A pharmaceutical company that is complete in all the necessary research and business operations and divisions is called a fully integrated pharmaceutical company (FIPCO). A FIPCO contains eight operating divisions.
The eight divisions of a FIPCO are presented in the next diagram (Fig. 1.23). Research and development (R&D) and
sales and marketing (S&M) divisions house the largest number of staff members, and the largest budget outlays by far occur there. To the outside world, most of the "action" at a company appears to occur in the R&D group and the S&M division, because their staff interacts with so many people, that is, the public, investors, investigators, providers, payers, vendors, and regulators. However, success of a company needs major engagement of six other key functional areas: human resources (HR, personnel), legal and regulatory, finance, manufacturing, medical affairs, and global operations, each of which will be discussed in this section of the book. Each division is headed by a senior or executive vice-president, who all usually report to the chief operating officer (COO) or president. The senior leadership team is composed of the chief executive officer (CEO), COO or president, chief financial officer (CFO, who leads finance group), chief scientific officer (CSO, who often leads the research group), chief medical officer (CMO, who usually heads the development group), and the chief information officer (CIO), along with the other senior division heads in manufacturing, sales and marketing, legal, and HR. They usually constitute the operating committee or team that runs the company on a day-to-day basis. Global operations will often be led by an executive vice-president, reporting to the CEO, or U.S., Europe, and rest of world will have equivalent leaders in a hierarchy reporting to the COO or CEO. Sitting above the operating committee and the CEO, a board of directors exists for oversight of the business and operations and is reportable to the stockholders, primarily, and government agencies (e.g., Securities and Exchange Commission and the Justice Department) and the public at large.
The research division is composed of predominantly PhD scientists, as expected, running laboratories dedicated to spe cific basic research areas that are technology platforms, such as genomics or protein chemistry or medicinal chemistry, biology or therapeutic focused, such as cardiovascular disease, or functional oriented (e.g., high-throughput screening or x-ray crystallography) (Fig. 1.24). Research role is the discovery and characterization of potential disease targets and possible molecules as interventions for the targets. Research needs to deliver product candidates to the development division for clinical work. Vertical organization based on drug categories often is done throughout a company from research, to development, and through marketing, forming cross-functional business units to optimize communication and coordination leading to drug development and product marketing in a specific therapeutic area.
The diagram in Figure 1.24 displays a core group of representative functions in a research division. Disease biology is a starting point in discovery process to explore disease patho-physiology, especially to understand existing and new mechanisms for disease. Targets for disease intervention are identified and validated in other laboratories. Molecules are created or discovered in yet other laboratories (hits) that need validation, resulting in leads and later drug candidates. Animal testing is done (preclinical work) for pharmacology and toxicology of the drug candidates. The metabolism and pharmacokinetics group examines drug disposition and drug interactions in animals and then humans. The pharmaceutics group formulates a product into a specific dosage form (e.g., oral capsule or injectible liquid), a container system (e.g., bottles and vials), and a delivery system (e.g., a syringe), based on the disease, patient, and health care system. A variety of specialty research groups may exist to explore a technology area (e.g., anti-RNA). An Investigational New Drug application (IND) is their successful end-product. Collaborations
with universities are very common mechanisms for a company to expand its research portfolio in related research fields and especially to tap into the wealth of basic research performed at universities. A company often allows lab heads to each create several research alliances with several universities to expand the search for novel mechanisms of disease and drug action. Basic research has collaborations with specialty companies as well to expand access to more technology platforms, delivery systems, and functional areas.
The development division creates the protocols and performs the clinical studies (phases I, II, and III) and related work, leading up to a New Drug Application (NDA in USA, Common Technical Document [CTD] in Europe) for drug products or biologics license application (BLA) for biological products. More than 10 different functions are involved and need to be integrated in the operations and planning of clinical studies for timely and targeted drug development (Fig. 1.25). The coordination role falls to the project management department, which usually chairs the product development teams composed of these development groups. Clinical management is the unit that most investigators work with, because they are responsible for protocol writing, investigator training, patient recruitment and selection, drug disposition, study monitoring visits to the sites, and final study reports, all of which the investigators are intimately involved in. The staff includes physicians, clinical pharmacists, clinical pharmacologists (PhD), and clinical research associates (CRAs).
The data management department creates the case report forms with the CRAs and performs data entry from the completed study case report forms. The biostatistics group writes the statistics section of protocols, ensures adequate study design, performs analyses of all the study data, and writes a statistical report for each study and for all studies in the NDA. Most companies will have a writing group to author the draft of the final study reports from the stat report and also help write protocols and publications. A quality assurance group exists to perform audits of case report forms, processes and procedures, and study conduct at the company and at study
(investigator) sites. Their goal is to assure compliance with protocols and procedures and avoid government regulatory bodies finding data deficiencies or procedural lapses that will nullify a study's credibility and even possibly throw out an NDA. The regulatory affairs group ensures compliance with worldwide regulatory laws and regulations, organizes and files the INDs and NDAs with regulatory authorities, and is the primary interface with any regulatory authority. A metabolism group, if not housed in the research division, performs the pharmacokinetic and drug metabolism studies, including ADME (absorption, distribution, metabolism, and elimination) trials and drug interactions work. The safety department records, summarizes, monitors, and reports the safety data from clinical trials and spontaneous reports for a company's drugs before and after marketing the product.
Although economic data is not required for product approval by regulatory authorities, the health care systems in the USA and government product pricing groups in the rest of the world demand such data to more globally understand a product's health care impact. Therefore, a pharmacoeconom-ics group usually exists to perform these studies before and after marketing. Finally, an outsourcing group exists to select vendor companies (Clinical Research Organisations, CROs) and coordinate the work of these; the CROs commonly will perform overflow work in any of the above development work areas. PMS is postmarketing surveillance for adverse events, usually through clinical trials. Epidemiology groups perform studies to generate disease-related data to help understand diseases (frequency, presentation, and their treatment), which in turn can help in the design of future drug studies.
The marketing division often is considered the lead group at a pharmaceutical company, guiding especially corporate and product strategy, but also creating plans, objectives, and action items for the whole organization around each of the products. They are organized by therapeutic areas and customer groups. The sales division often is combined with the marketing teams into product, therapeutic, or customer groups. The figure in Figure 1.26 shows seven possible functions that
' Project management (U.S. & Global)
- Clinical management:
o PhD, MD, PharmD, BS, MPH) c Managers (protocols & reports) c Monitors (sitevisits, CRFs, data)
- Outsourcing - CROs
- Data management (forms development & data entry) ' Biostatistics (protocols, analyses, reports)
k Medical writing ' Quality assurance (Audits) ' Regulatory affairs
^ Safety (adverse events) Phases of Clinical Research: i - jja - jjb - jjja - jjjb Other Trials: Metabolism (ADME), Economics, PMS, Epidemiology
Fig. 1.25. Industry Organization: Development
compose a marketing group. Marketing directs the sales organization with strategies, sales plans, tools (promotional and educational), and sales targets (providers, institutions, payers). Periodic sales plans (Plans of action, POAs) or promotion plans, often quarterly, are created to achieve a certain sales level for all the products. Sales pieces are created to describe the features, benefits, and limits of the company products. Professional affairs role involves liaison work with the health care provider groups and their professional societies, for relationship building and in sponsoring education, especially about new products for new disease targets, where the medical community is not familiar. Advisory groups are used by a company and are composed of investigators and providers who are experts for a disease. They are organized early in a product's life cycle, usually by phase 2 in 88% of companies. Educational programs are sponsored with universities, societies, or educational vendors to discuss the company products and related diseases, starting well before product approval, even at the phase 2 research time frame. A medical education group will exist for this purpose, separate from promotional marketing. Market research is performed in at least a couple ways; first, forecasting and tracking of sales is done for marketed or soon to be marketed products (the company's and competitors) for senior management; second, various market analyses are done for patient and provider preferences and product usage, utility of sales aides for marketing groups, and comparative product profiles and desirable new product profiles for the R&D groups in planning for new drugs and studies. Much market research occurs during research to understand product opportunities and advise R&D; a 229% budget increase occurs just at phase 2 to the tune of $1 million for a likely blockbuster or about $500,000 for other products, and about $5.5 million overall for one product according to cutting edge company. Direct to consumer (DTC) advertising has become a major marketing role to reach patients and improve both disease knowledge and access by the public to products through print media, Internet, radio and television.
Finally, a key liaison role with R&D exists to help focus their work on unmet medical needs in the medical marketplace, optimal product characteristics, provider and patient preferences, and health care system needs. The budgeting for a marketing team increases dramatically as a product moves through research and becomes more likely to be marketed as you would expect. When a drug enters phase 3, the budget goes up by 400-500% and jumps up again by 300% at launch. The launch spend by marketing for a potential blockbuster can be $500 million from 1-2 years preapproval to 1 year postapproval.
The sales organization is composed of the field sales persons (PSRs, professional sales representatives) and their management (district and regional mangers), who are responsible for achieving the sales of the company products (Fig. 1.27). In the USA, there are about 100,000 PSRs costing the industry about $2 billion per year. One large pharmaceutical company will have several thousand PSRs. The cost for one sales person in the field has been estimated to be about $150,000-$350,000, including salary, benefits, bonuses, a vehicle, entertainment account, and an educational account. The size of a sales force is predicated on the number of sales calls, that is, the number, and frequency, and also the type of contacts to health professionals (physicians, nurses, pharmacists, and administrators), as well as anticipating turnover (estimated to be on average 10% per year). A typical sales person will make 150 sales calls, visits, to customers in a month.
The primary role of a sales call is to promote their product, but they often offer educational materials and programs and other services provided by the company, such as reimbursement support, and can help the provider with access to the company's home office research people. Sales people need constant education to keep up to date with the new sales POAs, new clinical data and publications, and company services. Compensation is often more than $100,000 per PSR, composed of a base salary ($62,000 to $100,000) plus bonuses in cash or stock options. Bonus is based on exceeding sales targets, new product sales, and special achievements.
Fig. 1.27. Industry Organization: Salesforce
Besides PSRs, a sales organization will also have specialized, more senior sales people in a national or corporate accounts group to call on health system groups, for example, managed care organizations (MCOs), preferred provider organizations (PPOs), group purchase organizations (GPOs), payers, and insurers .
The manufacturing division creates the final product using all the necessary ingredients for a tablet or injectable or otherwise, packages it into an appropriate container system, and distributes it to the wholesalers, providers, and health care institutions. Of course, tremendous differences exist in manufacturing between drugs and biologicals and between different formulations, such as injectibles and oral tablets. The core functions in manufacturing are elucidated in Figure 1.28 for all products. The process engineering group works on the manufacturing operations to improve its efficiency, reduce costs to manufacture, and improve quality of the final products. The formulations group, if not already housed in the research group, may work on later generations of a product improving the product's shelf-life or its form to increase provider acceptance. The quality control department tests the purity and stability of the product and audits all manufacturing processes to ensure integrity of the final product. Package engineering works on the container system and its labeling to maximize product integrity, information availability, and utility of the product to patients, providers, and distributors in the vials, bottle, boxes, or whatever packages needed.
The physical plant where the product is manufactured must be planned well before product approval to meet projected market needs (scale-up) and keep up with changes in the marketplace. A new plant for a new product can cost $100 million to several hundred million dollars to plan and construct. The decision to build a new plant for a new product is a risk spend needed at least 5 years before product approval for construction, staffing, validation, trial runs, and regulatory approvals. The inventory and distribution system must be able to meet the needs of the product, market, and health care system, regarding storage, shipping, the distribution centers, the distribution channels, and locations of care. Finally, the product's needs in the USA and all the world must be met, including the differences of geography, health care systems, culture, and language.
Medical affairs, also called professional services, is a group of health care professionals who serve as the primary clinical interface with health care providers, patients, public, and customers for the marketed products (Fig. 1.29). They perform the types of services outlined in this diagram: medical information (questions and answers to patients and providers), medical science liaison (education of health care professionals by field-based professionals), marketing support to home office with technical information, clinical trials on the marketed products (phase IV), and pharmacoeconomic research on the marketed products. The basic goals are to support health care customers who use the products with information, education, and clinical research, mostly within the approved indications for the products, as well as the marketing department. This group is permitted by regulatory authorities to address unsolicited questions about nonapproved uses ("offlabel") from customers.
Global operations (Fig. 1.30) replicate the roles of the U.S. operations for the rest of the world, usually divided into the three other major markets: European Union (EU), Asia (Japan, China and Australia), and rest of the world (ROW). The most significant parallel groups are S&M, development, and manufacturing. A key challenge is integration of the plans and actions between the USA and all other countries in the global markets for the company and its products. The unique challenges for global operations are manifold; the unique cultural differences in business operations, regulations and laws, medical practice, health systems, general culture, and language, as well as integration with the U.S. operations. The approval processes are through separate regulatory authorities for each of the other three major markets and even individual countries (e.g., EMEA, European Medical Evaluations Agency). Outside the USA, socialized medicine predominates as the health care system in general, and most countries have
Distribution ^Inventory Contra
Scale-Up (Sales Forecasts) Plants
Distribution ^Inventory Contra
Customers [Providers & Patients & Payers + Company] Medical Info
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