One Business or Two? The Era of Precision Medicine

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In my career, I’ve held senior roles in both the biopharma and diagnostics sectors. Working across different cost structures, different business issues, and different regulatory systems in different parts of the world. I was once challenged as a new CEO in diagnostics by a pharma analyst to explain why I would want to join a high technology, low margin industry.

Since then, many higher value molecular diagnostics have emerged that are transforming several areas of medicine. From identifying which patients are likely to have the best and worst outcomes to predicting, for each individual, which of the available therapies is most likely to be effective.  Consequently, Precision Medicine (PM), (based on these advanced diagnostics and new targeted therapies) is now bringing real value to patients, especially in cancer and rare diseases, and increased economic value to the diagnostics companies involved.  I expect soon we will also be able to apply such PM technologies in diabetes, hypertension, auto-immune diseases, and perhaps eventually to all diseases.

But, industry beliefs and attitudes are yet to fully catch up. Two recent quotes I’ve heard; “Biopharma companies just do not understand the diagnostic ecosystem into which their products are launched.” And, “Many biopharma companies don’t want diagnostics to stand in the way of their products.” These remarks stem from the traditional and outmoded pharma model that regards the drug as the core of the business, and everything else such as; patient selection, patient views on the outcomes they are seeking, payer demands for proven value based on outcomes rather than inputs – as either peripheral to the business or as “market access” challenges to be overcome. And, diagnostics for some fall into one or other of these categories.

I can hear their responses from the biopharma C-suite: “All our pipeline drugs have biomarkers.” And, “several of our products have companion diagnostics.” This is true in many cases. But, as precision medicine makes its painful progress out of the lab, through clinical trials and into medical practice, I believe that we need to think more radically about the relationship between biopharma and diagnostics. For example; ‘patient centricity’ is one of the current memes in the biopharma industry, but surely true patient centricity demands shared clinical decision-making based on unique insights about each individual person and their disease. The patient’s facing serious diseases increasingly want to know their full diagnosis as a basis for intelligent therapeutic choice. And dialogues with payers will increasingly centre on rewarding outcomes and the best outcomes can only be assured if patient selection is stringent.

The changes in biopharma thinking about the pharma and diagnostics relationship need to flow right through companies, from R&D management, to clinical trial design, to the training of medical reps. Of course, the challenge will come: won’t this restrict our market?  But better, I believe – especially in crowded areas like cancer – to have a PM-focused, patient-centric and scientifically cogent approach, rather than an ‘all-comers’ strategy. We have already seen the reality of this in immuno-oncology.

But how does this mean the relationship between the two sectors of biopharma and diagnostics should change? This is not a straightforward question. I once worked for a company with both a pharma and a diagnostics division, but in practice coupling their efforts together proved very challenging. Even the company that has probably the biggest investment in precision medicine and large pharma and diagnostics divisions (no prizes for guessing) has yet to define externally, exactly how they go to market together.

A first step is for both sectors to understand each other’s challenges and act in concert to overcome them. For example, the changes underway to toughen the European regulatory system for diagnostics (as part of legislation prompted by debacles in the devices industry) will make it harder to gain timely diagnostic approvals. This should be a concern for both industries. Also, diagnostic reimbursement barriers on both sides of the Atlantic reduce incentives for, and delay the arrival of high quality, advanced diagnostics to the clinic. Again, a concern for both pharma and diagnostics.

The main link so far between the sectors has taken the form of “companion diagnostics”, but in many cases this will prove to be just a passing phase. As advanced diagnostic profiling matures, enabling us to bring broad genome sequencing and eventual ‘multi-omic’ profiling to each patient, broad diagnostic profiling, rather than specific tests, will direct the selection of specific therapies or combinations for each individual patient.  So approval and appropriate reimbursement of these profiling technologies will be integral to the arrival of Precision Medicine. But they too need to be adequately reimbursed, and doctors trained in the interpretation of their more complex results.

Is the answer for more pharma companies to own diagnostics businesses? Probably not. The science is too dynamic. The businesses still have different drivers. And, investment cycles and many ‘legacy’ routine high-volume diagnostics are irrelevant to modern Precision Medicine. In addition, the increasing need for bioinformatics expertise in the storage, handling, analysis and interpretation of the ‘big data’ generated by advanced diagnostic profiling, will not be natural territory for biopharma.  But for pharma companies to form a set of close preferred relationships with diagnostic and bioinformatics partners and create shared development and marketing plans makes great sense. As do combined efforts to shape the environment.

Precision medicine has the potential to create a shared agenda between the life sciences industry and its customers health systems, payers and patients by achieving better outcomes at a lower cost. But, without fresh thinking and concerted action across the pharma-diagnostics boundary, it will continue to struggle to deliver its full benefits.

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