Project Management: A License to Learn

Pharma pressures

Pharmaceutical companies find themselves in an awkward position because if they are to remain profitable and wish to justify to patients and governments the high prices that they charge for their medicines, they must demonstrate that their considerable R&D investment is resulting in new medicines. In 2000, the pharmaceutical industry was estimated to have spent US$58 billion on R&D, with around 40% of this being devoted to clinical trials (1).

The cost of successfully getting a drug to market is rising and so the pharmaceutical industry’s investment in R&D has had to increase. The Tufts Centre for the Study of Drug Development (Tufts CSDD) has estimated that the cost of successfully getting a drug to market is $897 million (2). Bain & Company have estimated the cost at $1.7 billion, and factor in more of the commercialization costs than the Tufts CSDD estimate (3). Both these figures include a significant contribution from the cost of all new compounds that fail the R&D process.

An area of concern for pharmaceutical companies is the considerable extra expenditure required for clinical trials (4). In its 2002 survey of US-based companies, PhRMA noted that the inflation-adjusted increases in clinical R&D costs were more than five times greater than the costs for preclinical work (5).

The course of drug development is unpredictable and therefore it is critical to have realistic expectations for any given project (4). There are inherent difficulties in running a drug development successfully and the larger the project the more numerous potential problems can be. Accounting for the factors that can stand in the way of a project’s success and being able to take an objective view of the strategies required is a demanding, but necessary task (4).

Regardless of the amount that a pharmaceutical company decides to invest in its new drug pipeline, there is no chance of success unless a project is effectively managed. At present the pharmaceutical industry is under pressure to improve its productivity, as the number of new products reaching the market has been on the decline for a number of years. In 2003, only 26 new molecular entities (NMEs – compounds not previously available as human therapeutics) were launched onto the world market, whereas in 1983 over 40 NMEs were launched globally (1, 4). The productivity decline has led to many observers believing that the industry requires a new approach to the way in which it runs its projects.

It is these circumstances that have led to the rise of project managers in the pharmaceutical industry. Project managers are able to apply past experience to ongoing projects in order to solve problems in a practical manner whilst also being able to develop new approaches to resolve project-specific issues. Although it is impossible to predict every factor that will affect a project, by being proactive the major issues can be identified. Furthermore, any preconceptions can be challenged and alternative scenarios can be devised (4).

Alliances and collaborations are playing a greater role in drug development. Companies are finding that by licensing in compounds they are able to supplement their pipelines. In 2004, over a quarter of the sales of the top 15 pharmaceutical companies were derived from in-licensed drugs (7). This approach allows the parties to benefit from the commercial and technical strengths of the other organization and the sharing of risk. Yet once again, careful management of a project is required if it is to have any chance of success. Poor project management could negate all the advantages that have been gained through potential collaboration.

The area of project management in licensing has not been thoroughly explored, but there are efforts underway to change this. The Pharmaceutical Industry Project Management Group (PIPMG), a not for profit group, is holding an industry-wide meeting in the UK to examine relevant issues in licensing (7). Delegates will examine real case studies and participate in discussions to see how they can learn from the experience of other companies. PIPMG has over 500 members representing a broad range of companies in the biopharmaceutical sector. PIPMG has examined the role of project management in a number of pharmaceutical R&D areas, but is now particularly keen to emphasize its benefits at the early stage of licensing (7).

There has never been a tougher time to be involved in drug development. In recent years, the market has become much more competitive and the political, regulatory, social and economic pressures more intense. Merck’s recent problems with Vioxx and Bayer’s withdrawal of Lipobay from the market in 2001 are timely reminders that there are no certainties in the field of drug development. If companies are to maximize their financial investment and allocation of resources then project management will be key to success. New approaches to solving productivity problems, such as collaborations, are a step forward but they will require careful management to ensure that potential benefits are realized.

1.                    Kermani F and Findlay G. The Pharmaceutical R&D Compendium (2000). http://www.cmr.org/

2.                    Anon (2003). Total Cost to Develop a New Prescription Drug, Including Cost of Post-Approval Research, is $897 Million. The Tufts Center for the Study of Drug Development Press Release 13 May 2003. http://csdd.tufts.edu

3.                    R Mullin (2003). Drug Development Costs About $1.7 Billion. Chemical & Engineering News. Volume 81, Number 50.

4.                    Kermani F. and Narayan C. (2005). Thinking ahead for effective clinical trials. Nature Biotech. Vol 23 (4): 499-501.

5.                    Industry Profile 2002. The Pharmaceutical Research and Manufacturers of America (PhRMA); available at http://www.phrma.org/

6.                    Anon (2004). Innovation on the wane? CMR International. http://www.cmr.org

7.                    Anon (2005). Licensing: A better way forward? Pharmaceutical Industry Project Management Group (PIPMG). http://www.pipmg.org