Insiders' Guide To Winning In The Drug Delivery Device Market — Part 4: Vertical Integration
By Doug Roe, Chief Editor
This Q&A is the fourth in a five-part series that will examine industry opportunities in the drug delivery device space. Part 1 explored the overall market opportunity and some of the product design related challenges. Part 2 investigated the often conflicting guidance from CDER and CDRH. Part 3 exposed the silos that can be created by maintaining different quality systems for drug and device. The final installment will look at the role of mHealth and the Internet of Things (IoT) in drug delivery device development.
Whether you are an original device manufacturer, an outsourced service provider, or a component/material supplier, the opportunity for growth over the next 10 years in drug delivery devices is enticing. The proliferation of biologics will lead to a large demand for new devices in an industry that lacks the needed expertise.
The classic example of vertical integration comes from Andrew Carnegie and his steel empire. Carnegie Steel Company (CSC) began by simply manufacturing steel in its various mills. Not satisfied with its supplier networks, the company went upstream and purchased the mines that supplied the coal and iron ore. It then developed transportation networks to deliver the raw goods to its factories, and acquired the technology to design and build its own tools, molds, and ovens. Finally, CSC went downstream by using its inbound supply trains, trucks, and ships as an outbound distribution channel to its customers. The company not only attained all of these assets, but it also developed and embedded the related expertise to make the massive endeavor sustainable. By doing so, Carnegie was able to create, and then leverage, controls and efficiencies along the entire steel production ecosystem.
How does this example translate to drug delivery? While the complete vertical supply chain integration Carnegie achieved may not be feasible in today’s life science industry, the core concepts definitely apply. Historically, the design and development of drug and delivery device have occurred independent of each other. Pharma companies relegated delivery devices to an afterthought, as part of downstream packaging considerations. With the introduction of the Affordable Care Act, however, payers and regulators have shifted expectations to a value-driven model. How, and when, to bring these two parts of the supply chain together can be critical to success in this new reality.
Vertical integration does not have to mean producing “everything” in-house. However, its tenets can drive a complete combination product development strategy, as well as establish the internal core competencies needed to consistently execute that strategy.
I recently sat down with Anand Subramony, VP of drug delivery and device development at Medimmune (the global biologics arm of AstraZeneca). Anand has over 12 years of experience working in the drug delivery device space with companies such as Johnson & Johnson, Dr. Reddy’s Laboratories, and Novartis. In his current position, he has the rare responsibility of heading-up both drug delivery and delivery device development. We discussed his thoughts on trends in the drug delivery device market and how the business philosophies of vertical integration can play a role.
What therapeutic areas related to drugs administered via a delivery device will represent the biggest opportunity in 2016-17?
Anand Subramony: Clearly, rheumatology and other inflammation diseases. This is a space that will also see a lot of biosimilars coming out in the next few years. Asthma is an area where there is going to be tremendous value created by device delivery features that make a big impact on patient centricity. Another area is lupus, which will have some novel devices come into play.
Which drug delivery device platforms do you expect to have the most growth in 2016?
Subramony: We are going to see a lot of innovation in the prefilled syringe (PFS) space. We have some forms of PFS in the market now, but what I think we will see more robust designs (larger volumes), improved safety mechanisms, and needle retraction.
Auto-injectors will continue to be a key product. Much of this, again, is patient-centered, moving the treatment from hospitals to homes. It is all about providing the medication in the safest way, with minimum pain, and in a convenient fashion. There’s also a good chance we will see some large-volume auto-injectors and bolus injectors next year.
What will be some of the key challenges facing companies that are expanding competencies into these delivery device platforms?
Subramony: Over the last 10 years, many pharm/bio companies have toyed with the idea of how much they want to be a device company. How much should they be vertically integrated? That is still the biggest challenge, as the part of product pipeline that demands device continues to expand. It is not an easy answer. Company leadership teams need to immerse themselves through a few rounds of pipeline review, followed by product development cycles comparing build vs. buy timelines, to really understand where they want to be.
If you are vertically integrated, you can build the device capability or core competency within your company. The insulin market would be an example. The device is going to drive your product differentiation, so you build around it.
On the other side, a pharm/biotech may have a molecule that has advanced in terms of efficacy or mechanism of action. Its success may not be device-dependent, other than delivery. However, patient-centricity of the device, and what it can bring in terms of commercial differentiation, can still make a significant impact. So, the basic concepts of vertical integration still apply. In this case, you would build your core development model with a device partner, so you can fine-tune the combination product.
What about those considerations related to the new reimbursement expectations?
Subramony: Companies need to understand how payers are going to view one delivery solution over the other. It has to be part of the overall product development strategy from Phase 1. No longer can you wake up before Phase 3 and think, “Hey, we need this to be injected; let’s find a solution.”
How can drug companies drive innovation in delivery device design in 2016 and beyond?
Subramony: There is a lot of opportunity to advance patient compliance. Improving assurance (safety) and designing with a human factors / usability approach should be the main considerations. The goal should be to grow expertise and core competencies in device design.
Don’t just rely on your internal folks. Reach out to design companies and explore the whole idea of tech disruption. We work closely with such companies. Identify if you have the right experts in your organization and if you are building those unique competencies internally. Or, determine if you need to implement an external approach to have your people learn and grow that way.
What are your market growth expectations for drugs delivered by device?
Subramony: It is definitely going to be a market with double-digit increases, next year and beyond. Expect much of the imminent growth in auto-injectors and other devices capable of high volume and/or viscous drug delivery. The fundamental need is for patient convenience, coupled with reduction in cost of clinical care, by facilitating home use. Because of the growth in biologics, the research data is pointing toward device-based combination products overtaking oral as the prime delivery method.