Bristol-Myers Squibb: following the string of pearls

Bristol-Myers Squibb (BMS) is something of an enigma in the pharma industry. Whilst many of its big pharma peers are seeking large mergers and tax inversions, BMS would rather have bolt-on deals with smaller biotechs and academia, having done its big merger back in the 1980s.

And whilst having a large presence in the UK, it remains quiet on the communications front – seemingly a very different strategy to its noisy neighbours at GSK, AstraZeneca, UCB and Pfizer.

The quiet, frugal nature of the firm has become a cultural one, and stems from 2007 when its former chief executive John Cornelius introduced the ‘string of pearls’ policy, something that sees the firm focus on a set level of therapy areas with strategic purchases, intentionally keeping these buys small and manageable.

Arguably the most successful of these deals was its 2009 purchase of Medarex, which saw BMS gain the company’s experimental immune-oncology drug ipilimumab.

Two short years later, BMS brought this drug to market as Yervoy, a new treatment for melanoma that teaches the body to attack tumours. It made $592 million in the first half of this year, up 28% on 2013, and is on course to become a big blockbuster for the company.

Johanna Mercier, the new general manager of BMS in the UK and Ireland, tells Pharmafile that the string of pearls was indeed the best policy for the firm:

“If you look at the company’s strategy board since 2007, well the core of it has not really changed. And honestly, I think that’s a huge benefit because we’ve been clear on what we’re focussed on, and we are also very clear that we want to be winners within the speciality biotech/pharma space, namely in: cardiovascular and immunology, oncology and virology, and also some genetically defined [or rarer] diseases.

“So we’ve been consistent in how we’re doing it and I think that’s really paying off, and actually we’re seeing other companies do some of the same.”

This consistency has continued despite an annus horribilis in 2012 when the $2.5 billion purchase of hepatitis C specialist Inhibitex failed to pay off. In the same year, the company was forced into a $1.8 billion write down when the firm’s hep C drug failed in clinical studies. Analysts were concerned that BMS may have lost its way – but 2012 proved an aberration, and the company is still going strong.

Innovation trumps short-term deals

The string of pearls has also evolved into an ethical approach for the firm, as Mercier says she doesn’t believe BMS will go down the path that both AbbVie has with Shire – and Pfizer is trying to do with AstraZeneca – in buying large rivals simply to save money on their tax bills (known as a tax inversion).

According to financial analysts, the potential deal between Pfizer and AstraZeneca is said to be worth $800 million a year in less tax for the US giant. But should both Pfizer and AZ have produced a strong product from their respective pipelines, such as Gilead is doing with its hep C drug Sovaldi (sofosbuvir) or AbbVie is with Humira (adalimumab), then both companies would be seeing billions each year added to its books, not just millions.

When this is put to Mercier, she says: “That’s my belief and BMS’s belief – and it’s paying off for us. The attempted merger looked like a lot of work for what was in part aimed at creating a slightly smaller tax bill.”

Mercier goes on: “If you look back to 2005/06, we were at the same stage [as Pfizer and AstraZeneca are now] where our pipeline was quite minimal, but our head of R&D at the time was very clear on his strategy.

“It was a long-term, 15-year plan – not a five-year plan – and he was very clear about what we needed to do and it just kept getting more focussed. And so when you look at our pipeline today; well in the last three years I’ve launched six products and will be launching three more in the next 18 months. And these are all distinguished products – we’re not looking to jump on any bandwagons.”

Looking at the Pfizer-AstraZeneca bid, she says that whilst she’d obviously had no involvement in that, Mercier questions why companies are focussing on tax inversions, instead of innovation.

“I think sometimes, they’re [pharma companies] doing it for the wrong reasons to be totally honest with you, because for me it should all be about the pipeline, and about the much longer term.”

Immuno-oncology

One of the biggest things to come from BMS’s pipeline has been Yervoy, the first new melanoma treatment to hit the market since the 1970s and the first to prove it can increase overall survival in late-stage melanoma patients.

The drug was the second immune-oncology drug to be approved by the FDA, after Dendreon’s Provenge (sipuleucel-T) prostate cancer treatment was given the go-ahead in 2010, and heralded a new and exciting era for cancer research.

Yervoy, she says, is a major success story for BMS and for patients. “If you look at Yervoy, it really is the platform for immuno-oncology. I mean of course this is not just BMS’s baby, it’s across the industry with many products coming round the corner, but really Yervoy is the proof of concept for this mechanism of action. Before it there had not been anything for melanoma for decades except for chemotherapy, which really wasn’t good enough to extend life.”

And BMS hasn’t stopped just at Yervoy, as its new drug nivolumab generated much excitement at this year’s ASCO cancer conference, which also received its first approval in June from Japanese health authorities.

Nivolumab (also known as Opdivo) is at the forefront of a new class of medicines known as PD-1 inhibitors (programmed death-1), a monoclonal antibody that works by locking the interaction of PD-1 with its ligands PD-L1 and PD-L2, giving the body’s immune system more chance of recognising cancerous cells and killing them.

The drug is also being tested against various other cancers including lung and blood, although its main therapy area is melanoma.

Analysts see Bristol-Myers Squibb’s immuno-oncology portfolio as being worth between $8 billion to $10 billion in annual sales toward the end of the decade.

It has, however, lost out to its closest rival Merck this month after it gained FDA approval for its PD-1inhibitor Keytruda for a second-line licence on melanoma. BMS will most likely not see US approval until mid-2015, but BMS is still positive about its future.

Mercier says BMS hopes its latest treatment for the disease will be able to replicate not only the success of Yervoy, but adds it is also being tested alongside its melanoma medicine to see if a combination treatment could be more effective.

“If you think about Yervoy, and you think about the products that are coming around the corner, such as nivolumab, and then think about the two together, then that can really change the story of melanoma,” she explains.

“This is an amazing change – and you think this has happened over the past three years. That is what our business is all about.”

Global perspective on a small isle

Mercier originally worked for BMS in her native Canada before moving on to roles in the US and Europe, until taking on the role as general manager in the UK and Ireland earlier this year. “That seems the wrong way around,” she says, “But actually it’s to my benefit because having done that, I have a much broader prospective for this role.”

And that global perspective has allowed Mercier to see UK-specific problems from new angles. One of the biggest issues for all UK pharma firms in 2014 has been the introduction of the new five-year PPRS deal, which essentially restricts industry growth for the next two years and stops it from growing by any more than 2% until 2018.

Mercier says: “I came in after the PPRS deal of course but I know a lot of people sweated over it. I think the overall PPRS scheme is a very good thing for the NHS and for patients because the intent from all sides is the right one – and that’s to make sure the NHS is more pro-innovation, and is focussed on getting new medicines to patients, and then allowing pharma to be reimbursed.

“But the concern that I have is that we’re not seeing that happen right away [i.e., having new medicines being adopted and pharma being paid] and the reason for that is probably because there is no direct mechanism to make it happen.”

In the first quarter of this year, the UK pharma industry as a whole had to pay £74 million back to the Department of Health after going over the agreed growth limit.

“This was not a small payment,” Mercier admits, “But I do think the intent of that payment is that the NHS is almost given a ‘right to prescribe’ for innovation. This is because anything that will go over their budget will get covered by the industry as we’re essentially underwriting the NHS medicines budget.

“And that all sounds great, but the problem is that despite all of this, new medicines still aren’t being used in the NHS as much as they should be for patients.”

This, Mercier explains, all comes down to incentives. “So for me the NHS has to have the right incentives. At the moment, doctors have QOF [Quality and Outcomes Framework that rewards doctors for following certain health policies] and other inducements – but I don’t think these focus on the right things because there are no QOF incentives for using new medicines.”

But, she says, there are perverse QOFs, such as the one for using Aspirin for patients with atrial fibrillation (AF). “What this has led to is a level of usage of Aspirin in the UK that’s just shy of 30%, and yet it has no efficacy in AF. None! And the side effects as well mean you could get an ulcer and not be protected, yet doctors get paid to promote it. It just doesn’t make sense.”

And this sort of policy has a negative effect on sales of BMS and Pfizer’s new oral anticoagulant Eliquis (apixaban), as well as other new blood thinners such as Xarelto (rivaroxaban) and Pradaxa (dabigatran), all of which do have proven efficacy and licences for AF patients to help prevent stroke.

But if you look at it the other way Mercier says, QOF clearly works as in other countries Aspirin uptake is less than 10 per cent. “So there’s no doubt QOF works,” she explains, “We just need to use it on the right things. And that’s what’s missing. On top of that, we in the industry can talk a good game, but I think what’s happening as an industry is that we’re not being pragmatic enough in our approach.

“If we can see something’s not working as well as it should, like QOF and Aspirin for instance, we should be saying something and helping to get it right.”

Let the products do the talking

Whilst Mercier thinks it’s important for the industry to have a voice, she says that the ‘BMS way’ is to be more quiet, and not shout about themselves or their products.

“That’s not just in the UK either: we’re even like that in the US as well, which seems strange for a US company I know. But our philosophy is ‘get your head down and get the work done’. Obviously we communicate at an individual level, but we’re not big in the media and I think we kind of like it that way.

“I mean we’re not one of the biggest companies, and we like to make sure that the proof is in the pudding: we will put our money where our mouth is and let the products do the talking.”

And this also means that both Mercier and BMS in the UK and Europe are wary of social media, and she questions whether it has a real return on investment.

She says: “BMS as a company has Twitter feeds, Facebook, and other media so there is activity, but what I would tell you though, in light of the regulations in Europe [which bar direct to consumer advertising], is that we are very careful when online.

“And we’re careful not least because the guidance around social media is not crystal clear, to say the least, and I’m not always sure about the return on it. But I think if you were talking to me in the US, that’d be a different thing, and we were doing a lot of social media in the US as we have very different regulations.

'But even there we had to be very careful because if there is a side effect that comes through to us via social media, then it has to be reported, and you have to find a way of doing that.

“People like the anonymity but at the same time, the companies out there don’t because they are responsible. Being online opens you up to millions of people, but with that comes a huge responsibility.”

This is a much more cautious policy than some other pharma firms are taking, such as Boehringer, Lilly and Janssen, who have launched a series of social media events such as tweet-ups (even on controversial areas), a foray into gamification and a number of digital disease awareness campaigns to help market themselves, and indirectly their products.

But for Mercier, she sees the advent of social media as more of an opportunity to learn. “For me, the role in the UK is more of a listening role to social media. That means we follow these sites and just listen and watch.

“It’s more about being aware of what’s going on because you can get a lot of insights out of that.”

When it comes to a return on investment in using social media in the UK and Europe, Mercier says she doesn’t even know how someone would go about ‘connecting the dots’ on how that works.

But she argues that there are a lot of insights to be had from online patient groups, such as PatientsLikeMe and others, which have closed patient communities discussing their diseases and drug treatments, and these data can then be shared with pharma.

“To understand what patients are talking about, whether its oncology or virology, you can get a deeper understanding and tweak the patient journey a little bit by seeing what they’re going through,” she explains.

“And if you better understand the patient, then we can better understand what the doctor needs from us. That is the big digital opportunity I see here in the UK but at this point, nothing beyond that.”

This is a bold strategy for the firm which is clearly keen not to jump on the digital bandwagon, and appears to have thought carefully about the pros and cons of social media – something not all companies have done, with many being guilty of over-romanticising the role of digital in healthcare.

BMS is hoping its three new launches in the coming 18 months will help shore up its string of pearls policy. But as Mercier says, it’s the products that she wants to do the talking, rather than having the company take centre stage.