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Gilead Sciences launched Truvada, a combination pill incorporating Gilead's individual antiviral drugs, Viread and Emtriva, in the U.S. in 2004. This involved gaining FDA approval, setting a national price, and negotiating reimbursement levels with private and public insurers. While these activities had been resource intensive, their completion meant that Gilead was able to sell Truvada, a combination HIV/AIDS therapy, across the entire United States, approximately 50 percent of the worldwide market. The remaining 50% of Truvada's potential commercial success, however, would be pursued in Europe. Europe presented a more complex environment for reimbursement than the U.S. for three reasons. First, the reimbursement process differed in each European country as to required submissions and approaches to pricing. Second, the average time between the beginning and end of reimbursement negotiations was highly variable across European countries. Third, the local office for Gilead in each European country had its own estimate as to the likely length of negotiations and level of reimbursed price for Truvada, making it challenging to devise and communicate a consolidated strategy across the organization. Gilead needed to determine the order by which it would pursue reimbursement approval for Truvada in Germany, France and Spain. Germany's regulatory authority used a "free pricing" approach. In France and Spain, the government health ministers often (though not always) referenced neighboring markets' prices for a given product in order to determine the product's domestic reimbursable amount. . The approach Gilead decided upon would not only determine the future for Truvada in Europe but also would have a significant impact on the company's future financial health.

The protagonist ("Howard Glass") is a recent GSB graduate (2007) heading up a biomedical team start-up focused on the gastric bypass method. The case tracks Glass and team from the team foundation and idea generation phases through the company's first 6 - 7 months of operation, as Minova burns through what little money it has and actively looks to close a seed of funding.

This case has been developed to facilitate a negotiation exercise related to the formation of partnership deals in the healthcare industry. It is based on actual information, but reflects a hypothetical situation involving two companies and a product that have all been disguised. The scenario described within the case involves Pharmac, a large pharmaceutical company, and Respire, a small medical start-up. Pharmac and Respire began negotiating a partnership to develop and eventually market an inhaled form of parathyroid hormone (PTH) to treat osteoporosis. If successful, this product would improve the available options for the treatment of osteoporosis. It was also expected to produce "blockbuster" sales since it would make PTH, an already extremely effective treatment option, more convenient and appealing to a large segment of untreated patients who were injection-averse (injection was the standard delivery mechanism for this drug). Development of the product was highly speculative and was expected to take six to seven years due to early stage development of the inhalable delivery system and the multi-year Phase III fracture trials required for approval. Pharmac had released the first man-made, injectable form of parathyroid hormone, called Strocal, in 2002. However, no one had yet developed a non-injectable version of PTH, despite efforts by Pharmac and other companies that spanned more than a decade. Respire's goal was to be the first company to solve this problem by developing an inhaled formulation and a device to deliver Strocal through the lungs in a safe, effective, and reproducible manner. Enough information is provided within the case to enable students to negotiate terms for royalties, milestones, exclusivity provisions, and an equity investment. At the end of OIT-81A, information known to Pharmac (but not to Respire) is provided. In OIT-81B, information known to Respire (but not to Pharmac) is given.

This case has been developed to facilitate a negotiation exercise related to the formation of partnership deals in the healthcare industry. It is based on actual information, but reflects a hypothetical situation involving two companies and a product that have all been disguised. The scenario described within the case involves Pharmac, a large pharmaceutical company, and Respire, a small medical start-up. Pharmac and Respire began negotiating a partnership to develop and eventually market an inhaled form of parathyroid hormone (PTH) to treat osteoporosis. If successful, this product would improve the available options for the treatment of osteoporosis. It was also expected to produce "blockbuster" sales since it would make PTH, an already extremely effective treatment option, more convenient and appealing to a large segment of untreated patients who were injection-averse (injection was the standard delivery mechanism for this drug). Development of the product was highly speculative and was expected to take six to seven years due to early stage development of the inhalable delivery system and the multi-year Phase III fracture trials required for approval. Pharmac had released the first man-made, injectable form of parathyroid hormone, called Strocal, in 2002. However, no one had yet developed a non-injectable version of PTH, despite efforts by Pharmac and other companies that spanned more than a decade. Respire's goal was to be the first company to solve this problem by developing an inhaled formulation and a device to deliver Strocal through the lungs in a safe, effective, and reproducible manner. Enough information is provided within the case to enable students to negotiate terms for royalties, milestones, exclusivity provisions, and an equity investment. At the end of OIT-81A, information known to Pharmac (but not to Respire) is provided. In OIT-81B, information known to Respire (but not to Pharmac) is given.

Historically, the biggest obstacle that healthcare innovators, such as pharmaceutical and medical device manufacturers, needed to overcome on their way to market was securing approval by the U.S. Food & Drug Administration (FDA) or other international regulatory authorities. However, in the last decade, a new (sometimes even more challenging) hurdle had to be cleared: insurance coverage and reimbursement. Payers--either public payers, such as Medicare in the U.S. and the National Health Services (NHS) in the U.K., or private commercial payers, such as Blue Cross/Blue Shield and UnitedHealth Grou--could deny coverage for a technology that had received regulatory approval if they determined that the supporting evidence did not adequately demonstrate that the technology was superior to existing treatment alternatives that were already being reimbursed. This had the potential to create a potentially adversarial relationship between payers and innovators in cases where they had conflicting interpretations of the evidence regarding the cost, benefits, and risks of new technologies. The challenges to innovators in managing this conflict are illustrated in this case study by an example: the 2006 decision by the U.K.'s NHS to deny coverage for Exubera, a new form of inhaled insulin.

In the spring of 2007, four budding companies were in the very early phase of their development. These entrepreneurial ventures illustrate the variety and breadth of new business ideas that can be pursued, and the unique issues that need to be tackled in order to turn each concept into a sustainable, profitable business. The case briefly describes each of the four companies-a footwear manufacturing company, a primary healthcare provider, a medical device, and a technology platform for creating biofuels and chemical products-in terms of the product or service being offered and the market being addressed.

Chronicles entrepreneur Lisa Conte's two ventures, Shaman Pharmaceuticals and Napo Pharmaceuticals. Shaman was formed to make drug discovery and development more efficient by studying traditional, indigenous healers in the tropics. Shaman had identified a promising compound that came to be known as crofelemer. For a variety of complex reasons, Shaman declared bankruptcy, and Napo, Conte's new company established specifically for this purpose, bought Shaman's library of compounds, including crofelemer. At the time of the case study, Napo was developing the compound for sale in large western markets while arranging an innovative public-private partnership to develop and distribute crofelemer in the developing world. In developing countries, the compound would treat diarrhea, which kills over 2.5 million children every year. However, the public-private partnership proved difficult to arrange. Concludes with Conte deciding whether to proceed with the partnership that would not only save the lives of children, but also provide much-needed capital to keep Napo in business. Highlights the difficulties of establishing partnerships across sectors and pursuing complex negotiations within the complicated market and regulatory environment associated with the pharmaceuticals industry.

In late October 2003, Randy Scott and the Genomic Health team had just received the results of Genomic Health's first pivotal trial. The company's product, Oncotype DX, a first-of-its-kind genomic assay that quantified the likelihood of breast cancer recurrence, had exceeded the standard measures of patient age, tumor size, and tumor grade in predicting recurrence outcomes. The study results would be presented at the 2003 San Antonio Breast Cancer Symposium in December and published in the New England Journal of Medicine in December 2004. Scott and his team now faced the challenge of determining how and when to launch this groundbreaking product. The team was eager to get the product to market as quickly as possible. However, extensive market research performed earlier in the year reveals that it had less than 10% awareness in the physician community and even less among consumers. When asked about what factors would influence their adoption, physicians overwhelmingly cited clinical validation studies--and lots of them. Many skeptics within the oncology field felt that the legitimate use of genomics in making treatment decisions was still 10 to 20 years in the future.

In August 2002, the FDA had notified the executive steering committee for Abbott Laboratories' new rheumatoid arthritis drug to expect approval significantly ahead of schedule. If everything went smoothly, the compound D2E7 (brand name HUMIRA) would be approved for sale in the United States before the end of the year. This gave Abbott and its HUMIRA brand team no more than four months to complete preparations for the product's launch. Abbott acquired D2E7, a biologic disease-modifying antirheumatic drug, when the company purchased Knoll Pharmaceuticals in March 2001. With a significant head start and combined 2002 sales anticipated to exceed $2 billion, Enbrel (from Immunex, later acquired by Amgen) and Remicade (from the Johnson & Johnson subsidiary Centocor) would provide HUMIRA with tough competition. Yet, with the rheumatoid arthritis market expected to grow to over $7.5 billion by 2008, there was still a significant opportunity for Abbott. The executive steering committee knew that the HUMIRA team would have to orchestrate every aspect of the product's global launch carefully to quickly and effectively establish HUMIRA in this challenging market.

In August 2002, the FDA had notified the executive steering committee for Abbott Laboratories' new rheumatoid arthritis drug to expect approval significantly ahead of schedule. If everything went smoothly, the compound D2E7 (brand name HUMIRA) would be approved for sale in the United States before the end of the year. This gave Abbott and its HUMIRA brand team no more than four months to complete preparations for the product's launch. Abbott acquired D2E7, a biologic disease-modifying antirheumatic drug, when the company purchased Knoll Pharmaceuticals in March 2001. With a significant head start and combined 2002 sales anticipated to exceed $2 billion, Enbrel (from Immunex, later acquired by Amgen) and Remicade (from the Johnson & Johnson subsidiary Centocor) would provide HUMIRA with tough competition. Yet, with the rheumatoid arthritis market expected to grow to over $7.5 billion by 2008, there was still a significant opportunity for Abbott. The executive steering committee knew that the HUMIRA team would have to orchestrate every aspect of the product's global launch carefully to quickly and effectively establish HUMIRA in this challenging market.

Provides entrepreneurs with an understanding of how to use market research and market information to test the validity of a business concept and to refine a business plan. Introduces the key questions entrepreneurs should consider, the techniques entrepreneurs could use to gather information to address those questions, and the practical considerations for collecting and interpreting data.

Since the 1990s, the distinction between the pharmaceutical industry and the biotech industry has blurred, creating what we can now call the biopharmaceutical industry. How and why did this happen, and where is the industry going now? Traditionally, pharmaceutical companies worked with plant- and chemical-based compounds, manufacturing drugs through chemical synthesis. Biotech companies, in contrast, sprung up starting in the 1970s and 1980s, when scientists began working on developing therapies manufactured in or extracted from living organisms such as bacteria, yeast, and mammalian and plant cells. These therapies, known as biologics, have been described as one of the "most sophisticated and elegant achievements of modern science," offering powerful therapeutic options for many diseases where previously no treatments, or only treatments of limited efficacy, were available. Biologics have included innovative therapies in rheumatology, cardiology, dermatology, gastroenterology, oncology, endocrinology, and other medical fields. In 2016, seven of the top ten best-selling drugs in the world were biologics. This note describes the biopharmaceutical industry, encompassing both older, larger "pharma" companies such as Pfizer, Merck, Roche or GSK, and younger biotech companies. It looks at the difference between traditional pharmaceuticals and biologics, the drug approval process, R&D, intellectual property issues, financial issues including fundraising, regulatory issues, and ethical issues.