So let's talk about how to create a very sustainable business, in order to have a sustainable business, you have to innovate. Without innovation, as we saw, generics comes in, take off your market and you end up basically fighting Chapter 11 or be dead in the water, or being the subject of a takeover. Innovation is key for this business, let's talk about different levels of innovation. Well, the first one is one that we call really disruptive innovation. Unfortunately, in the pharmaceutical business or in any business disruptive innovation is really tough. But in the Pharma business, it means either curing or preventing the disease and showing reduction in mortality and or morbidity, that is really the end goal. Just treating the symptoms is not sufficient when you have disruptive innovation and especially if you're first in class and best in class. You are going to be able to command to some extent of course, whenever pricing you want. And people are going to prescribe your drug because you are curing the disease or you're preventing the disease which is even more difficult. That is what I call the ultimate innovation and that's really what everybody should be aiming for. Incremental innovation is the second step, there are many things in incremental innovation. You could improve the quality of life and you'll have a lecture on actually, from macroeconomics and quality of life, so I'm not going to spend too much time on that later on. You could potentially reduce the cost of care, let's say you develop a drug that basically decreases the overall cost. You can have a drug that is safer with less side effects, therefore it's easier to use and overall makes the quality of life better, reduce the cost of the overall basic treatment and then potentially improve patient compliance. What I mean by this is basically improve the fact that the patient is taking their pills regularly instead of three times a day it could be a once a day, once a week, once a month. Therefor getting a better clinical outcome at the end of the day. There as well you probably will be able to get better pricing. You'll have to have comparative studies, obviously, because you are going to have to compare yourself against treatment that already exists but that's going to viewed as high value. Now, really, after that, from my perspective, you are really not innovating, you are doing what is called ME TOO drugs. So it is a drug with the same mode of action, maybe the fourth or third or sixth or you know whatever market entrant It potentially can be superior. Sometime it is, sometime it is not, it can basically sometime have better side effect profile or not, sometime, it can be just equivalent. Well if you just are equivalent, In my opinion you are wasting your time unless you are going to price your drug very very low like a generic and then what you are playing is to the commodity business. But if you are spending the money to file IP on a generic you are really spending your money in the wrong places, not in a generic but on a drug You are really spending money in the wrong places. Now, if you are doing a generic, that's a different story because it's not very expensive, especially for small molecule, for biologics again we will go through that later on, it's a lot more complicated. And I know people don't like to talk about biosimilars as generics, but to be honest In my perspective, I think biosimilar is actually, are a form of generics, of biologics. The other thing is that payers who make the decisions as whether or not your drug is on the formulary or are being reimbursed are not going to pay premium unless Your drug shows disruptive innovation and there is nothing else out there and you are curing the disease or you can demonstrate clear superiority in trial economic benefits. So you're going to have to have really these trials in order to be able to do that and as I said you have a full lecture on micro economics and all that intel So that's the the formula for success innovation. Well there's really three steps if you will and of course making this a lot more simple that it really is I wish I had the real successful innovation and have the cookie cutter approach. Unfortunately, it's not like that, then it's basically you have to identify the areas to plan. Where is there an unmet medical need, where do I think that I can really make a huge impact on the research standpoint and nobody else is working in that field. Where do I have enough data that I can make a difference with a product as I move forward. And also from that perspective, I have to look in areas where there is a high return. So you have to look at it from the perspective of the science, you have to look at it from the perspective of the market. You have to look at it from the perspective of the patient population, on the need, so it's really multi factorial from that standpoint. The second piece that you have to think about In the R&D process, I might going to be able to have small trials, or the point eventually not too difficult, or do I have to do a 20,000 patient trial? The process is going to be very different if I'm looking at that, and I also want to think about how do I deal with that process. Well can I do a list state collaboration or academia. Can I go into phase one really quickly rather than doing a ton of animal studies if the animal study don't give me good markers or there good markers for animal studies that are going to really derisk the project So I don't have to go into human clinical trials. It's going to depend on therapeutic areas, and you learn that as we go along. And as I mentioned to you, really understanding not just what the market is, but also what the payer is going to agree, what they feel is an unmet need, what they feel they are willing to pay. Later on, because if nobody's willing to pay for your drug when you launch, then you have a serious problem. Because if nobody's willing to reimburse you for that drug, or even be willing to prescribe it, then you should not developed it in the first place. The other thing's, you have to think about expanding the geographic footprint. We talked earlier on About the markets either US, Europe and Japan but you have to think now much more broadly like countries like India, like Brazil, like China and all the other developing countries around the world, which really are taking larger and larger expansion in terms of policy we call As well as for patient need for new pharmaceutical products. One of the other things I wanted to talk about briefly, and you'll cover this much later on, is that the FDA has developed, the Food and Drug Administration, again, has developed four distinct approaches to making drugs treating serious diseases available. As rapidly as possible. I'm not going to read through all of this, but there is four tracks that now the industry can go through. Again, you will have a lecture on the FDA and the IND and NDA process. There is fast track Breakthrough therapies, accelerated approval, and priority review. And each of these tracks are a great way for you if you have breakthrough therapies and innovative medicine to be able To have your drugs developed in collaboration with agency and being launched much faster than it would have been in the past if you're developing a me-too drug or drug that is very little value. So again I think that from that perspective the agency has done a fantastic job in working with industry and continues to do fantastic job And really trying to minimize and maximize getting new drugs for patients that are going to transform their life and really transform health care. Here's an example of the different. This is another study where they looked at market share and sales growth. Oncology Has been growing very rapidly. This is an area which is growing by leaps and bounds. It's continuing to grow very, very rapidly, especially with biologics, diabetes drugs, anti-diabetes drugs. Because unfortunately the world is getting fatter, and fatter. Unfortunately obesity is going rampant So a lot of people are getting Type II diabetes, which implies a lot more cardiovascular diseases, which implies hypercholesterolemia, which implies diabetes. And, of course, we are aging and with that there are a lot more immune diseases like rheumatoid arthritis. Vaccines are also becoming very important. So, again, as we can see from there There's a number of therapeutic areas that are growing substantially and are really having an impact on where the healthcare dollars are being spent. Briefly, one of the things I wanted to mention, this is another theory that was done by another consulting firm. where they demonstrated that there was a really big rise of the payer, where the payer want cost containment. They want vegetarian constrain, they want certainty. They can't have a drug that's going to blow their budget. And the other thing they want for that, is they want to understand comparative trial data And that's one of the things where pharma really has to go back and rethink their clinical development because placebo control studies are not sufficient. And in certain countries, unless you have comparative trials, your drug will not get approved. In others, you can do placebo control trials and you will get approved. The question is you might get approved but you might not get reimbursed or you might not and then you'll have to do once you are approved of another clinical trial which potentially can delay a launch. So that's some of the things Pharma has to think about. The other thing was the price perception issue, I told you I'll give you a couple of slides From that standpoint. Even though, if you look at the study that was done, again, by this consulting firm, in terms of overall spending this was in the U.S. If you look at the overall spending on the total cost Cost of health care including everything, hospitalization, including physicians, including really everything. Drug cost as not been rising as much as what people thought. But really, the overall health Care system has rised substantially. Having said this, when you have events like we had last year in 2015, where people raised the price of a drug by 5000% or you have drugs that cost north of several hundred thousand dollars For a course of therapy. That really sends you into the front page of the New York Times or the Wall Street Journal or the Economist or many other newspapers that says that pharma has a big perception problem. And pharma becomes the bad guy. So I think that from that standpoint, I'm hoping also that this course is going to teach people and educate people about The entire process, the complexity of the process and also make people think about what do we need to do to do better job, to get drugs that are novel and really offer better health care to patients. With that, Miss I apologize for this slide. This is unreadable but you have it. You can download it. These are all downloaded from the internet so this is all public data that I use accessible, this is a lot of reading. I will use a lot of these references also for some of my other lectures. You'll probably see these references also being used in some of these other lectures, I just wanted to provide that to all of you And of course I'm always accessible by e-mail or chat room once we launch the course again. With that, thank you very much for sticking with me for that hour of brief introduction on the course and I hope that you will stick with us because there is great lectures that are coming through. And thank you very much again.
