HEALTH SCIENCES

VIRTUALIZATION
IN PHARMA R&D

THE BUSINESS OF
VIRTUALIZATION IN RESEARCH
AND DEVELOPMENT
Sandy Johnston, Kate Moss,
and Andy Brown
PricewaterhouseCoopers

EMPOWERING VIRTUALIZATION,
ENABLING NEXT-GENERATION
PHARMA
Nick Giannasi
Oracle

RE-THINKING PHARMA R&D—
THE MERCK EXPERIENCE
Clark Golestani
Merck & Co

TECHNOLOGY AND PEOPLE—
SHIFTING THE R&D PARADIGM
AT GLAXOSMITHKLINE
Alex Lancksweert, Peter Milligan,
and Robin Dement
GlaxoSmithKline

healthsciencesvisions.com

com HEALTH SCIENCES Published by Touch Briefings. Managing Editor Sian Bithell eHEALTHCARE Editor PATIENT MANAGEMENT WITHOUT WALLS Wai Lang Chu HEALTH SCIENCES MANAGING RISK EMBRACING THE NEW Editorial Director PARADIGM IN GLOBAL PHARMACOVIGILANCE Patrick Wong THE POWER HEALTH SCIENCES OF CTMS BREAKING DOWN THE WALLS Sub-editorial Manager OF HEALTHCARE Patrick Wong INTEGRATION. Nobel Laureate PHARMACOVIGILANCE AT IN eHEALTHCARE THE INTERSECTION An interview with Lynn Harold Vogel.com Christopher Heider FLEXIBILITY.com Editorial Contact Sian Bithell In association with: E: sian. MPH. Touch Briefings is the trading name of Business Briefings Ltd. All information obtained by Business Briefings Ltd and each of the contributors from various sources is as current and accurate as possible. AND COMMUNICATION Bengt I Samuelsson. However. FACP. INTEROPERABILITY.com Associate Director—Health Sciences Kevin McGeehan For an electronic version of this publication and our report Managing Director David Ramsey archive.bithell@touchbriefings. Business Briefings Ltd and the contributors cannot guarantee the accuracy. Where opinion is expressed. MPH SUPPORTING ENGINE FOR THE S FUTURE healthsciencesvisions. PhD. ©2011 All rights reserved Cover image: © Karen McDonald . MD. adequacy or completeness of any information.com T: +44 (0) 20 7452 5152 F: +44 (0) 20 7452 5606 E: david. FACC CTMS IN THE WORLD OF M&A — MANAGING OPERATIONAL S CHALLENGES healthsciencesvisions. it is that of the authors and does not necessarily coincide with the editorial views of Business Briefings Ltd. Lisa Glass eHEALTHCARE—CHARTING THE FUTURE HEALTHCARE AND COLLABORATION PROGNOSIS Paul H Keckley.ramsey@touchbriefings. MD. OF HEALTHCARE AND and Rick Skinner LIFE SCIENCES Designer Kostas Kidos THE NORTHUMBRIA NHS INITIATIVE—PUTTING THE THE NEW POST-MARKETING BIGGER PICTURE INTO PRACTICE PHARMACOVIGILANCE Ian Shoobridge Jim Mackey TOOLBOX CTMS — A DECISION- Peter K Honig. PhD HEALTHCARE WITHOUT THE CHANGING LANDSCAPE WALLS—DELIVERING THE Design Manager FUTURE PARADIGM Marc Perlman and Brett Davis OF PHARMACOVIGILANCE— THE IMPACT ON MEDICAL INNOVATION AND HUMAN HEALTH Eliza Albie S BUILDING CONNECTIVITY.com Circulation Contact Miriam Oppenheim E: miriam.oppenheim@touchbriefings. a Touch Group plc company. please visit healthsciencesvisions. AND ORGANIC GROWTH — Publishing Director THE CHALLENGES OF CLINICAL TRIAL MANAGEMENT IN EMERGING GEOGRAPHIES Cathy Peck Lynda Shelley healthsciencesvisions. or for the results obtained from the use thereof. and cannot be held responsible for any errors or omissions. INTEROPERABILITY.com SIGNAL DETECTION IN THE Chris Huang DIGITAL AGE Dr Paul Chew and Dr Linda J Scarazzini THE CLINICAL TRIAL MANAGEMENT SYSTEM — THE Production Manager INTEGRATING RISK MANAGEMENT ACROSS THE PRODUCT LIFECYCLE CENTRAL INTELLIGENCE HUB Henry Levy Anthony Gibbons Paul Eisenberg. due to human or mechanical errors. Statistical and financial data in this publication have been compiled on the basis of factual information and do not constitute any investment advertisement or investment advice. INTEROPERABILITY.

Oracle is a registered trademark of Oracle Corporation and/or its affiliates. Oracle.com/lifesciences or call 1.Oracle Health Sciences 20 of the 20 Top Pharmas Get Better Results With Oracle oracle. Other names may be trademarks of their respective owners.1 Copyright © 2008.800. All rights reserved.ORACLE. .

Peter Milligan. and Andy Brown PricewaterhouseCoopers Empowering Virtualization. Enabling Next-generation Pharma 11 Nick Giannasi Oracle Re-thinking Pharma R&D—The Merck Experience 15 Clark Golestani Merck & Co Technology and People—Shifting the R&D Paradigm at GlaxoSmithKline 18 Alex Lancksweert. and Robin Dement GlaxoSmithKline VIRTUALIZATION IN PHARMA R&D 3 . Contents FOREWORD Tomorrow’s Virtual World—Big Pharma’s Big Chance 4 Sian Bithell Touch Briefings REVIEW The Business of Virtualization in Research and Development 5 Sandy Johnston. Kate Moss.

although it is by addressing the demand for innovative medicines where real progress can be made. From PricewaterhouseCoopers. but this strategy is no longer working. as governments worldwide attempt to shift the spotlight from disease treatment to prevention. are revisiting ‘virtual’ IT solutions to improve R&D productivity. and the resulting benefits to their business. Unsurprisingly the pharmaceutical industry is facing challenges from the weak global economy. ‘Empowering Virtualization. highlights how GSK.Foreword Tomorrow’s Virtual World—Big Pharma’s Big Chance Sian Bithell T ough times for Big Pharma indeed. among others. Kate Moss. Evidence demonstrates that spending in R&D has been increasing exponentially while the annual number of new drug approvals remains relatively low. it appears that focusing on disease rather than individual compounds should generate new business opportunities for pharma—but can such shifts be done alone with any great degree of success? Moving into a new decade. offering much more than a glimmer of hope for the future. and increased public scrutiny over ethical and business practices—driving development and regulatory costs sky high. Clark Golestani harnesses Merck’s progressive hands-on experience of virtualization and discusses the new strategies that have been employed at the company. written by Alex Lancksweert. predicting that IT-empowered data/knowledge management will drive efficiencies and facilitate the much-needed push for continued innovation that remains elusive. will find our report informative and engaging. Yet. For too long pharmaceutical companies have relied on modest improvements in existing research and development (R&D) pipelines while their blockbuster drugs ‘pay the bills’. written by Nick Giannasi. and Robin Dement. downward pressure on prices. Add to this the well-documented fact that patents for many of the industry’s blockbuster medicines will expire over the next few years and it is evident that tactical changes must be made. This article underlines the fact that the virtualization of R&D will need to be supported by enabling IT. ‘Technology and People—Shifting the R&D Paradigm at GlaxoSmithKline’. n 4 © TOUCH BRIEFINGS 2011 . Enabling Next-generation Pharma’. Fundamental to the future success of the industry is the need to improve on the return on R&D investment. Sandy Johnston. in our focused report ‘Virtualization in Pharma R&D’. Reflex action sees like-for-like mergers as a quick fix. The final article in this report. ‘The Business of Virtualization in Research and Development’. our second review. Complementing this. Looking to combine existing drugs in novel ways also provides a solution to unblocking the pipeline in the short term. goes even further. presenting an excellent introduction to the subject matter and a comprehensive analysis of the methods used to implement a suitable approach. They identify and review potential virtualization business models and strategies. Peter Milligan. senior management acknowledge that adopting new business models could provide them with long-term solutions to their problems. ‘Rethinking Pharma R&D—The Merck Experience’ provides us with an insightful ‘view from the ground’. Cost control measures can be employed and go some way to counter these problems. the challenges faced. This will require a shift from the integrated in-house model of R&D to models that embrace external innovation from creative alliances and outsourcing—the virtualization of R&D. but the pharmaceutical market is out there and there is little doubt that it’s growing globally. our readers. we have commissioned a collection of articles from expert commentators and practitioners in the new R&D landscape. Here. We would like to thank all of our authors for their contributions and trust that you. and Andy Brown provide a brief state-of-the-nation overview of the biopharmaceutical industry in their article.

E: sandy. Furthermore. as well as enterprise resource planning systems in finance and the supply chain. Ms Moss has extensive pharmaceutical industry experience across multiple therapeutic areas. As VP of Global R&D. while the total industry spend was an divergence away from the uniform model currently in use across most estimated $65. 2. With 20 years of successful direction and delivery of major international new product development and performance improvement projects. He has also led the implementation of new processes and systems across the pharma value chain.n. and Andy Brown Sandy Johnston leads PricewaterhouseCoopers’ (PwC’s) consulting practice for the Pharmaceuticals & Life Sciences Industry Group in the UK.2 billion2—yet the US Food and Drug Administration of the industry.1 the industry. sales and marketing account for the greatest corporate expense and rose from With so many blockbuster drugs going off-patent. The need to for companies is to replace them with similar high-earning products spend heavily on promotion not only affects the bottom line but could in order to sustain both rising research and development (R&D) also be seen as yet another sign of the paucity of innovative medicines costs and market and shareholder expectations.org/files/attachments/ PhRMA%202009%20Profile%20FINAL. In terms of total corporate expenditure. E: andrew. He has over 20 years of experience in consulting. Between 2008 and 2012.pwc. Pharmaceutical Research and Manufacturers of America. Kate Moss.jhtml (accessed March 2010). clinical trial supplies. Pharmaceutical Industry Profile 2009. mostly focused on the pharmaceutical industry. geographies. creating reached a record $50. Pharma 2020: The vision – Which path will you take?. including electronic data capture. Dr Brown has directed new product development strategy and execution at one of the major scientific information and business intelligence providers to the pharmaceutical industry. of the Pharmaceutical Research and Manufacturers of America (PhRMA) Fundamental changes across the industry are gathering pace. clinical data management systems.com Kate Moss is a director at PricewaterhouseCoopers (PwC). The models suggested—the federated and the fully diversified—are representations of the evolution of the biopharmaceutical industry and how new business models will be created. 1.johnston@uk. and virtual companies.com/gx/en/pharma-life-sciences/pharma-2020/pharma-2020-vision- path. and fast-track cross-functional drug development projects. the reaching the market. document management.com In this article the authors provide a brief ‘state of the nation’ overview of the biopharmaceutical industry. this article focuses on the critical issues and then identifies potential business models and strategies. He has a BSc (Joint Hons) in zoology/microbiology.brown@uk. and an MBA. a PhD in cellular immunology. practice regarding the promotion of medicines. He has particular expertise in directing complex global pharmaceutical R&D time compression. Available at: www. clinical trial management systems. He has considerable experience in business performance improvement and change management enabled by new technology and has led a number of major performance improvement and cost reduction projects for many of the world’s largest pharmaceutical companies. © TOUCH BRIEFINGS 2010 5 .com Andy Brown is an experienced international blue chip project executive and management consultant specializing in pharmaceutical research and development (R&D). In 2000 she moved into consulting. Available at: www.7 to 33. DC: PhRMA. However. aggressive promotion of shortage of suitable replacements in the pipeline together with pharmaceuticals also generates considerable criticism and poor declining productivity exacerbates the challenges faced by the public perception. and data warehouse projects in research and development. For the leading pharmaceutical companies.Review The Business of Virtualization in Research and Development Sandy Johnston. She works solely with pharmaceutical clients. performance management. and her client work is focused on managing change and general R&D performance improvement. leading to legislation and stricter industry codes of biopharmaceutical industry. developed. biopharmaceutical R&D spending by the member companies The biopharmaceutical industry is at a significant point in its evolution. He currently leads the UK Pharma R&D Practice and Pharma Cost Reduction Service Line at PricewaterhouseCoopers.pdf (accessed January 2010).1% of expenditure between 1995 and 2005. leading the European research and development (R&D) practice. companies.pwc.phrma. She began her career as a sales rep. Contrast this unprecedented number of market-leading drugs facing patent with the 53 new molecular entities (NMEs) and biologics approved in expirations. The principal force driving this need for change is the (FDA) approved only 24 new therapies in the same year. 2009.p. cost reduction. E: kate. In addition. he has started.pwc.pwc. and will complete a BSc (Hons) in psychology in 2010.moss@uk. 2007. and roles. not in terms of structure but in terms of risk sharing and financing. amounting to $157 billion (measured in 2005 terms) will lose market exclusivity. and sold his own technology-based business.3 billion. Balancing on the Precipice of the Patent Cliff In 2008. PricewaterhouseCoopers. biotech. he has worked with many of the world’s leading pharmaceutical companies. While the industry faces a number of influences for change. between 14 and Declining productivity has also affected the revenues generated by 41% of their existing revenues will be lost as a result of patent expiries. Washington. the imperative 28. branded drugs with revenues 1996 when R&D expenditure was estimated at $15 billion (see Figure 1). She has been integral to the recent Pharma 2020 publications from PwC. but the majority of her industry career was within clinical development and program management within pharma. contract research organisations.

Data on R&D spending for non-PhRMA companies are not included here. 2005/2006 Pharmaceutical R&D Factbook. years and $800 million on developing the failed cholesterol- lowering drug torcetrapib.4 PricewaterhouseCoopers estimates that the average cost of drug The current cyclical model of reliance on a few billion-dollar development is in the region of $454 million. 5 Obviously. Centre for Medicines Research International. Nevertheless. PricewaterhouseCoopers. estimate took into account the cost of financing the R&D and the • the shift from treatment to prevention of disease. DiMasi JA. Grabowski HG.’ Research from the that will more likely have the desired responses in specific populations.28:469–79. there is blockbusters and the subsequent race to develop new medicines to considerable variation in development costs depending on the replace the income lost from these high-value drugs as they come off therapeutic area.000 30 20. Pharma 2020: Virtual R&D – Which path will you take?. Centre for Medicines Research International found that 10 of the largest pharmaceutical companies invested over 20% of R&D Many Paths to Dynamic Change expenditure on line extensions rather than new development The decline in R&D productivity underlies many of the challenges projects.25:420–8. Managerial and Decision Economics. 6 VIRTUALIZATION IN PHARMA R&D . At the beginning of the decade. Health Affairs. 2007. billion for an NME and $1.22:151–85.000 20 10. bringing a new medicine to market was $802 million. 2005.jhtml (accessed March 2010). the mapping of the human genome was expected to greatly increase • chronic diseases placing increasing pressure on healthcare budgets.000 10 0 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004* 2005* 2006* 2007* 2008* R&D spending NMEs and new biologics approved *Includes biologics.000 60 R&D spending ($ millions) 50 40. Sources: FDA/CDER data. This innovation deficit and 3. 6 but these numbers still point to a considerable patent will not suffice. Theme of the Pharma 2020 series. In smaller companies. Pfizer was widely reported to have spent 13 will also provide some major opportunities. The cost of biopharmaceutical R&D: is biotech different?. human genome proving even more complex than originally • more pharmacoeconomic barriers and outcomes-based pricing. with the policy-makers.pwc. and expenditure a newly licensed drug might not even gain market access due to pharmacoeconomic barriers. after significant investment meet short-term earnings targets with long-term aspirations. J Health Econ.com/gx/en/pharma-life-sciences/pharma-2020/index. This • the growing markets of the emerging economies. 2007. 2003. 10. There are examples of major pharma The current structure of the political and legal framework losing billions in market capitalization after issuing unfavorable news surrounding drug development also means that companies do not (such as withdrawal of ‘potential blockbusters’ from phase III trials).318 • even tighter regulation. which will add to the challenges already facing the become increasingly complex. 7. which is why the strategic decision scientific advances enable the development of more targeted drugs for many companies is often to ‘play it safe. The demise of the blockbuster?. The price of innovation: new estimates of drug development costs. 2008. 5 Barriers to Innovation The industry will need to adapt and transform to address the changing As R&D processes within the biopharmaceutical industry have environment. The know whether their product will be eligible for reimbursement if it biopharmaceutical industry will therefore have to balance the need to does reach the market.com/gx/en/pharma-life-sciences/pharma-2020/pharma2020-virtual-rd- which-path-will-you-take. Adams CP. 7. Wadman M. This is a substantial risk The ‘one size fits all’ approach to R&D will also shift as technological and for an organization to take on. of NMEs and biologics approved 50. envisioned. the estimated cost of • the provision of healthcare moving closer to the patient. because they are not available for all 11 years.jhtml (accessed March 2010). the percentage was over 40%. Brantner VV. 5. which would in turn help • greater influence on prescribing by payers and healthcare improve productivity. At the beginning of the millennium. This has not proved to be the case. Hansen RW. 8. 2006.356:1292–3. Nature. it is hardly surprising that industry. Available at: www.Review Figure 1: Increased R&D Spending Against Decline in the Number of New Therapeutics Approved by the FDA No.pwc. When the party’s over. 4. Grabowski HG. N Engl J Med. PricewaterhouseCoopers analysis: PricewaterhouseCoopers.8 The necessity for change will have to be managed without forfeiting the confidence of the capital markets.9 faced by the biopharmaceutical industry. 6. PricewaterhouseCoopers. Estimating the cost of new drug development: is it really $802 million?. These changes include: productivity has tumbled. 9. the number of therapeutic targets. 2007. Available at: www. In other words. 2007. Cutler DM. the trends affecting the industry financial risk. PhRMA data.2 billion for a biological drug. 3 The current estimate is $1. and expense of failed drug candidates. Indeed.000 40 30. DiMasi JA.445:13.

Figure 3: What the Research Process Might Look nutraceuticals. biologic. and health management (see Figure 2). in order to increase productivity. in the venture version. VIRTUALIZATION IN PHARMA R&D 7 . enable the virtualization of the research process and accelerate the development life-cycle. The classic R&D model will transform into of the disease under investigation. Disrupting the existing Synthesis of Target ID initial testing of treatment treatment testing treatment order can have a major impact on a company’s short-term of treatment in vitro in vivo in man performance. The fully diversified model comprises a Source: PricewaterhouseCoopers. While the models are not mutually exclusive. generics. The changes to the roles and responsibilities of each of the company acting as hub property/capital growth • Operates on a project-by. A better understanding of systems new R&D processes that are more connected. Like in 2020 The evolution of the biopharmaceutical industry will create new business models. and reduce risk. reducing attrition rates or bringing about earlier attrition. The company expands from its core business into one that also provides related products and services. Two variants of the federated model • Based on provision of internally have been identified: in the virtual version. the regulators. and facilitated by greater use of new technologies.pwc. Available at: www. and lowering the costs of clinical trials. create the building blocks for the forging of more strategic. gained through increased collaboration between Whichever path is chosen. academia. 2009. PricewaterhouseCoopers.11 The federated model Owned: Fully diversified model is based on a network of separate organizations linked by a shared • Network of entities owned by one parent company purpose and infrastructure. modify or reverse pathophysiologic changes. not in terms of structure but in terms of risk sharing Design and Further testing Testing of Initial and financing. iterative. In the future. the federated model has the advantage of Mixed computer/lab Lab work being faster and more economical to implement. it manages a portfolio of investments. but this knowledge. Change has been in order to fully identify the targets and to dramatically increase the relatively slow. However. The transition will be painful. and healthcare will have to use new technologies to improve its understanding of providers. longer- lasting coalitions. too cumbersome.10 Virtual variant Venture variant • Network of contractors • Portfolio of investments There is no longer a one size fits all business solution for this • Activities coordinated by one • Based on sharing of intellectual industry. These improvements include shortening R&D processes by two- thirds. significant external assets • Combines size with flexibility improvements in R&D productivity are possible over the next 10 years. Furthermore. However. will disease. The Virtualization of Research and Development The paramount question the industry is currently trying to answer is Expediting Research—From the ‘how do we find new products now?’ Many of the lower-hanging fruit Virtual Human to Networked Pharma have gone. and by which a molecule.jhtml (accessed March 2010). This is an enormous task. The most successful of these coalitions will in turn create a fully federated network of long-term partners.11 network of entities owned by a single parent company. The traditional R&D process has been to define the target Traditional R&D processes are too complex. and biology that underpins both the disease and the human body will also predictive (see Figure 3). 2009. the defensive nature of these traditional mergers and acquisitions raises the question of whether there is value and sustainability in these consolidation strategies. • Stimulates entrepreneurialism current functional areas and the overall business models adopted by project basis and innovation each company will depend on the nature of their strategic priorities. these will 5 Source: PricewaterhouseCoopers. Pharma 2020: Challenging business models. such as diagnostics and devices. • Fee-for-service financial structure • Spreads risk across portfolio PricewaterhouseCoopers predicts that two principal models— federated and fully diversified—will emerge. governments. or diagnostic can be applied. too prone to expensive late-stage failures. it advances are providing the momentum to transform the paradigm is essential to have an intrinsic understanding of the pathophysiology of drug development. enabled by a comprehensive understanding of how the 11. a company outsources integrated product–service mix • Spreads risk across business units most or all of its activities. significantly reduce its R&D costs. The Business of Virtualization in Research and Development the imminent patent cliff have fueled another round of mergers and Figure 2: Business Models in the New Paradigm acquisitions. the industry the industry. Collaborative: Federated model • Network of separate entities • Based on shared goals and infrastructure The PricewaterhouseCoopers Pharma 2020 series presented the • Draws on in-house and/or argument that despite the many challenges faced.com/gx/en/pharma-life-sciences/pharma-2020-business-models/index. collaborative business models are far more complex than the existing integrated models. 2008. although continuing scientific and technological success rate of the molecules that do enter preclinical development. The federated In silico In vivo Testing in man model relies on the formation of opportunistic alliances. semantic drug-discovery be fundamental to helping researchers develop a finer grasp of how to processes.

5 years initiatives. An unprecedented response to this threat has been cost reductions in R&D. and is more models of different organs and cells or creating 3D images from the receptive to rapid feedback from patients and providers (see Figure 4). 2006. way they manage their R&D and. US Food and Drug Administration. will help make the standards—such as those in development by the Clinical Data connections that identify the links between disease and Interchange Standards Consortium and the Society for Clinical Data pathophysiologic pathways. and academic research centers are often at the forefront of different populations. However. such as the Predictive Safety Testing Consortium—an Confidence in mechanism from alliance between the C-Path Institute and 15 pharmaceutical research work 1 year 0. smaller drug in-life testing to substantiate its safety and efficacy in larger and/or companies. Intelligent use of the vast and disparate data sources will be facilitated by common electronic data interchange human body works at the molecular level. Current research. innovation. but not any longer. and Connectivity manufacturing and through sales force reduction. the current model of development. or for the treatment of other conditions. as a result. Existing processes have been expedited by the move associated cost escalation as more complex disease areas are toward the adoption of new technologies. A shift in the facilitated by the utilization of computer-aided or in silico design. and alleviate safety issues. Companies have reviewed the conducted in an eClinical environment. Such technologies will enable the or similar products CIE Launch industry to link the vast amounts of clinical trial data generated with Proof of value requirements CIS epidemiologic and early research data. 2007. approach toward a cumulative process. Available at: www. resulting data. cultural change. has been aimed at building more flexible. will gradually evolve into a process that is knowledge of physiologic processes. optimize absorption. which will include further It is generally recognized that biotechnology companies.com/volunteers/committees/mtpc/ documents/JWCPBioeconomicsNIST092507. Clin Pharmacol Ther.htm (accessed January 2010).5 years Epidemiologic data companies13—and biomarker qualification programs.ppt (accessed January 2010). 13. The lack of R&D productivity and the bottleneck. resulting in more trials being investigated has changed the game. achieved with relative ease through consolidation/outsourcing of Bioinformatics. cost reduction has largely been Expediting Development—Biomarkers. March 16. will need to be supported by a to-lead selection. The cumulative process will be based on the gradual accrual of data for a new drug. The collaborative Balancing the Need for Long-term Fundamental networked R&D approach provides greater potential for cross. patients. Available at: ieeeusa. metabolism. The creation of a virtual model will be The regulatory process will also need to adapt and evolve. excretion. Predictive biosimulation is already playing a growing role in the R&D process.69:89–95. R&D has been the The clinical development of new drugs remains the significant sacred cow. This knowledge will then be used to Management—and informatics tools that enable Bayesian analysis of build virtual models. September 25.5 become much more pervasive. will help to reduce end-point observation times. such Like in 2020 as survival. encumbered by our limited phases of clinical testing. the more decisive companies patients who suffer from a specific disease subtype. from the current ‘all-or-nothing’ Computational approaches can expedite hit identification and hit. industry. Woodcock J. way new medicines are approved. with its four distinct phenotypic variations. The Role of Biotechnology and Bioinformatics in FDA’s Critical Path Initiative. Collaborations with these external sources of innovation will be a key component of the new paradigm. In the past. and payers. Multiple Another development on the horizon that is likely to have a profound and duplicated R&D sites across the globe are no longer affordable impact on clinical development processes is the increasing use of and site closures are happening more swiftly post-merger. 2008. Change with Meeting Current Goals fertilization of technologies and access to key competences. reductions in the number of R&D personnel over the last few years have been dramatic. The ultimate goal will be the creation of the complex data sets. For many big Ppharma companies the arrival of the patent cliff edge in promoting effective communication and knowledge transfer will 2011–2012 may put as much as 41% of their revenue at risk through present a significant managerial challenge. expedite the identification of any significant patterns.14 First-in-man Automated Disease knowledge Limited (adaptive design) submission/ Knowledge/data clinical use Semantic technologies are also expected to play a major role in 20–100 patients approvals from clinical usage improving the development process. Biomarkers Definitions Working Group.Review Figure 4: What the Development Process Might Look biomarkers that are reliable surrogates for longer-term end-points. and toxicity profiling. Using clinical realize that whatever is done to address R&D productivity will be 12. integrates advanced bioinformatics data. Biomarkers and surrogate endpoints: preferred definitions and conceptual framework. biomarkers that will enable segmentation of patients with different but related conditions and allow for the testing of new medicines only in To balance different business horizons. to predict the effects of modulating a biological target on the whole system and is capable of reflecting common genetic and Ultimately. 14. The use of electronic medical records will also Source: PricewaterhouseCoopers.12 Regulatory authorities in both the US and Europe are supporting various biomarker 1. distribution. generic erosion. with greater collaboration between regulators.fda.gov/NewsEvents/ Newsroom/PressAnnouncements/2006/ucm108617. This will enable development processes to become virtual human—a single validated mathematical model that is able much more iterative. 8 VIRTUALIZATION IN PHARMA R&D . 2001. FDA and the Critical Path Institute Announce Predictive Safety Testing Consortium. and use that information to modify the course Clinical data/knowledge incorporated into studies on future indications/populations of clinical studies—the adaptive clinical trial—without compromising their statistical validity.

The use of functional service providers (FSPs) to undertake specific Major changes in strategic direction affect individuals at all levels of activities. into product development plans (PDPs) and clinical development thus avoiding the dreaded productivity dip. India. procedures (SOPs) and systems. agree ‘what’ must be achieved as having to face disruptive and damaging imposed cuts. in many R&D organizations transparency of cost has their IT application skills to deliver integrated services to the not been a priority over the years. Pharmacovigilance and clinical data management have systems in place to capture. Companies such as i3. PPD. hence. Innovex/Quintiles have been some of the key players in this arena of clinical development outsourcing. it can be argued that it is better to be the architect of ‘fit for purpose’ approach if they are allowed to sit at the strategy table change now rather than become the victim of dramatic and sudden as well as the operational one. with year-on-year improvements being incorporated into the contract with strategic outsourcing. With organizations (CROs) such as Quintiles. Tata. the optimal approach for R&D is to achieve transparency of strategic outsourcing of activities to business process outsourcing the cost base and then apply surgical precision to identified areas (BPO) providers such as Cognizant. Russia. transparency across functions. In the past five years. In other words. The key is to agree the desired outputs and quality along design through better cost information and hence more targeted cost with appropriate service-level agreements (SLAs) and operational- reductions. A robust retained VIRTUALIZATION IN PHARMA R&D 9 . To make matures and approaches the next generation of outsourcing deals. opposed to telling the partner ‘how’ and thereby reducing or even losing benefits. there are opportunities to make significant cost reductions providers to utilize their own operational infrastructure and without affecting ongoing R&D projects. The only difference is that the longer the cost issues are not plans (CDPs) has the potential to significantly reduce costs. However. the pressure to increase throughput. enterprise-wide project bigger global players may be needed in order to cope with this management systems. there is the opportunity scenario. As the pharma industry examples of true activity or process-based costing. instead. Often. K-force. Outsource. and finance systems. and R&D leadership will lose help pharma companies move from the ‘gold-plated’ approach to the control. with more control than fully is needed to ensure a smooth transition. and those affected and for those driving the changes. processes. This communication. to expect 30% or greater savings over time new companies to flourish in an ever-changing marketplace. The Business of Virtualization in Research and Development painful. Parexel. there are inadequate industry. ongoing tracking of savings realization Access to skilled resources in lower-cost locations such as the BRICS is essential. informed decisions about R&D cost reduction without simply cutting it is possible that new models may emerge. Care must be taken when predicting Clinical research and the conduct of clinical trials has always been the forward volumes so as to maximize contractual value through novel most costly and time-consuming element of the drug development pricing mechanisms. projects. Those companies that address this in the short term will level agreements (OLAs) or reverse key performance indicators (KPIs) transform their R&D organization to fit future requirements rather than for the sponsor. and medical writing. and staff mix. and Covance constrained budgets. costing as an output. sites. therapeutic areas. some major pharma an attractive option. For these reasons it is important provided by vendors and greater uptake by major pharmaceutical to rigorously scrutinize internal options during business players. To maximize cost efficiencies it is important to allow the service Overall. such as trial monitoring using sponsor standard operating organizations. in the race to reduce costs there is the potential risk that demand and supply management processes across R&D enabled by increased outsourcing may cause a capacity issue in the industry— integrated portfolio management. with likely expansion to functional-based cost-accounting method that does not capture the adjacent areas of the clinical data chain such as statistics true cross-functional costs of drug development—with only rare programming. and China) is part of the solution. is another route that has grown. countries (Brazil. and report costs—a traditional been fruitful areas for BPO providers. with the increasing adoption of However. without affecting ongoing critical R&D projects. and there may be competitive advantages to early adopters to achieve this desired transparency with integrated activity-based of larger-scale strategic deals. reduce costs. companies combine process management skills while leveraging Unfortunately. Keeping the transparency around costs will always be a challenge. and business continuity strategy is aimed at reducing costs. however. Outsourcing of clinical trials to full-service contract research unnecessary costs do not creep back into the organization. Gone are the days when all chemistry and biology activities case development. with new services being comparisons are not always easy. Outsource. Benefits tracking is also vital here to ensure that process. were conducted in-house. Fortunately. A very robust approach to change management. and areas other than projects through portfolio analysis. pharmaceutical industry has expanded outsourcing into most areas of combined with some issues around corporate and international R&D. human resources processes. there needs to be cost clinical will utilize the BPO model. Outsource The range of external providers delivering high-quality work to the Owing to the cost transparency issues discussed earlier. the growth in externalization of laboratory overhead allocation practices. true internal/external cost work in particular has been significant. This requires change by processes. analyze. the bundling of additional services can also be has been the norm for many years. The maturation from transactional Transitioning to new partners requires early and detailed and often adversarial relationships to strategic relationships with input collaboration to ensure scope and interface issues are resolved. and reduce internal headcount are helping It is reasonable. CROs can addressed the more painful it becomes. arbitrary corporate actions later on. and Accenture. Further cost saving and cost flexibility opportunities come from Hence. Thus. analysis. These for cost reduction. with sensitive support for all outsourcing studies. companies only outsource some 30% of their phase II–IV studies.

the biopharmaceutical industry to date has focused on as well as high levels of commitment from talented project team the one size fits all approach. n 10 VIRTUALIZATION IN PHARMA R&D . but one size medicines do not fit all members who are fully supported by their leadership. and the same is true of the R&D process. successfully managed. along with a patients. Business continuity and of this approach—on which the industry has relied for many years— managing the risk of impact on ongoing vital R&D projects needs have become increasingly clear. Success requires the highest caliber cross-functional collaboration In summary. The risks associated with major to be planned from the outset.Review organization structure and model is also required. and have been. changes in R&D can be. The limitations joint governance structure for the contract.

phrma. Pharmaceutical Industry Profile 2009. highly regulated business. Pharmaceutical Research and Manufacturers of America. © TOUCH BRIEFINGS 2011 11 . the outsourcing of fundamental processes—essentially the virtualization of R&D—will need to be supported by enabling information technologies (IT). With traditional value or cost hub model is gradually being transformed into a multihub. but are also There are two significant drivers for this change: the first is the required to have expertise in specialized manufacturing processes and innovation deficit and the second is cost pressure.org/files/attachments/ PhRMA%202009%20Profile%20FINAL. this centralized change the trajectory of that curve. The Globalization and Virtualization of R&D Enhancing Productivity—Reducing Costs Pharmaceutical research and development (R&D). he was co-founder of a start-up biotech company and an advisor to investment funds. ominous phrase that is now firmly established in the industry vernacular—downward price pressures. biologicals. R&D spending has continued to increase traditional model. It is difficult for deficit is a direct result of the lack of productivity in terms of new drug any single company to excel in all of these areas.1 The cost pressure or process efficiency a manufacturing partner with expertise in complex products.com In response to both internal and external pressures there has been a global paradigm shift in the pharmaceutical industry. Available at: www. The definition of the transformed into diverse models encompassing more strategic virtualization of R&D is essentially an externalization or virtualization of outsourcing with fluid development–manufacturing partnerships processes. networked structure. PhRMA 2009. proteins. Companies not only need to have core competencies in R&D across multiple therapeutic sectors. Add to this the impact of the impending patent cliff—an therapeutic areas are also integral elements of this trend. there approvals. he was at GE Healthcare. under the Over the last 15–20 years. single company or entity. E: nick. Innovation is now accessed from within pharma. a $15 billion unit of General Electric. Review Empowering Virtualization.giannasi@oracle. R&D pipeline.2 billion. or collaborating with therapies in the same year. The industry is changing—large-scale even from sources traditionally thought of as ‘only’ service providers. the increasing virtualization of R&D is expected to help achieve from scientific or licensed partners. with a multitiered network of innovation that traverses and clinical development partnerships. Consequently. was generally performed within the walls of one while the number of new drug approvals has been flat or declining. Before joining Oracle in 2006. Washington. Support. IT-empowered data/knowledge management will not only drive efficiencies but also facilitates the much- needed push for innovation in the industry. fully integrated ‘within-a-company’ business models are being such as contract research organizations (CROs). His career also includes success at a number of smaller bioinformatic companies. companies such as Shire these factors all point to a real need to improve efficiency. multiple entities—commercial and academic—with a coordinated research or development goal. and much-needed cost savings. Active relationships with CROs with Clinical drug development as it currently stands is too complex and excellent credentials in site management/patient recruitment in specific too costly. and Research and Development. together with a global network of clinical development sites. Marketing. Dr Giannasi holds a PhD in population genetics and a first-class bachelors degree. Enabling Next-generation Pharma Nick Giannasi Nick Giannasi is Vice President of Life Sciences Product Strategy at Oracle. This is exemplified by the figures showing with other companies who may have best-in-class capabilities across the biopharmaceutical R&D spending in 2008 to be around $65. The innovation the recruitment and management of global clinical trials. Within the core functions of pharmaceutical research and development (R&D). such as aspect of drug development also needs to be seriously addressed. for example oncology specialists.pdf (accessed January 2010). He led a global team for Sales. where he was Head of the Informatics Business and Director of Business Development and Licensing Discovery Systems. DC. integrated. or vaccines. as well as being a member of the GE Healthcare Strategic Marketing Executive. from academic centers. Rather than confining creativity to one It is difficult for any single company to be excellent at research across physical place where all the core activities are conducted. measures such as site consolidations having run their course. and earnings pressure— In the current biopharmaceutical space. resulting in greater outsourcing across the value chain. The failure to produce the innovation warranted by the has been an increasing trend by certain companies of establishing a enormous R&D spend has precipitated the search for external. In the biopharmaceutical industry these model is very much a kinetic network of research centers or skill difficulties are made more complicated by the specific intricacies of this centers. represent one extreme of the new paradigm—it has embraced the 1. With the increasing recognition that Enhanced productivity through better innovation is needed to innovation can come from a wide variety of sources. This scenario includes partnerships with academic yet the US Food and Drug Administration (FDA) approved only 24 new medical centers. the new multiple therapeutic areas. ‘best-in-class’ presence in a specific therapeutic sector by partnering complementary innovation.

collaborations with academic centers2 and CROs. laboratory data. Nat Rev Drug Discov. Current bandwidth longitudinal clinical data have the potential to expedite the limitations can affect the ability to move large volumes of data and development of targeted therapies in terms of both patient data types. Another important challenge relates to data Screening for disease-specific biomarkers not only aids further governance. 3. This model of research is in its infancy but patient-reported outcome (ePRO) data. in particular in the US with recent changes in the administration and the announcement of new stimulus packages in Data Logistics and Networked R&D the form of the Health Information Technology for Economic and A consequence of the drive to increase productivity that is affecting Clinical Health (HITECH) Act. across the world. almost on a recruitment and specific sub-populations for clinical trials. weekly basis. and academic enable more collaboration between healthcare organizations and centers alike is the tremendous volume of data that is generated and pharmaceutical companies. research organizations. Providing a good solid audit trail across several networks development of international integrated R&D networks. 2. and little re-use of information Trial design Investigator recruitment/ assistance management Data Clinical data collection Drug supply management Patient recruitment/ Reporting tracking and enrollment tools management Data Document Regulatory listings and image Statistical affairs management programming Laboratory data Laboratory data Document publishing/ Electronic Faster decisions management electronic submission data capture Statistical/ Trial data clinical reports Medical term Patient education/ coding capture remote monitoring Investigator clinical Protocol Clinical trial monitoring implementation. and AstraZeneca represent the middle ground. database management system Statistical creation/mapping. healthcare. focused need open standards. semantic tools will be required to make sense of approach.3 Merck has also started to implement its own virtualization strategies. and Singapore. Pfizer and Crown Bioscience announce a collaboration to research and develop new treatments for Asian cancers. Hughes B. the use of EMRs can facilitate targeted this situation is generally improving across the world. The utilization of such tools will certainly Wyeth and its re-organization of research groups into small.pfizer. and medical images.com/portal/site/pfizer/ index. Research will have a more patient- processed (see Figure 1). with or entities is critical. Data sets from a sub-population or from these increasingly large volumes of data. Companies also presents a significant challenge. At a basic level. the company has not Level Seven (HL7) and the Clinical Data Interchange Standards neglected the virtualization strategy. There have certainly been signs of an increasing the emerging high-quality and highly educated personnel available adoption and implementation of electronic medical records (EMRs) in lower-cost centers such as India. This is one of the largest challenges for the R&D starting in the home base and expanding through the industry. Drug development is evolving from a laboratory-based model where chemical entities are discovered that might have an effect to The global trend is one of more research centers outside of western one that makes greater use of data from patients and translational Europe and the US. inefficient process flow. 2009. and has pursued active Consortium (CDISC) projects. The greater use of patient data will biopharmaceutical companies. Companies such as people can access and share these data across different companies Novartis. Pharma pursues novel models for academic collaboration. China. Finally. This aspect of virtualization also capitalizes on methodologies. a key example Meeting the Demands for Virtualization in R&D being their External Discovery & Preclinical Sciences (X-DPS) group.jsp?ndmViewId=news_view&newsId=20091208006647&newsLang=en (accessed January 2010). However. such as those being developed by Health scientific teams as a means to innovate internally. 12 VIRTUALIZATION IN PHARMA R&D . GSK. Site initiation/ analysis queries Portfolio Patient management/ assessment diaries reporting Adaptive trials virtualized R&D model since its conception. However. The challenge is how to manage effectively centric approach. notwithstanding Pfizer’s recent acquisition of all of the data relationships. such as electronic data capture (EDC) and electronic population and disease. trial supply has tremendous implications for future drug development and information. Available at: mediaroom. 2008. there is the issue of data such as Pfizer and Merck & Co represent the other end of the spectrum. or data providence—ensuring that only the appropriate patient differentiation but also helps from a safety perspective.Review Figure 1: Clinical Development—The Landscape Today Silos of activity.7:631–2. To be able to share data effectively and leverage vast with R&D structures evolving historically through a consolidation information sources. integration. across global networks.

with robust communications layers based on open are made more quickly across the sequential elements of the R&D standards that can communicate with other applications will facilitate pipeline. healthcare institutions. historically. The collaborative use of these data by management Intranet healthcare institutions and pharmaceutical and life sciences Laboratory data Medical term coding organizations offers potential benefits. reporting. Traditionally. Empowering Virtualization. the overall pipeline will benefit from less costly failures in communication between formerly silo-ed databases as well as later phase II/III development. intelligent software. Importantly. The constraints of geographic distance and dispersed organizational inherent inefficiencies of silo-ed databases are counter to effective structure can be overcome by the strategic deployment of IT knowledge sharing. The limitations of these legacy to inform business decisions has become customary in other sectors. are not being leveraged for full competitive optimized quickly when business demands change while enabling advantage. While the use of data-mining techniques developed to serve these silo-ed data. data aggregation and clinical data warehouse tools such as Oracle’s Life Sciences Data Hub (LSH) allow the rapid This third option is a process-based approach and is a hybrid of data consolidation of data from multiple sources into a single warehousing and the federated approach. and is designed to support tools is supported by strong identity management tools that allow changing environments through workflow to automate business for secure sharing of data across networks and between internal and processes. scalable technology platform that can be improvement efforts. As the data sets grow in size and thus value. rather than days or weeks. Document and image Statistical management analysis A Dynamic IT Infrastructure—Tools for a Patient Trial data Leaner. These tools dynamic event-driven processes. and leveraging these insights can speed of processes within the R&D pipeline. These data. especially in the US. The increasing digitization of patient medical Central view of tools Outsourced aggregated records. driven by initiatives such as the HITECH Act. Currently. systems are a barrier to the virtualization of R&D because the the use of historic patterns to predict the future is currently not so VIRTUALIZATION IN PHARMA R&D 13 . A process-based environment where they can be analyzed. where data come through a set of dynamic management of disparate data sources. providing another option to the federated or data warehouse approaches to data aggregation. earlier. Shorter Development Cycle diaries capture Secure intranet With the increasing globalization and virtualization of R&D through outsourcing and offshoring. The integration of middleware-based messaging provides external users and enable collaborative development. visualized. will need the and managed information Clinical trial implementation of information technology (IT) tools that will ensure management data accuracy and aid data mapping. and the extension of New processes will generate greater amounts of data. such processes can translate to cost savings—if the go/no-go decisions as the LSH. thus. Sharing Data—Improving Knowledge Analytics is not simply a function of math or statistical analysis. data have been resources. and processed more integration with source systems and data structures and enables the efficiently. Both options present data to the user as a the mobilization of information across various projects. data sets from real-life databases. Moreover. Ingenix. aggregated. efficient a federated approach. and reported approach allows data views into source systems and scheduled on (see Figure 2). Analytic applications can help to provide deeper the leverage of valuable data assets that will improve the quality and insights into captured data. This if not effectively shared or used for reporting and performance will create a flexible. Moreover. The use of adapters allows will allow data to be integrated. from data integration to links to disparate sources. such as improved analysis of Drug supply the efficacy of different therapies across large populations and Reporting predictive modeling. for instance IMS Figure 2: Integrated Clinical Development Disease Analyzer. more evolve. limitations. from greater internet access through to superior Analytics for Delivering Efficiencies hardware processing. Another benefit is the layering of business intelligence intelligent loading of data. these standards can co-exist and interoperate informed decisions. and enables organizations to adopt emerging standards such as CDISC stronger testing of hypotheses. Support for interoperable data models and analytic tools that will allow much more efficient. are showing a willingness to Clinical data leverage EMR data. computing capacity by virtualization of computing resources. if the nature of the queries changes as the data with advances in processing power could translate to a leaner. enhance processes. data have been locked in silos and aggregated centrally—the data warehouse approach—or handled by enterprise-wide IT resources underutilized. the system may not be optimized to meet these changing efficient pipeline. The flexibility offered by clinical data warehouse copying of data to a central repository. Results can be obtained in minutes or hours with company-wide standards. Data warehouses are built for queries based on static semantic data management. The implementation of clinical data warehouse tools. However. and CEGEDIM. Applications were results of that data analysis. Increased speed and the time savings in demands. will facilitate single data source and both systems have their advantages and decision-making. which in turn will translate into more and HL7. and analysis tools together hierarchies. but The traditional approach for many organizations has been to build the use of data to arrive at optimal decision-making based on the data silos in separately owned domains. Enabling Next-generation Pharma Increasingly. provide valuable proactive pharmacovigilance information. effective innovation can be achieved only with effective knowledge and technology transfer. IT infrastructure is evolving and advancing exponentially.

Here ownership by replacing multiple analytic systems with a single there are yet more valuable data that could be brought into play. from reasons for this. developed to the right individuals at the right time to enable them to make on secure and scalable infrastructure. from IT specialists will enable researchers to focus on extracting industry partners. and patients. implementation of a worldwide network with R&D activities located listings.Review widespread within the pharmaceutical industry. The layering of analytics on top of a Delivering Virtualized R&D global data repository framework will reduce the global programming The virtualization of R&D has begun. blinding and unblinding. different process flows and break down traditional silos. n 14 VIRTUALIZATION IN PHARMA R&D . These technologies. and enable more informed decisions more quickly. report execution. workflows. The vision is the Data repositories that can be maintained by clinical programmers integration of life sciences and healthcare to provide an economically and statistical programmers without the need for constant support sustainable model that benefits the biopharmaceutical industry. immediate rapidly and establish collaborations with external partners. We are beginning to see the effort by providing a standard environment for generating the tables. easily accessible pooled patient data in a useable format is a distant A process-based approach can reduce the overall cost of IT systems reality outside its confines. including regulatory constraints. although the aspects of the arguments for and against accessing this metadata management. While these systems are within reach in the pharma environment. This integrated network can be sliced for formal reporting and ad hoc visualization. access multiple To further empower the end user. There are valid scientific knowledge across the entire development portfolio. integration and reporting system. overcome if we are to use these data to improve outcomes for both business decisions and patients. data are for wider discussion. from an information-centric rather than a data-centric perspective. It is the evolution of biopharmaceutical R&D. it is important to design the system parallel data sets. This shift vendors providing integrated applications based on open standards from retrospective analytics to prospective analytics will provide data and using common data elements. Applications for data integration. This real-time access enables a new kind of process improvement to virtualization is being supported by a global ecosystem of software what has previously been a more retrospective environment. Pooling of data from multiple sources globally to augment and acquire new assets. provide support across informed decisions. and figures for reports. This change is driven by the need to access global innovation. report storage and retrieval. which need to be microarrays to defining population subsets. such as in hospitals and surgeries. As well as structure utilizes flexible units that are able to take decisions more enabling deeper insights by leveraging the available data. and data visualization can all be built into the framework.

Nevertheless. therefore. Prior to joining Merck. We is necessary to develop a strategic. there has been a steady decline in new approvals. The trend since the network (FIPNet) model that relies on a highly networked. or both. or both. external influences such as been less efficient when performed as an extension of the larger pricing pressures and generic substitution of major products losing organization. the current numbers. Certainly. The X-DPS research team. pricing pressure from payers and healthcare systems. integrated network of external need to examine this further. Thus. It could be argued that the peak seen in 1996 was an anomaly due to several A recent Merck initiative has been the creation of the External factors—not least the introduction of the Prescription Drug User Fee Discovery & Preclinical Sciences (X-DPS) group. The general consensus is that the pharmaceutical industry is under of the fully integrated pharmaceutical company model (FIPCo). Mr Golestani has a degree in management science from Massachusetts Institute of Technology’s Sloan School of Management. partnered 1970s has been a fall in the number of products originating from infrastructure. needs to be addressed by re-defining the approach to drug discovery In 2008. leadership of the company’s technology architecture as Senior Director of IS Architecture. the substantial impact on given company? revenues from major patent expirations. Industry players are now recognizing the need to re-think and transform the R&D model by building a ‘virtual lab’ that utilizes internal research. Since the high of revenues in 2008 were derived from alliance products and patents 1996. defined areas of medical interest. and is a co-founder of Cross Road Technologies. Massachusetts. research and development (R&D) organizations have recognized that creativity and innovation need to come from multiple sources. The well-publicized decline in the R&D productivity curve over Merck—the company has entered into more than 250 significant new the last decade running in parallel to an almost constant increase in alliances in the past five years and about 65% of the company’s the cost of R&D paints a most worrying picture. he serves on Intel’s Enterprise Advisory Board and the PhRMA Foundation Informatics Advisory Committee. real estate. cost of R&D had increased three-fold for the same period. with IT responsibility for all areas of R&D including basic research. Technologies that are now in their infancy. at the same time. external collaborations. When you Creating a Global Network of External Expertise examine these pressures closely. It is much more difficult to Declining productivity despite major increases in investment in R&D maintain a strong pipeline when innovation comes from only one is the crux of many of the problems facing the industry today. Additionally. it is important to reiterate a Engaging and collaborating with external expertise has traditionally number of key points. and regulatory pressures. Inc. Mr Golestani was responsible for establishing and managing strategic client relationships from business development through to consulting services engagement delivery as a principal with Oracle Corporation’s consulting practice. whether it comes from internal research. © TOUCH BRIEFINGS 2011 15 . public affairs. unprecedented pressures: diminishing returns despite spiraling where the majority of core functions are fully controlled by a research and development (R&D) costs. spanning target identification through to post-marketing trials/pharmacovigilance. pre-clinical. portfolio. To create a more effective environment for innovation it patent protection will have a significant impact on revenues. however. Review Re-thinking Pharma R&D—The Merck Experience Clark Golestani Clark Golestani is the global head of IT for Merck’s Research and Development (R&D) division. industries questions: How do we respond to cost pressures? How can we more such as defense and aerospace have already undergone similar effectively leverage the innovation that is being generated outside successful transformations. especially in the context of partners. eBusiness. the ethos is to build a of average R&D cost per new approved drug. His previous responsibilities include leadership of Merck’s global IT capability supporting finance. While partnerships and alliances are not a new concept to R&D. such as semantic technologies. Undoubtedly. and various leadership and management roles within Merck’s research laboratories as IT Director. in terms extend the company’s research capacity. The X-DPS aims to Act (PDUFA)—and that the recent decline is a natural reverse to build on the recognition that access to external research can greatly more historic averages. procurement. This trend has led to organizations and encompass the entire R&D value chain from early many of the larger R&D organizations asking the following discovery to late-stage clinical development. and information security as Executive Director of IS Global Computing Services. leadership of the company’s global computing services. when the US Food and Drug Administration (FDA) approved (based on 50/50 split of joint ventures)—the wide range of challenges 53 new medicines. legal. leadership and development of the company’s IT strategy. HR. Reliance on a single source for innovation is an obsolete model. yet the and development. source.. clinical. the number of new approvals was half that of 1996. may yet prove to be the solutions for the challenges created by the need to effectively share and exchange the growing volumes of complex data. the number advantage of the innovation that occurs outside of the larger R&D of external deals has been on the increase. site services. in Cambridge. The networked model is a reality that can take ‘internal’ R&D efforts (see Figure 1). and enterprise architecture as Chief Architect. is a move away from the Compounding this issue is the fact that the industry has not been old FIPCo model and toward a fully integrated pharmaceutical able to innovate its way out of the problem. and related shared business services operations as Vice President of Corporate IT. To plug the innovation gap. show that the formula ‘virtual lab’ by mounting the best scientific program possible in is not sustainable. and regulatory areas of the company. external collaborations.

The intention behind that initiative was science and innovation as a means to expand the scope and size recognizing that there would be many third parties that needed to of Merck’s early pipeline. and pre-clinical sciences support. PartnerNet was created as a model by sharing. the business process specific to the partner’s requirements and access Examples of these partnerships include Piramal Life Sciences/Merck privileges. the partnerships now access to information. The R&D strategy is intended to collaborate on research projects. there has been a move away from the traditional service data allows transformation of those data into knowledge. and increased flexibility not only with academic partners but which this network could be extended to third parties to open up secure also with biotech and contract partners.deloitte. The group’s goal is to deliver 25% of Merck’s either share information with the organization or would require access early pipeline from multiple external sources within the next three to to relevant information from certain areas of the business process. expertise. A Strategic Partnership. This is a vision that is already in full-time equivalent (FTE)-based relationships. marketing. to one knowledge created cultivates innovation and expedites the that is more strategic: contract partnerships or strategic sole-source development of safe medicines. has brought chemistry. the partnerships are designed to share the business provided to various partner organizations. PartnerNet has expanded beyond the initial financial incentives. with Wuxi developing custom libraries for Merck.pdf Merck was an early adopter of the concept of knowledge sharing as a means to foster innovation. and it has evolved over the years as focusing on bacterial and fungal infections). Not Just a Service Supplier The creation of integrated networks supported by easily accessible Increasingly. These partnerships are progress. target of the company’s research division to a platform that is also utilized by Merck’s sales. In its simplest form this would be the secure Sharing Risk sharing of emails and files. Certainly. in and of itself. the network has allowed stakeholders to (a drug discovery program through proof-of-concept in oncology) share information in real time against a core repository. reflect the drive for innovation by taking advantage of external Merck’s partnership with the H Lee Moffitt Cancer Center & Research specialized skills. with Merck providing technologies have matured substantially since the inception of scientific input and access to Merck resources and expertise. a critical issue will be to 1970 1980 1990 2000 ensure that. in its most complicated form sharing would Looking beyond cost savings. Additional benefits 50 include greater efficiency and productivity through reduced procurement and monitoring of contract research organizations (CROs). More importantly. These collaborations are enabling technologies have matured. The advent of the worldwide risks of the R&D processes. including drug metabolism and pharmacokinetics (DMPK) and scale- 75 up. 2004. Wherever one is able to collaborate on and drive greater contract service providers to reduce costs. lines of communication. That. which has allowed for a much richer set of services to be Additionally. risk credentials to access databases. Furthermore. The research collaboration between transferring substantial volumes of data between the organizations to the two companies is focused on accelerating drug discovery further drive research in oncology. over a decade ago. The lifeblood of the pharmaceutical R&D process is about more than just utilizing the specific capabilities of third-party information. The five years. information is shared Year of product introduction correctly and efficiently. This agreement has now evolved into the current contract 100 partnership. PartnerNet has needed to constituents to advance lead optimization programs. customized early discovery program that is aligned Percentage strategically and operationally with Merck’s goals. The objective of the program is to provide an external streamlined. A good example of this Institute (MCC) is a clear example of PartnerNet’s pivotal role in type of relationship is Merck’s research collaboration with the Chinese facilitating this type of relationship. enabling anyone with the right support an environment that encourages open collaboration. many of the global collaborations and enable full access to applications facilitating participation in the part of partnerships are designed to drive creativity and innovation. The original evolve and expand to handle much more complex data types as well 16 VIRTUALIZATION IN PHARMA R&D . The MCC partnership involves company Wuxi PharmaTech Ltd. with the implementation of the ‘PartnerNet’ The X-DPS group is designed to focus explicitly on external sources of Network. PartnerNet is and Orchid/Merck (a drug discovery and development collaboration still very much in existence today. Deloitte Research.com/assets/DcomFrance/Local%20Assets/ Documents/Growthstrategiesbiopharmacompaniesfeb2004. networking driven primarily from the partner R&D facilities. with Merck often retaining late web and web applications has also facilitated knowledge-sharing development and commercialization rights and the partner receiving processes. Available at: www. with Wuxi providing Merck with dedicated teams of research chemists. within that network of collaborators. The partnership with Merck also helps Wuxi to gain world- 25 class experience. and financial departments. biologists. Adapted from Growth Strategies for Large Biopharma Companies. The provider relationship. The X-DPS group is also aligned with Merck’s internal R&D Internet-based virtual private network (VPN) allowed Merck scientists to strategies and pipeline priorities. focused primarily on cost performance. including creation of new drug discovery libraries and some challenges in sharing those data. PartnerNet. one may then fuel greater advances in R&D. and resources. This enabled Merck and its partners to share information in several ways. Breaking Down Silos to Foster Innovation 0 For the integrated network model to work.Review Figure 1: The Percentage of Pharma Products Originated agreement between the two companies was based on the traditional In-house is Declining third-party supplier model.

Integration of operating procedures and organizations could be facilitated by semantic technologies that enable systems will help to facilitate the creation of the networked model better connectivity and integration of the information chain. There are many parallels to movie-making in the more flexibility in data modeling and data management. the with collaborative partners is a business model that may be more application of semantic technology could drive business improvement sustainable for the pharmaceutical industry. Currently. the film industry is an extreme researchers reach novel insights from large volumes of data. of semantic technologies is to leverage information that is not easily. easily and effectively future. The promise complex project where the ingredients. Creative collaborations by capitalizing on the networked business models. The MCC partnership also sets a precedent In the area of semantic technologies. as the technology and standards mature. The Promise of Semantic Technologies As mentioned previously. Merck has collaborated with in that it breaks down silos between pharmaceutical and medical Cambridge Semantics. Each clinical Looking at the future landscape. with large cap companies bringing together independent units to supply the innovation. Thus. thereby allowing much can still be a failure. by their very nature. Today. The sharing of both rather than straightforward transactional relationships are also likely to transactional/structured and semi-structured data across a network of help to drive innovation. Further ahead. hard to standardize. Re-thinking Pharma R&D—The Merck Experience as greater data volumes. the project found that Merck and substantial infrastructure to capture clinical data for study. and deliver greater value. the data to support R&D create specific The Last Reel—The Future Landscape challenges in themselves. version of a networked model. Within technology it will be essential for the industry to think about how to this framework is often a financial risk and reward-sharing model. To exploit the capabilities of the together various specialty companies to produce that movie. EHRs may become the electronic data exchange can often be a hurdle for many pharmaceutical source of data that drives clinical research. n VIRTUALIZATION IN PHARMA R&D 17 . clinical research requires the building of Semantics’ Anzo semantic engine. complicated and. standardized in a strategic way. This needs to be re-addressed so that the risk is domains to enhance knowledge insights from the vast amounts of data not so disproportionate. The exchange of clinical and biomarker data between examine whether semantic technologies can improve the company’s MCC and Merck is an example of the potential future of drug ability to share data with external partners. This complexity is an industry. and reduce cycle time. the setting. with the major studio bringing the technology is still in its infancy. Using Cambridge development. an analogy can be made to the film trial may also have unique data capture needs. the data are quite often very leverages third-party expertise is an important step for the industry. the pharmaceutical The networked business model holds incredible promise for semantic companies take on the majority of the financial risk in terms of technology. The proof-of-concept project has been to communities. The production of a movie is a highly complicated and issue that is very specific to the pharmaceutical industry. can be world-class. Data sharing and become much more pervasive. organizations. In leverage the technologies in a more practical and pragmatic way and the future. or and the script. The focus now is to apply the technology to scientific investment in R&D. However. yet at the end of the day the movie cannot be fully. Notably. The biology of disease is a moving target The move toward a networked business model that strategically that changes on a constant basis. The shared financial risks and shared rewards generated. In the its research partners could manage the ontology. and semantic technologies may be the potential solution to this costly bottleneck. the pharmaceutical industry may reflect this business create enterprise-level semantic solutions. such as the actors. This can help pharmaceutical industry. model. as clinics automate and as electronic health records (EHRs) upload the data effectively.

The ability to harness R&D practices and seeking to transform how it discovers and information has already transformed many other industries.lancksweert@gsk. Information Poor have evolved over time and. sharing. medical. data to enable regulators to approve major impact on productivity. and government regulators to seriously examine an industry once admired for its contributions to society. technical scientific domain leads. and a key sponsor for the Simplifying Clinical Development program. process. analysis. Ever-spiraling drug prices. is the lifeblood of the improved efficiency and data quality. Yet finding. from develops novel and more-effective medicines. and its profitability and growth undertake a clinical study. the customization of these biopharmaceutical industry. particularly for all aspects of the design and integration of the many systems in which GSK is investing. and information analysts to understand business needs. he was part of Accenture’s consulting practice for the Life Sciences & Healthcare Industry Group in the UK where he led the implementation of new processes and systems across many of the world’s largest pharmaceutical companies. while GSK’s systems have significantly Information. Compounding these challenges is the widening gap between R&D expenditure and the number of new drug approvals. accessing. Peter Milligan. They are the endpoint of every experiment that is performed. Data are the major asset created in systems to functional needs has not encouraged standardization. involving different types of change (people.dement@gsk. and Robin Dement Alex Lancksweert leads Simplifying Clinical Development. R&D. and recent warnings about popular prescription medications have caused doctors. new safe and effective medicines. EvaluatePharma. reports. product recalls. The term has also been used to describe the unprecedented convergence of economic. investors. execution.com Peter Milligan leads the IT aspects of Simplifying Clinical Development. scope IT projects. and retrieves clinical trials data. A number of leading proactive monitoring of credit card transactions to prevent fraud to companies are revisiting how information technology (IT) systems can the mining of daily transactions to transform supply chains and streamline the processes of collecting. data to demonstrate the innovative value of medicines to payors. With its image under assault. and political forces which have converged on the pharmaceutical industry in the 21st century. He has considerable experience in business performance improvement and change management enabled by new technology and has led a number of major performance improvement and cost reduction projects during his tenure at GSK. enterprise architects. social.milligan@gsk. multiple logins and throughout the drug discovery and development process—data to other sources of redundancies and frustration—all of which have a progress a drug candidate. E: alex. Common reported difficulties included: entering the same data into They are the basic ingredient to making informed decisions multiple systems. E: robin. and added pressure on GlaxoSmithKline (GSK) make to investigators and patients when they resources. storing.com Journalist and author Sebastian Junger called it a “Perfect Storm” when three major weather-related phenomena converged off the coast of Massachusetts in 1991 to create a cataclysmic tempest. along with innovation. It can also be the source of new prospects under pressure. He led the diagnosis effort preceding the investment in Simplifying Clinical Development. higher R&D costs. patients. by doing so with greater transparency and openness about the way they operate. a critical change program to transform the way GlaxoSmithKline (GSK) collects. Ensuring the appropriate governance and healthier pipeline and a larger number of potential submissions is integrity of these data is part of the commitment companies like more concurrent trials. and will enhance pipeline with some 38 projects in Phase III. Clinical and Regulatory IT.m. Prior to joining GSK in 2003. and data to assure patients Compounding these challenges for GSK is a healthy development that the approved medicines are safe. and to coordinate with the heads of R&D IT Delivery & Support to ensure high-quality services and solutions are delivered. implementation. archives. and regulatory systems used in Development. organizing. As is the case at many valuable industry. and standards) over a prolonged period and designed to deliver twice the current output of regulatory submissions per year. To meet its stated intent to run twice as many late-stage 1.s. the industry is critically re-examining its innovation and increased productivity. 30-Apr-2010 (Source: PAREXEL’sBio/Pharmaceutical R&D Statistical Sourcebook 2010/2011) 18 © TOUCH BRIEFINGS 2011 . marketing practices. along with the thought leader for the strategy and design GSK is now executing.1 The drawback of a their quality of life. manual reconciliation of data.Review Technology and People—Shifting the R&D Paradigm at GlaxoSmithKline Alex Lancksweert.  Peter began his career at the Wellcome Foundation in 1989 and has led the design.  E: pete. and using this information can be a restore the public’s faith in the integrity and motivation of this time-consuming and cumbersome activity. regulatory. technology. She currently leads a global team of business analysts.com Robin Dement is the Vice-president of Oncology. many of the information systems involved in the planning. effective. pharma companies. and support for many of the clinical. and submission of clinical trial data Data Rich. and analyzing data to improve R&D productivity and.

aggregate. using these data to make Simplifying the Clinical Information Landscape better decisions. GSK’s vision for a simpler clinical development landscape is for a more streamlined. simplified environment with fewer. and monitoring Variable sourcing New capability Clinical supply management Safety signal management Safety case detection logistics Randomization Medical images Existing capability Sample allocation Treatment eDiary Labs programs with the same amount of resources. and accessible. such as those developed by the Clinical Data Enabling the more efficient acquisition and re-use of data is an Interchange Standards Consortium (CDISC). internal/external portal and site communications Integrated project planning and demand management Study and result disclosure Integrated clinical development Clinical Pharmaceutical materials partnership and clinical trial Clinical standards Clinical tracking and and management information and reference Medical writing respository management environment Study design Standard variables definition In-stream review Transforms/derivations Data transformation/derivation Submission Screens/checks assembly Long-term storage Master data management Reporting and output management Core capability Term coding Statistical analysis and modeling Data sharing Integrated electronic data capture. and and access data. An environment of data from system to system. www. By taking a clean-sheet approach to its clinical information landscape. and make more-informed simplifying its operations. perhaps even address queries. re-use. off-the-shelf systems that information has been accompanied by a comprehensive and on-going will enable GSK to more easily support the externalization of R&D overhaul of several of GSK’s key data acquisition systems. “GSK Goes Back to return on investment”. contract research Electronic Data Capture (EDC). which enables GSK to unlock the potential of the accumulated research data and enable its It is against this backdrop that the Simplifying Clinical Development scientists to leverage research performed on related compounds to (SCD) program was launched—one of several key change initiatives validate findings. better. and where data are information blueprint that provides a comprehensive view of the flow captured once and then used many times. analyze. and raise the return on organizations (CROs). run additional trials. integrated “best of breed” systems that create a seamless end-to. SCD is a but ultimately to more patients having earlier access to new and five-year change program designed to transform clinical development improved treatment options. such as its and collaboration with investigator sites. navigate processes. finally.scrip100.3 Anchored around intricately intertwined decisions. improving the focus of internal resources on higher value scientific activities. behaviors.gsk.2 a significant transformation environment that transforms GSK’s ability to access. and other joint development partners. leading not only to faster and more cost-effective trials investments in IT. not customized. data formats. GSK is seeking to integrate its clinical development systems to allow end flow of information based on the use of common standards and information to flow unimpeded from planning through to submission. Interview with David Redfern. acquiring the right data. and standards. and share clinical trial data. namely.pdf VIRTUALIZATION IN PHARMA R&D 19 . Clinical Trials Management System 2. and. by reducing the complexities of clinical development. Chief Strategy Officer.com 3. 2010 GSK annual Report http://www. of clinical development practices is required.com/investors/reps10/GSK-Annual-Report-2010. differentiated medicines. GSK is focusing on three areas: accelerating the delivery of new. processes. stored. This effort to define the flow of consisting of configured. An investment on R&D from 11 % to 14 %. An environment where it will be easier to find diversifying its business. Technology and People—Shifting the R&D Paradigm at GlaxoSmithKline Figure 1: Blueprint for GlaxoSmithKline’s Simplification of Clinical Systems Business intelligence. without the need to designed to deliver the three GSK strategic priorities. and To deliver on this compelling vision. data management. delivering more products of value. making sure they are consistently organized.

After all. accurate tedious data manipulation tasks. longer. GSK is also seeking to future-proof its investment to processes can be mandated. behaviors cannot. This is the environment GSK’s SCD hard-to-detect safety signals by pooling data across multiple trials. more effective collaboration between GSK and its vendors. amplifying delivery of new quality medicines. feel better. and for the change to clinical trials. and Interactive Voice or Web Recognition system (IV/WRS)— Investing in Cultural Change many selected following real-life evaluations of alternative vendors. Its goal is to become agnostic to the particular data become sustainable. or program is seeking to create. and live longer—a goal we can all get behind. and reduced effort on flows from beginning to end.Review (CTMS). SCD requires a cultural change. simplifying its problem—some of the many ways GSK anticipates being able to mine operations. architects. along with people. at GSK. acquisitions. acquisition vendor or system used by its partners. to common information models and common processes designed to seeking peer input. but technology alone cannot deliver the to collaborate with GSK to help it avoid the costly customizations that scale of meaningful change required to transform clinical development today constrain its flexibility. GSK is investing heavily in these leadership skills. or CROs. While systems and environment. calculators changed the way we did math. the program is uses to analyze. and delivering GSK’s challenging and inspiring mission of this treasure trove of information while protecting the health and improving quality of life by enabling people to do more. halving the effort of current activities to applying advanced analytics to detect a problem before it becomes a meet its goals of delivering more products of value. However. n 20 VIRTUALIZATION IN PHARMA R&D . To deliver on the reflect the ways in which it is partnering and collaborating to execute promise of simplifying clinical development. This vision is seeking to ensure that those impacted by the change are its already being put to the test. interoperable IT Developing this cadre of leadership takes time. wellbeing of patients. and the internet has systems. A New technologies imply change—typewriters changed the way we process which was designed to ensure the selection of “best of breed” wrote. where access to relevant. and interpret this information. In developing its vision for a more flexible. as well as to assess the ability and willingness of the vendors changed the way we work. A Brave New World The benefits of its investments in streamlining how it acquires and Information. some of the less tangible information to make informed decisions with clarity and confidence is benefits associated with unlocking the ‘nuggets of gold’ buried in the the norm. where the accumulated results of clinical studies are readily data offer the higher-value rewards: validating new toxicology screens retrieved and mined for insight that will eventually lead to the to reduce the need for studies involving animals. not the compliance. The decision to establish closer. and in bringing the organization along throughout the change while still being able to efficiently integrate the data with the systems it process. a new style of leadership. of its people to planning. is the most valuable resource a stores data are clear: reduced cost of ownership. Through broad business engagement. Imagine a world where this information delivery of higher-value scientific activities. as much as IT systems can tweak the environment lasting collaborations with fewer vendors has led to joint investments in it is the commitment. review. increased focus on pharmaceutical company has. and to becoming more rigorous and disciplined enable the seamless exchange and integration of data and facilitate a that will transform clinical development at GSK.

PERABI INTERO ATION LLABOR AND CO NG PPORTI ION-SU A DECIS URE CTMS: THE FUT E FOR ENGIN Travers Karen TRIAL HE NICAL TEM—T THE CLI NT SYS GEME E HUB MANA IGENC L INTELL CENTRA Levy Henry A: OF M& WORLD IN THE TIONA L CTMS OPERA GING MANA ENGES CHALL er pher Heid Christo ILITY. PPD and other principal industry leaders. sanofi aventis. interoperability and convergence embody the new digital ecosystem in the biopharmaceutical and healthcare industries. Amgen. Redwood Shores. provide unique insights on the key issues affecting the new healthcare paradigm and the biopharmaceutical R&D value chain.COM S SC IENCE HEALTH OWER THE P MS OF CT ATION. TH: FLEXIB GROW AL GANIC CLINIC AND OR GES OF ALLEN IN THE CH NAGEMENT TRIAL MA PHIES GE OGRA ING EMERG Shelley Lynda om visions. Oracle Corporation 500 Oracle Parkway. Quintiles.com/healthsciences .com HEALTH SCIENCES www. these reports set the future agenda for healthcare and life sciences executives. CA 94065 hsgbu_ww@oracle. Pfizer. GlaxoSmithKline. WWW. INTEGR LITY. With contributions from Merck. published in collaboration with Oracle Health Sciences.c ciences healths Connectivity. PERAB INTERO ILITY.HEALTHSCIENCESVISIONS. This series of expert-led reports.oracle.

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