Ernst & Young Beyond Borders 2013Today, BIA member Ernst & Young published its 27th Beyond Borders report on the biotech sector.

It is pleasing to see that the UK still has the strongest pipeline in Europe, with more than 400 products in pre-clinical, phase I, II and III trials. Additionally, the UK led Europe in innovation capital raised – $467m – and was second to Germany (which has two significant financings by family offices) in venture capital raised – $220m.

The report highlights the need for companies developing new therapies to think at an early stage about the pricing, reimbursement and access profile of the candidates. This is something that has also been discussed at some of our recent conferences.

E&Y suggest that companies need to understand not only the safety and efficacy profiles of their products but also how it is differentiated relative to both current and prospective standards of care. Failure to do this can result in delays to partnerships or lower valuations.

The report suggests that many biotech companies do not fully appreciate this changing landscape and highlights five “myths” that companies perceive as well as proposing five “guiding principles” to help companies recalibrate their R&D commercialisation.

These guiding principles are:

  1. Define your value proposition
    • Even in early development, seek to understand your product’s contribution and why payers would value it
    • Solicit input from key stakeholders
    • Refine your value proposition as your product moves through phases of development
  2. Understand standards of care and value pathways
    • Understand the current and future standards of care
    • Map value pathways for individual diseases and understand the biggest causes of value leakage
    • Prioritize value leakages that payers most care about
  3. Identify new solutions for value leakages
    • Use approaches such as drug delivery technologies and personalized medicine to fill value leakages
  4. Design relevant clinical trials
    • Consider head-to-head trials to influence comparative effectiveness research
    • Consider adaptive trials to identify responding subpopulations while using capital efficiently
  5. Defend your product after launch
    • There is no finish line
    • Monitor evolving standards of care and be part of the conversation
    • Explore ways to conduct “value mining” by partnering with others

E&Y says that it will be necessary for companies to help patients by delivering new products but also to understand the patient’s journey through value pathways and identify their biggest unmet needs and to develop the solutions to these needs.

E&Y has also updated its European documentation this year and has been distributing a handout at the BIO Convention 2013 that includes recent tax changes in the UK including the patent box. It shows how the UK measures up as a globally great place to start a biotech business.