For years now Roche has dominated the very top circle of Big Pharma R&D, investing more than $8 billion a year in drug development through a global network of research centers concentrated at Chugai, gRED in South San Francisco and pRED out of Basel. And as far as CEO Severin Schwan is concerned, that’s a winning formula that he has no plans to tamper with, even as Roche digs into its vast R&D ops in search of some greater efficiencies.
That’s one of the bottom lines in an in-depth report by Bernstein analyst Tim Anderson after a recent sit-down with Schwan, offering a chance to do a deep dive into the Roche chief’s thinking on portfolio strategy, top-line growth and R&D. The discussion centers on the CEO’s successful strategy of gaining marketing approval for a new set of blockbusters like Hemlibra as biosimilars bite into their aging franchise therapies.
Roche’s Genentech acquisition remains one of the most intriguing M&A success stories in biopharma. Genentech has continued to produce blockbuster drugs years after some analysts would have expected the innovative juices to have dried up. Schwan attributes their success to preserving their “structure, culture, and infrastructure around Genentech” while integrating everything outside of R&D.
So what about an R&D integration now? “Over my dead body,” replies the CEO. But that doesn’t mean Schwan has stopped looking for ways to carve costs out of the research and development groups.
There are areas where he concedes ROG is not very productive, for example, data management. ROG is building data sets that share common systems across business units, where there’s not only an efficiency element, but also a productivity element when you can better share data. ROG has talked a lot about leveraging real-world data, but it starts with sharing your own data from your own clinical trials too. So, they’re doing both in parallel.
Back office functions and manufacturing are two key areas where Roche plans to do some cost cutting. And their adoption of new trial design strategies also offers a shot at greater efficiency.
He thinks development is an area where intelligent trial design can improve both efficiency and productivity, leveraging real-world data in a very different way. Dr. Schwan thinks there’s a lot of potential here to influence how ROG works with regulators around the world. So, he sees substantial productivity opportunities across the value chain, particularly within manufacturing and development.
It’s also interesting to see how Schwan sees the company’s position in the immuno-oncology field, where he frankly sees Roche behind two key leaders as Bristol-Myers Squibb and Merck switch places on the number 1 and number 2 positions. For the CEO, I/O now is on track, with Tecentriq making it to the market in segments of the market with limited opportunities. That was the first of three big waves he’s tracking.
Here’s Anderson’s summary:
Tecentriq has pretty much achieved what ROG set out to do in this first wave. The second wave is about combination strategies with Tecentriq. Dr. Schwan appreciates the credit for chemo combo, and we’ve seen that play out well for companies that ascribed to this approach. He admits Keytruda certainly has an advantage here since they’re already on the market and approved in 1L lung, and have positive results from KN-189 in-hand. ROG is in catch up mode, but still in the race, particularly with IMpower 130, which he views as more comparable to MRK’s data set. IMpower 150 is a completely different regimen that works better in certain cases than others. Of course, there’s also IMpower 132, which is near-term and very important. Yes, Keytruda is ahead, but depending on how various trials read out, ROG could be back in the game, particularly with IMpower 132. He also highlights the TNBC opportunity with Tecentriq, but views this as a higher risk venture, representing an upside case. In the third wave of I/O, he thinks the breadth and depth of ROG’s pipeline positions them as one of, if not, the leader. So, today, MRK is no doubt ahead, but he thinks the jury is still out on lung cancer, and we’ll have to wait and see how the story with next-generation novel I/O molecules unfold.
Image: Severin Schwan. ROCHE
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