Posted 02 March 2017
By William C. Putnam, PhD, RAC
You are the senior regulatory professional in the board room overseeing a major development program. The program looks promising and all you need to be concerned about is the most expeditious and risk-free regulatory path to approval, right?
Unfortunately, that is not the case. The regulatory development path is typically much more complex and there are many business factors that drive the ultimate development strategy design. The most successful development programs take a three-pronged approach addressing scientific, regulatory and business outcomes.
Business outcomes are broadly defined as those initiatives and accomplishments that drive measured business results: revenues, earnings, cash flow, return on capital and valuation. A product's marketing, sales and profitability (e.g., label claims, product positioning, market size and return on investment) directly contribute to business results.
Because regulatory decisions have a direct impact on business outcomes, regulatory professionals need to have a comprehensive understanding of business, such as the business acumen provided by extensive on-the-job training, professional development programs or formal business training. This article describes the need for a comprehensive understanding of business for senior regulatory professionals, and provides specific examples to highlight this need.
The examples encompass clinical, nonclinical, and chemistry, manufacturing and controls (CMC) perspectives, small and large business perspectives, and pre- and postapproval perspectives. The regulatory professional's need for in-depth business acumen is universal in all aspects of the development continuum and in the smallest and largest organizations.
A senior regulatory professional's career traditionally begins in the laboratory or in a practical practice setting, but first comes the academic leg of the journey. In the hallowed halls of the most prestigious universities, graduate, pharmacy and medical schools, the higher education system trains some of the best scientists and healthcare providers in the world.
An increasing number of these individuals choose to embark on a regulatory career. All too often, they are trained only as scientists or practitioners and are never exposed to the business principles needed to implement balanced scientific, regulatory and business decisions.
The tight weave of regulatory and business, and the criticality of business acumen for senior regulatory professionals, is best exemplified through a high-level review of the complex decisions that a regulatory professional is required to make. A few of these scenarios are presented below, with particular emphasis on the business aspects.
These scenarios are not designed to be all-inclusive, but are designed to highlight the fact that business acumen is a critical success factor for the regulatory professional.
The Importance of Business Skills in Regulatory
Even at very early stages of development (e.g., nonclinical toxicology testing), a regulatory professional must understand the business implications of choices made. This is because the design of the nonclinical program facilitates the conduct of appropriate clinical studies at the appropriate target patient doses (i.e., doses that are relevant for safety and efficacy and are in line with the business strategy).
Perhaps the most visible of the regulatory decisions that transcend both business and regulatory is the design of the clinical program. The clinical program and the clinical study endpoints directly affect the product's label claims and, ultimately, the manner in which the product is marketed.
An understanding of the marketplace and the impact of regulatory decisions on product positioning is critical to the product success in the marketplace. The most straightforward (least risk) clinical design may not, and probably does not, yield the strongest business position (i.e., most claims and broadest target market).
A balance must be established between business needs for the product (target product profile from business perspective) and the scientific/regulatory risk associated with: (1) clinical trial success and (2) product approval. The senior regulatory professional is often required to make these decisions, so an understanding of their business implications is critical.
The need for a thorough understanding of the business aspects of regulatory decisions does not end with product approval. This is highlighted in a scenario in which a company would like to make a change to an approved manufacturing process.
The regulatory professional needs to weigh the cost of preparing the filing against the cost savings at the site (i.e., evaluation of the true return on investment). From a site cost perspective, these calculations need to include the actual cost of the change such as change parts, additional personnel training, demonstration and/or clinical batches, chemistry comparisons (e.g., comparative dissolution), clinical comparisons (e.g., bioequivalence studies), and methods/process validation. Also, from a cost perspective, the investment portion of the equation should include the cost to prepare the regulatory submission, potential time interacting with the regulatory authority and any applicable filing fee.
From a return perspective, the cost savings associated with the change need to be calculated and balanced against the product forecast. This calculation should also take into account the implementation time (e.g., is this a prior approval change). Thus, a regulatory professional's review of a proposed "simple change" needs to include many business aspects, and a comprehensive understanding of those business factors allows the professional to make the best decision.
Business acumen is extremely beneficial in a small or mid-sized company, where the senior regulatory professional is often required to wear multiple hats and make broad-ranging business decisions with minimal advice from other corporate officials. In these companies, the regulatory professional is often asked to make presentations and to update investors.
Therefore, the ability to seamlessly discuss the regulatory and business implications of the product development path is key to the next round of funding and company success. Further, the small companies often have minimal capital, which makes getting it right the first time from a scientific, business and regulatory perspective imperative to the life of the firm.
The regulatory professional's role in a small or mid-sized company situation is also complicated by the fact that the product development program may not have regulatory approval or commercialization as its main objective. The development program's purpose may be to develop a product or portfolio to the point where the product, portfolio or even the entire company can be acquired for profit.
Regulatory decisions in these situations may be quite different due to the business strategy (e.g., analytical method validation or full impurity identification may not be a part of the initial development plan). A complete understanding of the business implications, the regulatory ramifications of these decisions and the impact on subsequent development is necessary for negotiations with potential suitors and even in situations where there is no investor.
From the other side of the table, the acquiring company's regulatory professional is often at the forefront of the due diligence process. Assessment of the regulatory approach and the implications on the business proposition must be seamlessly evaluated in parallel. A regulatory professional with a strong background in business is the preeminent individual to accomplish this task successfully.
These examples highlight the need for senior regulatory professionals to have a deep, thorough understanding of business. This business understanding is necessary across the drug development continuum (discovery through postapproval) and in companies of all sizes (from a virtual company to big pharma). This comprehensive business understanding can come from on-the-job training, professional development programs and/or a formal business education.
The RAPS Executive Development Program will be held 26–29 June 2017. RAPS continues its successful partnership with the prestigious Kellogg School of Management at Northwestern University with a program designed specifically for senior-level regulatory professionals. Learn more about the program at RAPS.org/Kellogg.
William C. Putnam, PhD, RAC, is professor, pharmacy practice at Texas Tech University, and formerly a vice president and general manager, regulatory sciences, Cardinal Health Specialty Solutions.