The Challenges Awaiting Big Pharma

THE END OF BLOCKBUSTER DRUGS AND NATIONAL MARKET RULES ARE TESTING TRIALS FOR MANAGERS IN THE INDUSTRY. ALLIANCES WITH COMPETITORS AND RELATIONS WITH INSTITUTIONS THIS THE PRESCRIPTION THAT MASSIMO VISENTIN HAS FOR PFIZER

For a moment, you wonder whether you’re in New York or Milan, as you stare at the glass and steel skyscraper which hosts the Milanese HQ of Pzifer. It’s not only about architectural similarities: also the distance between the head company and its Italian subsidiary is not that great. In Italy, according to country head Massimo Visentin, Pfizer employs 2,600 people and grosses €1.3 billion in sales of pharmaceuticals, and €80.7 in consumer healthcare (non-prescription drugs, vitamins, nutraceuticals etc.). In the country, it has also owns three production sites exporting 75% of their output. Milanese, Visentin is a 47-year old Bocconi Graduate. He was appointed President and CEO of Pfizer Italia in May 2012. There he has overseen territorial growth, facing the revolution currently upsetting the pharmaceutical industry.
 
“In a decade, everything has changed,” says the top executive. “Many patents are expiring, and the advent of generics has made competition in the industry fierce, with a steady increase in the variety of pharmaceuticals available for sale. There are no longer blockbusters, i.e. widespread produced drugs for mass treatment, and so research has had to adapt, and is now working on niche products, following the personalization of health treatments that many say is around the corner. The main consequence is that, whereas before Big Pharma tended to have muscular approach when it pushed a new product on the market, by investing huge resources in a medicament that could sell loads, today it must take a different approach. Developing a new pharmaceutical product costs $2 billion on average; in order to be able to sustain the risk of placing a new molecule on the market, it has become indispensable signing partnerships with other companies, which would have been competitors in other times, but are now risk-sharers.”
 
➜ One product, but very different markets, according to pathologies, health systems, and regulations. How do you manage to be global and local at the same time?

We like to define ourselves as a highly localized multinational which is part of an international network. We have a common denominator, we have common strategies, but we apply them differently from country to country. However, contacts with the US headquarter are very frequent, daily in my case.
 
âžœ Is there a marketing problem in Italy, a country where few patients can name the company that makes the medicament they’re taking, while, for instance, all drivers know who their car’s manufacturer is?

No, I don’t think there is such a problem, at least not for us. The effect you mention derives from the fact that in Europe you cannot advertise pharmaceuticals directly to the public. Probably, in the US many more patients would be to name the company that manufactures the drug they’re taking. For us in Italy, the product is the most important thing, the expression of our excellence, and the Pfizer brand is a guarantee of quality, it adds value, because it ensures that everything is done to the best of our efforts, while meeting existing regulations. Our most important task is to make these values credible in the eyes of interlocutors: health operators and institutions.

➜ In this respect, pharmaceutical companies must, almost by necessity, lobby institutions for their products. In Italy, this is still regarded with suspicion. How do you interpret this role?

What we do is transferring adequate information to institutions. The market where we operate is not one of free competition. At the heart of our dealings with institutions is the cost of a drug, which the Italian National Health System often deems too high. The existing mechanism is based on a budget for pharmaceuticals and when that is attained, all the extra product being demanded must be supplied for free by pharma companies. Every year, in October or November we get to a point where we must give away almost everything for free.. It’s an untenable situation. This is why we argue that what’s important is the value, and not the price of a medicament. For example, a higher value means a better or speedier cure, which thus increases the patient’s quality of life and decreases his/her stay at the hospital, days of sick leave, and the risk of relapse and disability. We cannot continue to consider pharmaceutical spending as separate from the rest of health spending: an overall approach is needed.
 
➜ Almost three years ago, in a letter to the government, you described a similar predicament.. Has nothing changed since then?

  If there was a change, it’s been for the worse. Political instability is a serious problem, because every new prime minister changes people and rules, and we have to start again from scratch. We, and when I say we I’m also talking on behalf of the association of the 18 US pharma companies operating in Italy which I preside, need administrative certainties to draft our three-year development plans, which we are required do like any other listed company. We cannot tell our investors every two months that a minister or law has changed, or that earlier government promises won’t be kept. This is a shame because Italy is a European leader in pharma production, being the second largest producer in Europe after Germany, and the first in terms of per-capita value of output.
 
âžœ How does Pfizer’s top management react when you tell them about these aspects of the Italian health care system?

They ask themselves whether it’s worth staying in a country where after a given date you must give away your product for free. I don’t want to cause alarm, but the situation is bound to worsen, because there are new drugs that being launched on the market, for instance for the treatment of cancer or hepatitis C, whose budgets are going to be exhausted even more rapidly, and this could prompt Pfizer and other Big Pharma companies to distribute a given health remedy in certain countries and not in Italy. We are trying to do everything to avoid doing so, because it would create absurd situations of discrimination, such as a French patient being cured while a patient residing in Italy is not. But institutions must do their part.
 
 

by Lorenzo Martini
Translated by Alex Foti