Interview: JJ Bienaime CEO of BioMarin

If you could build a product that had a total worldwide addressable market of 3,000 people, would take an estimated 8-10 years to build, and cost around $70K per year per customer to manufacture, would you go after this business?

That’s what Jean-Jacques Bienaime set out to do when he took the helm of BioMarin as CEO in 2005.  And in doing so, he built one of the leading biotech companies in the world. How did he succeed? First of all, with a stomach for tough challenges, and an ingrained conviction that problems are opportunities in disguise. Second, by focusing on superlative results and dramatic innovation (first-to-market milestone therapies with high barriers to entry). I had the chance to sit down with Jean-Jacques to find out more.

History and Background

For starters, Jean-Jacques explained to me that the US government passed the Orphan Drug Act in 1983 to stimulate R&D in orphan drugs (drugs for a disorder affecting fewer than 200,000 people in the United States), offering businesses with the stamina to go after small markets tax incentives and protection. This, in essence, kick-started the orphan drugs market. BioMarin established its leadership by focusing on an even smaller market: they coined this ultra orphan drugs (exceptionally rare diseases).

BioMarin provides personalized medicine for genetic disorders. The company has now 4 drugs on the market: one with 3,000 affected patients (MPS I), the second with 1,100 (MPS VI), and the third with 50,000 patients worldwide (PKU). The fourth drug (Firdapse) was launched earlier this year to treat LEMS. BioMarin touts the only FDA drugs approved for those diseases.  Patients taking their drugs must undergo a genetic test to prove they have the disease (validate the need) prior to taking their drug. The diseases (problems) BioMarin sets out to solve are known, but the treatments are vastly unknown (high technology risk) and expensive to discover and produce. Jean-Jacques explained that this is one of the main reasons the biotech industry as a whole only became profitable in 2009, a full 30 years after Genentech’s founding. Of note, BioMarin is one of the few profitable businesses in the industry.

BioMarin employs a group of scientists who study orphan diseases to determine which ones are feasible to cure. They follow a genetic approach to treatment, as opposed to the shotgun approach used, for instance, in cancer treatment. The objective of BioMarin is to find drugs that can deliver dramatic benefits to their patients through personalized medicine. Incremental or competitive benefits alone are not good enough.

High Technology/Market Risk

We could say that BioMarin faces both high technology risk, and high commercialization risk.  The technology risk of finding a treatment are gargantuan, and the market/customers unknown. Epidemiology studies do estimate the number of affected people in the world, but they don’t tell you who those people are. Newborn screenings are not mandatory for most orphan diseases (with the exception of PKU). The challenge is that MPS patients often don’t know they have the disease; they go for years being mistreated and undergoing multiple surgeries before they are diagnosed with a genetic disorder. When there are so few people affected in the world, most primary care doctors will never see a case in their lifetime. So BioMarin needs to spend significant resources educating ophthalmologists and rheumatologists of the symptoms to be on the look out for in MPS patients.

How do you go about finding 1,100 patients who are widely dispersed around the world, and do not know they have a need?? And the challenge does not stop there.  Once found and tested, BioMarin still needs to ensure that patients take the medication. To put this into broader perspective, only half of all the prescriptions written in the US are filled. So it takes herculean efforts to find the customers, and educate them. Not for the faint of heart!

Once we find the patients, we need to help them get access to care, find hospitals who can administer the drug, and ensure they take the drug regularly. In some cases we need to arrange transportation — we even have a patient who lives on a tiny island off the coast of Portugal. Some of our patients are wealthy and take private jets to get to the hospital weekly, but others need reimbursement assistance. We have to educate the patients of the importance of taking their medicine regularly. Sometimes it means finding a hospital when they travel, or finding an alternate doctor when their doctor is on vacation.

A truly fascinating story, and one that is uniquely benefiting a formerly undeserved but profoundly affected population, thanks to Jean-Jacques’ vision and dedication.

Founder View: OpSource CEO Treb Ryan

I had an opportunity to meet with Treb Ryan, co-founder and CEO of OpSource, last week. I was curious to get his views on customer enlightenment, and hear how his product development team engaged with customers. Over the years Treb has devised an organic development process that seems to work well for his engineers. He was kind to share his views with me.

Know Thy Customers: In-Context Learning

Treb believes that good products are internally inspired (based on one’s experiences) and externally validated (through customer feedback).  He’s a firm believer that founders need domain expertise in order to build successful ventures. He advises young entrepreneurs to get a job in the industry they are trying to serve before starting a venture. He gave me the example of healthcare, where a lot of IT companies fail, due to a lack of actual healthcare expertise.

Treb also believes that feedback is best obtained by listening to customers “in context”. [Which resonates strongly with Customer Enlightenment principles]. Towards that end, he has his product engineers regularly sit in sales calls, customer service calls, and customer training sessions, to hear customer problems first hand.

 

It’s a great way for engineers to learn about customer problems. They can hear what questions customers ask, what works and what doesn’t. After speaking to 15+ customers, they often start to see common themes and problems emerge, and can bring this feedback to improve our products.Our head of product development is particularly skilled at this; he goes on a lot of customer calls, and brings back phenomenal insights.

I asked Treb if this process also applied to new products, or only to existing products. Interestingly, he said that the process had been useful to steer the company’s direction as well. He gave me the example of their SaaS delivery product. OpSource saw an unfulfilled need in the market, and spoke to 50+ customers to validate their assumptions and tailor product requirements accordingly.

 

Overcoming the Discomfort Barrier

I wanted to dig a little further, to understand what made Treb’s head of product development so effective, when technologists are often challenged when dealing with customers.

Engineers are typically insular in dealing with problems. They like to solve problems on their own, and are not big on social interactions. As a result they shy away from engaging with customers. And if/when they engage, they follow a stilted process that does not yield great results.

So does Treb’s head of product development have a knack for social interactions then? Treb said that he didn’t have a particular knack, but because he’s very knowledgeable, customers like to talk to him, and he has good listening skills.

What works in his case is that he’s not the one running the meetings, or having to lead with questions. His main role is to listen. And in the context of listening to real world customer problems, he’s able to glean valuable insights about our customers’ needs. When a customer mentions a problem, he may then intervene and ask: “If we were to do this, would that solve your problem? Would you pay for it?”

 

Good insights from Treb. OpSource has found an effective approach for getting engineers to engage with customers, without the unease of having to lead with questions. This approach has paid bottom-line dividends in OpSource’s business.

VC View: Customer Validation Litmus Test

I sat down with Prashant Shah of Hummer Winblad Venture Partners last week. I was curious to hear the view from his vantage point as an investor. How does he gauge customer validation, and what impact does it have on his investment decision? What advice does Prashant have for technologists seeking funding from his firm?

Customer Validation Litmus Test

Not surprisingly, founders must validate their product with customers to get Prashant’s vote. He can usually tell by asking the following two questions:

1) Why would customers make a buying decision?
2) Why would they buy from you?

Prashant finds that tech entrepreneurs often go on at length about describing generic market pains, but have a hard time giving him a credible answer to the question: Why would customers be compelled to change their status quo and make a buying decision? To illustrate his point he gave me two examples:

Geico: Their lavish campaigns tout that they can save you 15% on car insurance. Fine. Granted we pay too much for car insurance. But in the grand scheme of things, lowering my auto insurance is low on my priority list contrasted to bigger expenses such as housing. I am not compelled to make a switch to Geico when I see those ads. Those campaigns fail to pass the first test. A quantifiable ROI is not enough for customers to make a decision to buy; it needs to be an ROI that matters.

Virtualization: On the other hand, expanding the use of — and realizing savings from — virtualization is high on the list of priorities for enterprises. And companies such as vKernel, Pancetera and EvoStor (all of which Hummer invested in) can use this natural market momentum to get in front of customers. These start-ups don’t have to convince customers that what they are doing is important to them; their ROI already matters.

Overcoming the Barriers

I asked Prashant why he thinks technologists have a hard time answering his litmus test questions. The problem, he thinks, is that technologists excel at mastering technical problems, but have a hard time understanding behavioral customer dynamics.

He gave me the example of his brother, a distinguished engineer who tried to dabble in real estate as a hobby. Prashant’s brother got his license, and was bewildered to find out how difficult it was to understand customers when he held his first open house. He didn’t expect them to be so fuzzy in making a buying decision (thinking about furniture and such!). It was too much for his logical engineering mind.

Engineers are not always able to see the world through the customer’s eyes. Prashant cited an engineer who could not grasp why a 3-step install was too cumbersome for customers. “If it works, what’s the problem?” The engineer was furthermore convinced that if he made his procedure simple the customer would not fully appreciate the value of his (enterprise) product!  [Note that seen through a customer’s eyes a simple procedure is valuable. Seen from this engineer’s eyes, a simple procedure would hide the value of his creation].

Another barrier Prashant sees is that technologists often don’t know what to do to validate their products with customers. Many ask the wrong questions. As a result, they get marginal feedback on features: “Yes this feature is good/not good”, but fail to gain insights on what would make a customer buy.

In that light he sees a need to help technologists better understand how customers think. [And we seek to address those very questions in this blog].

Prashant’s Parting Advice

Prashant advises technical founders to seek a co-founder with a customer bent to complement their strength. He reminds them that addressing the technology risk is not enough: they must tackle the market risk and get clarity on “why would a customer be compelled to make a buying decision?” In fact Prashant places the market risk higher than the technology risk.

Good advice to keep in mind. Founders be warned if you are seeking funding from Prashant. Be prepared to answer his litmus test!