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“If you gave the same NCE to two different companies……”

Posted on March 24th, 2016 by in Pharma R&D

two-hockey-players

You might think this is the opening line for a riddle, but in fact it forms the basis of IDEA Pharma’s Productive Innovation Index (PII for short), an annual ranking of the top 30 biopharmaceutical companiesby their ability to successfully bring innovations to market. And, despite what you might surmise from that brief description, PII is not strictly a measure of sales and marketing prowess.  Nor is it a measure of invention, which the index creators, IDEA Pharma, associate with the discovery process.   Their leadership says, “We have always held firmly to the difference between innovation and invention:  when you launch great medicines you are an innovator, not just an inventor.”

IDEA Pharma specializes in path-to-market strategy at Phase II.  PII was launched by them six years ago with the underlying hypothesis of “If two companies each had the same NCE at the same stage of development (say end of phase 1), which company would do the best job of commercialising the product.”

A well-defined methodology outlines their hypothesis and a list of indices that, when combined in a weighted fashion and measured over a rolling five-year period, produce the annual PII ranking of the top 30 companies.   The indices encompass a wide range of measures such as regulatory efficiency and speed to market; avoidance of late stage failures for efficacy reasons; overall value proposition; percentage of sales generated by new products launched in the last three to five years; sales and marketing spend vs. turnover as well as other measures.

The PII 2016 results were recently announced and for the fourth year in a row the Janssen Pharmaceutical Companies of Johnson & Johnson (J&J) landed at the top of the list.  The PII creators were quick to point out that the gap between the leader and its followers narrowed considerably in 2016, but they also commented on the J&J’s leadership in NME launches since 2009 and the healthy number of new products, all with billion dollar or greater potential, in the pipeline between now and 2019.  

In terms of major movers up the ranks, Takeda, Novo Nordisk, AbbVie and Otsuka made the most notable gains, all climbing more than 10 positions in the rank.   Takeda’s success was attributed to a combination of operational excellence at the commercial level as well as the company’s assets in oncology (multiple myeloma), gastroenterology (ulcerative colitis and Crohn’s disease), and CNS (among other therapeutic areas).  For Novo Nordisk, commercial operational excellence also played a role, as did its strong foothold in the growing Endocrine, Metabolic, and Genetic Disorders arena, and its efforts to diversify its business, notably by building off its existing haematology franchise.   AbbVie’s move was attributed to a number of factors — the diversification and expansion benefits that ensued from its Pharmacyclics acquisition, positive data coming out of late-stage studies for both novel and launched compounds in oncology and immunology, approval of Duopa® for late stage Parkinson’s patients, and a priority FDA review granted for its Viekira Pak®.   Finally, positive developments in Ostuka’s focal areas of CNS and oncology helped propel its rise in the rankings.

Among the notable decliners for 2016 were Roche, Novartis, Merck, Boehringer Ingelheim and Eli Lilly.   Roche, despite a number of “wins” in terms of approvals and breakthrough designations, was off its pace in comparison to previous years’ performance so this was a contributing factor.   For Novartis, a range of hits across its portfolio (Gilenya® competition, Entresto®’s slow takeoff, and a number of key patent expirations) impacted its 2016 ranking.    A $3 billion annual sales decline for Merck, coupled with little activity on the approval and late phase data front, sealed the company’s fall from 4th to 16th in the rankings.   As for Boehringer Ingelheim and Eli Lilly, they fell to 26th and 27th in the rankings, having last year held the 10th and 13th positions.  Ouch!

Individual company performance aside, the IDEA Pharma approach to PII is noteworthy because of the way in which the index marries technical, regulatory, and commercial success.  For example, its “value proposition” measure takes into account factors such as achieving reimbursement (e.g. NICE) approval, expedited processing or breakthrough status, and developing a first in class NCE or novel mechanism of action.   Technical, regulatory, and commercial successes have many correlations; it’s insightful to see them so cohesively threaded together and analyzed on a rolling basis amongst a group of 30 peers.  Consistency is key, and difficult to sustain, as the 2016 results for both J&J and Roche demonstrate.   And, bigger isn’t always better.   Smaller, more-focused, and perhaps less functionally siloed, are the traits that characterize this year’s big gainers.     

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