Re: The Kinetics of Collapse: The 'Vaccine Variation'

Takeaway: The equivalent of ‘Johnny Rotten’ is now the most powerful person in the world. Navigating the global mayhem will take a more original approach to strategy, structure and tactical mix investments.

“At an event late last week in Arizona, anti-vaccine activist and Donald Trump transition team member Robert F. Kennedy Jr. said he’d fire and replace 600 people from the National Institutes of Health on day one of a second Trump term. The NIH is one of the public health agencies Kennedy loathes the most—and despite still lacking any defined role in a new administration, he’s clearly relishing the opportunity to promise retribution against them.

Kennedy made eyebrow-raising claims while fawning over Trump.

In comments that were first reported by ABC News, Kennedy declared, “We need to act fast, and we want to have those people in place on January 20, so that on January 21, 600 people are going to walk into offices at NIH and 600 people are going to leave.”

Kennedy, a long-standing opponent of vaccines, has consistently been critical of the NIH, the Centers for Disease Control, and other federal agencies that are part of the basic infrastructure of public health. His ‘The Real Anthony Fauci’ attacked Fauci, a former NIH director, at book length, albeit with what one physician reviewer called “many errors and gross misrepresentations.”

....Robert F. Kennedy Jr. Reveals Plans to Fire 600 Federal Health Workers, Mother Jones, November 12, 2024

Even before the news that Robert F. Kennedy Jr. was nominated to sit astride a care and service infrastructure with 13 divisions that run more than 100 programs, the drug market for vaccines was already trapped by the kinetics of collapse. Before 3 pm yesterday, Moderna had lost about $43 billion in market value in the last five months and Stephane Bancel stepped down as chief commercial officer. Pfizer had lost about $30 billion in market cap and was arguing with Starboard over strategic direction, management effectiveness and the concepts of "value" and "innovation" in the drug market.

[Note: The pressure seems to be working: Anirban Sen at Reuters was the first to report that Pfizer has hired Goldman Sachs to find a potential buyer for Pfizer Hospital, a business unit formed after a $17 billion Hospira acquisition acquisition in 2015. “The business, which could be worth a few billion dollars, currently generates nearly $500 million of earnings before interest, taxes, depreciation and amortization, the sources said, cautioning that a deal is not guaranteed and Pfizer could choose to keep the division.

Pfizer and Goldman declined to comment.”]

And on Novavax's 3Q earnings readout on Tuesday -- a performance review that triggered a “stock plunge” after sales guidance was lowered (again) -- EY Entrepreneur Of The Year and chief executive John Jacobs said his business needs to recover from its struggles in the collapsing COVID vaccine market and get into profitable territory. "We're going back to our roots," Jacobs said in an interview. "It's hitting the reset button and now starting to pivot our way.”

Meanwhile in Idaho the day before Donald Trump defeated Kamala Harris to become the leader of the free world, a regional public health department went radical, the first in the nation to stop providing COVID-19 vaccines to residents in six counties. From local news outlet KSLcom:

Southwest District Health appears to be the first in the nation to be restricted from giving COVID-19 vaccines. Vaccinations are an essential function of a public health department.

While policymakers in Texas banned health departments from promoting COVID vaccines and Florida's surgeon general bucked medical consensus to recommend against the vaccine, governmental bodies across the country haven't blocked the vaccines outright.

"I'm not aware of anything else like this," said Adriane Casalotti, chief of government and public affairs for the National Association of County and City Health Officials. She said health departments have stopped offering the vaccine because of cost or low demand, but not based on "a judgment of the medical product itself."

And an hour before the market closed yesterday, “shares of prominent vaccine makers plunged Thursday after President-elect Donald Trump announced his pick of Robert F. Kennedy Jr. to be the next secretary of the Department of Health and Human Services. As news reports of Trump’s choice began trickling out, Covid-19 vaccine maker Moderna dipped as much as 6%, and Pfizer fell almost 2%. Novavax, which created a protein-based Covid-19 vaccine, fell almost 6%.”

The problem with pivots is that they tend to pivot back to the past.

‘System Collapse’ of a $1 Trillion Market

I’m having a hard time seeing how the Strategic Pivot Thing happens for any vaccine business, particularly if that pivot depends on roots planted in a territory that is being uprooted at wrap speed (inside the Trump transition team, Kennedy’s plans to reset healthcare in the United States are referred to as an “Operation Warp Speed for chronic disease”).

Kennedy has said he would like to upend public-health agencies and rid them of what he views as the corrupt influence of the food and pharmaceutical industries. He has said he wants to ban pharmaceutical advertisements on television and has made false claims about vaccine safety, including linking vaccines to autism and describing shots for Covid-19 as the deadliest ever made.

Public-health leaders have responded with horror and disbelief. “Robert F. Kennedy, Jr., is not remotely qualified for the role and should be nowhere near the science-based agencies that safeguard our nutrition, food safety, and health,” said Dr. Peter Lurie, president of the Center for Science in the Public Interest, in a statement of angst yesterday. "Nominating an anti-vaxxer like Kennedy to HHS is like putting a Flat Earther at the head of NASA. CSPI opposes this nomination and any other nominees who are a direct threat to science and evidence-based solutions. If unassuming little viruses could talk, measles, mumps, and rubella would be loudly cheerleading for the nomination of this prolific spreader of scientific misinformation.”

Lurie's angst misses and misunderstands the Punk Rock Ethos driving Trump.

If the ideas take hold, Kennedy could undo decades of public-health policies that doctors and scientists have hailed as improving the health of Americans and lengthening their lives. Trump vowed during the campaign to give Kennedy influence in his administration. “He’s going to help make America healthy again,” Trump said of Kennedy in his victory speech. “Have a good time, Bobby.” 

Any 'drug + retail pharmacy system' whose business forecast, pitch deck and storyline of value to The Street uses the word "vaccine" -- e.g., cancer vaccine (projected @ $42 billion); flu vaccine (projected @ $17 billion); hepatitis vaccine (projected @ $13 billion); shingles vaccine (projected @ $13 billion); covid vaccine (projected @ $10 billion); CMV vaccine (projected @ $3 billion) -- is now foundationally fragile at best. (It didn’t help things when President Biden declared on 60 Minutes that "the pandemic is over").

Framing things in somewhat different terms: this $1 trillion Market Growth Outlook (via MarketsandMarkets)....

"The global vaccines market growth forecasted to transform from USD 78.0 billion in 2024 to USD 94.9 billion by 2029, driven by a CAGR of 4.0%. Similarly the vaccines market (excluding COVID -19 vaccines) is projected to reach USD 80.3 Billion by 2029 from USD 53.0 Billion in 2024, at a CAGR of 8.7% during the forecast period. Technological advancements in vaccine development, increasing government initiatives for immunization programs and expanding investments in research and development are some of the factors driving growth of this market."

....is wrong at the first slide. The jumping-off point is illogical. The entire concept is the problem. And all the hand-wringing from all corners about the impact of Trump 2.0 is missing the deeper storyline: The base layer doesn't “work” with a total change in territory that has happened overnight. The equivalent of ‘Johnny Rotten’ is now the most powerful person in the world. Strategic fit to accelerating, amplifying and exponentially-increasing chaos is going to take a whole new approach to strategy, structure and tactical mix investments.

When it comes to pharmaceutical brand, business and industry leadership 'reading the market’ accurately:

"The elephant in the room is the room itself, an approach to business and product marketing unchanged since the “modern pharmaceutical industry” began around 1849, when Pfizer was founded in Brooklyn.”

What’s changed in the 175 years since then is this: the world around us is now within us. There is no ‘out there’ that separates the observer from the observed.

Playing a Different Game

In his book on the history of soccer tactics, Inverting the Pyramid, Jonathan Wilson writes that soccer "is not about the players, or at least not just about the players; it is about shape and about space, about the intelligent deployment of players, and their movement within that deployment.”

Unlike chess, soccer is open.

The Standard Model of thought and action — the typical playbook, the familiar territory, the monotonous repetition of ‘dead words’ at the extreme end of redundancy (see Why Harris Lost in One Slide) — in health market strategy is one approaches it as a game of chess rather than a game of soccer. It reduces psychological and social phenomena to quantitative analysis bounded in narrow frames, The McKinsey Method that assumes away complexity and, more often than not, produces a market forecast that misses and misreads The Room.

The Standard Model of competition focuses on the players, not about creating new space within which to deploy them. The big idea machine is broken.

In an interview with CNBC the week before the election, Albert Bourla said he agrees with some of the criticisms from Starboard, saying he believes Pfizer is headed in a good direction. “I think we are doing a lot of changes. But if Starboard, and anybody else for that matter, have good ideas, I will certainly discuss them and entertain.”

Here’s an entertaining idea:

Pfizer + Walgreens + CDC + Oracle Health collaborating to construct a new care and service infrastructure in the United States — a better system of markets — where the competition is economic, positioned on the ‘production of affordable health’ as a more original strategy story. Sell it to your current and soon-to-be-forgotten ‘hospital customers’ via Pfizer Hospital. Invest in brand development and market maximization at a system level (versus profit optimization around individual products). Let Goldman Sachs manage the transactions and deal flows within the context of the new industry ecosystem. Better yet, put out an RFP to the investment banking vendors. Force Goldman Sachs to compete and pitch against JPMorgan and Bank of America for a new market in deal-making a new industry ecosystem sparks.

You could do this for less than what one brand teams spends on one DTC campaign to promote one drug. And you could probably get it done in less time than it takes to get a detail aid produced by an advertising agency and approved by Pfizer regulatory. (As a reference point, Novo Nordisk Foundation is investing around $90 million to launch Denmark’s first AI supercomputer built on an AI data center infrastructure. It took less than six months from announcement to completion.)

Assuming stability is one of the ways ruins get made. And shareholder value collapses.

Donald Trump, like the Sex Pistols decades ago, is a whole new genre. He didn’t wreck the old order so much as understand how to take advantage of the wreckage that was already there.

The stuck market — whether that’s the strategically-collapsing retail pharmacy market or the soon-to-be collapsing Big PBM market or the drug market floating somewhere in between — will need different policy, economic and business constructs for what lies ahead, better ‘navigational knowledge’ to move faster than the current, to get in front of change rather than become a victim of it.

“We were hopeful to get a larger market share this year,” said Novavax’s Jacobs after lowering its sales guidance (again). Which only proves the point:

Hope isn’t a strategy.

In related news last week, Eisai lowered Leqembi revenue forecast (again) after “rocky entry” to the US market.

It’s about to get a lot rockier.

/ jgs

John G. Singer is Executive Director of Blue Spoon, the global leader in positioning strategy and innovation at a system level. To engage with a mind stretch: john@bluespoonconsulting.com