It’s been an interesting year on the pharma commercialization front. Amid all of the acquiring, investing and reorganizing, a few trends bubbled to the surface.
Here are seven reflections, including the viewpoints of those working in the trenches at such companies as well as those tasked with studying them.
1. Outsourcing rocked on
Outsourced commercialization activity, the bread and butter of pharma marketing agencies, didn’t slow down this past year. However, it has diversified.
Nearly a quarter of the firms on the 2023 MM+M Agency 100 were new entrants that had risen into the ranking, often due to swallowing up smaller rivals.
That points to the continued vibrancy of a sector that, obviously, depends on pharma and biotech turning to third parties to help figure out pricing, access, regulatory, HCP promotion, creative and the myriad other facets of launching a drug.
Commercialization partners “allow pharma companies to almost pick and choose more easily,” said Dean Griffiths, managing partner and head of the London office at ClearView Healthcare Partners, a boutique life science strategy consultancy. “They’re not having to invest in particular capabilities.”
Outsourcing has become more attractive as the biopharma pipeline has grown and become ever more specialized – think rare disease treatments, targeted oncology drugs and cell & gene therapies – and biotechs increasingly decide to self-commercialize versus looking to partner for late-stage development and beyond.
Today’s launches also require more technological expertise, such as artificial intelligence (AI) and omnichannel marketing. Various agencies have different experience and tools under their roofs and evolve at different paces.
“Putting all of your eggs in one basket when it comes to a particular technology presents some risks – you may back the wrong horse, for instance, or a faster horse is going to come along soon,” Griffiths observed. “Allowing third parties to do some of that innovation and then participating in that, almost like a sponsor for a period of time, and then backing something else means you just don’t overcommit.”
2. Market access retained crown
Private equity (PE) firms continued to fuel the growth of the mid-sized networks and platforms we refer to as the new agency strategics. This manifested in these modern marketing organizations using M&A to expand into relevant adjacencies and broaden their capability set.
Within that trend, market access showed why it’s been the most coveted of commercial niches.
For one, Fingerpaint Group scooped up strategic market-access marketing firm The MYND Group this year. Nordic Capital acquired a majority stake in commercialization/market access platform IntegriChain from Accel-KKR.
Personifying the importance of access as a marketing discipline, 2023 Agency 100 honoree Fishawack Health decided to take on the branding of Avalere Health, which it bought in June 2022 with assistance from principal investor Bridgepoint.
The Inflation Reduction Act (IRA), the Biden administration’s signature drug-pricing law passed last year, will likely prompt companies to gather more proof of their drug’s positive impact on health outcomes prior to launch. That will increase pressure to set the right price initially – and keep the market access experts busy.
Consolidation and vertical integration in the payer landscape ratchets up the pressure on marketers, too.
“Over the last few years, that landscape has become less fragmented, so you really don’t have as many opportunities to not get [coverage] right,” said Nancy Phelan, SVP of omnichannel activation at Indegene.
A study the company ran this year showed payer activation/reimbursement challenges to be the top factor in terms of preventing pharma launch failures, with regulatory obstacles coming in second place.
“The Food and Drug Administration created an opportunity for marketers to start engaging in discussions with insurers much sooner, to start helping them understand what we’re bringing to market,” observed Jeff Rothstein, partner/CEO of Indegene’s CultHealth. “And yet the FDA right now is telling us that a much smaller percentage – perhaps as little as 50% – of the brands being launched are actually taking advantage of this.”
3. Search for integration
Then there was the formation of new organizations. These included Petauri Health, with backing by Oak Hill Capital; Navi-Med-backed Citrus; Boundless Life Sciences, which was founded under the NPG Health umbrella; and Calcium+Company, an overarching structure formed to house its diversified units. Long-time agency AbelsonTaylor also platformed.
A cohort of PE firms took Syneos Health private in a $7.1 billion all-cash deal. Accenture secured a 2023 MM+M Agency 100 honoree, ConcentricLife. And PE infusions continued with Spectrum Science’s investment from equity backer Knox Lane and subsequent acquisition of CrowdPharm and Hot Iron Health (HIH).
As the networks and platforms continue to differentiate, scale and become more attractive commercialization partners for biopharma by adding and strengthening capabilities, though, they face a new challenge. These organizations must get all of their internal brands to work seamlessly together in order to provide clients with ease of use and speed.
That includes back office integration, which creates cost synergies, as well as front office or client-facing integration, which is where differential value is created. This past year, strategic buyers introduced value-added tools designed to connect those dots.
These included Evoke’s recent platform-wide launch of a suite of audience-intelligence tools, Indegene’s data-driven omnichannel launch platform and Eversana’s “operating system” for targeting HCPs and patients, to name a few. On the network front, Omnicom Health Group rebranded to simplify the complexity of its services.
4. Boundaries were blurred
To explain the integration challenge another way, commercialization firms need to justify why having a platform is better than a mere collection of siloes. Closely tied to that endeavor is the blurring of lines between the heretofore siloed areas of commercial and clinical.
Boundaries are graying between services that were once the exclusive purview of clinical providers and CROs versus those offered by legacy marketing and communications firms. Similarly fading are the stark lines between medical communications as opposed to classic pricing/reimbursement and proving a product satisfies the market gap through RWE.
All of these capabilities are morphing into a much more broad-based commercialization framework. As such, there’s also been an expansion in terms of the remit of these businesses.
For instance, in one of the year’s larger deals, Thermo Fisher Scientific acquired real-world evidence (RWE) provider CorEvitas from Audax Private Equity for $912 million, or roughly 30 times EBITDA. Acquiring CorEvitas bolstered the RWE capability of Thermo Fisher, a company known more for its Phase 4 studies than for commercialization.
Thermo Fisher is “blurring the line between, ‘Is this a commercial business or is this both a commercial and an R&D business?’” noted Griffiths. “Because, if you’re essentially developing data to support the maintenance of marketing authorization, that’s clearly at the boundary of commercialization.
“Clearly part of that is going to be, ‘Oh, we’ve just done this new [clinical] study and we’ve just developed some more RWE,’” he added. “Soon, it may be that the same agency is communicating the value of the study as well as being involved in conducting the study.”
All of which begs the question, Who do we consider a commercialization business to be anymore?
Such a question is more than an academic one. You don’t go to the trouble of erasing distinctions unless you think you can mine the intersections between all of those disciplines for value.
5. What’s, uh, the deal?
Creating more streamlined services and value-add products helps not only to win more business. In many cases, these firms are preparing themselves for their own exit.
Through June, deal activity across the pharma commercialization services sector remained flat versus the same period last year. The second half of the year has been relatively constant, as well.
But one of a number of harbingers analysts have picked up on is that larger-sized deals are starting to print. As this is a year in review, I won’t belabor the point, but you can read my predictions here.
“We’ve seen some very active deal processes in the last few months,” said Griffiths, adding that next year could see a number of bigger-name firms come to market and/or attract interest. “2023 was a lot quieter than everybody anticipated in 2022. I’d say in 2024, people are hoping it’s going to be a lot busier.”
6. MSLs had a breakout year
There’s one aspect of commercialization that may be immune from outsourcing. Medical science liaisons (MSL) leaped forward this year, overtaking reps as pharma’s primary driver of HCP engagement, per one study.
Some 45% of the respondents in the study of 134 pharma-based execs picked MSL activities as ripe for either big or small budget increases. If those budget allocations pan out, the medical affairs team – which focuses on scientific exchange and sharing insights with HCPs – may finally be poised for a breakout role in commercial operations.
“That is a big shift in the commercial model,” agreed Phelan. It stems from the need to deliver a more nuanced message to the market, one which reflects the complexity of treatments increasingly being approved.
“Being able to deliver that message and educate HCPs so that they are well-prepared and they understand new clinical data – there’s absolutely never been a bigger opportunity for MSLs,” she added.
Griffiths predicted that they will be maintained largely as an internal pharma resource. “There’s not an oversupply of MSLs,” he said. “Whenever you have a scarce resource, people tend to want to hold onto it.”
That said, opportunities for vendors involve empowering MSLs with the tools and resources they need, like a digital dashboard, new education material or next-best-action decision support.
7. Marketing budgets were (likely) flat
A potential boost in pharma marketing budgets was also mentioned as yet another variable that could affect next year’s M&A picture within the pharma commercialization sector. Meantime, with those budgets falling 8% last year, it’s anybody’s guess where they go from here.
Ultimately, Griffiths said he foresees a “rebalancing.” On the one hand, there are fewer full-time employees on commercial teams, which frees up more money for marketing. On the other hand, budgets have probably remained relatively flat this year due to what he called the “overall budgetary repression.” Moving forward, the lower sales potential of the upcoming new products will exert downward pressure on commercial spend.
“We’re anticipating there being about 250 approvals per year for the next five years, when we do the risk-adjusted forward projection of the molecules that are currently in Phase 3,” he explained.
With most of the new products, the number of eligible patients is slated to decrease versus last year’s approvals, he said, because those products increasingly target niche indications. That suggests budgets could stay relatively static for the next 12 months, with some uptick beyond.
Speaking of commercialization budgets, we want to hear what you think. If you’re a brand manager, portfolio lead or commercial ops executive (or otherwise have knowledge of your company’s marketing budget), please fill out MM+M’s annual Healthcare Marketers Survey. You can do so here.
