Wednesday, July 01, 2009

Roche drops PhRMA; moves to BIO -- are they a "maverick?"

I noted with interest on Tuesday that Hoffman-La Roche plans to drop its membership in the Pharmaceutical Research and Manufacturers Association (PhRMA), the leading US industry association lobbying for pharma interests in Washington and beyond. Likewise, the Financial Times is reporting the company also has plans to drop its membership in the Association of the British Pharmaceutical Industry (ABPI).

Instead, as part of its take-over of Genentech, Roche says in the US it will join the Biotech Industry Organization (BIO).

“Genentech and Roche believe BIO’s purpose is closely aligned with the direction of the new company and, therefore, can represent the company’s interest in Washington,” spokeswoman Darian Wilson said in a company statement released last week.

The New Jersey newspaper Star-Ledger quite rightly painted the move as an effort by Roche to sever its ties to Big Pharma.

It is a defection whose importance is made clear by the efforts put forth by PhRMA to keep Roche onboard. Billy Tauzin, president and CEO of PhRMA, told the Star-Ledger that the group sent it chairman, AstraZeneca CEO David Brennan, to Roche’s headquarters in Basel to make a personal appeal to Severin Schwan, Roche’s chief. But in the end, Tauzin says, the Genentech forces, who “feel they are different,” won out.

But attempting to be different than the rest of Big Pharma may make sense if you’re Roche – or any other company looking to survive and thrive in the reality that is today’s pharma marketplace. Let’s face it; the industry’s not terribly popular (deserved or not) with consumers, governments, activists groups… and the list goes on.

In her "Eye for Pharma" blog, Lisa Roner liken Roche’s move to the strategies Southwest Airlines has employed over the years to set itself apart from the rest of the US airline industry. Southwest, arguably the most successful US airline now or ever, has built its business on being different, bucking the “group think,” stick-together-as-we-push-ourselves-over-a-cliff mentality embraced by all the other airlines.

Roner points out that when everyone else in the US airline industry rushes to raise fares and tries to one-up each other on who can charge more, Southwest lowers theirs. When the industry suddenly decided that charging exorbitant fees for carrying checked passenger baggage somehow made for smart strategy, Southwest said not us. They fly out of alternate airports, run local “shuttle” type flights and do a whole host of other things the rest of the US airline industry would tell you amount to flirting with certain death.

But Southwest remains the most profitable, stable and highly respected airline in the country – precisely because they are not like the others.

Roche’s move to distance itself from the Big Pharma pack is, in some industry watchers' opinions, is an incredibly smart one if they leverage it well. It’s a unique opportunity for Roche to paint its newly merged company as a different breed of pharma, with different priorities and commitments to its stakeholders. It’s the ultimate opportunity to pull a “Southwest” and break free from the lemming mentality that so often seems to rule pharma.

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