“Leading with 2020 vision” was the theme of this year’s Vistage Executive Summit––an event aimed at helping business leaders stay relevant today’s fast-paced, technology-driven culture by giving executives a platform to share insights and firsthand experience.
Among the speakers and breakout sessions at this year's event in Boston, The FDA Group’s CEO and President Nick Capman sat down with Soyini Coke to discuss the state of the pharmaceutical industry, FDA compliance, and more on the CEO Exclusive Broadcast.
Listen to the interview and read the full transcript below.
Soyini Coke (SC): Morning everyone, we’re back at the Vistage Executive Summit in Boston and I have with me now, Nick Capman who is President and CEO of The FDA Group. Nick, can you start off by just telling us a little bit about The FDA Group and what you guys do?
Nick Capman (NC): Sure, the technical explanation is we do GxP Auditing and Remediation Regulatory Services. What that means is like you use an accountant to help you with the IRS, pharmaceutical companies and medical device companies use us to help them with the FDA.
SC: Ah, and so, when you talk about the FDA, do you have experts that advise these pharmaceutical companies about how to interact with the FDA?
NC: Absolutely. So there’s two sides to how we help. One is compliance, so making sure that they’re doing clinical research, laboratory work, manufacturing, and compliance with FDA regulations, and the other piece is regulatory. So, communications with FDA and the paperwork.
SC: So, CEO Exclusive really focuses on bring market intelligence to CEOs from other CEOs much like what Vistage does. So from your perspective, what do you think other middle market CEOs need to know about your industry and what’s happening?
NC: So, about fifteen years ago, research and development budgets were very high and what’s happened is there’s been a shift from R&D budgets to business development budgets. So––
SC: This is in pharmaceutical companies?
NC: Correct. Right, so I think it’s great for everyone. So what you see is a lot of small startups doing research on compounds seeing if they can get through preclinical testing, early stage clinical testing and the pharmaceutical companies can watch them, see the results and then make a decision to purchase so the smaller company can exit and the pharmaceutical company can take on a compound that they know has promise. Most recently what I’ve noticed is the shift from going from your in-house research and development to business development and looking at smaller companies so that you can purchase their assets has gone on even earlier. So, typically you didn’t see this until what we call phase two or phase three. This year, I’ve seen large pharma looking into preclinical companies, which is very early. So, I think it’s good for them because they can start a conversation with a pharmaceutical company, it’s for the pharma company because either A.) they can buy it before it even gets into clinical which is good for them and the smaller company, or they can at least guide them down the right path.
SC: So, one of the things that I’ve heard a little bit about is this thing called the “patents cliff.” Can you explain for listeners what that is, and any changes that you’re seeing? Is The FDA Group being affected by the patent cliff at all and just a little bit about that. That’s one of the trends I’ve heard about.
NC: So, when you say patent cliff, you’re talking about the time that the pharmaceutical company owns the patent?
SC: Exactly.
NC: So, I haven’t seen any substantial changes as it pertains to that. It’s good protection for the company that invested a lot into R&D to be able to hold that until a certain amount of time––I think it’s seven years. And then it’s good for the consumers because it allows––within a reasonable amount of time, in my opinion––the generic companies to come and provide it at a lower cost. But oftentimes you see the branded companies making generics of their own drugs.
SC: And so, are you seeing a proliferation of more pharmaceutical activity or less activity in terms of development of new compounds and new products?
NC: So, it’s more activity, but it’s more decentralized, right? So, you see a lot of newer or smaller startups getting involved and the large in-house research and development department has been smaller, so I would say the shift––when we talk about R&D to business development actually increases entrepreneurship because more individuals are willing to take those chances and do research into compounds.
SC: And so as you think about the implications for growth, do you think that these companies are going to end up––you mentioned some of them being bought. Are these products going to eventually make it to market, or are they are they going to just end up kind of dying on the vine, so to speak?
NC: That’s what the pharmaceutical companies are attempting to do. They watch the development that’s happening and when they see promise in terms of safety and efficacy, that’s when they make an offer to purchase the compound. So, they wouldn’t purchase it unless they saw promise, and that’s why usually you didn’t see anything until phase two or three when you actually are evaluating the efficacy, right? But they’re going back even earlier where I think it’s a little bit riskier, but there’s more payoff when you can acquire an asset in a preclinical or phase one.
SC: One of the things that I saw because I’ve worked with some companies––not so much in pharma but in medical device––is some of these companies getting frustrated with the fact that they were having to wait until phase two and phase three to have these conversations and they were in some cases taking their IP to Europe. Are you seeing less of that now? Are companies feeling more comfortable going all the way to market in the U.S. or are they still taking their IP to Europe?
NC: Nine times out of ten they go to Europe first because it’s easier.
SC: Okay, and do you think that is good for U.S. pharma or do you think it’s neutral? I mean…
NC: What we’re talking about specifically is medical devices which is different from drugs.
SC: Right.
NC: So, by them going to Europe first, it doesn’t affect our market. Sometimes they do it in parallel, sometimes it’s staggered. But it really doesn’t have an effect on what they do in America because we’re one of the biggest markets, right? So, even though you’re going to Europe first, there’s an obvious pathway for you to go to the United States after.
SC: Okay, great. And, tell us a little bit about your company and you know, how these trends are affecting you internally as The FDA Group.
NC: You know, we kind of go with the waves. A couple of things that come to my mind is, as it pertains to FDA and compliance, there’s usually waves of industries that they look at, right? So, New England Compounding had a bunch of issues with deaths and what ended up happening was FDA you know, really focused on the compounding pharmacy industry. So we saw a lot of work there to try to help companies comply with FDA and FDA you know, not to get too technical, they were saying that you’re a manufacturer when in fact they weren’t. So anyway, they came out with new regulations and everyone seems to accept it. So, every once in awhile you see a wave where the FDA has a focus on a particular segment and those industries that experience that, it’s good for them to call us because then we can help.
SC: Final question is, you’re a Vistage member, and you’re here for the Executive Summit. Tell us a little bit about what you’re looking forward to today.
NC: I came last year for my first time and it was amazing. I think Vistage is amazing. We actually made the INC 500 this year.
SC: Congratulations.
NC: Thank you very much, so I think it was last week I was in Orlando. My mind’s getting boggled with everything I’ve been doing lately, but I met a bunch of CEOs there and asked them if they knew Vistage and they said, “No, I don’t know what it is,” and I said, “Okay, well you just made your money back because you’re talking to me about Vistage.” So, it’s been invaluable, and I think it’s fantastic and I’ll expect my check in the mail.
SC: Alright, very good. Well, thank you so much for being on the show with us and sharing your insights and market intelligence.
NC: Alright, thanks a lot!
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