90% of drugs marketed by big pharma bring in less than $180 million per year. Compare that number to the total cost of $350- 600 million for approving a single drug (including all the failures that lead up to it). Of course, one might think that the money can be made back in four years, but drugs have a huge maintenance cost in terms of regulatory compliance, marketing and sales. The margin on a drug- to- drug basis is very slim. This places the onus on the other 10% of drugs to be blockbusters – to more than make up for most of the other drugs that are earning far too little revenue. This is how the industry has structured itself around a blockbuster mentality – a reliance on drugs that bring in at least $500 million per year in revenue. Considering the odds of achieving blockbuster status, this is a very high- risk strategy. Pharmaceutical companies will have to change their ways if they are going to enter the new era of individualized medicine. CHI Summit Pharmacogenomics report

Blockbuster drugs are defined as drugs with $1 billion or more in sales.  Mega- blockbusters are drugs with sales of $1 billion plus in their first year.  IMS Health, Market Insight, Mar. 19, 2002 http://www.ims-global.com/insight/news_story/0203/news_story_020317.htm

Related terms: FIPCO, franchises- pharmaceutical, market fragmentation, multibusters,  pharmaceutical industry, targeted therapeutics

brand name sector: Pharmaceutical companies which specialize in developing new drugs, as opposed to generic or "me-too" drugs.  Tend to be highly R&D oriented.

Related term: mega-brand

business - pharmaceutical: http://www.pharmaweek.com/topic_BusinessandMarkets.asp 

business intelligence: Wikipedia http://en.wikipedia.org/wiki/Business_intelligence  
See also competitive intelligence

business models - R&D:  When considering the R&D productivity crisis it is imperative that current thinking, processes and models be challenged. For example, does the current strategy to align R&D by therapeutic area need to be further enhanced or do we chart a different course? The focus will not be on tools or technology for the promises of technology have arrived. The next wave of strategic thinking needs to be around business models and structures. Additionally, the impact of globalization on these evolving models must be understood and leveraged in order to successfully take the next step forward. Focus will be on specific examples, working models, strategies and approaches to achieving increased productivity. Molecular Medicine: Global Strategies to Reinvent the R&D Business Models February 28-March 2, 2007, San Francisco CA

Related term: FIPCO 

business plan: Tutorial and outline from the Small Business Administration (US) http://www.sba.gov/starting/indexbusplans.html

business rules:  Any statement that can be put in the form of "if then". Business rules cam be implemented in a computer program by programming if- then statements in- line. This is very efficient performance- wise, but you have to know exactly what rules need to be placed where. [Isabelle Rouvellou, el. al., Combining different business rules technologies: A rationalization, 2000] http://ebusiness.mit.edu/bgrosof/paps/oopsla00-br-wksh.pdf

business strategies: Alliances glossary

Centers for Medicare and Medicaid Services: Was HCFA Health Care Financing Administration, name changed in June 2001. http://cms.hhs.gov/

China - drug development in: Sought by most international pharmaceutical and biotechnology companies, China has become a partner of choice for international biopharmaceutical companies. In order to minimize unnecessary expenses, time and risk involved in R&D, companies have found an effective solution and worthy partner in this low-cost region populated by a highly-skilled drug discovery and development talent pool. In addition, due to its growing western-educated middle class, China presents valuable commercial opportunities for pharmaceutical and biotechnology companies.

However, companies want to be certain their intellectual property and proprietary processes are protected and that the effort of an overseas operation is ultimately worth the effort. For those interested in taking advantage of the recent regulatory improvements, skilled labor, patient population and quality research of the region, there are methods for overcoming the obstacles and leveraging the incredible opportunities offered by China. China, drug development in: Strategies for launching discovery & development activities, Sept 10-11, 2007, Philadelphia PA

collaboration, communities of practice: Alliances glossary 

competitive advantage: The business environment in the pharmaceutical industry is changing so fast that the Darwinian concept of "adapt or die" is on the mind of every senior executive. Genomics, microarray analysis, high- throughput screening, and other technologies have increased the complexity of pharmaceutical research; regulatory policy shifts and an ever- shrinking period of product exclusivity threaten profitability; and pharmacogenomics and personalized medicine may turn the old market structure on its head. 

competitive intelligence CI: The process by which a company analyses information available about its competitors, its market and its customers to be able to anticipate changes in the industry and make the right strategic decisions. Companies have been doing Competitive Intelligence for years, and it was usually part of a  "market analysis", a "strategic planning" or a "marketing" function. There are a number of formal definitions of Competitive Intelligence (CI). The Society of Competitive Intelligence Professionals (SCIP) defines CI as "the legal collection and analysis of information regarding the capabilities, vulnerabilities, and intentions of business competitors, conducted by using 'open sources' and ethical inquiry." There is also  a broader definition: CI is the team process of discovering, analyzing, and delivering intelligence from publicly available, non- proprietary information sources for the purpose of becoming more competitive in the marketplace. CI Primer: Introduction to Competitive Intelligence, Industry Canada http://strategis.ic.gc.ca/sc_mangb/cip/engdoc/ci_intro.html

Wikipedia: competitive intelligence  http://en.wikipedia.org/wiki/Competitive_intelligence Definition and external resources.

Competitive Intelligence Glossary, Pine Ridge Group, http://www.pineridgegroup.com/prg/ciintelglossary.htm 100+ definitions

compound annual growth rate: Forecasting.

concentration ratios: http://www.agbioforum.org/v6n3/v6n3a07-oehmke.htm 

consolidation: See under mergers & acquisitions.

convergence strategies: Finding new combinations of formerly distinct market segments for a company’s pharmaceuticals, therapeutic devices, and diagnostic processes or equipment. CHA, Cambridge Healthtech Advisors,  Strategic Considerations for the US Pharmaceutical Industry report, 2005

core competencies: A harmonious blend of capabilities which are difficult for competitors to imitate. Traditionally, core competencies have been directly linked to the competitive attributes of price and performance of products and services. But as techniques and standards for achieving low cost and high quality are increasingly simple to imitate, core competencies must be continuously refined as the source of differential advantage. This implies that today and in the future, the real source of competitive advantage lies within the ability to optimize the blend of technology, procedures, and human skills, all with attributes of flexibility and the ability to optimize the changing opportunities in environment and marketplace. [American Institute of Certified Public Accountants "CPA Vision Process Glossary"  http://www.cpavision.org/poll/glossary.cfm

corporate DNA: A company's core values, culture, personality, etc., that supposedly gets passed along to all new employees. Corporate DNA, however, is actually altered slightly every time a new person is hired. And a wholesale shift can occur by simply replacing the CEO. Nominated by Laurel Sutton.  Buzzwords, Buzzwhack, 2002  http://www.buzzwhack.com/buzzcomp/indac.htm

deals: Alliances glossary

development: Research glossary

disintermediation: An Internet term referring to the removal of intermediaries in a commercial transaction. The trend toward disintermediation in healthcare will actually arise from the application of the Internet to healthcare.  In one example, Orchid Bioscience announced GeneShield.com an Internet- based genetic testing service to identify people with mutations that could trigger side effects or reduce the efficacy of certain widely- prescribed drugs. Use of this service can potentially place more knowledge and decision power in the hands of the consumer.  There are at least a half dozen of these websites with business models similar to GeneShield.com, all directed to the consumer. CHI Summit Report Transforming the Pharmaceutical Industry  2001

disruptive technologies: Some technology improvements are linear or incremental. Others truly change the paradigm. Harvard Business School faculty member Clayton Christensen's Innovator's Dilemma (1997) analysis (of data from the disk drive industry) found disruptive technologies are much cheaper than existing ones.

Big mainstream companies were quite capable of developing these technologies (and had). What they couldn't do was figure out how to market them (and justify devoting sufficient resources to them).

The pharmaceutical industry is mentioned only in passing, but the success of larger established companies either partnering with smaller less established ones (clearly happening in the pharmaceutical and biotechnology sectors) or spin- off of promising developments as separate companies (Johnson & Johnson said to be particularly good at this) makes a lot of sense.

Related term: nonlinear

drug development: China:  China has become a partner of choice for international biopharmaceutical companies. In order to minimize unnecessary expenses, time and risk involved in R&D, companies have found an effective solution and worthy partner in this low-cost region populated by a highly-skilled drug discovery and development talent pool. In addition, due to its growing western-educated middle class, China presents valuable commercial opportunities for pharmaceutical and biotechnology companies.

However, companies want to be certain their intellectual property and proprietary processes are protected and that the effort of an overseas operation is ultimately worth the effort. For those interested in taking advantage of the recent regulatory improvements, skilled labor, patient population and quality research of the region, there are methods for overcoming the obstacles and leveraging the incredible opportunities offered by China.   Drug Development China: Strategies for Launching Drug Discovery & Development Activities, Sept 17- 18, 2008, San Francisco, CA

drug development - costs: The fully capitalized cost to develop a new drug, including studies conducted after receiving regulatory approval, averages $897 million, according to an analysis by the Tufts Center for the Study of Drug Development.  The announcement expands on the $802 million estimate released by the Tufts Center in November 2001, by including post-approval R&D costs. The $802 million figure includes total average preclinical and clinical costs up to the time of receiving FDA marketing approval. Estimates are in year 2000 dollars. Joseph DiMasi et. al, Tufts CSDD,  May 13, 2003  http://csdd.tufts.edu/NewsEvents/RecentNews.asp?newsid=29

drug development -- India: Topics feature Best approaches to outsourcing, in/out-licensing, and risk sharing partnerships Protecting and managing your intellectual property (IP) Local perspectives on what are the true challenges in India Integrating efforts in India with all other worldwide research activities Actionable strategies for launching R&D activities  Drug Development India: November 15-16, 2007 • Philadelphia PA

drug discovery pipeline: Drug discovery & development

drug repositioning: Drug discovery & development 

drug utilization: The utilization of drugs as reported in individual hospital studies, FDA studies, marketing, or consumption, etc. This includes drug stockpiling, and patient drug profiles. MeSH, 1973

drug utilization review:  Formal programs for assessing drug prescription against some standard. Drug utilization review may consider clinical appropriateness, cost effectiveness, and, in some cases, outcomes. Review is usually retrospective, but some analysis may be done before drugs are dispensed (as in computer systems which advise physicians when prescriptions are entered). Drug utilization review is mandated for Medicaid programs beginning in 1993. MeSH, 1994

Related terms: ATC/DDD, EPhMRA, PBIRG

due diligence: The process by which V[enture C[apitalist]s conduct research on the market potential, competition, reference interviews, financial analysis, and technology assessment. Usually divided into business due diligence and legal due diligence. [Netpreneur Exchange, Glossary of terminology] http://www.netpreneur.org/funding/FundingArchive/mava2001/Glossary.html

Sample Due Diligence Checklist, Deloitte Touche http://www.deloitte.com/vc/0,1323,sid=2304&cid=3434,00.html

ebXML: Sponsored by UN/CEFACT and OASIS, is a modular suite of specifications that enables enterprises of any size and in any geographical location to conduct business over the Internet. Using ebXML, companies now have a standard method to exchange business messages, conduct trading relationships, communicate data in common terms and define and register business processes. [ebXML.org "About ebXML" 2001] http://ebxml.org/ Broader term: Computers & computing XML

economics: Industrial Economics of Biotechnology, Chris Green, Industry Canada, 2001.   http://strategis.ic.gc.ca/epic/internet/inoca-bc.nsf/en/ca00913e.html  Possibly a useful model for other countries.

elevator pitch: Sound bite version of your business plan.   
Advice on from the MIT Enterprise Forum http://www.mitforumcambridge.org/archive/r_apr00.html#editor

emerging companies: Understanding how early events in a firm's history determine its future path required collecting data on the earliest decisions made in shaping an organization, rather than studying the end product — mature firms. In addition, SPEC has gathered information on the broader organizational context to understand the alignment of employment practices with the strategy, organizational design, production technology, and culture. Entrepreneurs report that external stakeholders play a role in early decisions, so information has also been gathered on how financial players and professional services providers shape early practices.  Stanford project on emerging companies http://www.gsb.stanford.edu/spec/ 

enabling technologies:  Technology has always played a key role in the discovery and development process of drugs, but recently Pharma’s Enabling Technology Groups (ETG’s) have come under fire; blamed for failure or missing data signs and excluded from victories and successes. This internal organization with its complex reporting structures plays a vital role in the successes and failures of the organization and yet can get lost in the shuffle. There are many facets to this group and working closely with them is a key to an R&D department’s success. With ETG’s conflicting demands, and its service to various groups, project prioritization and resource allocation can sometimes be different than the internal client’s. As well, even with a successful implementation of a technology, the project can still fail because the roll out strategy had not been thought through or the team has moved onto other projects, leaving the rollout to the client. 

Frequently cited examples of enabling technologies for drug discovery and development are combinatorial chemistry, high- throughput screening, microarrays, bioinformatics and computational biology, nanotechnologies, and imaging (including biosensors and biomarkers).  

EphMrA: European Pharmaceutical Marketing Research Association  http://www.ephmra.org/main.asp?page=0    

ethical issues, ethics: See Ethics Ethical, legal and social issues ELSI.

FIPCO Fully Integrated Pharmaceutical Company: In the 1991 – 1992 cycle, people were obviously drawn to the FIPCO model, which is the fully integrated pharmaceutical model. This is based on the idea that it is reasonable for a life sciences startup company to pursue a strategy that involves development of all the downstream capabilities - basic R&D through clinical development, manufacturing, and, ultimately, marketing - under one roof. That philosophy was debunked as a viable business strategy for many of the companies from the 1991– 1992 class that tried to expend substantial resources to build those kinds of capabilities over a product portfolio that was quite narrow and limited in its maturity. In the last cycle of the mid-1990s, the business model that people came full circle to accept was more of an outsourcing model. In this we see companies focusing on what they do best and partnering with bigger companies for clinical trials, marketing and manufacturing. Russell Ray (Credit Suisse First Boston Health Care Group) Roundtable Discussion, Trends in Capital Markets From Convergence: Ernst & Young's Biotechnology Industry Report, Millennium Edition, 2001]

Not a term heard as frequently now as in the 1990's.  

Related terms: biotechnology industry, pharmaceutical industry

fail fast: A term that makes people in drug discovery and development wince, but considering the costs of later failures, it looks more and more like an attractive option.

failure http://www.cs.indiana.edu/mit.research.how.to/section3.13.html

financing: Financials glossary: See angel investors, collaborations, convertibles, mezzanine, PIPES, venture capital, warrants.

forecasting: See market forecasting

for-profit genomics: A loosely defined collection of commercial ventures that range from selling technologies, tools and information to delivering new drugs. David Malakoff, Robert F. Service "Genomania meets the bottom line" Science 291: 1193-1203, 16 Feb. 2001

fragmentation: See market fragmentation

franchises - pharmaceutical: In the pharmaceutical industry, we tend to think of franchises as a suite of relevant drugs marketed to a specific cluster of physicians. While this definition served our needs for sales efficiency and scientific credibility, it has left too much value on the table. We encourage the industry to re-think the idea of franchise in terms of brand identity, of the images, values and ideas consumers and other stakeholders, such as pharmacists, associate with a given brand. Vimal Bahuguna and Bob Lieberman, "From Patents to Franchises, Bogart Delafield Ferrier, US http://www.bdf.com/patentstofranchises.htm

free market: vs. price controls.  CHA, Cambridge Healthtech Advisors,  Strategic Considerations for the US Pharmaceutical Industry report, 2005 

genomic technologies: Includes bioinformatics, cloning, combinatorial chemistry, functional genomics, gene delivery, gene expression monitoring, gene identification, genetic variations/ SNPs, high performance computing, microarrays, protein arrays, protein function, protein interactions,  proteomics, sample prep, sequencing, target identification,  target validation.  Used to index CHI's Drug Discovery & Development Deals Database

global drug development: India, China, Greater Asia, Latin American, Eastern Europe, and Russia/CIS present great opportunities for the international pharmaceutical industry. In order to minimize the expenses, time and risk involved in R&D, companies have found an effective solution and worthy partner in many of these low-cost regions populated by highly-skilled drug discovery and development talent pools. In addition, due to growing populations and an expanding middle class, some of these emerging regions present valuable consumer market opportunities for pharmaceutical companies.

Despite these trends and rewards, companies are wary of quality, infrastructure and the protection of their intellectual property and proprietary processes. The role of these regions has grown beyond simple outsourcing and thus the complexity of projects has increased. Some trepidation is warranted. However, the consensus is that the rewards outweigh the risks and the issue is now how to leverage these emerging regions effectively.  Global R&D Strategic Planning for Discovery and Development Operations in China, India and other Emerging Regions, May 29- 30, 2008 • Washington DC

Global Industry Classification Standard GICS:  GICS classifications aim to enhance the investment research and asset management process for financial professionals worldwide. It is the result of numerous discussions with asset owners, portfolio managers and investment analysts around the world and is designed to respond to the global financial community’s need for an accurate, complete and standard industry definition. The GICS structure consists of 10 sectors, 24 industry groups, 64 industries and 139 sub-industries. Morgan Stanley Capital International Inc., GICS  http://www.msci.com/equity/gics.html  

harmonization of pharmaceutical regulations: Drug approvals & clinical trials glossary

healthcare - high cost of:  Michael Porter on http://hbswk.hbs.edu/item.jhtml?id=4255&t=strategy 
Healthcare: Baker Library Guide, 2005 http://www.library.hbs.edu/guides/healthcare/ 

healthcare management:  The C[enter for]H[ealthcare]M[anagement] encourages cross-disciplinary exchange — between management and information technology strategists, healthcare payers and providers, diverse academic specialties and disparate geographies. In particular, we seek to understand how the fusion of business and technology innovation can create new, effective healthcare industry solutions. IBM Center for Healthcare Management http://www-935.ibm.com/services/us/gbs/bus/html/chm_overview.html 

high tech industry: The traditional perception of high tech - still reflected in our indicators - has been research- intensive manufacturing industries, like computers and aircraft. The penetration of technologies like information technology, biotechnology, and advanced materials throughout the economy has, however, changed the basic meaning of high tech. Rather than referring to the output of R&D intensive industries, high tech now refers to a style of work applicable to just about every business ... This change is said to have revolutionized the features of a successful technology policy. Distributed knowledge, skill, entrepreneurship, together with new forms of collaboration between firms, universities and the government, can now result in more effective products and services.  Importantly for both firm and worker income, they can result in significantly differentiated products and services. In other words, technology policy must be more user- centered and demand- based than ever before. [Nicholas S. Vonortas "US Policy towards Research Joint Ventures" Nov. 1999]  http://www.feem.it/web/activ/wp/abs00/14-00.pdf

hype: In the long run, not a useful contribution to awareness of and debate about 21st century science. 

Related terms marketing; Genetic testing glossary "good genes, bad genes"

hypercompetitive:  In Richard A. D'Aveni's Hypercompetitive Rivalries: Competing in Highly Dynamic Environments, (1995) he describes situations in which competitive advantages are not sustainable. Companies must be willing to cannibalize their own customers and positions, making all products obsolete including their own. The pharmaceutical industry is sometimes described as hypercompetitive.

idea markets: Ajit Kambil, You can bet on idea markets, HBS Working Knowledge, Dec. 1, 2003 http://hbswk.hbs.edu/pubitem.jhtml?id=3808&t=innovation

life cycle management: Successful drugs follow a typical pattern of heavy up- front investment in development, followed by market penetration and peaking sales, followed by a decline in the face of follow- on drugs or generics. A number of approaches can be used to alter the shape of this revenue curve, including second- generation follow- on compounds, extended life through formulation and drug delivery enhancements, outcome studies and management of the generification process. Some steps can be taken early to maximize the benefits of drug life cycle management. 

MDDL Market Data Definition Language: An XML- based interchange format and common data dictionary on the fields needed to describe 1) financial instruments, 2) corporate events affecting value and tradability and 3) market-related, economic and industrial indicators.  http://www.mddl.org/default.asp

METI Ministry of Economy, Trade and Industry: In January [2001] the Ministry of International Trade and Industry was transformed into the Ministry of Economy, Trade and Industry (METI).   http://www.meti.go.jp/english/

Previously known at MITI, Japan. Described as "an ambitious effort to restructure the research arm of Japan's industry ministry", made up of 45 institutes and centres with a structure "designed to combine application- orientated goals with considerable operational autonomy for the institutes". [D Cyranoski "Goal- directed revamp for Japanese research" Nature 401:7, 1 Mar. 2001] 

Related term Alliances glossary TRAs Technology Research Associations.

MITI Ministry of International Trade and Industry (Japan): Now MET

management informatics: 

market forecasting- pharmaceutical:   Accurately forecasting the market potential for new compounds is becoming an essential tool in long- term strategic planning, as it aids in various decisions that are pivotal to the survival and success of a biotech or pharmaceutical company. Forecasting is used in many situations: to evaluate a licensing opportunity, to assess a particular lead compound and even in pipeline and R&D portfolio analyses. Forecasting is also essential in understanding how the dynamics of a market are changing, and in raising awareness of a company's current and future competitors. .. Top- down forecasting extrapolates from available sales data, using algorithms of how a particular drug class or market has previously performed. Bottom- up forecasting involves reconstructing the market from its components, which allows the analyst to model how particular changes over the forecast period will affect the base- year assumptions.  John Earl "What makes a good forecaster?" Nature Reviews Drug Discovery 2(1): 83, Jan. 2003 http://www.nature.com/drugdisc/nj/articles/nrd1005.html

market fragmentation - pharmaceutical industry: Likely to occur as drugs are developed for specific population subsets with optimized safety and efficacy. Of the perils listed, this is perhaps the least founded. Currently, the percentage of patients that react favorably to a drug ranges from 20-80%. The market segments itself as patients and doctors switch between medications in order to find the one that works. In fact, market share may erode further even in the absence of significant competition as physicians avoid prescribing a drug if a subset of patients suffer toxic side effects. By defining the population that responds well to a drug, pharmacogenomics can help secure market share. Blockbusters are still possible if the defined population is large. [CHI Summit Pharmacogenomics report]

market research: Can be difficult to impossible to find data in emerging sectors and for disruptive technology. 

Related term: competitive intelligence

megabrands: According to AstraZeneca, a megabrand is a product that has the following characteristics: Reaches $1 billion in annual sales by year two of launch and is clearly destined to achieve peak sales of several billion dollars Requires a rapid global roll- out to around 60 countries within that two- year period Needs a huge marketing investment.  [IMS Health, Market Insight, Mar. 2, 2000 http://www.ims-global.com/insight/news_story/news_story_000201e.htm

Related term: brand name sector

milestones: Specific business accomplishments, often tied to funding sources.

Molecular Medicine Tri-Conference April 19-22, 2005, San Francisco CA  

multibusters:  Multiple drugs for a single indication, efficacious in identifiable sub- populations.

Related term: blockbuster drugs

NAICS North American Industry Classification System: Replaces US SIC codes. Developed jointly by the U.S., Canada, and Mexico to provide new comparability in statistics about business activity across North America. http://www.census.gov/epcd/www/naics.html   

An industry taxonomy. Related term SIC codes

NAPCS North American Product Classification System: On February 2, 1999, in partnership with its counterparts in Mexico and Canada, the Economic Classification Policy Committee (ECPC) of the [US] Office of  Management and the Budget launched a three country initiative to create a product classification system for NAICS industries. We will use this classification system to coordinate the collection, tabulation, and analysis of output and price data for the products. http://www.census.gov/epcd/products/

non-genomic technologies: Categories used to index CHI's Drug discovery and development deals database include animal models, bioproduction,  cell based screening,  cell culture, combinatorial chemistry, diagnostic, drug delivery, lab automation,  labels, signaling & detection, lead discovery, lead optimization, medicinal chemistry, sample prep, separations, therapeutics.

open source intelligence: Wikipedia  http://en.wikipedia.org/wiki/Open_source_intelligence 
Not related to open source software.

optimization: A discipline that uses mathematics and computer science techniques to solve complex business problems whose results depend on hundreds, thousands, or even millions of interconnected variables.  Open Channel Foundation "Optimization" http://www.openchannelfoundation.org/discipline/Optimization/

Narrower terms: process optimization; Assays & screening lead optimization

organization of pharmaceutical R&D: By far the most common organizational structure within pharmaceutical R&D is based on therapeutic indications. As target pathways and target families become better recognized as opportunities for synergistic development that cut across disease indications, what are the implications for how best to capture this synergy? As molecular tools are increasingly applied beyond target biology to more of the entire development process, how can expertise in specific tools best be leveraged across different departments? As chemistry and biology become more intertwined, how can researchers trained in one discipline or the other learn to better communicate with each other? As researchers trained in reductionist techniques and used to working on small projects become involved in much larger systems biology and high throughput chemistry projects, how does this change the nature of the work they do? What organizational structures and policies may facilitate optimal performance under these changing conditions? 

outpartnering: How is this different from outsourcing and/or partnering?

outsourcing:   In the battle against declining productivity, pharma companies have generally responded by restructuring the R&D organization, investing in technology tools and platforms, and entering into mergers and deals. However, an alternative and highly effective approach to the innovation deficit has been quietly gaining momentum. This report examines the reasons, the models, and the benefits of outsourcing in five key areas of R&D: discovery research, ADMET, formulation manufacturing, full-scale manufacturing, and clinical development.  CHA Cambridge Healthtech Advisors, Successful Outsourcing of Pharmaceutical R&D: Trends and Strategies report, 2004

Related term: Drug Approvals Glossary CRO Contract Research Organization

partnering: Alliances glossary partnering - proteomic partnering - big pharma and biotech

patent: Intellectual property & legal glossary

people: One of the most important information resources, particularly in an area changing and evolving as rapidly as the biopharmaceutical industry is and has been. 

pharmaceutical industry: The pharmaceutical industry thrives on innovative products and clinically differentiated medicines that can create real value. Innovation has the greatest impact on a pharmaceutical company’s long- term success, yet pressure to reduce drug prices from both government and consumers may force drug companies to seek alternative revenue streams. ...  a thorough analysis of current trends and issues that are challenging high- level decision making, including the following: The main issues that companies face as a result of globalization. The need to align products and markets, and differentiate products. Key issues in forming development partnerships. Convergence strategies  — finding new combinations of formerly distinct market segments for a company’s pharmaceuticals, therapeutic devices, and diagnostic processes or equipment. Outstanding needs in new product development & commercialization. Managing the regulatory environment and drug approval process. Insight Pharma Reports, 2015: Strategic Considerations for the U.S. Pharmaceutical Industry report, 2005

Rocked by massive drug withdrawals, charges of greed and dishonesty, exploding pipelines, and a proliferation of regulations, the pharmaceutical industry has reached a tipping point. Big changes are coming—it’s just not clear what they will be. PharmaWeek About PharmaWeek  http://www.pharmaweek.com/pharmaweek.asp 

I have said for a number of years that I hoped drug companies which encouraged open sharing of scientific information would prosper in the long run, but without finding much evidence (even anecdotal) to validate this.  I was delighted to find the following report which quantified the positive correlation between companies encouraging peer reviewed scientific publication and productivity (correlating patents issued to company scientists with articles published in peer- reviewed journals by company scientists). Diffusion of Science Driven Drug Discovery Organizational Change in Pharmaceutical Research,  Iain M. Cockburn, Rebecca Henderson and Scott Stern, NBER, Sept. 1999  http://www.cid.harvard.edu/cidbiotech/events/henderson.htm  

Related terms: biotechnology industry, blockbuster drugs, market fragmentation. 

Pharmaceuticals Library Guide Baker Library, Harvard Business School, 2005 http://www.library.hbs.edu/guides/pharma/   Annotated bibliography

pharmagraphics: The emerging discipline of understanding how different segments of the population relate to their health information needs. How do factors such as age, income, education or disease indication affect consumer behavior and preferences? How can a better understanding of these segments be used effectively to improve the impact of promotional and educational spending allocations between different channels and campaigns

Related term: psychographics

platform companies: The pharmaceutical industry faces a crisis of productivity in R&D, and hundreds of new companies have been founded based on tools that can aid in improving drug development. There is a growing consensus, however, that the business model of a tool provider faces enormous challenges, compounded by being out of favor by the investment community. In order to obtain new, or additional funding, many technology companies are remaking themselves into drug discovery companies, employing their proprietary technology not as a service for others, but for the in-house discovery of therapeutics.

Also referred to as "technology platform companies", the ones developing and marketing the instrumentation and informatics needed to make use of genomic data - the 21st century equivalent of the pick and shovel manufacturers of the 19th century Gold Rush.

platform technology: A technique or tool that enables a range of scientific investigations. Examples include combinatorial chemistry for producing novel compounds, high- throughput screening for in vitro chemical screening, and in vivo biophotonic imaging for disease detection and chemical testing in living animals. [Xenogen Glossary, 2001] http://www.xenogen.com/glossary.html

price controls:  vs. free market. CHA, Cambridge Healthtech Advisors,  Strategic Considerations for the US Pharmaceutical Industry report, 2005 

price trends - prescription drugs: The purpose of this report is to examine pricing dynamics for prescription drugs for recent years. The prices of new drugs will be analyzed over time and by factors that may be associated with launch prices. Price trends for 1995 to 1999 will also be examined by therapeutic category for a number of major categories (in terms of expenditure levels or growth) with well- defined subclasses that can be analyzed individually and compared on the basis of the age of the category. The pricing of generic substitutes in these therapeutic categories will also be provided for comparative purposes. Finally, launch prices during the study period for new entrants to existing subclasses within the therapeutic categories will be examined and compared to the prices of the incumbents in the subclass.

The results show that new drugs can vary substantially in their impact on drug expenditures. Some drugs are introduced at significant discounts to existing drugs that are highly substitutable with the new drug. In addition, while entirely new classes of compounds to treat a disease or condition are often priced at a premium relative to older classes, this is not always the case. The data also suggest that new drug prices tend to reflect the degree of price sensitivity in the market and the perceived value of the product to patients. Finally, average price increases over time for the pharmacologic and chemical classes examined varied in all directions in relation to general price inflation. However, most class price increases were similar to economy- wide inflation rates. Joseph A. DiMasi, PRICE TRENDS FOR PRESCRIPTION: PHARMACEUTICALS: 1995- 1999, Aug. 8- 9, 2000 http://aspe.hhs.gov/health/reports/Drug-papers/dimassi/dimasi-final.htm

process optimization: Rather than focusing on technology alone, companies must closely examine workflow, capacity and communication to optimize discovery much as one might optimize a manufacturing process. Benchmarking performance at multiple points within drug discovery and development is an essential pre- requisite to process optimization. 

productivity:  Iain Cockburn, a professor at the Boston University School of Management who has extensively studied pharmaceutical research productivity, believes the current dearth of new drugs is merely an inevitable pause in the industry's development cycle. Today's drug deficit is often compared with a golden age of applications in the early 1990s that were spawned by advances in small- molecule chemistry 15 to 20 years earlier, he says. Now the industry is adjusting to a new era of molecular biology that will take time to produce results.

The adjustment, Cockburn suggests, was side- tracked somewhat by the 1990's biotechnology boom, which confused the process of drug development as large pharmaceutical firms and biotech companies sorted out their roles as potential rivals and collaborators. Further, he says, it is simply harder to invent new drugs now, because the low- hanging fruit -- such as the once- revolutionary ace inhibitors -- has already been plucked. "Now the industry is focusing on cancer, Alzheimer, and exotic viruses. They're working on tougher problems," he says. "The way you come up with these drugs is through a lot of heavy- duty science rather than industrial chemistry, and it's just a lot more expensive."  Susan Warner, Pipeline Anxiety: Scientists Pumped into New Roles, Scientist, 17 (10) May 19, 2003  http://www.the-scientist.com/yr2003/may/prof1_030519.html

spin-offs: Large(r) companies may find spinning off smaller divisions (or newly acquired ones outside their core competencies) makes more sense than trying to integrate different companies and cultures. Some spin- offs eventually become larger than the parent.  Johnson & Johnson is noted by Clayton Christensen in his Innovator's Dilemma as being particularly good as spinning off a number of successful enterprises. 

Related term: disruptive technologies

stage gate criteria: Process for making periodic go/no go decisions in R&D standards: A challenge to develop for disruptive technologies. See standards: See also Expression glossary Microarrays glossary 

start-ups: Startups, the authors [Joshua S. Gans, David H.  Hsu and Scott Stern] observe, have two options when it comes to commercializing innovations. They can compete with incumbents through the product market, or they can cooperate with established businesses by selling their technologies through the market for ideas. In the second case, a startup can, for example, license its technology to a larger company, form a strategic alliance or agree to be acquired outright. If entrepreneurs typically choose one of these cooperative strategies, the balance of market power is likely to be preserved. But if they decide to compete with industry leaders, Joseph Schumpeter's "gale of creative destruction" may well be unleashed. ...when intellectual property protection is strong and complementary assets are critical for success, startups can earn the highest returns by becoming ideas factories and auctioning their innovations to established corporations. The pharmaceutical industry is one sector in which that pattern has prevailed. What's the best Commercialization Strategy for Startups? Sloan Management Review, 43 (3): 10, Spring 2002 http://web.mit.edu/smr/issue/2002/spring/1c/

New businesses, often one looking for funding. Examples of start- ups that eventually achieved capitalization and revenue greater than its parent include: Affymetrix, Abgenix and Guilford Pharmaceuticals.

Merriam-Webster dates the use of "start-up" to 1845.   

See also emerging companies

technology sensing:  

technology transfer: Alliances glossary

time to market: A major consideration for strategic planning in the pharmaceutical industry.

translational medicine: Molecular medicine glossary

UDDI Universal Description, Discovery and Integration project: The project creates a platform- independent, open framework for describing services, discovering businesses, and integrating business services using the Internet, as well as an operational registry.  http://www.uddi.org/about.html

uncertainty: Molecular Medicine glossary

venture capital, venture leasing: Financial glossary

war games: see business war games

white space: Financial glossary.  
Related term: market research

XBRL eXtensible Business Reporting Language: Provides a common platform for critical business reporting processes and improves the reliability and ease of communicating financial data among users internal and external to the reporting enterprise. XBRL.org http://www.xbrl.org/