How Japan can Leverage Structural Changes in US Pharmaceutical Industry – Interview with Co-Founders of Boston Strategics

Eita Kitayama – Advantage of Close Collaboration with Hematologists/Oncologists

Keizo Koya – Drug Development, Just Like Producing a Movie

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Two Japanese entrepreneurs, who both have significant work experience in US drug R&D ventures, have founded a pharmaceutical/biotech R&D consulting company in Boston. Boston Strategicsemploys a revolutionary business concept called “True” Open Innovation, suggesting minimal infrastructure for efficient management of product development. In the United States, Contract Research Organizations (CROs) have evolved to provide a wide range of pharmaceutical outsourcing services including in vitro and in vivo studies and clinical trials. Eita Kitayama and Keizo Koya, co-founders of Boston Strategics were interviewed to discuss how Japan can leverage structural changes in the US pharmaceutical industry.

Q. Please explain the background for the growth of the CRO business in the US.

Eita: As a result of M&A or restructure of large pharma companies in the 1980s, all kinds of relevant human resource have been released to start up drug R&D ventures or CROs. US CROs have already established their own know-how to conduct contract researches, and started transferring it to China. In the US, they are competing each other by specializing or sophisticating their services in certain specific areas. A total of research and development budget of US pharma companies is estimated $189B in 2013, while $85B was used for outsourcing in 2011 and estimated $150M in 2015.

Q. How do you differentiate “internal” and “external”? First of all, how many people do you think are required for drug R&D?

Keizo: Only a few, highly experienced people should be enough for the strategic management of a program/project. Boston Strategics has a policy not to exceed seven employees. It is important not to set a boundary between “internal” and “external.” It is risk itself to have organization or infrastructure which automatically confine what you can do. I would like to develop drugs just like producing movies, assigning the best experts for each project like a writer, director, or actors to make the best movie.

Q. Any know-how to use CROs more efficiently? How can they keep their competitiveness?

It is not a viable concept that you “use” them more efficiently or cheaper. If you sign a contract and pay for the services, you will receive results as defined in the protocol. However, you have not received a real advantage yet. For example, if a safety issue is identified in humans, we sometimes need to go back to preclinical studies to find the mechanism of the toxicity. In this case, it is critical whether or not we have a good relationship with scientific experts at the company developing the product, or the CRO who is managing the trial to strategize on the best path forward for the clinical program. One of the strong advantages of Boston Strategics is an alliance with University of Texas M.D. Anderson Cancer Center (MDACC), a world leader in hematology/oncology research, translational medicine and cancer treatment. It is quite exciting we can discuss a concept of drug development with investigators at MDACC and design preclinical and clinical trials together. It is crucial to share a professional enthusiasm to develop new therapeutics. Nothing can be done without mutual respect. Boston Strategics can also provide cost competitive services in the U.S. and in Canada, working with Canadian CROs to benefit from Canadian tax credit.

Q. How do you think Japanese pharmaceutical companies can acquire such know-how while there are strong negative responses to outsourcing?

Once a development program is functional and has added value by moving it to the next milestone, it is possible to out-license it, develop it as a joint venture, execute a co-marketing arrangement for markets outside of Japan, and/or spin it off into a separate company entirely for commercialization. It is important to have global know-how to do this successfully. Although it is also possible to accept temporary employees from Japanese pharmaceutical companies for training purposes, the selection is difficult. Although there are enthusiastic candidates, in today’s world, drug development is global, and programs need to be designed and executed according to global drug development standards for successful major market penetration worldwide. It is only those who understand, can design and execute development plans to U.S. and worldwide drug development standards who will be successful in this country. In addition, once successful, it is uncertain if the trained person would be amenable to going back to the original company.

[Original article in Japanese; translated by Strategia]