Lacerta Bio spent the week at the AAPS ( American Association of Pharmaceutical Scientists ) annual conference . Over 8,000 pharmaceutical scientists, service providers, and others came to AAPS in DC to talk pharmaceutical science, especially formulation development, translational research, pharmacokinetics, and manufacturing. As the name suggests, AAPS is a science-driven conference. Thus, the tone tends to be a bit more serious compared to BIO and BioPharm America. However, because of our pharmaceutical science backgrounds, AAPS provides a good opportunity to learn about the latest technologies, to meet new contacts, and to catch up with old friends and colleagues. What did we learn at AAPS?
First, many of the product service companies we spoke with are actually hiring! One recruiter we met in the hallways said “business was booming” for positions at Director level and below. This may be a reflection of the growing demand for CRO and CDMO services by pharmaceutical and biotechnology companies. Excipient companies also appear to be performing well, with several of them attempting to innovate to differentiate.
However, it is unclear to us if many of these companies have the size and critical mass to survive in the long term. For example, earlier this year, Pfizer signed a long-term (5 year) partnership with Parexel and ICON to simplify things for Pfizer, while also reducing development costs. Lilly also pursued similar approaches to cut development costs. If companies like Pfizer continue to pursue a more strategic approach, will the smaller CROs be forced to consolidate to match the demand for scale? Conversely, will highly specialized service providers survive without expanding their service offerings? Is pharmaceutical science and formulation development alone sufficient to grow these businesses, or will down-stream services (and perhaps even products) be required to provide revenue generation and growth? And what about international expansion?
We also asked a few exhibitors about the value of having a booth in the AAPS exhibition hall. Several exhibitors were there because they “had to be there.” One excipient company representative told us they have never accepted an order from a customer at an AAPS convention. In other words, some exhibitors were there because their clients & customers were also going to be there, and had to maintain share of mind and voice.
Two service providers we spoke with eschewed booths, and instead used those dollars to a) send more people to the convention to walk the floor and meet people, b) hold a private party for clients and prospects, and c) invest in Google AdWords and other online marketing. Is this a trend? We’ll see.
We were also pleased to see a social media presence, with Twitter being a favorite of several companies there. We would like to see more pharmaceutical scientists become active on Twitter. However, we recognize that many pharmaceutical and biotechnology employees have concerns regarding company policy on social media. Our impression is that the Twitter velocity at AAPS paled in comparison to #BIO2011, recognizing that BIO is more than double in size.
What about the pharmaceutical science itself? There were a number of high quality presentations and posters. Regretfully, there were too many good ones for us to attend! Poster quality was variable, with the morning poster sessions being very quiet (sleepy graduate students?). Regardless, many of these posters and presentations will result in pharma and biotech business development opportunities in the future.
From a business development perspective, revenue generation was a definite focus for many companies. Many small and mid-sized companies that we spoke with were looking for any revenue generating opportunity, be they generics, niche branded products, and so forth. We would not be surprised to see some CMOs license technologies to develop and manufacture sell their own products. Similarly, companies that focus on formulation development as a service may pivot into internal product development to create out-licensing and monetization opportunities.
Lastly, we interacted with many pharmaceutical scientists who have become entrepreneurs. In fact, pharmaceutical science may be one of the rare areas where a company can be formed and start generating Revenue fairly quickly, especially if the founders have solid scientific reputations, and facilities can be accessed inexpensively. Formulation development, translational research, and consulting (especially clinical and regulatory affairs) appear to be area of entrepreneurial interest by experiences pharmaceutical scientists. Scientists from outside the US appeared to be especially keen to start and grow their own businesses, especially if they could tap into personal and professional relationships back in their home countries.
We still believe there would be value if a scientific conference like AAPS offered 30-minute one-on-one meeting opportunities like the networking conferences do. With several investors and consultancies walking the floor, 30-minute sessions would be an excellent way to schedule and conduct meetings away from the business of the hallways and the exhibition.
In summary, AAPS was an excellent convention. The science was good, the exhibitors were eager to talk about their businesses and their observations on the industry, and the evening receptions were busy. We are already looking forward to #AAPS2012 in Chicago next year.
We recommend checking the #AAPS2011 feed on Twitter for other insights from the show.