While the human cost and economic disruptions of the global pandemic have created shock waves, the mission of the pharma industry to maintain a steady supply of vital medicines and deliver new innovation has provided a powerful focus for leadership teams. Other sectors may be more threatened, but the business challenges facing pharma are urgent, like ensuring that supply chains are functioning so patients can get needed prescriptions filled and remain on critical therapies. With much at stake, pharma executives are moving decisively to ensure patient health, manage disruptions and lead the development of a vaccine, antiviral or other therapeutic solution for Covid-19.
Below we examine the near-term implications of Covid-19 on the industry and offer an action plan to help companies operate safely and effectively in the midst of the crisis, support healthcare professionals and patients, and sustain long-term innovation portfolios.
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Implications of Covid-19 for pharma
Leadership teams face disrupted supply chains, delayed clinical trials and lack of access to physicians and other medical forums. In the coming months, patients may be increasingly unwilling or unable to visit physicians for new diagnoses or prescriptions or refills. Companies that are overly dependent on single suppliers are at higher risk of supply-chain disruption.
The Covid-19 crisis also will have knock-on effects for the broader pharma environment, including reduced funding for early-stage biotech companies and diminished demand for contract research organizations. Pharma companies will delay some product launches, and those that go ahead may fall short of expectations, given the impediments to commercializing drugs at the same speed and scale in the current environment. Once the public health crisis is over and business operations return to normal, pharma executives will need to adjust go-to-market strategies for previously planned product launches.
Importantly, the underlying economic crisis triggered by the Covid-19 pandemic will have a significant ripple effect on state and national budgets. Urgent and costly measures to shore up businesses and support individuals will force governments to contain outlays in every category, including healthcare. The incremental innovation required for premium-price drugs will continue to rise, as will pricing pressure on commodity products such as generics and biosimilars.
Near term: Act now
Most pharma companies don’t face a crisis, but key actions can help address new challenges:
- Assure core operations.
- Ensure the safety of all employees, including remote and global workers.
- Identify situations that may limit patient access to drugs and take action:
- where distribution of drugs may be difficult (e.g., infused therapies, especially in less healthy populations);
- where patients are unable to get prescriptions refilled or need physician consultations; and
- where patient support groups, co-pay assistance funds or provision of free goods may come under pressure because of rising unemployment.
- Use a war-room approach to protect the supply of critical products.
- Triage critical trials.
- Delay or hold trials for which enrollment is challenging, including those involving patients that are immunocompromised and those that require a hospital setting.
- Engage with investigators and subjects in essential trials already underway. Discuss expected results, areas of greatest risk and potential changes to procedures. When protocols need to be amended, seek investigator feedback and move quickly and decisively.
- Follow Federal Drug Administration and European Medicines Agency guidelines to manage patient safety in ongoing trials. Consider changing the location for patient visits, providing transportation to and from the trial site and shipping treatments directly to patients.
- Adjust the commercial model. Personal interactions between sales reps and physicians are curtailed in many regions.
- Develop activities for the salesforce that will maintain their productivity. Use digital platforms and other channels where possible to increase awareness of products and physician engagement.
The Covid-19 crisis poses special risks for some pharma companies. The following situations may require executives to take substantial actions to reduce costs and preserve cash:
- Dependence on physician-administered products or hospital-administered products. One solution may be to source home infusion providers, regardless of reimbursement, or seek help from payers, both public and private. Changing reimbursement conditions will require government help. Do so quickly and with a coalition of manufacturers, providers and patient organizations.
- A fragile supply chain that cannot meet demand if suppliers in China or India shut down.
- High exposure to the few categories of nonessential medicines.
- Immediate plans to launch a product that is critical to your valuation.
Longer term: Plan now
- Restart the development engine.
- Resume clinical trials that were put on hold or delayed. Reengage with investigators and other stakeholders.
- Triage the portfolio and allocate scarce resources accordingly. Identify trials that suffered the greatest delays and invest first in those that will deliver the highest value.
- Turbocharge commercial efforts.
- Proceed with delayed product launches.
- Restart field efforts in a coordinated manner.
- Learn from industry trends that Covid-19 has accelerated, such as telehealth and remote medical engagement. Focus on rightsizing the company’s field force and capabilities.
- Accelerate digitalization of the value chain and ways of working, making the most of Covid-19 crisis learnings in areas such as customer engagement, real-time supply chain monitoring and digitalization of clinical development.
- Reevaluate plans and forecasts based on potential scenarios in accordance with portfolio shifts in R&D and commercial. Adjust the cost structure.
- Explore acquisition opportunities. Lower valuations, particularly in biotech, may make some targets more financially feasible. Review the products, companies and platforms that are part of your long-term strategy.
- Consider dual sourcing for critical products such as active pharmaceutical ingredients (APIs) and excipients. Assess risks tied to the company’s sourcing and manufacturing footprint to ensure sufficient backup in case of future disruptions.
- Invest in automation and reduce administrative costs, especially those linked to previous acquisitions.
- Explore new opportunities in anti-infective and antiviral medications. Increased demand for therapeutic solutions for future pandemics is likely to increase funding for research and reduce hurdles to market access.
As leadership teams know full well, the pharma industry is on the front lines of a battle to contain a global pandemic. Setting the right priorities today can help companies accelerate innovation while ensuring a steady supply of urgently needed drugs for patients directly and indirectly affected by Covid-19.
The global Covid-19 pandemic has extracted a terrible human toll and spurred sweeping changes in the world economy. Across industries, executives have begun reassessing their strategies and repositioning their companies to thrive now and in the world beyond coronavirus.
Loïc Plantevin leads Bain & Company’s Healthcare practice in Europe, the Middle East and Africa and is based in the firm’s Paris office. Jason Evers is a partner with Bain’s Healthcare practice and is located in the Chicago office. George Eliades is a partner with Bain’s Healthcare practice and is based in San Francisco.
The authors wish to thank Tim van Biesen, leader of Bain’s Global Healthcare practice, and Joshua Weisbrod, leader of Bain’s Healthcare practice in the Americas, for their contributions to this article.