BioPharma R&D Focus Paradigms when Payers are the Customers

Most Pharma companies focus their R&D activities by therapeutic area. But in the New Pharma world of Payers as Customers, does this continue to make sense? In this article, we will look at the history and evolution of therepautic area focus in R&D, highlight today’s new requirements and suggest a pragmatic approach for focusing R&D to create tomorrow’s transformative medicines.

History and Evolution of Therapeutic Area Focus

In the 1990s, Pharma companies began focusing their activities around therapeutic areas (‘TAs’). Since Key Opinion Leader (‘KOLs’) were the primary influencers of physician prescribing and the scientific advisors to regulators, it made sense to align the Clinical Development and Regulatory functions with the areas that KOLs specialised in e.g. endocrinology, oncology, psychiatry, etc. When the blockbusters came to market, companies built major commercial franchises. Pressures began to build on R&D to deliver replacement products and so the Research function too was focused on TAs. Matrix structures became the norm and some companies even created standalone TA-based business units with dedicated Marketing, Regulatory, Clinical and Research.

Over time the TA concept evolved as its more obvious limitations became evident. In Research for example, target-based drug discovery became (and remains) a popular approach whereby researchers create drugs that modulate a specific biological target in a key pathway of the disease pathology. However that same target is often relevant in other diseases. For example, researchers in a rheumatology-focused group looking to treat arthritis might seek to inhibit the TNF-alpha cytokine in the inflammation pathway. The resulting drug-like molecules created to modulate TNF-alpha could also be relevant in other diseases in dermatology, gastroenterology and pulmonology. Drugs created for one disease could be effective in another disease from a completely different TA. Some Research functions thus began to organise according to groups of related biological pathways while continuing to use the “therapeutic area” phrase for convenience – hence the emergence of “immunology”, “neuro-degenerative” and other TAs defined by biological pathways rather than by branches of the medical profession. A well-articulated multi-TA example is Merck Serono’s pathophysiology-driven R&D model.

Another evolved variation of the TA concept is the R&D group focused on a route of administration. For example some “dermatology” groups evolved into “topical medicine” groups – they went beyond addressing the needs of dermatologists to creating topically-applied products for ophthalmologists and gynaecologists. Similarly some “respiratory” groups evolved into “inhaled medicine” groups.

For investment analysts, journalists and market researchers, TA focus was easy to understand, and it gave these external parties a straightforward mechanism to validate what Pharma companies were telling them by seeking independent opinions from KOLs. And external communication continues to be a reason why some of the evolved variations continue to use the TA terminology.

New Rules for Transformative Medicines

Focusing R&D builds critical mass, prevents resource dilution, and enables synergies of activity and know-how to deliver R&D’s aims. Historically, R&D aimed to deliver IP-protected medicines that KOLs would recommend and regulators would approve; the Commercial organisation’s physician relationships would then ensure market success. Focusing by TA worked well for these aims. But today, the rules of the game have changed. While KOL endorsements and Regulatory hurdles continue to be important, Payers are now the primary determinant of success. And Patients are an increasing influence on Payers, Regulators and KOLs via their advocacy groups’ lobbying. R&D now has to deliver “transformative medicines” that take patient and health system outcomes well beyond the current Standard of Care – today’s gold standard therapies are tomorrow’s lower-priced generics/biosimilars. R&D has to exploit all its know-how to find and commercialise transformative medicines, which are not necessarily products for extending current commercial franchises.

In this environment, the evolved TA variations mentioned earlier will become increasingly prevalent. Much of the critical know-how for innovation is about understanding how to modulate certain biological pathways. As pathways often occur in multiple diseases, the chances of finding a transformative medicine are greatly reduced if some diseases are ignored because they are “not in our TA scope”. For example, an Immunology group, operating from Research through to Clinical Proof-of-Concept, aims to find the best application for its own-discovered or in-licensed inflammation-modulating molecule, irrespective of current market franchises. Similarly, there could be more opportunities to leverage the know-how of a “topical medicines” group than what can be found in the dermatologist’s arena. In contrast, there will be increasingly less emphasis on achieving ideal (and quite likely unachievable) Target Product Profiles derived from the need to replace current products.

Alternatives to Therapeutic Area Focus

To generate transformative medicines, R&D should be organised by whatever paradigms that will best:

  1. Apply/leverage strengths – assets, know-how, collaborator relationships, cultural characteristics.
  2. Identify compelling unmet needs and stimulate breakthrough approaches by changing the perspectives of R&D people and the collaborators they interact with.

In addition to the TA paradigms discussed earlier, below are three alternative paradigms to consider, all of which are already being applied to a some extent in the industry (although their potential could be better exploited).

Patient Centric: More and more R&D organisations are talking about becoming more “patient-centric”. But a true patient centric approach is broader than many people envisage. Patients do not typically suffer from just one disease, co-morbidities are important. A single disease may have multiple pathologies and symptoms requiring multiple treatment approaches. Patients’ response to drugs varies greatly according to their genome and epigenome. Patients have a lifestyle they seek to retain while under therapy. Diagnostics, medical devices, nutritional supplements, smartphone apps and digitised value-added information could all play an important role in combination with drug therapy. For those who do it right, focusing on the total needs and opportunities of a particular patient type could generate a strong return on investment.

Technology Platform: Some technologies are applicable for developing a string of new and better products e.g. phage display antibodies, hi-tech parenterals, molecular conjugates, etc. Historically, many companies who started as technology platform specialists tried to turn themselves into integrated drug companies focused on the therapeutic area of their lead product, often because their investors felt this would increase valuation. But results were mixed and many were subsequently absorbed into larger companies. Implementing a sustainable model as a development company might have been a better approach; partnering with external collaborators for the TA know-how as needed. Similarly, in-house technology groups within larger companies could become repeated innovators of new/improved medicines rather than being, in many cases, merely internal service providers.

Contextual/Situational: A deep understanding of the situational context in which the patient is treated can lead to transformative medicines. For example:

  • Intensive care units (ICUs) and operating theatres (OTs).
  • Indications where patient-reported outcomes are important.
  • Supportive care indications in cancer clinics and palliative care centres.

Companies can get smarter at looking at the total context and meeting hitherto less-understood customer needs through better observation and customer-collaborative product development. For example in the rapidly-evolving US healthcare environment, certain major hospitals could be open to collaboratively developing treatment protocols that reduce use of scarce ICU and OT resources, or reduce probability of re-admissions.


The need to generate transformative medicines is now fundamental. To maximise chances of success, companies should combine the traditional and evolved TA approaches with some alternative paradigms, selecting this mix to (i) best exploit strengths, and (ii) “shake up” the perspectives and interactions of R&D people. And they should implement pragmatically through integrating in-house groups and external collaborations.

This article was first published in pharmaphorum