Day 2 at JP Morgan: Change is coming, but which drugmakers will stay on top?

Share this content:

Dr. Howard Krein, chief medical officer at StartUp Health, talks with Greg Simon, executive director of the White House Cancer Moonshot Task Force, at the StartUp Health Festival in San Francisco. Photo credit: Monica Semergiu

The pharmaceutical leaders presenting at the JP Morgan Healthcare Conference vary in their industry outlooks: some are hopeful, and others are uncertain, but most admit that change is coming, whether or not they want it.

“We're seeing reform taking place with the customers,” J&J CEO Alex Gorsky said Monday.

On the way to the Westin Tuesday morning, my Uber driver, asking me about the conference, wondered who is at fault for high drug prices. It depends who you ask, I said. Insurance companies say it's profit-driven drugmakers, while pharmaceutical companies say too much cost-sharing has shifted to the consumer.

See also: Day 1 at JP Morgan: Pricing is top of mind for pharma CEOs

But Gorsky may be right. Customers of all kinds are demanding change.

This may be one reason why he and Novartis CEO Joe Jimenez separately said they expect to see more risk-sharing and outcomes-based contracts between drugmakers and insurers. And it's clear that change is afoot in the healthcare industry — and that the manner in which companies respond to uncertainty and new patient demands is likely to decide their longevity in the market.

Here are a few more examples of change we can expect to see this year, as well as one we won't be seeing.


1. Sanofi wants to be the next OTC leader.

The French drugmaker recently closed its $25 billion asset swap with Boehringer Ingelheim, and it is now the proud owner of six “iconic” over-the-counter brands, a move that puts the company among the top three players in the fragmented OTC market, Sanofi CEO Olivier Brandicourt said Tuesday. What's so great about OTC brands? Well, for one, there is no patent cliff. The brands are “ever-lasting,” in Sanofi speak, and they also create more sustainable revenue streams. The size of the portfolio also likely means more synergies in advertising and promotional activities.


2. Valeant's serial acquisition days are over.

“We've done a lot of M&A in the past,” Valeant CEO Joseph Papa said Tuesday, before stressing that the company is no longer going to rely on growth through acquisition. The “New Valeant” — that was the name of the presentation — will be focused on new products, finding hidden assets, and paying down debt. It is also working to stabilize its sales force, bringing down the turnover rate of 11% from May 2016 to roughly 6% now. A day earlier, Valeant disclosed that it would divest Dendreon Sanpower for $820 million and three skincare brands — CeraVe, AcneFree, and Amb — to L'Oreal for $1.3 billion, as if to reinforce the point Papa would make on Tuesday. Papa went so far as to create a fact-and-fiction summary defending the New Valeant. Example: “Valeant doesn't do R&D.” Papa: R&D spending is going up, by 38% this year. Another example: “Valeant just buys companies and raises prices.” Papa: The company has committed to single-digit price increases for its U.S. branded drugs.


3. Pfizer isn't budging when it comes to drug pricing.

The drugmaker has been insistent in its position on drug pricing, which argues against changing — unlike companies like Allergan and Novo Nordisk, which have pledged to limit price increases, and Johnson & Johnson, which said this week it plans to publicly detail average drug price increases for its prescription drugs. Pfizer CFO Frank D'Amelio reiterated comments made by CEO Ian Read in December at the Forbes Healthcare Summit. (Read did not attend the Pfizer session on Tuesday.) In short, they believe that because drug spending as a percentage of total healthcare spending hasn't changed much in recent decades, it's not up to the pharmaceutical industry to address concerns about how drugs are priced. Their beef is that out-of-pocket costs for patients are significantly higher when filling a prescription (15%) than when visiting a hospital (3%), and thus they view it as a system-wide issue. “We don't anticipate any major changes in how we do drug pricing,” D'Amelio stated.


4. No one should have to choose between hospice care or going bankrupt.

But at least once a week in the U.S. someone must make that choice. People with health insurance are less like to die of cancer than those who do not have coverage. Where you live decides whether you live. This is according to Greg Simon, executive director of the White House Cancer Moonshot Task Force, who argued that there are too many unconscionable choices when it comes to cancer care. Speaking at the nearby StartUp Health Festival, Simon said he also wants to see more attention paid to the role of nutrition in preventing cancer and during the treatment of cancer.

Share this content:
Scroll down to see the next article