In 2003, Taiwanese generic drug leader TTY Biopharm and other Taiwanese venture capital firms funded a new type of drug company. PharmaEngine was launched with the specific mission of getting to market faster with drug treatments. To reduce the time between drug discovery, the first step in formulating a new drug, and approval, the last, the new biotechnology firm based in Taipei would use a business model called “networked pharma.”
A form of outsourcing certain phases to streamline the process, networked pharma gained traction in the early 2000s. Firms like Accenture published research on how pharmaceutical companies could improve efficiency by rethinking the business model for drug research and development. In this new model, drug companies could manage in-house the portions of drug R&D where they already had expertise and outsource activities such as trials, manufacturing, supply chain and sales to global partners who brought their own expertise, thereby speeding the time to market for new drugs and reducing the financial risk for PharmaEngine. In our work, investment in innovation that so permeates the culture and mission of a company as to innovate not only its products and competitive position but also its business model is a frequent hallmark of a Knowledge Leader.
PharmaEngine’s founders aimed to use the networked pharma model to advance treatments for rare cancers that occur in Asia, getting the drugs through the development pipeline and into approvals faster. As the firm explains in its most recent annual report “the development of new drugs is like a relay race, each link can produce value.” PharmaEngine will acquire a new drug after the early “discovery” phase, defined on the FDA’s website as after a research institution has identified a promising new compound, and only after conducting its own initial market research phase and identifying strong market projections. At that point, PharmaEngine licenses the drug and guides it through the rest of the process. This includes multiple levels of testing and human trials on into FDA drug review, approval and safety monitoring. The firm taps its global network of contract vendors expert in US FDA/European Union EMA standards to conduct trials, build the manufacturing process, create a marketing platform and license the drug to other distributors.
This commitment to investing in the development phase of these new drugs also makes PharmaEngine a Knowledge Leader, the most innovative health care company in the emerging markets and #3 in the entire world, according to our intangible-adjusted data. PharmaEngine invests 42.6% on R&D as a percent of sales, at least quadruple that of other emerging markets biotechnology companies that pass our screen for knowledge intensity.
Today PharmaEngine’s main source of sales is from ONIVYDE, a chemotherapy drug for treating metastatic pancreatic cancer. It has been approved by the US FDA and is available in 38 countries, having launched in Taiwan in June 2016. Two more drugs are in the pipeline. PEP503 is a treatment for soft tissue sarcoma for rectal, head and neck cancer and is currently in trials in Taiwan, and PEP06 is a treatment for solid tumors and currently in pre-clinical development.
As of 3/31/19, PharmaEngine, TTY Biopharm and Accenture were not held in the Knowledge Leaders Strategy. Intangible-adjusted data source: Knowledge Leaders Capital and Factset, as of 5/23/19.