Mass Customization in Pharma

The latest Knowledge@Wharton has an interview with Sidney Taurel, outgoing CEO of Eli Lilly.  In it he describes some rather dramatic and fundamental changes in the drug industry.

The new business model for companies like Eli Lilly will likely move away from production of such [Prozac, Cialis, Evista and Darvocet] "blockbuster" drugs and instead will focus on highly individualized solutions for patients, according to Taurel. It will emphasize therapies that work more often than not, as well as therapies that have a very clear benefit, thereby creating a more integrated system with greater economic and medical value. While some have dubbed the changes in health care "personalized medicine," Taurel prefers the term "tailored therapeutics."

Or perhaps a form of "pull medicine?"  Therapies designed for unique and even individual circumstances instead of pushing a solution to as wide a population as possible.  It's a significant, and risky, change to the traditional pharma business model.

The ultimate promise of tailored therapeutics is about "the individual patient, and we are prepared to stake our business on realizing that promise," Taurel said of Eli Lilly.

And as with manufacturing it comes down to maximizing value to the customer, where the customer is the end-user as well as the system that supports the process.

The practice of medicine remains too much of a trial-and-error process that has not maximized the efficacy of prescription therapies, which work about half the time for the most common diseases, he said. "When our industry is better able to target our products to the patients who will really benefit, then our value proposition will surely grow. When medicines are used more optimally to reduce the trial-and-error nature of health care, then fewer resources will be wasted and the cost of health care will be sustainable."

The analogy to lean manufacturing doesn't just describe the identification and delivery of therapies, but also the development process itself.

He used "biomarkers" -- or biological indicators -- as an example of one of the many modern advantages that will help drive the tailored therapeutics revolution. "Biomarkers are more pervasive and sophisticated than ever before, and they are coming into play in much earlier stages of drug development," Taurel said, noting that Eli Lilly now has biomarker strategies in place for nearly all molecules at the earliest clinical development stage.

Important benefits of biomarkers include the ability to weed out unpromising molecules early in the game, compress development times, run smaller and more focused trials and explore secondary indications earlier. "We hope that some of the beneficial effects of widespread biomarker indication will be shorter cycle times and lower costs in drug development," Taurel said.

Smaller and more focus trials that find problems and opportunities sooner, compressing development time.  Just as one piece flow is superior to how batch processing creates higher inventory cost as well as a higher risk and impact when problems are found.

Drug development is incredibly costly and risky.  I know one of my previous employers spent a couple hundred million dollars and ten years developing a new drug, just to have it almost immediately pulled from the market when three people died from a very rare interaction when combined with ten other drugs. The drug was effective, but public misperception forced the product to be removed from the market.  How would a more targeted and personalized development model survive?

Despite his optimism about the future of tailored therapeutics, Taurel acknowledged that some in the industry worry about the current business model being overturned -- specifically, that the lack of blockbuster drugs will reduce big pharma's ability to pay for the next generation of research and development.

Taurel said a more effective, targeted treatment has the potential to increase repeat prescriptions, as opposed to the current trend away from repeat prescriptions due to the lack of efficacy. Tailoring also bodes well for reducing costs and thus contributing to the bottom line. "The net result of sales can be quite virile. Instead of getting a relatively small slice of a large pie, the tailored model promises a larger share of a more segmented pie."

Doing that in a regulated market that requires huge sums to develop new products with increasingly long development times, which are even then subject to public and political fickleness, is a challenge.  To say the least.