks of planning, fundraising, and execution.
In response to investor demands, biotech leaders now drive their companies with the end market in mind, armed with answers to technical questions on the compatibility of their solution with the future ecosystem and competition they will face in five to ten years. This new approach was critical for fundraising while it also strengthened equity stories and indirectly reduced the need to find a partner to access the market. In fact, the pressure of the last few years has forced companies to mature their commercial case and made them a stronger player in the ecosystem.
This increased maturity comes into play when it comes to the biggest cost line in a biotech’s profit and loss statement: clinical trials. Companies are now both strategically and operationally precise when designing trials, not only focused on “just” regulatory approval but also anticipating what evidence they will need to demonstrate value to payers, patients, and physicians. Most CEOs and CMOs now excel at designing trials (or surround themselves with people who do) that best combine risk profile, cash use and rapidity, and depth of data generation and speed of recruitment. They also excel at presenting the selection process in the boardroom.
In a context where differentiation and medical value drives success, biotechs have naturally become more patient-centric. They embrace the idea that a product must make sense not only for physicians and payers but also for patients. While patient engagement does make their jobs more complex, biotech leaders understand the value of taking the time to learn what patients need and integrate that feedback into product development. While pharma companies have struggled for decades to implement patient-centricity in their operations, I feel that recently, biotechs have taken the lead by bringing patients and innovations closer.
How does this evolution position biotech companies on the market today?
In short, biotechs are on the rise! Because they responded positively to the pressures of the environment, I believe that biotechs have never been so mature and educated about the ecosystem. Therefore, they have the opportunity to take more space and retain more value in the process of bringing innovations to market.
Today, biotechs hold most of the drugs that are in development and will launch in the next ten years. Because they have taken a more holistic, patient-centric, and longer view, many companies are thinking about playing a broader role, especially since they’ve already done significant preparation towards commercialization and defined a strong narrative. That preparation means that the barriers to commercial entry are also somewhat lower, especially for companies that clarified their evidence generation plan to support the medical value brought to their patients versus existing alternatives on the market.
In an environment where companies are gradually implementing digital approaches and increasingly focused on smaller and better-defined patient populations (e.g., rare diseases, precision medicine), the lines between commercialization and development are more blurred than ever. A pure and traditional commercial play does not drive success anymore, meaning that biotechs have a superb opportunity to leverage their medical and development culture to potentially play a role in their program’s commercialization. We see more and more biotech executives and boards considering the option, at least in territories they know well.
Typically, biotechs have taken on extremely high risk, with more probability of failure than success. The few companies that were successful retained only a fraction of the value of the innovation after exit. Now, biotechs have the chance to capture more of an innovation’s value by not limiting their role to the early phases of development. Of course, not all companies will make this choice, but staying in longer to reap greater rewards is a viable choice now. And for those deciding to exit, a more mature case will help them retain a higher percentage of the asset’s value in a deal.
What should biotech leaders do if they want their companies to become even bigger players in the ecosystem?
Dedicate yourself to proactive transformation. Shifting from an R&D company to a pre-commercial/commercial organization is not easy, and only those who proactively invest in a change management plan will succeed. In some cases, you don’t necessarily have to become another type of company completely, especially in rare diseases where the environment is inherently small. Regardless, you must plan and structure the transformation. Plus, you must make sure your board is aligned with that ambition because as a leader, you’ll be spending your days on this transformation.
Continue to develop and maintain a holistic view. You are only credible as a commercial player if your model is based on a strong patient-centric link between your development and commercialization plans. You need to continuously maintain that link and ensure that the assumptions of both sides remain aligned. Retaining transversality is the only way to compete with more commercially experienced and resourceful competitors.
Don’t do it alone. To play a role in the commercialization of your product, normally handled by a larger organization, you must establish a network that provides access to skills, experience, and knowledge. Leveraging partners, advisors, key opinion leaders, and patient associations is key. And the future is probably less about fighting your competitors but rather partnering within the ecosystem to succeed.
About the Expert
Joris Pezzini, Executive Vice President of Biopharma, has more than 15 years of executive-level experience in the healthcare industry, with both science and business roles at biotech, pharma, and consulting firms. Joris is a biotech engineer and received a business and leadership degree from Harvard Business School.