celgene risk management

celgene risk management

Effective Risk Management Strategies in the Pharmaceutical Industry: A Case Study of Celgene Corporation

1. Introduction to Risk Management in the Pharmaceutical Industry

The pharmaceutical industry is a complex and highly regulated industry with a very diverse set of risks. The pharmaceutical industry has substantial costs, risks, and long lead-times associated with drug development. The pharmaceutical regulatory environment that these firms operate within is unique and complex. It is argued in this paper that the development, production, and commercialization of drugs in pharmaceutical companies can benefit from the successful implementation of risk management strategies. Successful risk management strategy implementation can result in a more predictable and value-creating environment for firm operations and profitability. The pharmaceutical sector is characterized by significant and unique risks. In sum, the theoretical framework for establishing a successful risk management strategy in the pharmaceutical industry is developed at both the industry level and firm level based on extant literature.

The purpose of this paper is to establish and describe effective risk management strategies in complex organizations, with a specific focus on the pharmaceutical industry. Our research questions include: What are the most effective strategies for managing risks in the pharmaceutical industry? What is the impact of risk management on the business and operations of a pharmaceutical company? Also, how have specific pharmaceutical companies successfully implemented these strategies or what can a specific company do? We approach the task of establishing effective and comprehensive risk management strategies by a comparative case analysis of two specific companies in the pharmaceutical industry: Abbott Laboratories and Gilead Sciences, Inc.

2. Overview of Celgene Corporation and its Risk Landscape

Celgene Corporation’s development, like other biopharmaceutical organizations, is based on its patent-protected intellectual property (IP) in its investigations and theories on disease and its disease activity experiments. Small molecule treatments potentially tailored to target particular disease activity underlined by post-translational abnormalities are attributes of Celgene’s growing study and its tax and sales products. Enabling risk-reward financial opportunities and collaborations in industrial rate of return product life cycle diversity and uncertainty, for example. Regulatory risks are major considerations for the institutional climate prior to introducing a pharmaceutical product under review. Health can be priced effects added. Established big test, brand, and drug curiosity is the potent effect of IP health plans. Smaller players may focus the most on these attributes and usually have lower access to significant health concentrate areas. Regulatory rules seek to reconcile the conflicting stakes of suppliers and stakeholders within a clear context of the rights of intellectual property. Since they are initially designed to incentivize scientific innovations by setting up attached property, they provide the patent holder with a dominant power for the excluded costly licensing or generic output of durable or recent health treatment. This means that currently needed procedures, dosages, or health strategies may be prohibitively expensive by IP, although they are recognized for their value in intervention phase 2/3.

2.2. Celgene Corporation Risk Landscape

With the anticipated acquisition by the pharmaceutical giant BMS, the future of Celgene is uncertain, yet the corporation’s past already presents a major case study for risk management in corporate governance.

Celgene Corporation is a multinational integrated biopharmaceutical company that specializes in the discovery, development, and marketing of neurodegenerative, inflammatory, and neoplastic disease treatments. Established in 1980 in a New Jersey basement, the company brought its biggest oncological asset, Thalomid (Thalidomide), to the market despite a controversial history of defects for babies born to mothers treated with the drug for morning sickness. Today, Celgene Corporation holds a number of international landmark approvals for cancer immunotherapy from lenalidomide (Revlimid), pencillinamide (Pomalyst/Imnovid), and epinnastine (Otezla) drugs that are under investigation and targets a spread of tax- and FDA-approved indium- and violet-exposure diseases. The company has significant profitability, successful phase 3 trials, and great rises in stocks reserved.

2.1. Overview of Celgene Corporation

3. Key Risk Management Strategies Implemented by Celgene Corporation

Conduct Research in the Right Market; Reward for High Performance. Celgene carefully studies the competitive landscape to ensure that it is focused on the best areas of medical need, leveraging cutting-edge technology. Celgene actively seeks relationships that will broaden their R&D efforts, extend their therapy area expertise, and further the development cooperation. Celgene establishes footholds in interesting scientific innovation occurring everywhere. Celgene has a clearly articulated ability to operate in a variety of alliance types, from unbalanced equity joint ventures, total co-development/co-promotion collaborations, to supplier network management, to one-off relationships. Given its size and prominence at every level of the healthcare ecosystem, Celgene can forge partnerships in oncology, in hematology, in inflammation and immune diseases and ensure success by discerning the right partners and acting on potential opportunities by capitalizing on those outward relationships.

Celgene’s success has been a result of the company’s willingness to take and manage risk. It has successfully developed a number of effective risk management strategies. As its CEO, Robert Hugin, said, “Today, major pharmaceutical firms seek to mitigate risk by partnering with biotechs at an early stage because the small firms have less due diligence and respond to risk differently. This is important because a lot of great biotech is being born outside of the U.S. You’ve got to take the risk to go outside the U.S. to find it.” The company implemented various measures to manage these risks more effectively, including investing heavily in research and development; operating in highly specialized therapeutic areas of focus; focusing on smaller markets with higher growth; establishing networks and partnerships with cutting-edge organizations, such as universities, small biotechs, and large biotech companies; and promoting a high-performance system where employees are rewarded for taking calculated risks.

4. Case Studies and Lessons Learned from Celgene’s Risk Management Approach

In this chapter, the generic risk management framework was then tested on a UK-based Celgene pharmaceutical product development case. The risk management process is both studied and observed. Conclusion and possible further research are found in Chapter 5. Preliminary results show that the framework can be rationally used as a systematic risk assessment model within the internal pharmaceutical firm by also eliciting human behavioral issues which can affect the decision-making feature of a firm. Pharmaceutical firms can be equipped with an informative model to help inform future risk management policy and studies. In addition, the real-world case can generate practical learning for project managers’ risk management project skills.

In the previous section of the paper, five essential risk assessment techniques were presented to identify potential project risks within a firm. In this section, we present case studies on Celgene, who are actively involved in designing their risk management strategies in the pharmaceutical industry.

5. Future Trends and Innovations in Risk Management for Pharmaceutical Companies

These value-conscious healthcare systems may increasingly lead the industry to work more closely with governments and patient support groups to contribute to the measurement, reporting, and demonstration of the contribution of patented pharmaceutical products to society as well as systems effects such as productivity gains. In the area of biologics and improving the likelihood and speed in the development and licensing of new models of diseases that either slow or reverse substantially the progress of diseases may create a need for guiding evolving patenting and regulatory structures. To enhance patient safety, there is a need to measure and report established and novel product-related risks and to develop new surveillance methods such as vaccines and biologics. For example, in the area of generic follow-on biologics, while addressing legitimate reservations about interchangeability and prescribing autonomy that physicians may have.

The pharmaceutical industry’s frameworks for addressing risk are likely to be further influenced by the increasing impact of the demographic and economic trends of population growth and aging in the world’s most populous countries. The interaction of aging, genetic predisposition, and lifestyle factors (mainly rising affluence in developing economies), and the knowledge science is generating about the genetic basis of diseases, are likely to create a need for new health and pharmaceutical products. At the same time, demographic shifts related to aging populations in developed countries may lead to increasingly cost-constrained and value-conscious healthcare systems. In the future, pharmaceutical companies may explore and innovate in collaboration with regulatory authorities and bodies such as the WHO to explore alternative risk evaluation and pricing models.