By Paul Thomas, Senior Editor
In introducing biotech guru G. Steven Burrill today, Illinois BIO (iBIO) president David Miller likened the speaker to the Michael Jordan of biotechnology. “There will never be the next Steven Burrill,” he said. “At a critical time in biotech’s development, he was there.”
High praise, but indeed Burrill, head of Burrill & Company, has arguably been the leading guru and visionary within biotech in the past few decades. Not surprisingly, Burrill’s talk—delivered at an iBIO event at the University of Illinois at Chicago—was befitting of that label. His pronouncements and predictions were bold and sweeping. As usual, he was a font of juicy quotes (see list below).
All of the world’s biggest problems—from climate change to energy sufficiency to food security—have biotech as their solution, Burrill began. “One thousand years from now, we’ll look back and see this as mankind’s greatest moment . . . Shame on us if we don’t take advantage of this opportunity.”
“The good news is, the ball’s in our hands,” he said. “The bad news is, we don’t want to fumble it.”
Burrill believes that today’s health care system is essentially the same as 2,000 years ago. It is “episodic” in that we wait for disease to occur and then wait for doctors (today’s “tribal healers”) to tell us what to do. Too often the advice is wrong and the care doesn’t work.
“In the next eight years, we’re going to change everything,” Burrill said. We’ll move from a dysfunctional health care system to one that treats a “well population” more effectively. This change won’t come easily because doctors, pharmaceutical companies and other main actors within the traditional health care system “aren’t going to vote themselves off the island voluntarily.”
What’s Ailing the Global Health Care System?
Burrill framed his discussion with a discussion of the main challenges our health care system faces:
• An aging population
• The rise of chronic disease (“Most of the things that used to kill us don’t kill us any more. Unfortunately, a dead patient is a cheap patient . . . It’s expensive to keep everybody alive.”)
• Rising demand for improved health care vs. finite resources (“Most people and governments around the world believe that health care is a right, not a privilege.”)
• A misguided focus on treating, rather than preventing disease (There is an “inherent disincentive” to keep people well.)
• Innovation too often drives rather than lowers costs. (“As copays go up, societies are beginning to change this line of thinking, that it’s better to stay well that treat sickness.”)
• Unhealthy behavior is difficult to change.
• One-size-fits-all medicine not the most effective way to treat people. (“We’re at the end of blockbuster-ology” and entering a world of personalized medicine.)
Where Does Big Pharma Stand?
“The Big Pharma business model is evolving,” he said. “The dinosaurs of this generation are trying to figure out if they can change rapidly enough so they don’t become extinct.”
The pressure on Big Pharma companies is only intensifying, he says, as the costs of drug development continue to rise and more blockbusters are coming off patent. “It used to cost $200 million and seven years to get a drug to market,” he said. “Now it takes twice as long and seven times the cost. Less than 1 in 3 products that come to market ever recover their costs. That’s the problem for Big Pharma.”
This has resulted in the “massive dislocations” (especially layoffs) in marketing and especially R&D. “Today, Big Pharma says, R&D is the last thing we want to do . . . [it] has gone to an inorganic growth kind of thinking.”
“What does Big Pharma do better than anyone else in the world?” Burrill asked the audience. Discovery? Development? Manufacturing? The answer to all three is no.
Marketing and distribution? The answer is probably yes, he says. “Oceanliners called big companies are trying to move from a vertical orientation to a horizontal one and renting rather than owning everything.” If they can’t change fast enough, they’ll become irrelevant.
“Guys like Jeff Kindler at Pfizer tried to take some of these oceanliners and turn them around, but how do they do that?” he asked. They are investing in areas such as over-the-counter drugs, generics, emerging market branded generics, biosimilars, licensing, and so forth. As a result, “Big Pharma doesn’t look anything like it used to look like.”
How does pharma continue to innovate as it cuts its R&D? For one, said Burrill, it has “gone back to school,” striking deals with academia. (“This is somewhat nuts,” he said offhand. “Pharma wants access to that ability but has no interest in paying for the downstream development.”) It’s also getting involved in public-private partnerships, and engaging in “co-opetition” to share costs with other manufacturers.
And straight R&D investment is happening, but mainly overseas. He cited Merck in China and AstraZeneca and Bayer in Russia as examples.
Innovation Despite Poor Regulation
Ultimately, Big Pharma’s fate lies in its ability to truly innovate despite significantly greater barriers than in the past. One such roadblock, he noted, is FDA. “My friend [FDA Commissioner] Peggy Hamburg called me the other day and said, ‘I have a problem.’And I said, ‘I know: Everybody is trying to avoid you and get into other markets in the world and come to you later.’ We have a system where FDA is going from being the gold standard in the world to becoming a late adopter.”
“Innovation is tougher today than a decade or two ago,” he added, due also to weakening intellectual property and limited access to capital.
Despite its unfulfilled promises, personalized medicine still provides the greatest hope for change and for Big Pharma to rediscover success. “We all drank the koolaid that personalized medicine was going to be the savior of our industry,” Burrill said. “We were going to have designer drugs overnight.” This hasn’t happened, of course. “But if you stand back for a minute,” he said, “we’ve moved from a uniformity of disease to understanding the vast variability of patients” and moving from an “episodic sickness-care” world to one of preemptive and increasingly personalized medicine.
“It’s not a personalized medicine problem” to date, he said. “It’s spurious science. There’s gravel in the road, but don’t underestimate that we’re going to improve our knowledge and information.” When that happens, personalized medicine will truly take root.
And within the personalized medicine world, Burrill expects money to flow towards diagnostics (Dx) and away from therapies. “Rx value is going down, while Dx is going up. We’re in the midst of this massive shift in the value proposition of each. You’re going to live in a world of companion therapeutics where the value is going to be on the Dx side. Big Pharma companies don’t like to hear this, but I think it’s true.”
A few more of Burrill’s better lines:
• “This is an extraordinarily opportunistic time. You ought to be pumped up about it.”
• “The U.S. is not prepared for the fact that we are not going to be the economic engine of the world. We’ll be a little like Britain—with a strong past, but not that strong of an economy.”
• Emerging markets “several years ago represented only 15% of global sales. By 2020, they’ll represent 50% of global sales. How do we become the dominant companies in those countries we weren’t dominant in the past?”
• “Regulatory agencies are like a black hole—you can get into them but can’t get out.”
• “Suppose in June the Supreme Court throws out Obamacare. Does it matter? No. The system is going through dramatic changes and we can’t put it back in the box. It’s not really relevant to what we’re doing. Innovation is still going to happen. Don’t get hung up on [the outcome of] Obamacare.”
• “Aging is now looked at as a disease . . . It’s the fastest growing disease in the world!”
• “We have data today. We don’t have all the algorithms, but Big Data is with us and we’re going to be able to distill that information. In a few years, we can basically sequence everyone’s genome for almost nothing.”
• “Why was Roche willing to spend $7 million for Illumina? Genomics is going to be the secret sauce of diagnostics in the future.”
• “We’re in austere times. Austerity is our friend. It will reward discipline in creativity. Values are now distorted in biotech on the low end. The opportunity to create value has never been greater.”
Finally, for the biotech investors and innovators on hand, Burrill provided a list of areas that will make a difference in our future:
• high-speed, low-cost genomic sequencing
• artificial intelligence
• smart pills
• stem cells
• gene therapy
• systems biology/synthetic biology
• cheap/global access to internet
• mobile phone apps
• 24/ body wearable monitors
He concluded: “Are we going to change the health care system? You bet! All of this stuff exists today.”
–image courtesy oceanlinermuseum.co.uk
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