Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) may be in crisis but under CEO Kåre Schultz it is not stagnating. The Israeli pharmaceutical company is continuing to find ways to distinguish its generic products, as well as investing in innovative R&D. One of the ways to accomplish this is to build the complete technological offering around the drug - what is known in the industry as “beyond the pill.” In fact, it succeeded in introducing into the market one of the first products in the field of online inhalers for asthma drugs.
The source of this technology is Gecko Health Innovations, founded by Dr. Yechiel Engelhard, who has become a senior executive at Teva, after it acquired his startup.
“All of the inhalers in the world will be online”
“I founded Gecko following very personal reasons. My grandfather was seriously ill with asthma, and he died of the disease. As a doctor, it made me think that, although we think of asthma as a treatable disease, it is still life-threatening in the end.”
What can digital technology do to help in this situation? “The gap lies in the fact that inhaler users aren’t sure of exactly how much they inhaled, and when they see a doctor, they can’t tell him exactly what they took. If the doctor knew precisely how much of each drug the patient used, had the background to do it, and what the effect was - he would have a complete picture,” says Engelhard.
When he started to develop the product, inhalers were totally “stupid” - i.e., they had no software component whatsoever. “We began with pediatric products, based on the sense that children are the easiest to educate, both in the use of the product and in the real behavior change as a result of the insights they get from the information. The intention, later on, was also to reach adult asthma patients, as well as people with COPD.”
Engelhard is an Israeli physician, who went to study business administration at MIT nine years ago. Subsequently, he went to work for Athena, a company that was computerizing patients’ medical files and assimilating digital medical records, and then for a company that dealt in disease management for people with chronic diseases.
Gecko was founded in 2012. The connection with Teva was already made in 2013 (while Jeremy Levin was CEO). The company’s unique line of inhalers was perceived at Teva as having the ability to distinguish its inhalation products, even if the drugs in the inhaler are generic.
Initially, the companies engaged in what Engelhard calls “concept cooperation,” an attempt to characterize the joint product. In 2015, (Erez Vigodman was CEO), Teva decided to acquire Gecko and to put Engelhard in charge of its digital activity for inhalers and beyond.
“A year later, we started trials with Britain’s National Health Service. The results were impressive in terms of patient and doctor satisfaction, and they also led to the approval of the product by the FDA last December. It was one of the first products in that field that was approved.”
During that time, Teva also became the distributor of products made by Syqe, which has developed an online inhaler for medical cannabis. Syqe is also planning to develop its product for use with additional drugs that call for a smart inhaler, so that it is quite possible that, in the near-to-distant future, these products will become competitors, although they work with different technologies and with different abilities (Syqe emphasizes the administration of a precise dosage, while Gecko emphasizes the documentation of the dosage taken).
“The not-so-distant future is that all of the inhalers in the world will be online. It is just a matter of time,” says Engelhard. He mentions a company called Propeller, which was acquired for $200 million by ResMed, even though ResMed does not yet have any drugs of its own. “The acquisition shows where this market is going.”
How did your integration process as a startup with Teva come about?
“It wasn’t a trivial matter. We were 12 people when we joined Teva and became the entity that was intended to connect Teva to the world of new technologies and to construct the package of digital services around the drug, in a way that would add value. We had to build very unique technologies in a company that had not previously aimed at software and communications. Fortunately for us, they allowed us to go on acting like a high-tech company. Generally speaking, when integration occurs, they force you into all of their internal processes - but thanks to a lot of support from Teva's management, we succeeded in continuing to operate in our own way, without taking the whole burden of the corporate procedures on ourselves - while still receiving the support.
“We’re continuing to manage a software product the way software products are managed. In drug development, the approach is to finish each stage, to do quality control, and only then go on to the next stage. In software, you can’t work like that. You have to do the testing while you work. You make mistakes in order to correct them, you bring a product to the beta users quickly, and you respond to their criticism and bring the product back to them immediately. Despite the desire to move quickly, it is a medical product, and you have to take that into account.
He adds, “The unique thing about the structure of our team in the company is that the team includes not only R&D, but also the strategic team, which plans the approach for penetrating the various markets - first in the US and then in other places. We also have a regulation group and a legal group, which focus exclusively on our needs. I have a team of some 40 people, and I have access to a matrix of approximately 150 people at Teva. “The people on the sales team for Teva inhalers are also in charge of selling the new inhaler. It makes sense - they have the contacts with the customers; but we’re responsible for the marketing program.”
How does your product change the lives of the salespeople who are selling the classic inhaler?
“Salespersons love a good story, and this is a good story. Our sales tactics are to ask the doctor, ‘What would you want an online inhaler to do?’ And when they tell us their dreams, the salesperson can usually take out the product and say: ‘We’ve made it all come true.’ From the standpoint of the patient, it is the same drug, in an inhaler that looks almost the same. Our patent is for measuring the airflow.”
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How did you construct the approval track with the FDA?
“The product was approved as an improved drug, along with the devices and along with the software. Each of those was approved by a different department of the FDA. For the purpose of getting our product approved, a lot of instructions were written, and it was a bit surprising to see such an innovative breakthrough product coming from a company that’s known for its generics.”
The next step is to bring the “beyond the pill” approach to other Teva products as well - but not too quickly. “When my team was integrated into Teva, we wanted to bring the message of “beyond the pill” to all of Teva’s products. But after that, we understood that it is better to move gradually: first to focus on the respiratory product and to understand it in depth, including the entire value chain that’s constructed around the product in the market, how to close the circle vis-à-vis the patient - in fact, how this whole world is really going to look. We’ll start with a focused launch of the inhaler, and we’ll expand it in 2020. Only after that will we go on to other respiratory products, and then to the other drugs.”
Are the insurance companies already willing to pay a premium for the added value?
“We’re pricing the product as a unique model, which embodies some of its value, but our advantage is that the payment is for a drug in an inhaler, and not for a digital product. The doctor doesn’t have to prescribe an additional product.”
If the product warns that there’s a problem - that the patient isn’t taking the drug the right way - who’s in charge of taking action?
“We aren’t going to burden the doctor with additional work at this stage. Rather, we will offer him more information to work with at the usual doctor visit. However, we see that the job of an intermediary, who takes some of the doctor’s load, is taking shape throughout the world. In fields such as diabetes, cardiac insufficiency, and - in the near future - respiratory diseases as well, patients are being helped by registered nurses, physician’s assistants, or even personal coaches with special training, who have been certified in supporting patients on a daily basis, when they’re at home, because these patients are struggling with heavy mental burdens. By supporting them, it is possible to avoid the exacerbation of the disease over time, and to save doctor visits.”
Is it possible that the drug company will offer the patient support services?
“We don’t intend to offer disease management service at the medical level. That’s not our core competence. We will set up a technical support center for the product - one for the patients, and one for the doctors, the nurses, the disease support system.”
Published by Globes, Israel business news - en.globes.co.il - on February 27, 2019
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