A few years ago, I had the opportunity to look closely at the service effect approach to outsourcing that AstraZeneca was using to manage its outside vendors.  At the time, AstraZeneca's approach could be considered visionary, since it was one of the earliest examples of a life science company that was willing to relinquish tight control over its vendors and allow the vendor to gain from exceeding expectations or share in the loss of failing to meet expectations.  Over time, this model has expanded across the industry as companies have more closely examined what they consider core competencies and are increasingly outsourcing and/or partnering on a growing list of activities that include research, development (especially clinical trials), manufacturing, and regulatory affairs.  As I have discussed in recent reports, IT infrastructure is also on the chopping block via IT cloud services, a process whose adoption following broader industry acceptance seems to be occurring with barely a lag.  In all of these areas, it remains clear that effective information sharing, including strategic expectations, productivity outcomes, and costs, is key to successful initiatives.  It is also increasingly clear that the key insights are also applicable within life science organizations with no groups, functions, or divisions exempt from scrutiny.  During transformative times, old models are continuing to fall by the wayside.

Recent announcements by Pfizer and GSK that they are making significant cuts in worldwide staffing (estimated at more than 19,000 and 4,000 positions respectively) continue to shake the life science industry.  For many of the researchers included in the RIF (reduction-in-force), fear, uncertainty, and foreboding preceded the move, with the falling axe a confirmation of their deepest fears.  For more experienced researchers, the transition is likely to be painful, since it has been many years since they last tested the waters of the job market.  Strong scientific expertise alone is not likely to make the transition easy, since a large number of job seekers with comparable skill sets are also in the competition.  To succeed, job hunters need to reach beyond their science mindset for other tools in their arsenal, with a focus on more pragmatic and process oriented capabilities.  Project and process management skills, the ability to leverage technology to empower collaboration and improve operational effectiveness, and strong communication skills will be strong differentiators and valued assets in the new life science ecosystem.  With many of the new technical opportunities arising within smaller, more entrepreneurial biotechnology and biopharma companies, individuals that bring a diversity of skills will always be in demand.  Unfortunately for many (especially in the United States), these new opportunities are no longer limited geographically and are expected to arise in emerging players around the world (at a substantial discount to traditional U.S. market salaries).

The likelihood of the $1000 genome is at hand, whole genome disease studies are in progress at multiple sites, and regular announcements continue trumpeting the discovery of the relationship between genes and disease.  While genomic research has yet to fully prove its value by uncovering the root cause of a major disease and highlighting the direct path to a cure, it is at the cusp of moving beyond the disease risk correlation towards more actionable information that will enable practicing physicians to make better therapeutic decision making, resulting in improved patient outcomes today.  This progress is moving much faster than originally anticipated and promises to change the face of medicine forever.  These advances have been catalyzed by advances in technology as well as leading efforts in translational medicine at organizations like Partners Healthcare in Boston and M.D. Anderson Cancer Center in Houston.  It is also clear that progress is coming at a time when it is most needed.  The ability to determine beforehand which drugs will work and which ones will not work has the potential to save millions in dollars from both averted use of therapeutics that were unlikely to work as well as reduced costs from a shorter path to improved patient outcomes. 

Moving into the new year, most industry pundits are trumpeting the end of the economic crisis that has significantly impaired advances in the life science industry (and other industries as well).  It is clear that the financial markets are loosening their grip on new funds for the industry through both venture capital as well as the opportunity for IPOs.  Mega pharmas are continuing their unabated pursuit of M&A in hopes of allaying fears regarding their upcoming blockbuster drug patent expirations.  From our own pulpit, we will shortly be announcing our 2010 Predictions for the industry as well.  Despite the growing optimism regarding the future, it is also clear that both companies and investors will be more diligent and thorough in their actions as they actively move forward.  To be successful in these new brighter days ahead, companies must pursue their aspirations from a solid foundation (both strategic and operational) with a vision towards both near and long term achievable milestones.  Companies failing to excel at the fundamentals can be expected to fall behind, despite the emerging window of opportunity. The performance threshold just went up and this will be the new norm.  More details follows.

The life science industry continues to move forward as it tries desperately to fill expected loss of revenue from drug blockbusters over the next several years.  Major M&A between mega pharmaceutical companies promises to restore profitability through increased operational efficiency, although this approach can only hope to maintain a somewhat proportionate rate of return at a lower combined revenue level.  Acquisitions of smaller biotechnology companies are a higher risk bet on the success of drugs in the pipeline, paid for at a premium that is likely to only get higher moving forward.  In all cases, the prolonged development and approval process guarantee that bets made today will not pay off for at least a few years at best and never, at worst.  Are we in desperate times in the industry or simply moving from one business model to the next?

The final phase of adoption of the Genetic Information Nondiscrimination Act preventing group health insurers for companies with 15 or more employees from denying coverage based on genetic information took effect on November 21, 2009.  This follows the May 21, 2008 signing of the bill, which initially covered both employer action and individual health insurance plans.  This final nail in the genetic discrimination coffin eliminates the last possibility that a company could play big brother using genetics as a strategic advantage in employee hiring and firing.  As a diversion from traditional blogging, it makes sense to republish my original newsletter article from 2008, since the discussion remains the same (included below).  Genetic discrimination, may it rest in peace.

As always, I welcome comments and discussion from our readers. 

Recent shortages of H1N1 flu vaccine have spurred numerous news reports highlighting alternative vaccine manufacturing options that could have rapidly filled current shortages and provided vaccines to consumers in the United States.  It is clear that the current approach to vaccine production (i.e. growing virus in chicken eggs) is antiquated, cannot deliver vaccine in a timely fashion (other than routine annual vaccines with a long lead time), and is severely limited by availability of large quantities of raw materials.  Vaccine alternatives, including use of adjuvants to improve the efficacy of existing vaccines (thereby allowing current vaccine supplies to be stretched farther) and cell culture based production methods that promise to reduce production time from months to weeks, are being highlighted while failing to recognize that these options are untested in large populations.  From the layman’s perspective, these options are a failure of the system to act.  The industry and government’s perspective is somewhat different, recognizing that unproven processes carry unknown risk that the public is unwilling to tolerate.  This disconnect is the basis for misconception and confusion, driving specific agendas from across the business and political spectrum.  While an informed public is the answer to this dilemma, it is virtually impossible to deliver a consensus opinion, since leading voices are afflicted with the agendas already mentioned.