My Biopharma Situation Analysis 2025: Part II
Happy Thursday.
Yesterday, I discussed how the industry is on the cusp of a revolution in R&D productivity - and how downstream processes such as clinical operations and R&D / commercial cross-functional collaboration need to evolve to keep pace. Today, I want to share my thoughts on what I believe to be ones of the most insiduous barriers standing between innovation and impact. Specifically, like all big problems, this barrier has little to do with process and product and everything to do with the third part of the trifecta-
People.
Part II: The real shortage in the biopharma industry - belief and certainty; growing distrust of the biopharma industry by nearly everyone who matters
The life sciences industry is fundamentally built on mitigating risk. Rather than rehashing words I wrote in 2022 (inspired by this hilarious SNL skit), I'm just going to repeat them here;
Look, I get it. Life science products are financially risky to develop because of (rightfully) high regulatory requirements and because well, biology is complicated. Each successive step in development - preclinical to Phase I, Phase II to Phase III, precommercialization, etc. - is also associated not only with increasing sunk costs (i.e. total dollars ‘in the hole’) but also increasing incremental cost. This coupled with the high variability in life sciences can make any CEO - anyone, really - nervous since you can do everything right - literally everything - and just have it completely fail. While every consulting firm will tell you that this is preventable - and to be honest, they’re right to an extent - the hard truth remains that no amount of preparation can truly derisk an asset - unless, of course, you’re a me-too of some kind or another.
All of the studies, the clinical trials, the regulatory approvals, the rules surrounding what language to use with patients or doctors, the payer scrutiny - all of it at its core is designed to do one thing; ensure that a patient gets a product that works. Accordingly, one can think of all of the steps prior to commercial approval as how to provide the market with certainty that a product will work and be safe, while all the steps post-approval are focused on how to create belief that said product is the right solution. While it is critical that all stakeholders believe in a product's value - government regulators, patient end-users, HCP prescribers, etc. - perhaps the most consequential stakeholder in the US market today from this perspective is the payer.
In classic markets, the consumer or user of a product (i.e. a coffee, a car, a flight, etc.) is also the customer (i.e. the one who buys said product). In the healthcare market, the consumer and the customer are more often than not two separate entities - the consumer is the patient, and the customer is usually a healthcare insurance company or the patient's employer. Like a parent who makes the final decision on whether their child will get a specific toy, US payers wield tremendous power by virtue of their role in deciding which products are worth paying for and in what circumstances. For biopharma, this makes payers more often than not their core customer; after all, you can have every patient in the US believing your product is right for them but if their insurer disagrees & will not cover the product? The majority of those patients will not have the resources to buy said product on their own - and you just ate a huge loss in your financials.
While it is quite popular to brand payers as soulless organizations dedicated to denying people care they need, the reality is most of these entities are simply trying to ensure patients get care that actually works. This requires certainty - and the main way drug products are developed and commercialized can often create doubts. One example - as clinical trials are highly controlled settings where manufacturers can (and often do) tinker with inclusion and exclusion criteria to maximize chances a trial shows a specific outcome, payers are always aware that a successful trial may not translate in the uncontrollable 'real world.' Another example is the budget impact of a new product - a question many payers rely on pharmacoeconomic analysis or budget impact models to forecast. Though manufacturers will nowadays always submit their budget impact models to payers to create more certainty, whether the models actually do what they are meant to is somewhat unclear. Even in my experience speaking with US payers, I've heard more often than not that the pharma-submitted budget impact model is 'nice' but from a skewed perspective - and a better way to prove certainty is through pragmatic trials, head-to-head trials vs. standard of care, or better yet - real world data and evidence.
Fostering belief and certainty is not a challenge only with market access stakeholders - it's a challenge with patients and physicians as well. Estimates vary by indication but likely around or over half of US patients do not trust the pharmaceutical industry as a whole, with cost & perceptions of cost being the major factor. Unsurprisingly, many healthcare providers are also shifting their perceptions of the pharmaceutical industry, creating additional friction in the HCP-biopharma relationship. It seems biopharma in general is fighting a losing battle with regards to public opinion.
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If no one trusts you enough to buy your product, it doesn't really matter how big your portfolio is. While biopharma is somewhat resilient to this - particularly companies in areas like oncology, rare diseases, gene therapy, etc. where products are nearly always life-saving and the alternative is unthinkable - it isn't immune. As belief and certainty erode, so declines the market opportunity of a new asset with it - and so grows the barrier to commercial success accordingly - or, at least that's the logic if you don't do anything about it.
I want to pause here to address a truth that may be painful for anyone who views themself an expert and has felt the frustration of not being believed. The life science industry is built on the process of science itself, and there is this prevailing conviction that one need only find 'the right evidence' and everyone else who can rationally understand said evidence will reach the same conclusion. It is why between the lines in the proceeding paragraphs you can see a battle around 'truth' itself - what is the 'right' answer, what is the 'right' data, and of course, what is the 'right' process. Yet, paired with it is the unasked question many a biopharma professional has asked themselves - why does it seem like I can have the 'right' everything and still it is not enough to drive belief and certainty?
The answer, of course, is that it isn't enough - at least, not anymore. We live in a world where information is so plentiful and accessible that people have turned to narratives - frameworks, heuristics, and in many cases, bias - as their way of interacting with the truth. Patients, physicans, and payers are not exempt from this paradigm shift, which inevitably introduces irrationality into not only how a biopharma product is perceived, but how the company itself is perceived - and subsequently the decisions on how and when a product should be used. There is great variability as well in human perception; to use an extreme example, one year you could be celebrated publicly for saving the world, and the next villified at the turn of a dime.
While I do think some of us are closer to figuring out the ideal playbook tackling this challenge, the majority of us may not even know where to start. After all, what can you do if your product depends on scientific truth - but the world around you considers it less, and less important?
For anyone who has been married for a significant amount of time, the pattern above ('I'm right, they are wrong, why can't they understand?') may seem eerily familiar - and that's because it is. Scientific truth will always be at the heart and center of how our industry creates value. Yet, as the world evolves, we must learn how not to let a dogmatic focus only on scientific truth stand in our way of ensuring products get into the hands of patients who need it the most. It's the little things - such as asking 'what type of model & source data will help you, payer, assess our product's budget impact' instead of 'we built this BI model and it proves we're X or Y.' It's listening attentively to what data endpoints are HCPs using to monitor treatment success in real world settings. It isn't just blasting marketing messages at patients on your latest product, but working with them to co-create the right solution. It isn't about abandoning the truth; it is about bridging our perspectives with others so we are all seeking the truth together.
Belief and certainty are fostered through dialogue and not lectures. So long as biopharma leans towards the latter, we will continue to see trust in our industry, our products, and our people decline and with it, our chance to do good. However, if we appropriately recognize that one of our must-win battles is ensuring belief and certainty for our products and our enterprise, then we continue have an opportunity to truly impact patients across the world.
The actions we need to take to get there ... well, that's a discussion for Part III.
But, what do you think about this trend? Are we going to see a mass revolt against 'big medicine?' Are we already seeing it now? What could possibly be the trend for Part III?! Let me know any way you wish - comment, private message, email, epic love poem, etc. - and thank you for taking the time to join me today.
If you like it, leave a reaction or a follow. More importantly, if you didn't like it, feel free to tell me why (I'd say 'downvote the shit out of it,' but LinkedIn does not have this functionality).
Either way, thanks again. Talk soon.
-WY