Henri Termeer on Startups, Drug Prices, Getting Older (Part 1)

5/13/13Follow @xconomy

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to do the work myself. I can work with people, advise them on what would be wise to do, make introductions, make combinations, create things, and move them forward. It’s similar to Genzyme in the sense that I’m doing many things. But there’s much more freedom now.

I absolutely loved Genzyme. I love to think back about the time I was there. I’m in contact with numerous Genzyme people. Some of them now run companies, and some of them are still at Genzyme. I’m very happy to see that Sanofi has done well for them. They are getting paid back on the investment they made.

But I love what I do now. It’s very different. It’s a much more free-flowing kind of environment. I think I can be quite helpful in certain situations.

X: You’re 66, or 67 now, right? What do you want to accomplish in this phase of your career?

HT: I’m 67. But I feel 66 (laughs).

X: OK (laughs), but do you think you’ll be doing this for another 15 years or so? What do you want to accomplish in that time?

HT: My mother is 99. She obviously needs a little more attention, but she’s still very, very wise and still very, very involved and very decisive about what she wants to do in life. She has no plans to go anyplace. I take that as an example. I can do a LOT of things, still. What I hope I’ll be able to help with is executing on investments, and bringing new therapies to the marketplace.

There’s never been a more exciting time than the current time.

We are moving into a time when patients, because of personalized medicine, will start to become involved. Before you had this big black box that they’d look at 20 years ago, of pharma companies, or biotech companies, that hardly knew what they were doing. It’s moved on to a much more consumer-friendly environment.

It creates a new environment. A new environment for funding, and for how you build a company in a much more fragmented world. I think that’s a very exciting thing. We can build many more new companies that bring therapies to the market, rather than broad-based products of the past.

X: How do you decide which projects to get involved with?

HT: At Genzyme, we worked on many things. A few things we worked on worked. Some didn’t work, but we gained some knowledge. It’s often a matter where you can say, “I know about some part of a disease, a specific disease, and I know some things to try,” and then you organize to try them.

I see young people, scientists, from all over the world who observed the Genzyme experience and they want to know, “Is this good enough? Is this the right thing to try?” We have the most interesting conversations. Very often, it seems a hard thing to do. Because the invention or the therapy often isn’t really delivering the kind of power you need. Rare diseases, which are so popular right now, deserve to be popular if we come up with stuff that works. Stuff that’s palliative, or just on the surface—only helps a little bit—isn’t really therapeutic in a real sense. That’s not good enough. That’s not where we should focus our attention and energy. We should go for stuff that really makes a difference for the patient, in which they go from having a rare genetic disease to having a future again, a life again. The Genzyme experience gave us some insights into how that works.

X: You said earlier this is the best time ever to be doing this kind of work. But there are also a lot of challenges out there for entrepreneurs. Venture capital is going through a significant decline. Who will support early-stage innovation? Who will support young entrepreneurs like you were 30 years ago?

HT: Well, 30 years ago, there weren’t many people supporting it, either. We are now in a moment where the same people who voted politicians in who doubled the NIH budget have agreed not to let it grow anymore. That will not grow, because of all the circumstances you and I know about. But the interest of the taxpayer who supported the politician in the past who voted to double the NIH budget—the interest is still there. It has grown. The taxpayer is an individual. And the individual has a family, and has certain conditions. They know their risks around certain conditions, whatever it is—cancer, heart disease, genetic disease. In the next 20 years, we’ll see movement in which the patient will become much more involved.

There are already some good examples today where you can see it happening. The biggest one is cystic fibrosis. The CF Foundation has done a fantastic job of organizing the patient population, raising money, allocating the money in new ways to entrepreneurial activities that are directed to figuring out a better mode of therapy. They’ve made real progress, and they continue to get more resources to make more progress.

That is one example. We’re seeing it now in Duchenne Muscular Dystrophy. It becomes possible now, when we talk about much more specific diseases, and we can communicate with patients, because of technology, because of the Internet. We can find them, they can find each other, and they can get organized. We are not there yet with every disease, not even close.

X: But Henri, the public also has some serious grievances with the pharmaceutical and biotech industry. You know them all. A lot of people are upset about high drug prices, high insurance premiums, costs going up. Not to mention all the various scandals that come out every other week—off-label marketing, hiding of negative clinical trial data, conflicted relationships between pharma companies and clinical research investigators, for a few examples. What do you think the industry can do to repair the public trust, and build stronger relationships like you’re referring to?

HT: You do precisely what I just mentioned. The complaint about healthcare cost is universal. It’s not dependent on the amount of money being spent. The complaint in the U.K.—where they spend a much smaller amount, about 8 percent of GDP as compared to 16-17 percent in the U.S.—is the same. Everywhere, we spend a lot of money, and we still die. People die of terrible diseases. We have diseases where people are 30, 40, 50 years old and in the middle of their careers, and they become immobilized, or have to take care of their Alzheimer’s victim parents. It creates an anger. We say as a society that we make all these investments in technology, and yet we still have all these terrible things. The progress that we can make will allow this industry to be strong.

It’s not a matter of being popular, it’s a matter of being nurtured. There’s a lot of risk involved, and a lot of study involved, and a lot of trial and error involved in the R&D stage. As a society, we need to really help it along. As we see more and more successes, it will allow this industry to say we deserve the kind of support that will allow us to continue.

X: So are you saying the industry needs to earn back the public trust by delivering more good drugs?

HT: Yes. That’s the only way to do it. Europe, of course, has arrived at this point of anger earlier than we have in the U.S. because they have more nationalized, monopolistic buyers. But Genzyme was just as successful, or more successful, in Europe on certain things than we were in the U.S. It was because people accepted that if you have something like the products we have, they will be high-cost. They wanted them, because they had the efficacy.

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  • Dan Eramian

    One of the smartest CEOs this industry has ever had

  • http://www.facebook.com/jinpu.yang Jinpu Yang

    Some of his comments on drug pricing are quite eye-opening for me. I guess from many years of justifying high pricing for rare disease treatment, he had many useful insights! I am as optimistic as HT. Eventually, there will be a balance developed between the cost and the effect of the healthcare industry.