Roche's CEO Severin Schwan isn't the only pharma CEO facing a highly unappealing economic reality (and not just talking of it) – executives of practically every pharma reporting for the second quarter to date has laid made this point. But Schwan's remarks to analysts on today's half-year earnings call were particularly harsh, especially coming from one of the industry's best long-term performers. "The financial crisis has arrived for the pharmaceutical industry," he stated.
Not only did Roche suffer two important clinical development setbacks in the past month, but it, like the rest of the industry, is facing accelerating pricing pressure—a point which he and his top lieutenants honed in on repeatedly. These hits will fall through to the bottom, he noted, adding, 'We won't suddenly have more products [to offset the shortfall] because prices are coming down."
To some extent, he was playing to analysts, who are wary of Roche's promises to cut cuts in the face of a slowing top line. After all, the company, which has demonstrated its scientific prowess by launching a series of unexpected blockbusters, isn't, as one analyst put it, known for being "mean and thin."
But on another level, the setbacks to Avastin and the experimental Type 2 diabetes drug taspoglutide, really hurt --especially if FDA ultimately decides to take up ODAC on its recommendation earlier this week against full approval of Avastin in first-line metastatic Her-2 negative breast cancer. In that case, Roche will have to stop promoting the drug and re-educate physicians about its use for first-line breast cancer (it now is available for that indication under the accelerated approval process) – which could cost the company hundreds of millions of dollars in sales.
To some extent, he was playing to analysts, who are wary of Roche's promises to cut cuts in the face of a slowing top line. After all, the company, which has demonstrated its scientific prowess by launching a series of unexpected blockbusters, isn't, as one analyst put it, known for being "mean and thin."
But on another level, the setbacks to Avastin and the experimental Type 2 diabetes drug taspoglutide, really hurt --especially if FDA ultimately decides to take up ODAC on its recommendation earlier this week against full approval of Avastin in first-line metastatic Her-2 negative breast cancer. In that case, Roche will have to stop promoting the drug and re-educate physicians about its use for first-line breast cancer (it now is available for that indication under the accelerated approval process) – which could cost the company hundreds of millions of dollars in sales.
And the hypersensitivity issues that arose during a Phase III trial of taspoglutide, Roche's first drug for Type 2 diabetes, mean a delay of 12 to 18 months in the regulatory filing, which Schwan called "a big disappointment." That is likely to translate into some restructuring in the U.S., including of the U.S. primary care sales force – a group of about 750 reps – executives said, although they weren't specific about details of what they would do.
Meanwhile, Stefan Frings, Avastin Franchise director, was less circumspect in his response to the ODAC committee vote. Accusing the agency of having "stacked the deck against Avastin by choosing voting members who were previously negative" on the drug, he also noted that the briefing booklet "honed in on median PFS [progression-free-survival], ignoring hazard ratios."
And Roche, he added, wasn't alone: immediately after the vote, he told analysts, thought leaders contacted the company to say they "were appalled" by the committee's decision. "This is not a Mylotarg situation," he went on, referring to Pfizer's recent decision to withdraw that acute myeloid leukemia drug from the U.S. market because of excessive mortality. "Avastin mortality isn't excessive and risk factors work in its favor," he insisted, adding "Avastin is a meaningful option for certain patients with breast cancer."
Pascal Soriot, chief operating officer of Roche Pharma, took a less acerbic, more diplomatique tone, stating that the company "needs to work with FDA" to understand the relationships of PFS and hazard ratios and to have clear "expectations for rules of the game for all projects going forward."
Whatever the outcome of the Avastin decision - due in mid-Sept - this is a year when Roche steps in line with its pharma counterparts and focuses on the new frontier of "operating excellence."
Meanwhile, Stefan Frings, Avastin Franchise director, was less circumspect in his response to the ODAC committee vote. Accusing the agency of having "stacked the deck against Avastin by choosing voting members who were previously negative" on the drug, he also noted that the briefing booklet "honed in on median PFS [progression-free-survival], ignoring hazard ratios."
And Roche, he added, wasn't alone: immediately after the vote, he told analysts, thought leaders contacted the company to say they "were appalled" by the committee's decision. "This is not a Mylotarg situation," he went on, referring to Pfizer's recent decision to withdraw that acute myeloid leukemia drug from the U.S. market because of excessive mortality. "Avastin mortality isn't excessive and risk factors work in its favor," he insisted, adding "Avastin is a meaningful option for certain patients with breast cancer."
Pascal Soriot, chief operating officer of Roche Pharma, took a less acerbic, more diplomatique tone, stating that the company "needs to work with FDA" to understand the relationships of PFS and hazard ratios and to have clear "expectations for rules of the game for all projects going forward."
Whatever the outcome of the Avastin decision - due in mid-Sept - this is a year when Roche steps in line with its pharma counterparts and focuses on the new frontier of "operating excellence."
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