Pharma s Sharp Right Turn on R&D Creating an IT Platform to Fuel Future Growth

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1 Accenture Life Sciences Rethink Reshape Restructure for better patient outcomes Pharma s Sharp Right Turn on R&D Creating an IT Platform to Fuel Future Growth

2 Leading pharmaceutical companies are evaluating new business models including alternative information management platforms to reduce costs, shorten timelines, and maintain quality and compliance. 1,000 R&D jobs slashed; local facility shuttered in R&D restructuring. That statement modified from an actual 2012 headline sums up the woes of leading pharmaceutical companies as they battle to buoy research and development (R&D) productivity that has fallen far and fast in the last decade, while spending on drug development has climbed. The headline also points to why pharmas are so interested in new drug development models that may be able to cut development costs by more than 30 percent, accelerate timelines by at least 10 percent and still maintain high quality and compliance. They expect to realize most of those gains by moving to business models for data and regulatory management that are very different from their conventional outsourcing models. Specifically, these pharmas are evaluating new information management platforms that can manage the full scope of their regulatory and clinical data operations, with support across all geographies, submission formats and regulatory agencies. The platforms make research data more widely available by standardizing how it is collected, formatted and distributed. Traditionally-siloed functions can pull from the same data pool and contribute unique perspectives to the investigative process. Additionally, analytics help researchers to model outcomes, spot trends and ask the right questions. These pharmas sweeping process reengineering efforts are likely to encompass everything from standardization to process optimization. They will involve much more concurrent activity in clinical, regulatory and pharmacovigilance processes, enabled by optimized process execution, integrated technology and world-class analytics capabilities and a pay-as-you-go service model. Standardized data formats extend to electronic health and medical records, supporting social networks that enable patients and physicians to be active participants in health care. In this, the first of a series of point-of-view papers on pharma s overhaul of development activities, we look closely at how automation can streamline clinical data management when pharmas team in pre-competitive collaborations. 1

3 2

4 By the end of this decade, leading pharmaceutical companies R&D operations may no longer own and invest in their own, private technology solutions. Instead, they would rely on industry-wide services, analogous to utilities, that provide transaction processing and services that support the sharing of non-competitive data across a wide range of corporate sponsors. This sharp change of direction is important to consider if pharmas expect to offset slowing growth rates to achieve bottom line results. Many pharmaceutical companies need to modernize their development operations. By adhering to obsolete models of development in particular, in-house technology solutions they have not yet moved fast enough or far enough to meaningfully alter the calculus that determines their economic success. The consequence: overweight development cost structures, stunted innovation mechanisms and less-than-agile operations that are unable to keep pace with the demands placed on them. To be fair, most R&D functions are trying to change. But their efforts are rarely without pain. In the past three years, 18 R&D locations have closed in the US, with an additional 14 in the EU. 1 The challenges facing R&D have never been greater. It s an understatement to say that pharma R&D organizations are under pressure to deliver differentiated products while holding spending flat. Over the last 15 years ( ), R&D spend has grown five percent annually while output in terms of new molecular entities approved has dropped by approximately 22 percent. 2 Limited progress has been made to reverse these trends. In addition to these financial constraints, a silo mentality across the R&D cycle has resulted in optimizing of local processes, disconnected transactional systems, and a lack of information governance. The ever-increasing health organizations and marketplace s requirements have led to large, complex R&D functions. Many companies consider their R&D activities to be proprietary and a source of competitive advantage. Thus, over time, they have built significant internal R&D capabilities to handle clinical, regulatory and pharmacovigilance functions. Even those companies that have outsourced some functions to contract research organizations (CROs) often in a piecemeal approach due to multiple factors have found that managing those resources has added to the overall complexity. These challenges are exacerbated by the substantial internal IT platforms that many pharmas have built to support their R&D capabilities. Although these proprietary systems have been optimized for the companies operations, they have hindered the implementation of standards and collaboration across the industry. The costs have been very real: Maintaining basic operations and completing transactions can, in our experience, consume up to 80 percent of the time of a pharma company s IT resources. As a result, IT departments have had limited capacity to enable strategic growth for the company through technology innovation. The shift toward pre-competitive collaboration But a shift is now under way. Leading pharmaceutical companies are starting to see that many foundational or operational transactions and the supporting IT environments aren t quite the competitive levers they thought they were. With the maturation of new solutions such as cloud computing ( the cloud ), these far-sighted organizations now see real possibilities in a new flexible operating model: precompetitive collaboration. This model means that individual companies no longer have to bear all the development burdens themselves. They can work collaboratively with research partners whether they are CROs, or software vendors or aggregators to spread the risks of development, reduce its costs, and accelerate its outcomes. There is no reason that we should have separate ways to activate investigator sites, declared one senior R&D pharmaceutical executive. 3

5 There are clear indications that precompetitive teamwork is already under way. TransCelerate Biopharma, a nonprofit joint venture signed in the fall of 2012, brings together 10 Big Pharma companies to find ways to make the clinical trials process more efficient. 3 Headquartered in Philadelphia, TransCelerate involves GlaxoSmithKline, Pfizer, Johnson & Johnson, Bristol- Myers Squibb, Eli Lilly, AbbVie (Abbott), AstraZeneca, Sanofi, Boehringer Ingelheim, and Genentech, a unit of The Roche Group. Each will contribute funding and staff from its R&D divisions. The venture is a crucial milestone because it signals the willingness of otherwise fierce rivals to tackle some of their biggest problems together and effectively break down barriers facing each of them. One early realization is that if pharmas are to get maximum benefit from such collaborative approaches, their IT organizations also need to evolve to align with pre-competitive collaboration. We need to get much better adapting technologies to improve the quality of clinical data, says another industry leader expert. That s what Pfizer did beginning in 2011, when it launched an internal program to dramatically improve its R&D productivity. With efficiency as a primary objective, Pfizer specified that its alliance partners Parexel and ICON could use their internal systems and processes to capture operational and clinical data for clinical trials. Working closely with Accenture, Pfizer conceived a scalable clinical aggregation layer, based on industrystandard technology that would give it easy access and control over all of its data. This innovative technology platform, built using the cloud, establishes the framework for a utility model for aggregating clinical data. In time, this cloud-based solution will help Pfizer to retire its traditional clinical trial system infrastructure, reducing the need for capital expenditures and significantly lowering annual IT operating costs, all without sacrificing quality or outcomes. 4

6 The benefits of a utility model With the first release of this solution, Pfizer can now securely exchange data with its alliance partners via an information exchange hub. Its business users also can aggregate, analyze and visualize clinical trial patient data across studies and drug programs to support precision medicine, real-world analytics, product defense and regulatory inquiries. In addition, business users benefit from rapid and easy access to high-quality, relevant and analysis-ready clinical data. They get an aggregated view, or single version of the truth, across internal and external data that conforms to Clinical Data Interchange Standards Consortium (CDISC) standards. There is a high-performing, fully validated environment capable of analysis and data visualization. Additionally, users realize better informed clinical development and risk-management planning and decisions. This Pfizer initiative is an example of a leading practice today. The cloud-based pay-as-you-go model gives pharmaceutical companies the opportunity to: Accelerate realization of capabilities at a lower cost by leveraging an externally-hosted model with prebuilt assets to host data management, patient data flow and analysis and reporting technology. Focus on the science, rather than the operations, of clinical trial execution. Facilitate data exchange between external partners, while creating a playbook for data exchange for future acquisitions or collaborations. 5 Team with a single provider for business process outsourcing and IT in order to deliver outcomes and structure costs appropriately. Participate in pre-competitive collaboration opportunities with industry peers. Establish foundational capabilities to facilitate future growth and efficiency. Allow internal IT resources to focus on innovation and drive greater business value. TransCelerate s member companies are also pursuing utility models to propel advances in pre-competitive areas. Their initial focus will be on carrying out clinical studies starting with these five projects: 1. Development of a shared user interface for investigator site portals 2. Mutual recognition of study site qualification and training 3. Development of risk-based site monitoring approach and standards 4. Development of clinical data standards 5. Establishment of a comparator drug supply model. The main technology component the shared, cross-industry investigator portal is designed to streamline investigator and site access through harmonized delivery of content and services. It will offer a central point of access and single sign-on for investigators and site staff. The portal has three big target outcomes: the design and implementation plan for a common investigator portal with early capabilities including investigator training, site and investigator information, and resources links; harmonized security policy with single sign-on; and common taxonomy and technology. Marketplace requirements and internal financial goals make it less and less economically feasible for pharmas to continue relying on their legacy and proprietary IT platforms to support drug development. This does not need to be an all or nothing decision for pharmas, i.e., abandoning these long-term investments overnight or immediately automating their clinical trials data management. Using the analogy of utilities evolution, over the last two centuries, individuals and businesses moved away from handling their own needs for water supply, waste disposal, and lighting toward safe, cost-effective third-party services delivered by utility companies. Focusing time and effort on these activities by individuals or businesses was no longer time or cost-effective. Similarly, forward-thinking pharmas are recognizing that continuing to conduct certain elements of their development activities themselves is not time or costeffective. So, they are relinquishing direct control over aspects that no longer confer competitive advantage. For most pharmaceutical companies, this change in approach cannot come soon enough. They are constrained by the costs of drug development, the ever more complex web of regulations they face and lengthy timelines. Companies realize they cannot sufficiently improve their development operations with piecemeal improvement programs or siloed approaches. Far-sighted pharmas recognize they need to overhaul their approach to development and focus on the aspects that truly drive competitive advantage. They understand that they can effectively utilize external resources available to cut their R&D and approval cycles to get products to market more quickly and boost the products time under patent. Doing so is the sharp turn that can put them on the road to profitable growth.

7 Sources: 1. Workforce Reductions in Pharmaceuticals- Outsourcing, External Innovation and Collaboration Will Drive the Industry Forward, GBI Research, June 12, 2012, marketresearch.com/gbi-research-v3759/ Workforce-Reductions-Pharmaceuticals- Outsourcing-External / 2. Accenture Research based on CMR s 2012 Pharmaceutical R&D Factbook, Thomas Reuters, and EvaluatePharma, Big Pharma R&D Deal Could Cut Development Costs, Medpage Today, September 23, 2012, medpagetoday.com/publichealthpolicy/ GeneralProfessionalIssues/

8 Contact us To learn more about how Accenture can help your company, please visit accenture. com/lifesciences or contact one of our managing directors: David Boath Senior managing director - Accelerated R&D Services david.d.boath@accenture.com Henry Levy Managing director - Life Sciences R&D henry.d.levy@accenture.com About Accenture Life Sciences Accenture s Life Sciences practice is dedicated to helping companies rethink, reshape or restructure their businesses to deliver better patient outcomes and drive shareholder returns. We provide consulting, outsourcing and technology around the globe in all strategic and functional areas with a strong focus on R&D, Sales & Marketing and the Supply Chain. We have a long history of working hand in hand with our clients to improve their performance across the entire Life Sciences value chain. Accenture s Life Sciences practice connects more than 10,000 skilled professionals in over 50 countries who are personally committed to helping our clients achieve their business objectives and deliver better health outcomes for people around the world. Stay Connected accenturemanagementconsulting company/accenture Accenture Life Sciences Blog Accenture experts share insights and opinions on opportunities and challenges in the pharmaceutical and medical technology industry. About Accenture Accenture is a global management consulting, technology services and outsourcing company, with approximately 261,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$27.9 billion for the fiscal year ended Aug. 31, Its home page is Copyright 2013 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture. This document is produced by consultants at Accenture as general guidance. It is not intended to provide specific advice on your circumstances. If you require advice or further details on any matters referred to, please contact your Accenture representative.

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