Specialized Master degree studies such as the \"Master in Biotechnology Management\" or \"Master in Healthcare Management\" are now available at some top European and US-American business schools. These specialized programs become increasingly popular as they offer the industry-specific training that is so critical in order to excel in the healthcare sector. I feel that the article would appeal to the readers of Pharma Focus Asia as some readers may think already about an advanced university education in healthcare. In fact, some business schools wish to increase their recruiting in Asia to reflect the growing importance of Asia as a major future pharma/biotech market.
Leading pharma or biotech executives often hold degrees in science (including medicine) or in business. For scientists who are interested in pursuing careers in management one hurdle is to acquire the knowledge and skills necessary to excel in a business environment, and for executives with a business education it can, at times, be challenging to understand the implications of new developments, e.g. in molecular biology.
Therefore, many regard a dual education, e.g. a Ph.D., MD, or any other science degree combined with an MBA or MBM (Master in Biotechnology Management) as the eminent training to advance a professional career in the pharmaceutical and biotechnology industries. In fact, quite a few CEOs of well-known healthcare organisations share this kind of education: Michael Maves, MD & MBA, former Executive VP and CEO of the American Medical Association (AMA), Risa Lavizzo-Mourey, MD & MBA, President and CEO of the Robert Wood Johnson Foundation in Princeton, USA; Gary L. Gottlieb, MD & MBA, President and CEO of Partners HealthCare, an integrated health system founded in 1994 by Brigham and Women’s Hospital and Massachusetts General Hospital in Boston; David Zarling, PhD & MBA, CEO of Colby Pharmaceutical Company in Menlo Park, USA; Elisabet de los Pinos, PhD & MBA, Founder and CEO of Aura Biosciences in Cambridge, USA; or Oded S. Lieberman, PhD & MBA, CEO and Chairman of the Board of Neuroderm, a biotech company located in Israel. That list could be continued. Although the examples focus on the healthcare sector, similar careers are possible in, e.g. financial services or consulting. A typical dual degree graduate may work as investment manager in a venture capital company analysing biotech investment opportunity, or she may, as a consultant, provide advice how to optimise a clinical development programme or how to modify a term sheet of a licensing agreement in order to maximise return.
Although popular, a general MBA programme has one disadvantage: its case studies are on a variety of industries not related to healthcare. A student may find himself analyzing a case on McDonald’s hamburgers or Mariott hotels; although without doubt educational, the conclusions cannot always be transferred to healthcare. Take the definition of a customer, for example. A typical customer makes the purchase decision, pays for the product, and consumes the product. In healthcare it is different: the physician chooses the drug, the healthcare insurance pays for the drug, and the patient consumes the drug. It is obvious that marketing and pricing decisions are not following the same rules as for ordinary consumer products. A dedicated business education for future healthcare leaders needs to consider the specific attributes of the healthcare market.
Furthermore, the development of a pharmaceutical drug is extraordinarily risky and expensive. Any pharma or biotech executive needs, therefore, a good understanding of the pharmaceutical development process and how to analyze and manage development risk. A good grasp of decision sciences, together with some knowledge of benchmark probabilities for the development process and a solid understanding of the principles of portfolio management are mandatory for anyone operating in a biotechnology environment. The way preclinical and clinical development is organised is a key determinant of how likely it is to reach the market. Some experts believe that up to 35% of clinical failures are not the result of a true lack of efficacy, for example, but rather a result of suboptimal clinical research design or conduct. We probably all know examples of drugs that show promising and clinically meaningful efficacy results in Phase II but just miss statistical significance in a Phase III trial by a hair's breadth. Enrolling 5% more patients might have provided the level of significance desired and turn a failed study into a successful one.
Another important area rarely covered extensively in traditional MBA programme is related to intellectual property (IP). The process of filing a patent and the requirements of getting a patent granted such as, e.g. utility, novelty, and unobviousness need to be understood as well as the concept of 'freedom to operate'. Unique to the healthcare industry are also the regulatory requirements to get a new treatment approved.
Biotechnology companies, more than firms operating in other industry sectors, need licensing deals in order to attract capital. First, any biotech firm will receive direct cash compensation when certain milestones are reached so that internal projects can, at least in part, be funded from income generated from licensing agreements. Second, biotech companies 'validate' their technologies and scientific approaches to treat a disease through agreements with established pharmaceutical developers. Therefore, business development in healthcare is an important subject that is rarely covered by traditional MBA programmemes.
Although finance may appear as a subject that requires little, if any, adaptation to the healthcare sector, this point of view may change when considering the risks imminent in pharmaceutical development. How shall a manager account for that risk? Ordinary discounted cash flow analyses rarely deal with cash flow uncertainty that is as high as in the pharmaceutical industry. Often, investments in drug development are seen as a series of options with multiple sources of uncertainty, or, in other words, as 'compound rainbow options'. As the underlying is a real asset (the drug) rather than stock, the value of a pharmaceutical project can be calculated as a 'real option' with attributes of compound rainbow options. Few MBA programmemes cover these kind of financial instruments.
Finally, entrepreneurship and the ability to write a business plan is particularly relevant for the biotechnology industry. How shall a business plan be structured? How shall the opportunity be described, a financial plan be created, and how to approach investors? These skills can be trained in good entrepreneurship classes, but they rarely focus on the biotechnology industry in the vast majority of MBA programmemes. Thus, if a potential student already knows that she wants to work in the pharmaceutical-biotechnology industries, she may be better off looking for a specific programmeme that provides the dedicated education needed to excel in the healthcare sector, rather than enrolling in a more general MBA programmeme.
Cost Accounting and Management Control
There are, in principle, two possibilities to acquire the specific expertise that is unique to the pharma and biotech environment. The first is to search for an MBA programme that offers a healthcare management major. The second possibility is to enroll in a specialized programme offering, for example, a Master in Biotechnology Management (MBM). Among the top business schools, only a few offer this kind of healthcare specialization. One example for an MBA offering a healthcare management major is the Wharton School of the University of Pennsylvania, located in Philadelphia in the USA. Beyond the MBA core courses Wharton's Healthcare Management Department offers courses in, e.g., Health Services System, Economics of Health, Managed Care, Financial Management of Health Institutions, Health Care Marketing, Comparative Health Care Systems, Management and Economics of Pharmaceutical, Biotech and Medical Device Industries, and Health Care Entrepreneurship.
Wharton's Health Services System course provides an overview of the evolution and structure of current healthcare systems covering payors, healthcare providers, suppliers, patients, and physicians. Among other areas of interest the course examines the impact of cost containment, disease management and the role of epidemiology in assessing population health needs and risks. The Economics of Health course takes advantage of fundamental economic concepts to evaluate health policies and analyze the healthcare market. Wharton's Financial Management of Health Institutions course explains important concepts such as net present value as applied to pharmaceutical companies, decision tree analysis and real options. The Healthcare Marketing course focuses on aspects that distinguish marketing in the pharma-biotech industries from marketing in non-healthcare industries. Finally, the Comparative Healthcare Systems course looks at the structure of healthcare systems in different countries, focusing on financing, reimbursement, delivery systems and adoption of new technologies. In summary, Wharton's healthcare management education is an excellent example how a dedicated healthcare education can be integrated in a general MBA curriculum.
A second example is IE Business School's Master in Biotechnology Management (MBM) programmeme. IE Business School is located in Madrid, Spain, and known for innovative concepts in management education. Unlike an MBA with a healthcare focus, IE's MBM is fully dedicated to a pharma-biotech management education. About 30% of the MBM courses are equivalent to IE's MBA programme (introductory courses such as, e.g., Cost Accounting, Financial Accounting, or Competitive Strategy), whereas 70% are focusing on the healthcare industry (such as, e.g., Biotech Industry Fundamentals, Marketing and Sales for the Biomedical Market, or Innovation and R&D Management in the Life Sciences). IE's MBM programmeme has the advantage over some other programmemes that its 'blended', meaning that three short face-to-face periods alternate with intense, highly interactive online periods. Thus, students that are already employed do not need to give up their jobs in order to receive their Masters' degrees, and they can study from anywhere on the world at any time.
The courses are complemented by World Awareness Seminars, Leadership Workshops, and Specialised Industry Conferences.
The contents of the individual specialised courses examine important, industry-relevant issues. For example, MBM's course on Strategy Implementation & Uncertainty Management investigates to what extent the concept of uncertainty, including the concept of risk as one of its dimensions, can be analysed and dissected into manageable components. The course looks at the value of portfolios and proposes useful approaches to build and manage them.
The Business Development course discusses the process of identifying opportunities with good potential for strategic fit with the business and structuring the strategically most adequate relationships ranging from limited IP licenses to long term partnerships. This includes the process of negotiating and arriving at agreements structured to make for a successful deal for both parties.
During the Economics Environment & Economics of Healthcare course students get exposed to the concepts of pharmacoeconomics including cost-effectiveness, cost-utility, and cost-benefit analyses. These concepts are increasingly relevant for pricing decisions of new treatments.
In the Finance and Global Life Sciences Business course students learn how diverse financial instruments can be used to fund biotech and pharma companies, and understand the role of venture capital in the birth and growth of new biotech ventures. The course also introduces the role of international acquisitions, joint ventures and strategic alliances in the global life sciences industry.
The Innovation and R&D Management in the Life Sciences course focuses on the design and management of R&D processes, assessing and building innovation capabilities and optimizing interfaces between players affecting the R&D process. Development of new products and pipeline management in the biotech and pharma industries is a central part of the course.
All concepts learned during the programme culminate in writing a business plan during the Global Entrepreneurship in the Life Sciences course. Understanding the requirements and expectations of investors and sources of capital is a major objective of the course. Prerequisites to analyze viability of a business proposal such as, e.g., market research, R&D and intellectual property generating strategies, business development avenues, financial forecasting and access to capital markets are covered by the course.
The above examples demonstrate how a dedicated programme can provide the knowledge and skills required to excel in the complex healthcare environment. Equipped with these skills graduates of IE's MBM programmes typically follow four career paths: they advance within their organizations, e.g., one graduate from a major, multinational Japanese pharmaceutical company was put on a fast-track career development programme immediately after graduation (only two out of 10,000 employees are selected for the company career development programme each year); they advance in another organisation belonging to the same industry sector, e.g., one graduate moved from an entry-level position to Business Development Director of another healthcare company after finishing his MBM; they switch industries, e.g., one graduate moved from the lab bench to an analyst position of a leading Spanish bank, analysing healthcare stocks; they start their own companies, often based on the business plans they developed during their Entrepreneurship course and with the support of the course's professor, e.g., one US-American student started his own biotech company in Berkeley in the USA and became the company's CEO; another talented, young molecular biologist co-founded a biotech financial advisory firm.
The above examples illustrate that a specialized programmeme provides the right education in order to advance careers. IE's MBM programmeme probably is one of the most internationally diverse programmemes available. As Asian students are, compared to the relative importance of the region, still underrepresented, the IE currently seeks to recruit more Asian students, specifically from India and China.
There are over one hundred programme worldwide that provide a Master in Healthcare Management (or similar) education. However, only a few allow students to continue working while studying, only a few are outside the USA, and only a few focus on the pharmaceutical and biotechnology industries. Given the success of those programme that provide the optimum preparation for future careers in biotech and pharma, or in related sectors, it is likely that more programme will be developed offering a specialised training in healthcare. This will not only benefit students who wish to pursue a career in healthcare, but also the society as a whole as those graduates are ready to master the challenges the industry is likely to face in the near future.