Case Studies

Case Interview - World Class Market Intelligence

Licensing Intelligence for Boehringer Ingelheim

Interviewed for this case was Richard Chizzonite, Executive Director (retired), Global Licensing, Cardiovascular & Inflammatory Diseases. He was head of the Ridgefield R&D Global Licensing group from 2001, where his group was responsible for the global licensing efforts in the cardiovascular and chronic inflammatory diseases indications and for enabling technology licensing for the Ridgefield R&D organization.

Background

Boehringer Ingelheim is a worldwide affiliated group of companies with almost 40,000 employees and group net sales of EUR 11bn in 2007. The  two main business areas are Human Pharmaceuticals and Animal Health.  The Human Pharmaceuticals business covers three segments: Branded  and Generic Prescription Medicines, Consumer Health Care, and Industrial Customer business for third parties. The core business segments in Animal Health serve Food-producing and companion animals.

This case presentation will illustrate the importance of intelligence for the in-licensing process of a pharmaceuticals company:

1) In-licensing - Acquiring new products from external sources

Acquisition of external drug products that complement internal R&D programs and contribute to the company’s drug products pipeline
Occurs at all stages of the drug product development pipeline from early product discovery (e.g. novel medical principles) through Phase III human clinical trials
Applies to partnerships formed between two pharma/biotech companies to develop & commercialize drugs after approval by the regulatory agencies

2) Out-licensing - Partnering non-strategic product assets to provide current and future revenue streams

“Licensing is becoming increasingly important for pharmaceutical companies”, Richard Chizzonite says. There are a number of reasons for this development:

To fill in gaps in the internal product development pipeline and thereby increase the probability of a successful stream of new drug product launches and therefore, future revenues
To complement and accelerate internal product R&D programs
To acquire novel ideas and R&D not currently under investigation within the company
To diversify risk through sharing long-term risks with a partner

“We use the term Competitive Technical Intelligence (CTI) for activities conducted in order to provide an on-going and clear picture of the external technical and scientific environment and competition faced by a pharmaceutical company during development of specific drug products”, says Chizzonite.

“This is a highly complex process, the challenges of which stem from both the technological aspects of drug development and the long time-frame between product inception and commercial launch. Tracking and analysis of both of these aspects naturally requires advanced analytical skills by a CTI professional. Technical questions and challenges tend to evolve throughout the development phase of the product due to the changing requirements dictated by the product’s transition from laboratory to animal and then to human testing phases. This necessitates constant monitoring of external competition and new technologies”, Chizzonite describes.

“The timeline from the first idea to a successful product launch is also extremely long in the pharmaceuticals industry, easily 10-15 years”, Chizzonite says. “This implies that the CTI professional needs to anticipate future competitive scenarios on a long timeline and with limited data. It also requires the ability to include both current and future medical best practices in the assessments”, Chizzonite continues.

Practice and Impact of CTI on the Licensing Process

At Boehringer Ingelheim the mission and organizational structure of the CTI group are described as follows.

Mission

To support achievement of corporate goals by providing timely and issue-driven analyses of the external environment, in the context of internal programs, especially where technology is a factor

Organization

One or two CTI professionals support each therapeutic (disease) area, e.g., cardiovascular disease (usually highly trained and technical individuals who have the ability and inclination to look beyond the technical aspects to overall directions and forces affecting treatments in a disease area)
Supported by information specialists (e.g. scientific & technical library staff)
Supported by external contract CTI services, usually for routine competitive monitoring and for special projects

CTI Role in Support of Licensing Activities

The process of identifying, evaluating and deciding about licensing projects and strategy involves internal stakeholders that are members of a cross-functional licensing advisory and decision team. The CTI professional is an integral member of this team, that also includes the Head, Disease Area Licensing (e.g., cardiovascular); VP Research, Disease Area; VP Medicine, Disease Area; Head, Disease Area Marketing; and Head, CTI, Disease Area.

The licensing advisory team’s responsibilities are

to develop a global in-licensing strategy for each disease area (e.g., cardiovascular)
to evaluate new in-licensing opportunities (Go/No Go decisions)
to develop and present licensing evaluations to senior management
to champion licensing projects to top senior management throughout the evaluation phases, and
to provide information about scientific, medical, marketing and competitive positioning as well as strategic direction throughout the contract negotiations

Table 1. Continuous monitoring of the external environment: Topics on the CTI professional’s radar screen supporting licensing activities

New drug products	· At all stages: from new idea stage to market launch · Overall disease perspective, i.e., all drug products for a specific disease · How specific drug products work to treat disease (e.g.,medical target in cardiovascular disease) · How effective are the drug products in treating the disease (is there a competitive opportunity for new drugs) Disease related trends in drug R&D (i.e., is the treatment paradigm changing)
Disease related trends in drug R&D (i.e., is the treatment paradigm changing)
Emerging technologies used in drug development
Human clinical trial plans & results
Benchmarking how competitors perform R&D
Licensing opportunities, strategies, and threats

CTI is critical to a structured in-licensing process

“We use a structured process to identify and evaluate various products and companies in the in-licensing process”, Chizzonite says. Our “toll-gate approach” helps us structure the decision making process and the related intelligence requirements.

Graph 1. Illustrates the in-licensing process and the toll-gate approach with the GO or NO GO decision points.

Case Study: Drug Product Licensing Process for the Cardiovascular Disease Area

This case example illustrates the activities conducted in each step of the in-licensing process.

Boehringer Ingelheim was looking to identify and acquire strategic drug product licensing opportunities within the cardiovascular area, including products for:

Heart failure
Atherosclerosis
Heart attack, stroke & deep vein clot diseases•
Atrial fibrillation

The first step of the process, prior to any search and identification step, is for the licensing advisory team to formulate a licensing strategy that summarizes what types of strategic licensing opportunities are desired and those that are not desired. Once a strategy is in place, the licensing
team formulates objectives for a specific project and initiates the process, proceeding with each licensing opportunity through each step of the in-licensing model from initial evaluation to deal conclusion.

1. Search and identification of In-Licensing Product Opportunities

In the first phase of the process, it is essential to search for licensing opportunities in many different sources. The following list provides an overview of potential sources:

Product & external company press releases
Commercial product databases (drugs, clinical trials, etc)
Product Partnering meetings (BIO meetings, etc.)
BIO Investor Meetings (JP Morgan, etc.)
Scientific and medical meetings
Literature and patent searches
Private biotechnology company lists & websites
Solicitations from potential partner companies
Regular pharmaceutical company visits

In the particular case being highlighted, the following information sources were identified as the most important ones in order to produce a master list of private biotech companies with potential in-licensing product opportunities:

ReCap Biotech Company Database
Genetic Engineering News Biotech Company Database

Analysis of the 3,000 companies on the master list resulted in the identification of approximately 1,900 private biotech companies as potentially having suitable drug in-licensing opportunities. Further analysis of the 1,900 companies identified 186 potential licensing opportunities in the cardiovascular disease area.

2. Initial evaluation

These 186 cardiovascular licensing opportunities passed the first toll-gate and entered into a two step, more detailed initial evaluation process.

Profiles for each of the 186 opportunities were assembled from information collected from all secondary sources, including the initial data from the master private company database. The profiles contained the name of the drug, company name, drug features, mechanism of action, phase in the drug development process, and so forth. These data were compiled in an Excel spreadsheet for easy access and review by the licensing advisory team. One key to success in a
structured licensing process is to have in place a system for easy handling, storage and retrieval of all information related to each potential licensing opportunity.

During the initial evaluation step, the licensing advisory team will make a recommendation whether to proceed with an individual licensing opportunity to the next step (a GO decision) or to drop further evaluation (a NO GO decision). Typically, the licensing team will move forward with a GO decision on less than 10% of the opportunities that entered at the search and identification step.

3. In-depth evaluation and due diligence activities

If a licensing opportunity has been given a GO decision to enter the in-depth evaluation phase, a complete and thorough assessment of the opportunity is undertaken by an expanded expert team that includes all members of the licensing advisory team. This in-depth assessment
includes not only the technical profile of the opportunity, but also the potential to successfully develop the drug further, which includes the medical efficacy, medical need, market potential and patent protection for the opportunity. This assessment also is based both on the possibil-
ity of the drug actually providing the intended solution, i.e. a high probability of receiving FDA approval, and on a competitive benchmarking analysis investigating whether any competing companies/drugs would potentially be launched before the drug in question.

During this, the longest stage of the evaluation process, CTI plays a critical role in providing competitive information to all potential stakeholders, including the medical, marketing and negotiation teams. Typically, this is the stage at which most licensing opportunities are given a NO GO recommendation by the evaluation team.

4. Deal Conclusion – few deals executed from many evaluations

Typically, less than 1% of the licensing opportunities that enter the evaluation process in a disease area, such as cardiovascular diseases, will result in a deal execution. “This figure may not sound large when we initially start with close to 200 opportunities to evaluate”, Richard Chizzonite says. “But it is by far a more common outcome that we decline an in-licensing opportunity than that we go ahead with one”, he continues.

Reasons for declining a licensing opportunity typically relate to one or several of the following:

Scientific and human clinical trial data – e.g. limited efficacy, unknown biochemical target, toxicity or safety issues
Market assessment – Limited marketability
Third party competition – Competition may be too far ahead, competitor secures the deal before Boehringer Ingelheim does
Intellectual property/patent (IP) issues – No IP covering the product, short patent life, limited worldwide IP coverage, third party blocking IP
Disagreement on business terms – Financials, deal structure, etc.

Key Success Factors for CTI’s Impact on Licensing

At Boehringer Ingelheim, the following key success factors have been identified for CTI related to the in-licensing process.

Process and organization

“It is vital to have the toll-gate model developed properly”, says Chizzonite and continues: “It took us over two years to develop an appropriate model including solving all practical issues around it, so that everyone was comfortable with the data collection, doing the analysis and reaching a decision. The organization to work through the model must also be in place with all the major stakeholders involved. Everyone must understand who is responsible for which aspects of the process and that each step requires input and approval from each stakeholder”, Chizzonite concludes.

Combining the R&D and the market perspectives

“It is necessary to understand both the technical aspects of the drug and the future market requirements. Even if the launched drug meets the technical requirements, it is of little use if 4 or 5 drugs with equal efficacy have reached the market before we launch our drug”, Chizzonite says. Being too late results in difficulties in recovering the investment expended on acquiring the licensing opportunity and during the drug development processes.

Skill set of the CTI person

The skills required from a CTI professional are quite a combination. The person needs to be able to perform sophisticated technical analyses and to maintain contacts with very different interest groups both internally and outside the organization. The expectations of a CTI professional include:

Expert in a disease area as well as in existing and developing markets for that disease area
Expert in tools and techniques to identify and track products under development
Ability to dig, explore and question
Expert at interpreting external data in the context of competition and internal product programs
Ability to communicate equally with scientists, clinicians & opinion leaders
Ability to communicate assessments and GO/NO GO recommendations to team & management

“The importance and impact of in-licensing will increase in the future”, Richard Chizzonite says. “This is due to an intensified pressure within the industry to fill individual company drug development pipelines and to reduce the inherent risks in bringing new products to market. As a result, the need for sophisticated CTI professionals and methods will increase in order for a pharmaceutical company to ensure that licensing decisions are based on a thorough knowledge of the technical background of each licensing opportunity”, he concludes.

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