Thinking outside the lab

Biotech is tapping pharma marketing skills as more products are approved.

Biotech is tapping pharma marketing skills as more products are approved.

The biotechnology industry's years of uncertainty are not over yet. The outlook is bright at the moment, but industry analysts and veterans - aware that historically, biotech has fluctuated in five-year cycles - continue to proceed with caution. The unprecedented presence of the pharmaceutical industry in this upturn, however, is changing the way the 25-year-old sector communicates, leaving some wondering if the current high will last longer than the ones that came before it. Increasingly, pharmaceutical companies - with cash in their pockets and big sales forces, but dried-up pipelines - have teamed up with innovative, science-minded biotechs that often have limited funding for development and marketing. Even biotech firms that have opted out of co-promotion deals have felt the presence of the pharma industry, as the growing number of FDA-approved biotech drugs has demanded more product-focused, or pharma-like, communications strategies. "Two years ago, the corporate story was very difficult to separate from the product story, because the company's story was the product story," recalls Amy Flood, associate director of public affairs for Gilead, which recently received approval for AIDS drug Emtriva. "Now that there are drugs, branding the company is its own focus." By the end of June, the AMEX Biotech Index was up 27.64% for this year. And according to a report by Burrill & Co., a life sciences merchant bank, in the second quarter of 2003 alone, biotech raised nearly $3.8 billion in financing, and an additional $2.2 billion in partnering transactions. The report cites "the good news coming out of the FDA" as a major contributor to investor enthusiasm. Since taking the helm in November 2002, FDA commissioner Mark McClellan has committed to accelerating the agency's new-drug application process. Just last month, at the Biotechnology Industry Organization (BIO) conference in Washington, DC, he vowed to reduce the median review time for drugs by 10% over the next five years. On average, this means the review time could go from 18 months to 16 months, while drugs for diseases with no treatment - or priority drugs - that are generally viewed in about six months could be reduced by several weeks. The commissioner estimated that the approval process for each new drug would cost $12.8 million less. Whether McClellan will follow through on his promises in the long term remains to be seen, but if the second quarter of this year is any indication, signs are hopeful that he is a man of his word. In just three months, the FDA approved seven biotech-based drugs: Bexxar for non-Hodgkin's lymphoma, Xolair for asthma, FluMist for influenza, Fabrazyme for Fabry's disease, Iressa for lung cancer, Velcade for multiple myeloma, and Aldurazyme for Hurler-Scheie forms of mucopolysaccharidosis I. Proof is in the pipeline Most people handling communications for biotechs acknowledge the benefit of an efficient leader at the regulatory body, but feel that success ultimately lies in a company's pipeline. "Sure, the FDA's current language is all beneficial and gives investors confidence," says Mary Bennett, SVP of operations and communications for Inspire Pharmaceuticals, a Durham, NC-based biotech dedicated to developing treatments for deficiencies in mucosal hydration and mucociliary clearance. However, "The make or break of a company still comes down to whether it has a product that works." Inspire currently has development and commercialization agreements with Allergan Pharmaceuticals for two products to treat dry eyes. In fact, marketing for four out of the seven drugs approved by the FDA last quarter is being handled by biotech-pharmaceutical match-ups. Corixa is working with GlaxoSmithKline (GSK) to get the word out about Bexxar. Genentech submitted FDA materials for Xolair, but the drug was co-developed with Novartis, which will also promote the product. FluMist, an inhaled flu vaccine, was developed by MedImmune and Wyeth, which are planning to spend $50 million to market the drug. Johnson & Johnson is co-marketing Millennium Pharmaceutical's cancer drug, Velcade. In its concluding summary, the second-quarter 2003 biotech report from Burrill & Co. states, "Partnering with larger pharma or biotech companies has never been more important to the survival of biotech." As partnerships with pharmaceutical companies assist biotechs with bringing products to market, changes in strategy are needed from the agencies and in-house PR teams for both companies. Traditionally, communications for biotechs have been heavily focused on IR to get funding, and on familiarizing audiences with a company's name to prepare them for products that were not yet available. That need still exists for small, emerging biotechs with no products, but a greater number have reached the next level, which requires expertise on disseminating product messages as well. "As the biotech sector grows up, it is coming to an understanding that it's best to pick an agency with IR and product PR skill sets," tells Marcia Kean, CEO of Feinstein Kean Healthcare. "More than ever we are being asked to support business development, and offer strategies for partnering with pharma companies." Michele Parisi, SVP and director of MS&L's West Coast healthcare practice, agrees, and says MS&L anticipated this trend of biotech companies needing jack-of-all-trades PR agencies when it opened its West Coast office. "We intentionally did not create a separate biotech division because we did not want to silo ourselves," reports Parisi. "We have been operating in the space [i.e., handling the needs of emerging biotechs with no products on the market] since 1996, but we have made sure to incorporate expertise from other regions and practices as clients have continued to grow." Having more products on the market is certainly good news for biotech companies and their agencies, but Parisi also notes that it can result in new communications challenges. She explains, "Companies reaching a mature stage [such as Biogen, MedImmune and Millennium] are now coming to a point where they have to compete for share of voice with the pharmaceutical industry. They are going from being big fish in a small pond to being small fish in a big pond." Parisi's colleague, Mary Ellen O'Donohue, co-director of US healthcare for MS&L, adds, "When a sector is performing well, it is good news because stakeholders tend to pay more attention to your clients. It's important to keep in mind, however, that it means they're paying more attention to everyone's clients. You have to ride the wave, but make sure you do it strategically to avoid getting shut out." Convergence with pharma Some feel that as biotechs' profits continue to expand, their internal resources will grow, slowly creating cultures that more closely resemble those in the pharmaceutical industry. Megan Humphrey, associate director of PR for Novartis, for example, says that her company's partnership with Genentech, the second largest biotech company, for Xolair is no different than a pharmaceutical company teaming up with another pharmaceutical company. She attributes this to the two firms having "joint objectives." Gianfranco Chicco, president of Chandler Chicco Agency, agrees. "Especially when it's a larger biotech company, the challenges of working together are no greater than they are when any two organizations come together. Even with smaller biotechs, they're getting a lot more savvy in the way they do business." Besides having more drugs on the market and more robust pipelines, part of the changes in culture at biotech companies can be attributed to M&A activity in the pharmaceutical industry. When two companies join, or one buys another, it often results in staff changes. Several pharmaceutical mergers have ended with executives, equipped with a corporate approach to communications, finding work at biotechs. Traditionally, communications departments at smaller biotechs have been either nonexistent or handled by scientists who may lack marketing experience. The sector is also beginning to see some M&A activity of its own. Just last month, Idec Pharmaceuticals and Biogen agreed to a $6 billion-plus merger, which is the second largest biotech deal ever. (Last year, Amgen, the world's largest biotech, acquired Immunex for $10 billion.) "The two [the biotech and pharmaceutical industries] are really starting to take on characteristics of each other," concludes Kean. "The convergence is making it more of an even playing field, and more of an even partnership." ----- The pros and cons of co-promotion For the biotech partner: Pros
  • Creates valuable equity investment
  • Decreases costs, while still allowing for some revenue (as well as often providing some types of milestone payments)
  • Provides access to experienced sales force
  • Provides access to more experienced regulatory team Cons
  • Strongly reduces potential revenue from product
  • Often means loss of control over much of the product marketing For the pharma partner: Pros
  • Increases the pipeline
  • Possibly allows access to products that are more innovative (i.e., could not have been produced via traditional methods)
  • May decrease R&D expenditures Cons
  • May not be able to control biotech's corporate communications to target audiences
  • Decreases overall profits

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