Example of the Impact of Strategic Planning

Original post can be found here on LinkedIn (part 2 of 2).

In our last post we discussed the importance of having a clear strategic future vision for ensuring sustained business performance. In this dialogue we’ll dive into an example of where Pharma Executives have failed to have, or utilize, a strategic vision for the future.

Governments worldwide are facing significant budget deficits and policymakers are increasing looking to biopharma for cost offsets. As a result, we are seeing the evidentiary standards required for access and pricing increasing worldwide. In France and Germany, the percentage of new product evaluations that are ASMR V or deemed to have no added benefit have doubled since 2020. Spain and China have implemented new mandatory HTA processes, and Germany has established a higher rate of response for PRO study results to be considered valid. In the U.S. the number of prescription medications excluded from one or more PBM formularies has increased dramatically, with exclusions being seen for the first time with oncology and hematology products.

The IRA has established a mandatory Medicare “negotiation” process with a pricing ceiling but no floor, and a political appointee (Secretary for HHS) has been granted enormous discretion in deciding how pricing will eventually be determined. All of this has disrupted the traditional biopharma pricing model and led to a far less predictable market for investors. The resulting near-term revenue cliffs have led to lower biopharma valuations and companies looking to BD, M&A and cost optimizations.

To reduce costs, many companies have turned to consulting firms that employ across the board cuts and benchmarking of reporting layers and spans of control as a means of reaching their cost reduction targets. Not only is benchmarking the fastest path to mediocrity but given the fact that Access organizations are largely payroll driven and highly specialized, the reductions required are disproportionately impactful to Access organizations. In addition, given the fact that approximately half of a typical Access organization is dedicated to functions that are required for a biopharma company to operate in the U.S., Access Strategic Marketing and HEOR are taking the brunt of these reductions.

So, rather than understanding the significant trend towards rising future evidentiary standards and the increasing focus on value, these executives are trimming the very staff and studies required to obtain access and gain pricing that is reflective of the holistic value of their drug products and thereby devaluing the economic potential of their future product launches. For these once successful biopharma companies to ensure sustained future performance, they will need to develop a clear, well researched and thought out, strategic vison for the future and then utilize it as a guidepost for re-designing their companies.

I have attached a post by Rita Numerof, PhD. I can’t recommend highly enough that you take the time to read it as well as the linked Forbes article.