Success and Disruption
As an example of the impact of personalized medicine, consider the evolution of treatment for human immunodeficiency virus (HIV), the retrovirus that causes AIDS, during the 1990s and 2000s. Physicians found that by grouping patients into smaller subsets based on (1) the subtype of their HIV infection, (2) their body’s response to the infection, and (3) the stage of the overall infection, they could prescribe the best tailored therapy cocktail for each patient. This combination of prescribed diagnostics and pharmaceuticals has been a remarkable success story. It has improved quality of life for patients and extended the average life expectancy of newly diagnosed HIV patients by 20 to 25 years.
HIV infects different patient groups in different ways; for a patient diagnosed with it, a physician must choose from more than 20 different antiviral agents in six unique drug classes. While undergoing antiretroviral therapy, patients are monitored with advanced diagnostic blood tests every three to four months to assess the severity of infection and confirm that the virus is being suppressed. Some of these tests can predict how individual patients will respond to specific therapies, thus increasing their odds of survival. For instance, Selzentry, an antiretroviral drug developed by Pfizer, works by binding to and thereby blocking the CCR5 receptor, which is found on the surface of certain human cells and is necessary for the entry of the virus into the host cell. But in some people, HIV can use other receptors instead, which would render Selzentry ineffective. Therefore, before Selzentry can be prescribed, patients are given an HIV tropism test called Trofile to determine whether the drug will be effective for them.
Personalization of anti-HIV drugs benefits all constituents. Payors and governments maximize the value of therapies on the market, squeezing the best effects from the cheapest anti-HIV drugs. Physicians and clinicians, who have had to rethink their management of HIV/AIDS treatment, have dramatically improved success rates. Patients are the ultimate beneficiary: An HIV-positive test used to be a short-term death sentence. Now HIV is considered a chronic, manageable disease, with treatment costs that are considered acceptable and affordable, even in sub-Saharan Africa.
Pharmaceutical companies have also benefited greatly. The PMx approach to HIV/AIDS treatment, for example, has helped make Gilead Sciences Inc. (with a market cap of $38 billion) the world’s second-largest biotech company, after Amgen Inc. The use of companion diagnostics allowed Gilead to improve the overall efficacy of its portfolio of drugs for HIV/AIDS, cementing its lead in that market.
But of all the constituents, pharma companies face the greatest disruption from personalized medicine. It forces them to adopt a new business model with a counterintuitive value proposition, requiring unfamiliar new capabilities to make it work. For many pharma companies, PMx means changing established practices in all aspects of the business — from the earliest stages of target identification and drug discovery, through clinical development, regulatory approval, commercial development and operations, and marketing and sales.
PMx is only one of several strategies that pharmaceutical companies will adopt in the next few years. Some will seek to retain the same business model even as their innovation pipeline dwindles. They will use their marketing capabilities to sell so-called branded generics, off-patent versions of their own former blockbusters, accepting lower margins in return for high-volume sales. Others will play the specialty pharmaceuticals game, repurposing old drugs in new delivery systems for different diseases than those for which they were originally approved. This is a well-established low-risk model that investors understand.
But a number of pharmaceutical companies will adopt the personalized medicine paradigm. They recognize the competitive advantage that could accrue from a segmented customer base with structures, processes, and capabilities to match. They are just unsure about how to leap ahead into practice.