It’s time for the 2018 industry outlook. Oh, we’re late to the prognostication party? You say you’ve already had dozens of forecasts slipped into your stockings?
I’ll predict that whether these fortune-tellers focused on commercial drug sales, pharma profitability, biotech fecundity, new drug approvals, regulatory environments, international market dynamics, or our neck of the woods – contract drug development and manufacturing – nearly all include a particular uncertainty:
“In 2018, more unpredictability from the White House …”
Spoiler alert: you won’t see any of that here. Well, even if you sort of just did, this is what I mean: Get over it, get on with it, and don’t focus on Washington. Not that feigned, imagined, or some real political uncertainty isn’t important, it’s just that it’s not what 2018 will be more than marginally about for us. (Particularly now that the tax bill has passed.)
And while we’re at it, yes, there is a new FDA commissioner, and that is exciting and important to us. But again: No need to spend much time trying to read Scott Gottlieb’s tea leaves. Best just to note for now, as the Evaluate 2018 Preview for the biopharmaceutical industry, did: Gottlieb seems “widely embraced by industry and investors alike.”
So what should we focus on? I’d suggest starting with two of the continuing factors that lit up 2017: innovation, and data.
Oh, and Amazon.com, Inc.
Looking For The Amazon Effect
A seed for this unusual third factor was planted in that Evaluate year-end report mentioned above:
“… [t]he arrival of the online retail giant Amazon in delivery channels is already a dominant talking point, with big pharma, insurers and pharmacy benefit managers all being forced to confront the possibility that “the everything store” could soon be selling prescription drugs. Amazon’s silence on its plans has stimulated much speculation … If the online retailing giant decides to pursue a large role in the supply chain, it will become a customer that could prove to be tougher than today’s PBMs.”
Amazon and pharma supply chains: It gets one to thinking (expansively), and closer to home. We’ve just asserted that 2018 will again largely be about innovation and data in the external supply chain; who in the world does better in those categories than Amazon?
So we have:
A superior talent for developing lightening-fast product delivery and tightly networked supply chains; a denizen of data collection – and precise action directed by the interpretation of which; and a highly advanced product and business innovator, becoming more active in the biopharma space.
Kind of sounds like the service provider of a Big Pharma’s wildest 2018 dream, doesn’t it?
Now the suggestion here is not precisely that Amazon will become the next CDMO. But if our industry needs (1) to get better at innovation in the supply chain (to further assist with innovating drug products), and (2) become more proficient in collecting and then utilizing massive data accumulated from that supply chain, then we should at least consider learning what we can from the best. And who knows? Maybe even figure out how to partner with them.
A bit of a stretch, some readers might be thinking. Yes, just like that Facebook guy (and gal) establishing the Chan Zuckerberg Initiative, which includes a “Biohub” that “invests in early-stage research with long time horizons,” and “The Human Cell Atlas” project, “a global collaboration to map and characterize all cells in a healthy human body.”
Or as far-fetched as Google (Alphabet Inc.) getting into drug R&D by creating a company called Verily, already with partners such as Biogen, GSK, and Sanofi. Among other things, Verily is “pursuing research in systems biology, nanotechnology, and biomedical systems engineering, with potential applications for immuno-oncology and other areas.”
Well, at least words like “immuno-oncology” bring us back to our realm of reality. In fact, the Evaluate report states:
“A look at the output of the US regulator over the past couple of years amply demonstrates that the biopharma sector is in the midst of a very strong run of breakthroughs and launches. A major concern for investors is whether this productivity can continue in 2018. Macro events will, as always, hold their sway. But it is perhaps the industry’s bread and butter – clinical readouts and drug launches – that are emerging as a dominant preoccupation. ‘R&D successes and failures are probably going to be the biggest driver of sentiment next year, all other things being equal,’ says Ben Yeoh, senior portfolio manager at RBC Global Asset Management. ‘The immuno-oncology space continues to be a barometer – there will be a lot of attention there.’”
Attention it seems, from companies we might not have expected.
Welcome To 2018
Perhaps we can assert then that some tech titans already intersect at least tangentially with our own second-party platform (which we call “outsourcing”) for drug development and innovation.
And again, what do these companies understand perhaps even better in some regards than our biopharma giants? First: advanced techniques to gather, effectively mine, and most importantly direct courses of action based on, data. Amazon, Google and Facebook are nothing if not expert at all that. Second: when it comes to supply chain innovations – particularly those that in turn help feed new product innovation – Amazon has to be considered a “prime” model of study for any industry.
Even more, instead of a Thermo Fisher Scientific purchasing a Patheon for $7.2 billion, could it be Amazon entering the fray some day soon? The money is sure there, as well as at least some (as-of-yet unspecified) interest in the biopharma supply chain. While I think we’d all agree the odds for anything like that are still way long, I hope we also agree it’s a worthy thought experiment: A futuristic contract service provider augmenting biopharma outsourcing just might end up being a company we are familiar with in other parts of our lives.
None of this is to disregard the multi-talented contract development and manufacturing organizations that helped make 2017 as successful as it was – full of expanding outsourcing partnerships and relationships, some actually enabling the creation of new virtual and start-up drug sponsors; scientific and technological breakthroughs such as CAR-T cell, gene and immunotherapies, antibody-drug conjugates (ADCs), and nano applications; and a resultant uptick in FDA-approved new molecular entities.
So a warm welcome to 2018. Here’s hoping we all figure out what we really need to focus on to make it another successful year.