RamaOnHealthcare November 18, 2022
Today, RamaOnHealthcare talks with Colin Aldridge, a Director at TripleTree. TripleTree is a healthcare investment bank focused on mergers and acquisitions, recapitalizations, and strategic advisory services for innovative, high-growth healthcare technology and services businesses. As a contributing author to TripleTree’s recent report on the outsourced pharma services ecosystem, Colin supports the firm’s new business development, client engagement, and transaction execution activities.
RamaOnHealthcare (ROH): What are some of the key themes driving the robust market focus on the outsourced pharma services landscape?
Colin Aldridge (TT): Pharma services has long been an attractive, high-growth sector that has garnered significant investment and triggered robust M&A activity. Over the last decade, a combination of forces has shifted how pharma services platforms deliver value. With the emergence of specialized drugs targeting unmet needs in underserved populations, plus continuous scientific and technological advancements, pharma services platforms are now key players across the drug development lifecycle. Compounded with a more consistent and favorable regulatory environment that supports the advancement of specialty drugs, particularly biologics and cell & gene therapies, there has been an explosion of active clinical trials led by SMB (small-to-medium sized biopharma) focusing on narrower patient populations. And as the complexity of developing and commercializing these products has increased, the financial and operational challenges have also increased, requiring a tailored approach at every step of the product lifecycle. This convergence of forces has focused the market’s attention on outsourced pharma services.
TripleTree foresees M&A activity in this category to remain robust, if not accelerate, given the continuous rise of disruptive solutions, highly acquisitive financial sponsors and strategies capitalizing on the sustainable growth opportunity, and the expanding macro factors influencing sub-sectors.
ROH: What areas within the outsourced pharma services ecosystem are garnering particular interest as of late?
Colin Aldridge (TT): In TripleTree’s work for the recently published report on outsourced pharma services, we focused on a select set of service areas where innovative solutions are attracting market attention and disrupting the traditional approach to drug development and/or commercialization. It quickly became evident that we needed to conduct a deeper dive into a couple of eClinical areas, including DCTs (decentralized clinical trials) and RWD / RWE (real-world data / real-world evidence), and the broader commercialization ecosystem, including medical affairs and communications, market access, HUB, and patient services and supply chain. Coincidentally, a few of our focus areas saw a flurry of market activity in 2022 as both financial sponsors and strategic buyers aggressively competed to gain access to new capabilities, key expertise, and market share in fast-growing areas. A case in point was the double-digit number of transactions in medical communications in 2022 alone. Additionally, while not highlighted in our report, the ecosystems around eClinical patient recruitment and retention, specialized CROs (Contract Research Organization), and CDMOs (Contract Development and Manufacturing Company) have remained incredibly active. Meanwhile, larger-scale, global platforms seek to provide flexibility in their solution suite to meet the needs of SMBs focused on developing complex molecules that serve narrower, and more geographically diverse, patient populations.
ROH: TripleTree’s Pharma Services report highlights how traditional services-based models, such as medical communications and medical affairs as you noted, are attracting a lot of recent market attention – even though they are less tech-enabled. Why is the market paying attention to those capabilities?
Colin Aldridge (TT): In the medical communications and affairs world, advanced scientific expertise has become a critical competency to delivering the market with clear and digestible insights on a new specialty product coming to market. This is particularly relevant for key therapeutic areas, such as oncology or rare diseases, where a clear narrative that educates providers on a new product’s differentiation against current standards of care and adherence to evidence-based guidelines play a vital role in a product’s commercial success. When attached to a curated, multi-dimensional communications strategy that ensures key constituents are aware of a new product in market and its availability (i.e., payer coverage, formulary placement, patient assistance support, delivery medium, etc.), manufacturers are realizing significant uplift in commercial success rates. Newer-age tech-enabled capabilities are also expanding their role in supporting key medical affairs and communications professionals, such as MSLs (Medical Science Liaisons), to maximize their impact on a product’s success. MSLs are increasingly adopting digital platforms to deliver real-time, evidence-based data to key market constituents, open more channels for direct healthcare provider engagement and minimize any lag in removing respective barriers to a new product’s adoption in the market.
After engaging with industry leaders, TripleTree affirms that there is a broad consensus on the transformative role that medical communications and medical affairs services play. The resulting impact on pharma’s product design and commercial strategy will continue to bolster innovation, investment, and general sector growth in the near- and long-term.
ROH: Data, particularly RWD, seems to be a hot topic in the drug development world. How do you view the current landscape of data-focused providers and their impact on the drug lifecycle?
Colin Aldridge (TT): There’s a clear market consensus on the long-term potential of RWD / RWE and HEOR (Health Economics and Outcomes Research) and the collective impact across both the clinical and commercial lifecycle of new therapies. But in today’s environment, there’s still a relatively narrow set of use cases where RWD / RWE is having a material impact. The clearest use case thus far has been in Phase IV, post-approval studies where RWD / RWE is leveraged to construct external control arms to drive a product’s label expansion, thereby providing access to a broader patient population. We’ve seen some instances of this approach in the primary clinical approval stage and even in go/no-go decisions for clinical trials. However, there remains a number of clinical, regulatory, and quality barriers preventing the adoption of new-age use cases such as clinical trial design, trial site selection, endpoint targeting, or even patient identification. But as we look forward, the supportive regulatory environment combined with a vast ecosystem of data-focused outsourced providers seeking to differentiate their RWD / RWE solutions has set the stage for continued innovation and expanding use cases we can expect to drive robust market activity.
The potential long-term value proposition of RWD and RWE is vast, but still in the early stages. With a relatively narrower set of use cases today, multi-dimensional market tailwinds, and a meaningful opportunity for disruption across the drug lifecycle, TripleTree expects the ecosystem of RWD, RWE, and data interoperability to experience significant innovation, investor interest, and M&A market activity.
ROH: What areas of the commercialization portion of the drug lifecycle do you see a longer-term opportunity that may not be getting as much focus today?
Colin Aldridge (TT): One that immediately comes to mind is the pharma supply chain. The pharma supply chain ecosystem has historically lagged in tech-enablement and innovation relative to the other categories in our report. But with the rising demands associated with specialized drug distribution, the pharma supply chain has made significant strides to bring new value-additive capabilities to the market – solutions that unlocked new value within specialized drug commercialization strategies. Beyond cold-chain services, which are well understood in the market, commercialization strategy teams are gaining access to integrated supply chain platforms with various capabilities. This includes predictive parcel tracking to minimize disruptions, direct-to-patient programs, and multi-enterprise digital supply chain networks, to name a few. With gaining access to the global populations underpinning commercial strategies for specialized drugs, curated supply chain strategies that go beyond services provided by core infrastructure will play an increasingly vital role in commercial success.
TripleTree anticipates the larger strategic platforms will continue to pursue M&A opportunities that expand their platform capabilities, resulting in sales growth and increased share of wallet across pharma services spend. Ultimately, these ‘big bet’ platforms will begin to have an outsized role as they influence and shape go-to-market strategies for new specialty drugs and precision medicines.
ROH: A perceived issue with the rise of specialized medicine is the increasing financial burden on payers, providers, and patients. How is the outsourced pharma services ecosystem addressing the challenge of healthcare costs?
Colin Aldridge (TT): Steadily rising healthcare costs is an industry-wide concern. Both drug manufacturers and outsourced providers are acutely focused on managing this trend while ensuring sufficient ROI on high-risk, high-cost specialty drugs. In the world of commercialized specialty drugs in particular, the role of HUB services and other patient support services platforms directly targets the issue of patients’ financial burden and product accessibility. Pharma-sponsored and other third-party patient financial assistance programs administered by outsourced platforms are designed to maximize savings, provide drug price transparency/comparison, and drive overall drug accessibility so new life-saving therapies can reach the patients who need them the most at a minimized cost burden. These outsourced platforms are also providing ongoing clinical, therapy-specific education and support for patients at the expense of manufacturers and payers alike. This unlocks the broader value proposition of specialized drugs and further improves the cost alignment between manufacturers and payers for the benefit of patients. In parallel, the continued maturation of RWE and HEOR aims to demonstrate the broader economic benefit of high-priced drugs’ outside of simply reaching a clinical endpoint. Examples might include medical cost avoidance, improved behavioral and mental health, or even indication expansion opportunities. In doing so, manufacturers will have more ammunition to incentivize payers to expand coverage on high-cost drugs through more favorable formulary terms and ultimately lessen the financial burden on patients while enabling better overall patient outcomes.
ROH: As you think about the broader healthcare industry, what role do pharma services companies play in advancing healthcare?
Colin Aldridge (TT): Pharma services platforms sit at the epicenter of a large, growing, and complex ecosystem of constituents with conflicting priorities. Whether it’s the manufacturers’ focus on maximizing commercial success and ROI on new specialty drugs, or a payers’ focus on managing cost/list prices while improving outcomes for under- or untreated complex patient populations, or even patients and providers seeking new options for difficult-to-manage conditions, pharma services’ solutions can act as the lynchpin to bridge the gap. As the broader healthcare industry continues the march towards a more patient-centric and value-based system, drug manufacturers are also adjusting to these priorities and triggering the seismic shift for outsourced pharma services providers to play an outsized role in driving this new reality. As a result, the pace of evolution, innovation, and disruption happening across the pharma services landscape is accelerating and delivering pathways to unlock untapped value for all constituents. This is truly a unique opportunity in the healthcare landscape.
TripleTree recognizes the significant challenges and competing interests with constituents across the healthcare ecosystem but believes pharma services providers will play a critical role in delivering far-reaching value that can advance a better healthcare system.
About Colin Aldridge
Colin Aldridge is a Director at TripleTree focused on supporting the firm’s new business development, client engagement, and transaction execution activities. Additional responsibilities include market research and industry trend analysis.
Before joining TripleTree, Colin served as Vice President of Healthcare M&A at Cantor Fitzgerald. Colin also previously worked in various corporate and debt advisory roles at JPMorgan and MUFG.
Colin earned a B.A. in Business Economics from Brown University.
Securities and Investment Banking products and services are offered through TripleTree, LLC, a non-bank subsidiary of Capital One, N.A., a wholly-owned subsidiary of Capital One Financial Corporation, and a member of FINRA and SIPC. The products and services offered or recommended are not FDIC insured, not bank guaranteed, may lose value, not a deposit, and not insured by any federal government agency.