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Managing Medical R&D
Defining and Realizing Clinical and Commercial Value
David J. WierzSenior Director
Commercial Investment & Pricing StrategyWyeth-Ayerst Pharmaceuticals
27 February 2001 Economics of the Healthcare Industries 2
Managing Medical R&D
Considerations
Can and How Should Medical R&D Be Managed?
How Can Investment Decisions be Structured and to Best Use Human and Financial Resources?
What Business Model(s) Best Support the Commercial Necessity for Sustainable Medical R&D?
27 February 2001 Economics of the Healthcare Industries 3
Managing Medical R&D
Factors For ManagingInternal Medical R&D in Corporate Activities
Commercial Process in Medical R&D
Integrating Academic and Medical Center Research
Working with Virtual or Perpetual Early Stage Firms
Creating and Maintaining Shareholder Value
Public Health and Disease Prevention
Individual Incentives and Compensation
27 February 2001 Economics of the Healthcare Industries 4
Managing Medical R&D
Development
The Process of Medical R&D
Defining and Realizing Opportunities
Commercialization
Discussion
27 February 2001 Economics of the Healthcare Industries 5
The Process of Medical R&D
DefinitionScope• Basic Science and Technology
• Discovery
• Feasibility - Toxicology and Pharmacology
• Development
• Life Cycle Management
Scale• Traditional Chemistry and Bio-Chemical Activities
• Bio-Tech Plus Gene and Protein Therapies
• Information Science
27 February 2001 Economics of the Healthcare Industries 6
The Process of Medical R&D
ObjectivesCorporate• Identify and Expedite Commercialization of New Therapies
• Optimize Use of Corporate Resources
• Deliver Products with High Commercial Value
• Create Sustainable Processes and Platforms for Ongoing Work
Clinical and Social• Address Unmet Medical Need
• Enhance Individuals’ Health Status
• Affect Prevalence and Progression of Disease
27 February 2001 Economics of the Healthcare Industries 7
The Process of Medical R&D
Traditional ExecutionLinear Process• Screening
• Discovery
• Development
• Commercialization
• Life Cycle Management
Chemical or Bio-Chemical Basis• Molecular Orientation
• Mass Application
• Ex-Post Commercial Assessment
27 February 2001 Economics of the Healthcare Industries 8
The Process of Medical R&D
Traditional StructureScientific Model of Research Teams• Vertically Integrated
• Dedicated Resources for All Activities From Screening Through Life Cycle Management (LCM)
• Focus on Disease States
• Associated - Not Necessarily Integrated - Commercial Assessment and Guidance on Development and LCM
• Resource Allocation by Project
• Employ Total Funding Construct
27 February 2001 Economics of the Healthcare Industries 9
The Process of Medical R&D
Traditional StructureRamifications• Funnel Model of Medical R&D
– Emphasis on Maximizing Candidates to Gain Products
– Broad Disease-Based or Mass Market Application
• Science Driven Commercialization
– Limited Understanding of Medical Need
– Transom Effect
• Sub-Optimal Investing - People, Funds and Products
27 February 2001 Economics of the Healthcare Industries 10
The Process of Medical R&D
Evolving StructuresObjectives• Better Target Resources
– Practical Unmet Medical Need
– Commercial Opportunity
– Regulatory Requirements
– Practical Considerations - Manufacturing and Use
• Better Execute R&D Processes
– Enhance Candidate Selection in Screening and Discovery
– More Closely Link Trials to Desired Profile
27 February 2001 Economics of the Healthcare Industries 11
The Process of Medical R&D
Evolving StructuresObjectives• Fully Leverage New Technologies
– Access to Expanded Chemical
– High Through-Put Screening
– Gene Targeting
– Protein Targeting and Therapy
• Enhance the Efficiency of the R&D Process
– Viable Candidates
– Clinically Successful Agents
– Commercially Meaning Products
27 February 2001 Economics of the Healthcare Industries 12
The Process of Medical R&D
Evolving StructuresFunction• Focus on Body Systems in Addition to Morbidities
• Increase Activity in Screening and Discovery
– Application of Bio-Markers
– Expanded Use of Biological Models
• Integrate Commercial Assessment into Development
– “Early Crafting” of the Product Profile
– Apply Scientific & Commercial Marketing Supporting R&D
– Focus on Maximizing Life Cycle Revenues
27 February 2001 Economics of the Healthcare Industries 13
The Process of Medical R&D
Evolving StructuresForm• Traditional
– Strategic Business Units
– Therapy Area Teams
• Evolution
– Marketing Hybrid
– Entrepreneurial Discovery - or - Dynamic Funnel
27 February 2001 Economics of the Healthcare Industries 14
The Process of Medical R&D
Evolving StructuresEmerging Effects• Clinical
– Use of Platform Technologies– Rationalize Screening and Discovery
– Leverage Resources Across the Corporation
– Application of Gene and Protein Markers– Markers or Surrogates
– Diagnostics
– Therapeutics
– Enhanced Commercialization– Speed to Market
– Value of the Product
27 February 2001 Economics of the Healthcare Industries 15
The Process of Medical R&D
Evolving StructuresEmerging Effects• Commercial
– Direct Involvement in R&D Decisions– Unmet Need and Commercial Potential
– Target Profile Optimizing Commercial Opportunity
– Emphasis on Pre-Launch Marketing– Clinical Education
– Therapy Application
– Deployment to Mass Customization– Product Marketing
– Life Cycle Management
27 February 2001 Economics of the Healthcare Industries 16
Defining and Realizing Opportunities
Resource AllocationDefining Commercial Potential• Unmet Need
• Untreated Need
• Need Based on Current Practices and Behaviors
Defining Investment Strategies• Recognize Dynamics in Technology and Product
Development
• Full Investment Context
• Contingent Investment Model - Real Options
27 February 2001 Economics of the Healthcare Industries 17
Commercialization
Medical R&D Business ModelTraditional R&D
Team or Franchise R&D
Hybrid R&D
Variations
Commercial RamificationsRole of the Current Pharmaceutical Firm• Structure and Function of R&D
• Effect of Sales and Marketing
Integration of Internal and External Resources
27 February 2001 Economics of the Healthcare Industries 18
Managing Medical R&D
Discussion
