We all know that medicine and technology are converging, but who’d have thought that likely buyers of biotech companies will soon be Google, Microsoft or Apple. Jenny Chapman talked to
Dr Gregory Berman at
PA Consulting about the tech companies overtaking the big pharmas in healthcare.
The time is fast approaching when we shall be looking to Google, Microsoft and Apple for much of our healthcare.
Yes, healthcare. Doctors will no longer be able to prescribe drugs simply on the basis of past performance in other people and the symptoms you are displaying; they will be using complex software programs which churn a whole load of data and decide what’s best for us.
Dr Gregory Berman is an expert in healthcare innovation at PA Consulting in Melbourn and he says the industry faces fundamental change due to pressures coming from both within and outside the sector.
For a start, the patents on some of the world’s biggest blockbusters are about to run out. For instance, Pfizer’s Lipitor, which lowers cholesterol, is worth $8bn a year in sales, but not for much longer, the price will have to plummet when the patent ends.
“These changes are huge, and in this particular case have caused Pfizer to go out and buy Wyeth, that was last year.
“And it’s happening across the industry, Merck bought Schering Plough, Roche bought Genentech, all last year. There are massive changes taking place in the industry and there are huge cost pressures.”
Much of all this is to do with NICE (National Institute for Clinical Excellence) and the way it operates. Dr Berman says the UK is ahead of the rest of the world with NICE, which judges not only the safety and efficacy of new drugs, but whether they are cost-effective, which means “assigning a value to people’s lives”.
Of course, this sounds terribly sinister, even more so when Dr Berman starts talking about QLAY, which stands for Quality Life Adjusted Year, a template for judging whether someone’s life is worth living for an extra six months, given the cost involved.
“For some people who take a drug it may not work, but for others it may give many years of extra life. Fifty percent of drugs don’t work in half of patients.
“But we are getting to the stage where we will be able to decide in advance whether a drug will work, and this is because of personalised medicine.”
NICE has already started paying some of the drug companies based on whether their drug works in individuals, an arrangement which flies in the face of the traditional pharma business model: “At the moment if I am a drug company my raison d’etre is to shift as much powder as I can and get people to swallow it.
“But this is shifting to whether the drug works in each individual. If it doesn’t, I don’t get paid.” He is still in pharma firm mode.
An arrangement NICE already has in place with Johnson&Johnson and Velcade (new treatment for multiple myeloma) involves payment only when certain end points are reached in the patient’s condition. The deal has been running for two and half years and the drug company is very pleased with it.
“Other companies are resisting,” Dr Berman says, “but the UK is ahead of the rest of the world in this. Other countries are beginning to put agencies similar to NICE in place, and the most hits on the NICE website are coming from the US.”
And what it’s all about is the technical component of the way forward: “We’re only at the start of how people respond to drugs at genetic level. Information associated with disease – who will respond and who won’t to various drugs, it’s very valuable and a whole bunch of companies like Microsoft, Telefonica, Cisco, Google, are trying to get into healthcare because they can see that in future it is going to be about understanding patient behaviour and genetics, what
drives health and illness. The supply of drugs might not be the be-all-and-end-all, with the pharma companies no longer top of the tree because other players will have all the value in the data on decision-making.”
Get the picture? It’s simple, really. As touched on in the Spring issue of Cambridge Business, it’s all about target-shooting rather than the existing scattergun approach to prescribing.
Dr Berman cites rheumatoid arthritis as an example: “It’s not life-threatening, it affects 1% of the population and it can be really disabling, particularly in the hands for people over 70.
“The old traditional treatment, Methotrexate, costs the health service 50p a week, while the new treatments with antibodies, the biotech drugs, cost £1k a month, and the doctor has to decide which to prescribe. In future the doctor’s decision will be based the patient’s genetic profile, which is a very big shift, and there are these new entrants from the tech sector all trying to elbow their way in.”
The thing is, the NHS can’t really afford to play hit and miss with biotech drugs which cost £1k a month – Humira, the arthritis drug which had its beginnings in Cambridge is approaching this for two shots a month and yet is a blockbuster making billions of dollars.
Drugs like this are expensive enough to concentrate the NICE mind on a future where drugs are very carefully targeted at much smaller populations who are certain to benefit.
“In 10 to 15 years the pharma companies will be less profitable than they are today, and the sector will be much more integrated technology-wise.
“At the moment the industry is segmented into medical devices like pacemakers and other implants, pharmaceuticals and biotech, etc.
“The start-ups will still all be biotechs in drug discovery, although the number will diminish because they are so dependant on access to capital and the gap between the seed funders and the VCs is now quite large.” There’s also a good chance that instead of being bought by big pharma, in future it will be Google and Microsoft bidding for budding biotech companies.
“At a macro level for healthcare, it’s about the convergence of pharma with technology.”
The examples continue, medical devices with drugs on them. Novartis has made an investment in a tablet which can be tracked in the gastro intestinal tract.
The doctor jumps up. He’s just remembered something he spotted online only this morning in
Pharma Times: “GSK, MedTrust launch iPhone/iPad app for cancer trials”.
The story reads that the pharma giant has teamed up with a US technology company to launch CancerTrialsApp, described as the first free geolocating cancer clinical trials application for the iPhone and iPad.
I can hardly believe this hasn’t happened before, a directory of clinical trials available to doctors so they can put forward their patients to take part and probably live longer.
There is a quick search menu based on a dozen common cancers, and when a relevant trial has been identified, details are sent to the iPhone or iPad registered to the nearest location.
“Cambridge is really well suited to get a slice of the action,” Dr Berman says. “There is a big opportunity here. Chips, Bluetooth, biotech, software, if we had a good entrepreneur to spark it off.
“We are increasingly being approached by the large providers asking how they can form a business, who they should be working with, what technologies are needed. We need an entrepreneur to set something up in Cambridge, something very much at the interface.”
To visit PA's pages on healthcare, please click
here.
To visit PA's pages on technology and innovation, please click here.
To read Gregory Berman's article (also by Ian Rhodes and Bob Damms) in European Medical Device Technology, April 2010, click here.
To read Gregory Berman's article (also by Ian Rhodes and Bob Damms) in Pharma Exec, Aug 2010, click
here.
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