The L-Factor: "We’ve got the critical mass”

Franz Humer, a lawyer by training, is CEO of F. Hoffmann-La Roche Ltd – a company whose strategy is to use innovative scientific breakthroughs to shape the future of medicine. Which is fitting for one of our industry’s most celebrated thinkers. To find out why he is, read on…

“We as an industry need to be able to inform the patients about drugs that are available for diseases”
-Franz Humer

NGP. For the past few years, there has been a lot of concern about severe side effects of drugs. A couple of drugs have been pulled off the market – Vioxx and Tysabri are perhaps the best known – while a couple didn’t even make it through clinical trial (torcetrapib anyone?). What do you think is the problem with the system?

FH. The European authorities are, and have been, very good in reviewing the safety of drugs. Where I think the system needs improvement is on post-marketing surveillance. How can we detect serious side effects in a large number of patients?

But what I think for the industry is important, we need to keep this in balance. There is a balance between efficacy and safety. There aren’t any drugs without the potential of side effects. Therefore we need to see, where is this benefit/side effect ratio going wrong?

We ourselves have had experience with a drug that we had to withdraw in 1997 from the market – Posicor. Those are, for a company, very difficult and very important decisions to make, together with the regulatory authorities. I think what the [US Food and Drug Administration] FDA is now planning to do, of reinforcing post-marketing surveillance, is a step in the right direction.

NGP. Can you describe your experience with Posicor?

FH. We had no signals whatsoever in the extensive Phase II and Phase III clinical trials. Then the drug was used, because it was so efficacious, in the most serious cases.

That was a drug to treat high blood pressure, and it was used primarily in the elderly, who were on a range of medications. All of a sudden, two cases of serious side effects appeared, which we reported to the regulatory authorities, [and] sat down to discuss. And while we were in discussions, a third case was reported. At that time, we jointly agreed that we had to pull the drug.

NGP. How can a drug company prevent those problems before they happen – in the planning phases for clinical trials, or in looking toward the populations that will eventually use the drug, such as those who take multiple medications?

FH. Very difficult, because very often the physicians themselves do not know which other drugs people, especially elderly people, take. Second, side effects, which are 1 in 10,000 or 1 in 20,000: it’s very rare that you would pick those up in regular Phase III clinical trials or Phase II trials, which run for a few thousand patients, but not tens of thousands of patients.

Those are things which you can only pick up in widespread clinical use, and that’s [why it’s important to have] the system of side effect reporting, side effect analysis, in-house safety boards – the way we run them – who review every side effect that gets reported. They follow each one of those up, classify it and monitor if there are any patterns in those side effects.

NGP. What are your thoughts about the use of mass-media advertising to the general public?

FH. We as an industry need to be able to inform the patients about drugs that are available for diseases.

We discussed with the European Commissioner that patients in a very large European country are not allowed to read something about Avastin when they go on Roche’s internet site. We can’t show this. If they speak English, they go to the US internet site and they can read everything they want. Now does that mean that only English speakers are allowed to be informed?

Personally, I’m not a proponent of this consumer-type marketing of serious medicines. I jokingly said, “One could get a complex when watching US television, because I don’t have the diseases which are being advertised, and only happy people seem to have those diseases. And they all have enormously white teeth.”

So I think that’s where perhaps the industry needs to look again: are we really within the boundaries of patient information?

NGP. What about the tactics that pharmaceutical companies use to promote their products with caregivers?

FH. Again, I can only talk from the perspective of Roche. With our drugs, it is extremely important that we promote the Avastins, the Tarcevas, the Xelodas of this world to the target audiences.

An oncology sales force that is well trained and covers the most important oncology centres has probably between 60 and 100 people. This is extremely important for the physician to find out [and] discuss what is the best treatment that is currently around. So in that sense, those very experienced reps are an extremely important part in the diffusion of innovation. Success in this industry (is determined) by a company’s ability to bring forward clinically differentiated products.

It needs to be something that is of a measurable, noticeable benefit. I do not believe that then the competitive advantage is only, “You have 3,000 salesmen, I’ve got 4,000 salesmen, therefore I win.” I do not see that that is the future of our industry.

NGP. You have said, “We will not merge”. Why not?

FH. Because I think that’s the wrong strategy. We are spending €3 billion per year on R&D, which means we’ve got the critical mass. We’ve got a pipeline today, which we’ve built up over the last seven, eight years, that, industry-wide, is considered one of the best pipelines in the business. I do not believe that mega-mergers produce value, and I think the results we are achieving are vindicating that strategy.

NGP. What’s your response to those who criticise you for not making drugs available for reasonable prices in poor countries?

FH. A lot of that criticism was focused with regard to AIDS and HIV. With AIDS and HIV today, access to drugs for the developing world is no longer an issue. The issue in most of the countries is one of priorities of the local health care system, it’s one of healthcare infrastructure, it is one of nursing, it is one of government priorities in order to invest in that area.

In terms of AIDS and HIV, we, Roche, together with a couple of other companies, work very closely with most governments in sub-Saharan Africa, Thailand, China, Brazil, in order to make those drugs available at different prices. I think we’ve made very substantial progress as an industry to counter that criticism, which I would say was fully justified five years ago. The industry made a mistake at the time. A big PR mistake.

NGP. In terms of lowering the price of drugs, is outsourcing a strategy for you – to place manufacturing facilities in areas where labour is cheap?

FH. No, the issue is not one of cost there. The issue is one of supply, safety and guaranteeing a supply chain. We’re trying to distribute our manufacturing capacity among three major sites at the moment – Basel, Germany; South San Francisco; and Vacaville, US – and register all sites for all products, so that we can shift capacities around.

NGP. You have mentioned in past interviews that the historic centre of gravity of the drug industry in Europe has shifted to the United States. What is the US doing right that we could do?

FH. The United States is the clear winner in terms of investment in R&D by this industry, and also in terms of output of new products and the speed with which the population has access to these new products.

What has Europe done wrong? Europe has focused only on costs, and not on benefits, has disregarded the fact that you only invest in R&D if there is also a reward at the end of the period for R&D.

If I’m the health minister and I have a budget squeeze, I don’t really want to tackle the hospitals, I don’t want to tackle the cost of the doctors, but I could cut the price of the drugs by 10 percent with an edict tomorrow. And the drug prices are down 10 percent, even if the cost of drugs only represents 10 percent of your budget. But at least you’ve done something that is easy to sell to the public. You do it often enough, and you destroy an industry.

What it has led to is that the good people who come out of universities didn’t find good jobs they wanted in industry in Europe. They went to the United States. If you have a researcher who at 25 or at 30 moves from Frankfurt to California or to Boston, most likely he will get married to an American, and he will have children. And seven years later or 10 years later, when somebody says, “Well, why don’t you come back to Frankfurt?” he’ll say, “You must be joking. My wife doesn't speak German, my children like it here, I'm not going to move.” You lose a generation of researchers.

NGP would like to thank the San Francisco Chronicle for its kind assistance with this article.: “”

Excerpted from a speech given by Dr Daniel Vasella to the 23rd IFPMA Assembly, Geneva, October 2006, with kind permission.

Daniel Vasella: “The public remains sceptical of our industry’s ability to continue to innovate”