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Does the Rise of Specialty Pharmacogenomics Consultants Signal Stronger Market or Popularity?

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If it takes a mature market to support a specialty consultant class, then the appearance of Genomic Healthcare Strategies, with its focus on pharmacogenomic-based medicine, could be a sign that the field is establishing itself.

Though it hasn’t yet made any money from clients, the new consulting company hopes to cater to individuals, companies, and “policy organizations” in molecular medicine, genomics, and therapeutics, by helping them “understand value and monetize opportunities,” said Kevin Batchelder, a consultant for the Charlestown, Mass.-based company.

According to the GHS website, this means conducting market research, “developing and managing relationships,” and advising clients on market positioning and public relations.

While larger companies perform most of these functions in house — big pharma employs armies of people to liaise with the US Food and Drug Administration and nurture marketing strategies — it may be that consultants can help give a few of the smaller ones a leg up. However, there already exist a number of consultants who offer these services, and GHS’ focus on genomics may serve a need among pharmas, molecular-medicine firms, and payors. As an ancillary effect, it may also signal the field’s greater public visibility.

“Certainly there’s been a lot of funding put into companies in these areas, and they certainly need help in what markets they target, what opportunities they target, what the sizes of those opportunities are, and then what strategies they should use to address those,” said Gary Sams of Beachhead, a product- and technology-oriented consulting firm based in Encinitas, Calif. “From my perspective, this is an ongoing emergence of that’s been going on for [more than] 20 years.”

There is no shortage of consultants who specialize in one or another sliver of molecular medicine. Several companies, such as Boston Healthcare Associates, maintain a stable of consultants with diverse specialties, such as molecular diagnostics and regulatory issues, while smaller shops such as Largen Associates, based in Chapel Hill, NC, are composed of individuals who work in a loose network. With four full-time employees so far, GHS sits somewhere in the middle, but it is the only one to specialize in pharmacogenomics.

At the moment, GHS is “talking to several kinds” of clients, including a group that “has a genetic-based diagnostic” and a “large, integrated” academic medical center, said Batchelder. The company is also “starting to talk” to a payor group — “one of the blues,” he said, referring to the insurance Colossus BlueCross BlueShield.

For Mature Audiences

That the genomics market has players within it that need — and are willing to pay for — consulting services may signal that the space is firming up. “I think that’s absolutely true,” said Batchelder, but added that “it’s still not the mainstream,” and it won’t be until there are more “Herceptin-like stories.”

“I don’t think [the market] is mature enough for this kind of group,” said Michael Largen of Largen Associates. From his assessment, GHS is a “loose confederation” of consultants and physician entrepreneurs with a strong background in bioinformatics and with new companies. “I’m not sure they would necessarily fulfill a need [in pharmacogenomics],” while the group might be valuable in other areas of genomics, particularly to startups, Largen said. Small- to mid-sized pharmacogenomics companies, such as Third Wave, “would say, ‘Well, we have that expertise in house,’” Largen said.

Others say smaller companies may not be the ones that need consultant services the most. Sam Tetlow, author of the Cambridge Healthtech Institute report “Successful Pharmacogenomic Business Models,” said that “that sort of strategic analysis is going to be much more relevant to a larger company. That includes large biotech firms and specialty pharmaceutical companies. But I think the real play there for GHS is with the drug companies” because consultants can make the case for changing pharma economic models, said Tetlow.

There is the sense among most of the people Pharmacogenomics Reporter interviewed for this article that the field has in fact changed, and that GHS is somewhat symptomatic of that change. “I think what you’re seeing is that personalized medicine is beyond being a curiosity,” said Gualberto Ruaño, CEO of Genomas and a founder of Genaissance and consulting company Phenomas. He said he has spoken to some of the members of GHS.

Pharmacogenomics “is moving with real force into the real world, and everybody has to anticipate it and what kind of impact it will have,” Ruano said. “I think [the appearance of GHS] is very good for the field.”

“I think that the market has clearly shown a change,” said GHS’ Batchelder. In particular, payors have shown “demonstrable interest all the way from pharmacy benefit managers to more than noises, and — I think — some action from [the Centers for Medicare and Medicaid Services].” The pending release of voluntary pharmacogenomic submission guidelines is also mounting interest in consulting services, and so is an “increasing number” of molecular-medicine startups, Batchelder said (see PGx Reporter, 11/4/2004).

If there is growing interest in pharmacogenomics, it might serve as a springboard for enterprising companies that hope to capitalize on a trend. Largen considers GHS to be such a company. “It’s a marketing hook for them,” he said. “You ask people, and they’re starting to think more about personalized medicine and combined diagnostics and therapeutic efforts. So I’d say this is an intelligent attempt to capture some of that enthusiasm,” said Largen.

For Tetlow, the CHI author, the real question is: “Are they being retained by medium and large pharma companies to truly evaluate how to integrate a [pharmacogenomics] model into their existing approach to selling therapeutic drugs?” If a consulting company is not aiding in that process, then Tetlow’s question becomes: “Is this just a good angle that gets them in the door?”

According to Batchelder, a typical example of GHS’ services is illustrated by an undisclosed group the company is “talking to” right now. With SNP patents related to inflammatory response, this group came to GHS with questions about diagnostic testing: What kind of diagnostic test? A Food and Drug Administration-approved test? Should it be a kit? Should it be run in aCLIA lab, with a buckle smear sent in? What are the confidentiality issues, and who should review the results? What are market opportunities for a diagnostic test?

For a payor client, GHS would determine whether claims have scientific validity, then determine how reimbursement works in terms of different healthcare plans, said Batchelder. The company would ultimately determine a plan’s impact on patient health and project a return on investment, he said.

Diagnostic tests to stratify asthma patients are Batchlelder’s bet for “a spectacular win, all the way around” for pharmacogenomics companies, considering the disease’s “huge, multi-billion-dollar a year cost” and the body of reviewed genetic data showing variable drug responses, he said.

— CW

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