Cancer drugs attract the largest share of investment in biopharma, and widely shape the conversation around dealmaking and strategy. In the past decade, large drugmakers alone have invested nearly $1 trillion in oncology M&A along with billions in internal R&D.
This capital has fostered historic advancements for patients, but puts increased pressure on companies to convey a differentiated story to investors while communicating change internally.
- The successes and challenges of precision medicine have shifted the investment landscape, as new therapies for some forms of cancer change the treatment paradigm and the way clinicians think.
- Oncology is also where improvements in data science have shown the most promise, with R&D changing rapidly to leverage the breadth of predictive biomarker data.
As such, communications to investors and employees play an increasingly critical role in the next wave of cancer innovation. Biopharma leaders should consider two important strategies:
Companies with a well-defined value proposition are poised to stand out.
The global oncology pipeline has various new players entering the scene, particularly from China. While therapeutic data speaks the loudest, it can be difficult for companies to cut through the noise in this crowded landscape.
Risk in new drug development remains high. Issuers need to provide a clear “base case” value proposition and attractive upside potential for investors.
A study by Stifel found that within its universe of listed oncology companies in 2020, quality of efficacy data represented nearly half of the variability in enterprise value, with all other factors having notably less influence on valuation. Since no single factor – outside of drug efficacy – overwhelmingly drives investor perception, companies must craft a comprehensive narrative that weighs the value and importance of other variables, like field of oncology or commercial opportunity, together as a whole. This helps connect the overall strategy, align expectations for innovation, and tell a story that resonates with all stakeholder groups. Maintaining consistent and transparent communications around targets and initiatives can help validate a company’s strategy, building credibility and anticipation ahead of clinical data announcements.
Even in a risk-averse environment, a compelling narrative grounded in a strong investment case can enable issuers to gain traction in the financial markets.
The new pace of innovation requires strong change management capabilities and clear internal communications.
The intersection of finance and technology advancement in cancer R&D also has implications for companies internally.
On one hand, with the growth of companion diagnostics and advancements in tools like predictive AI, drug development is evolving fast to produce the next winning oncology candidate.
The remarkable pace of transformation, however, can lead to communications challenges for biopharma companies as they scale and commercialize their innovations. Companies should be mindful that frequent shifts in strategic priorities, leadership and resource allocation can place a significant strain on trust within their organizations.
Regardless of how well structured the transformation may be, success hinges on how effectively organizations lead their employees through the change to secure buy-in and encourage adoption. It's essential for employers to communicate not only the overarching strategic goals, but to clearly articulate how the transformation will impact employees’ daily experiences. This requires open communication channels and clear messaging on relevant issues, such as evolving job responsibilities, ways of working, role continuity and reporting lines, all of which are critical to a successful transformation.
As biopharma organizations evolve to achieve innovation milestones, tools like stakeholder mapping are invaluable in identifying tailored messaging needs across teams, levels, experience, and geographies, among others. Even more important is aligning cultures, as culture remains the single most impactful driver that enables an organization to navigate disruption, engage effectively and drive success amidst integration complexity and change.
Drugmakers are constantly adopting new R&D priorities and strategies to make advancements in the field of oncology and beyond. Many will find that strong change management capabilities and practices better position them to capitalize on value creation initiatives.
--Dan Nguyen, Account Supervisor, Strategic Situations & Investor Relations (Dan.Nguyen@edelmansmithfield.com)