In the middle of the 20th century, pharmaceutical companies were highly respected and patients depended on their physicians to make healthcare decisions for them. Drugs were a key part of a physician’s “toolkit.” As we entered the era of blockbuster drugs, most drugs were small molecules created by chemical synthesis, but biotechnology was beginning to emerge as a possible source of new therapeutics. Meanwhile, direct-to-consumer pharmaceutical advertising began to empower patients. Fast-forward to today and we see pharmaceutical companies suffering degraded reputations and values, patients being empowered by the Internet and social media, and average life expectancies increasing by a decade. Digital health technologies are posed to explode and the top 10 pharmaceuticals by sales will soon all be biologicals!

1. Passing
the
Healthcare
Innova2on
Torch:
From
Medicinal
Chemistry
through
Biotechnology
to
Digital
Technology
Fron2ers
of
Medicine
MaRS
8
May
2013
Mar2n
Sumner-­‐Smith

3. Abstract
In
the
middle
of
the
20th
Century,
pharmaceu2cal
companies
were
highly
respected
and
pa2ents
depended
on
their
physicians
to
make
healthcare
decisions.
Drugs
were
a
key
part
of
a
physician’s
‘toolkit’.
As
we
entered
the
era
of
the
blockbuster
drugs,
most
were
small
molecules
made
by
chemical
synthesis,
but
biotechnology
was
star2ng
to
emerge
as
a
possible
source
of
new
therapeu2cs.
Meanwhile,
direct-­‐to-­‐consumer
pharmaceu2cal
adver2sing
began
to
empower
pa2ents.
Fast
forward
to
today,
and
we
see
pharmaceu2cal
companies
suffering
degraded
reputa2ons
and
values,
pa2ents
further
empowered
by
the
Internet
and
social
media,
and
average
life
expectancies
increased
by
a
decade.
Digital
health
technologies
are
posed
to
explode
and
the
top
10
pharmaceu2cals
by
sales
will
soon
all
be
biologicals!

4. About
me
Martin Sumner-Smith, PhD
Academic – Biotechnology – Bioinformatics – Enterprise – Advisory
1970’s 1980’s 1990’s 2000’s 2010’s

5. http://en.wikipedia.org/wiki/Kondratiev_wave

6. Global
Core
Systems
The world’s 4 trillion dollar challenge, Using a system-of-systems approach to build a smarter planet – IBM

8. Inefficiency
in
Healthcare
The world’s 4 trillion dollar challenge, Using a system-of-systems approach to build a smarter planet – IBM

10. Pharmaceuticals
Digital Health
Biotechnology
Medicinal Chemistry

11. “…the
industry
has
seen
itself
as
an
independent
product
supplier
to
healthcare
rather
than
as
an
integrated
part
of,
and
collaborator
with,
the
other
par8cipants
in
the
ecosystem.”
Fade or flourish? Rethinking the role of life sciences companies in the healthcare ecosystem – IBM

12. Market
Growth

13. Patent
Expiry
Fade or flourish? Rethinking the role of life sciences companies in the healthcare ecosystem – IBM

14. Declining
R&D
produc2vity
Fade or flourish? Rethinking the role of life sciences companies in the healthcare ecosystem – IBM

15. R&D
Success
vs.
Expenditure
Identifying R&D outliers
Peter Tollman, Yves Morieux, Jeanine Kelly Murphy & Ulrik Schulze
Nature Reviews Drug Discovery 10, 653-654 (September 2011)

16. Identifying R&D outliers
Peter Tollman, Yves Morieux, Jeanine Kelly Murphy & Ulrik Schulze
Nature Reviews Drug Discovery 10, 653-654 (September 2011)

17. http://www.lek.com/sites/default/files/in_vivo_new_face_of_blockbuster_drugs_l.e.k.pdf

18. Life
Sciences
Industry
Trends…
• Blockbuster
era
comes
to
an
end
• Strong
sales
growth
but
declining
expecta2ons
§ P/E
for
large-­‐cap
biopharma
fell
from
35x
in
2000
to
11x
in
2010
§ Pricing
and
access
pressures
§ Higher
scien2fic
hurdles
§ More
stringent
regulatory
hurdles
§ Increased
compe22on
§ R&D
actually
destroys
value
in
some
organiza2ons!

19. Slide
19
Time
MarketGrowth
Technology Adoption
Life Cycle
Growth
Market
Mature
Market
Declining
Market
Indefinitely elastic
middle period
End of
Life
A
Fault
Line!
E
D
C
B
The
Category
Maturity
Lifecycle
Category Lifecycle

20. Slide
20
Experiential
Innovation
Marketing
Innovation
Innova2on
Types
for
Mature
Markets
–
Customer
In2macy
Zone
Customer Intimacy Zone
Enhancement
Innovation
Line Extension
Innovation
There are four types of innovation in the Customer Intimacy Zone

21. Slide
21
Market
Access
• Moore
describes
this
further
market
development
as
‘frac2liza2on’
of
core
markets
PC

22. 1970’s 1980’s 1990’s 2000’s 2010’s
First DTG in 1981
Merck’s Pneumovax in Reader’s Digest
http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3278148/

23. http://www.zoloft.com/

25. Average
Life
Expectancy
https://www.google.ca/publicdata

26. TRIZ
Genrich
Altshuller:
“Theory
of
Inven2ve
Problem
Solving”
1. Problems
and
solu>ons
are
repeated
across
industries
and
sciences
2. Pa?erns
of
technical
evolu2on
are
also
repeated
across
industries
and
sciences
3. Innova>ons
used
scien2fic
effects
outside
the
field
in
which
they
were
developed
http://en.wikipedia.org/wiki/TRIZ

27. http://www.triz-journal.com/archives/1998/12/a/

28. http://www.lek.com/sites/default/files/in_vivo_new_face_of_blockbuster_drugs_l.e.k.pdf

29. http://www.lek.com/sites/default/files/in_vivo_new_face_of_blockbuster_drugs_l.e.k.pdf

30. Therapeu2c
Foci
Fade or flourish? Rethinking the role of life sciences companies in the healthcare ecosystem – IBM

31. Market
Leading
“Pharmaceu2cals”
• In
2012
the
top
pharmaceu2cal
was
a
biological
for
the
first
2me
§ Abbvie’s
HUMIRA
• “By
2020
the
top
10
pharmaceu8cals
will
all
be
biologicals”
–
Steve
Burrill

32. Sales
Erosion
aaer
Patent
Expiry
Small Molecule
Biologicals
Measuring the return from innovation: Is R&D earning its investment? – Deloitte

33. Ultra-­‐Orphans
http://www.forbes.com/sites/matthewherper/2012/09/05/how-a-440000-drug-is-turning-alexion-into-biotechs-new-innovation-powerhouse/
Alexion’s Soliris

34. R&D
Innova2on
• Rising
costs,
especially
sunk
cost
for
failures
§ Late
stage
failure
rates
too
high
• Declining
output
§ Need
to
simplify
opera2ons
• Costs
7x
in
25
years
§ Cost
per
new
drug
now
$1.1
-­‐
1.7
billion
§ Slow
pace
of
discovery
and
valida2on
§ Inefficient
pa2ent
recruitment
• 80%
miss
deadlines,
average
90
day
delay
§ Complex
analysis
required
for
trial
termina2on

35. Risk
Mi2ga2on
The future of the life sciences industries:
Transformation amid rising risk – Deloitte

36. http://www.forbes.com/sites/johnnosta/2013/04/16/digital-health-will-pharma-follow-or-lead/

37. Life
Sciences
Industry
Trends
• Tradi2onally:
A
high-­‐risk,
high-­‐margin
business
• But
increasing
pressures:
• Loss
of
patent
protec2on
&
compe22on
from
generics
• Costs
of
innova2on
and
R&D
skyrocke2ng
• Reimbursement
ceiling
and
demands
• Increased
transparency
required
by
regulators
&
others
• Drive
a
move
to:
Managed
risk
and
more
conserva>ve
margins

38. “The
life
sciences
industry
stands
at
a
crossroads.
Its
business
model
is
broken,
and
the
surrounding
healthcare
ecosystem
is
changing
drama8cally.
So
how
should
companies
respond?
They
can
carry
on
as
normal
and
poten8ally
fade
into
insignificance
or
completely
rethink
how
they
engage
with
the
other
stakeholders
in
the
healthcare
ecosystem
in
an
effort
to
flourish
anew.”
Fade or flourish? Rethinking the role of life sciences companies in the healthcare ecosystem – IBM

39. “…you
can’t
meet
the
challenges
of
tomorrow
with
yesterday’s
tools—and
expect
to
survive.”
The
future
of
the
life
sciences
industries:
Transforma2on
amid
rising
risk
–
Deloiie

40. Pharmaceuticals
Digital Health
Biotechnology
Medicinal Chemistry

41. “One
of
the
key
drivers
for
the
future
lies
in
using
informa8on
to
create
more
personalised
care
and
standardisa4on
at
the
same
8me.
We
are
witnessing
the
‘industrial
revolu8on’
of
healthcare,
enabled
by
IT”
–
PA
Consul2ng

42. “And
while
the
industry
remains
data
rich,
it
is
weaker
when
it
comes
to
turning
data
into
insights.”
Fade or flourish? Rethinking the role of life sciences companies in the healthcare ecosystem – IBM

44. From vision to decision: Pharma 2020 – pwc

45. Engaging
the
Pa2ent
http://www.ted.com/talks/jamie_heywood_the_big_idea_my_brother_inspired.html

46. “The
shiPing
trend
in
pharma
towards
increased
adop8on
of
IT
beyond
their
tradi8onal
needs
and
exploring
new
IT
avenues
in
digital
marke4ng,
regulatory
submissions,
predic4ve
analysis
&
cloud
compu4ng
has
become
more
evident
in
the
last
few
years.”
IT
Life
Sciences
Summit
2012:
Technology
Enabled
Pharmaceu2cal
Business
Transforma2on
–
DIA

47. Change
Time
Achieved
Expected

49. Gartner’s
Hype
Cycle

50. Source: http://www.infoq.com/news/2012/08/Gartner-Hype-Cycle-2012

55. http://rockhealth.com/2013/04/2013-digital-health-funding-update/

57. http://www.xcubelabs.com/mhealth-infographics.php

58. Smartphone/Tablet
base
features
• Processor
• Local
and
Cloud
storage
• Distant
communica2on
• Time
• Loca2on
• Ac2vity
• Local
communica2on
• Camera…

60. Wearables
IMS estimates $14 million in 2011
rising to $171 million by 2016

61. Add-­‐ons

63. Proteus Digital Health

64. The
Internet
of
things
–
M2M

67. Watson

69. Where
do
the
data
go?

71. Synergy
“At
8:03am
you
used
your
asthma
puffer
while
entering
the
MaRS
concourse,
walking
at
a
moderate
pace
towards
the
Tim
Horton’s
aPer
an
unusually
long
subway
ride.
Your
pulse
was
110,
blood
pressure
135/80,
temperature
37.2,
blood
glucose…”

72. “Based
on
data
collected
to
date
I
es8mate
that
there
is
78.9%
probability
of
an
allergen
to
which
you
react
present
at
the
following
loca8ons…”

73. Pa2ent
empowerment
trends

74. Thank
you
Martin Sumner-Smith, PhD
Email: martins@digitalforhealth.com
Office/Mobile: 1 (416) 727-4426
Web: www.DigitalForHealth.com
Twitter: @martinss
Linkedin: http://ca.linkedin.com/in/martinss