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Feature

Battling against the odds

Posted on: 10 Nov 04

Summary

In recent years, the market for those developing new drugs has become much more competitive and the political, regulatory, social and economic pressures more intense.

In recent years, the market for those developing new drugs has become much more competitive and the political, regulatory, social and economic pressures more intense. Even pharmaceutical and biotech companies with years of experience can no longer guarantee success for their next product. In order to remain innovative and productive, companies must explore new approaches to the technical and commercial obstacles that stand in their way and forge partnerships with organizations that can help them realize their goals.

 

Overcoming obstacles

Perhaps the most noticeable obstacle in drug development is financial, as companies must determine what is the most effective strategy in order for them to gain a return on their initial investment. In 2000, global pharmaceutical R&D expenditure was estimated at US$46 billion with global biotech R&D expenditure accounting for a further US$11.2 billion (1). Yet despite the enormity of this expense fewer newer drugs are reaching the market. In the 1980s over 40 new molecular entities (NMEs – compounds not previously made available as human therapeutics) were being produced annually, but since 2002 output has dropped to below 30 NMEs per year (1, 2).

 

An additional problem is that despite the increasing financial investment and use of newer technologies, success rates for drug development remain unpromising. For example, the Tufts Center for the Study of Drug Development (Tufts CSDD) suggested that only 21.5% of drugs entering into Phase I trials would progress to gain market approval (3). Therefore the cost involved in developing new drugs for the market actually includes a sizeable contribution from the cost of all compounds that fail during the R&D process. Tufts CSDD have estimated that the average cost of successfully getting a drug to market is now US$897 million (3).

 

Industry observers also believe that there remains room for improvement in optimizing the R&D process. CMR International analyzed data mean development times to market for 923 NMEs between 1985 and 1999, with respect to the US, UK and Japan (1). On average mean development times to market for all these countries were not less than 12 years (1).

 

Dealing with the pressure

When a drug reaches clinical trials, the pressure on companies can be intense as they try to allocate sufficient finance and resources to the project. On average, clinical trials account for 40% of total R&D costs (4). Only the largest companies can run several pipeline projects at the same time and remain financially viable. For example, despite some negative media coverage concerning the productivity of GlaxoSmithKline, in December 2003, the company had 147 projects in clinical trials (5). Thus GlaxoSmithKline is still upbeat about its prospects through the current set-up of the company.

 

In contrast, smaller companies may need to make unpopular organizational decisions in order to prioritize projects. For example, in October 2004 Curagen was reported to have announced large staff cuts in order to reduce its cash burn rate and improve the prospects for its four compounds entering clinical trials (6). Similarly, following the failure of a major product in Phase III trials, Maxim Pharmaceuticals announced that in order to keep financially solvent it would have to half its workforce (7).

 

Altana has been developing Roflumilast as a treatment of chronic obstructive pulmonary disease (COPD) and asthma, but has experienced some delays in enrolment for its US trials. As a result, the application for the US approval of Roflumilast will take place later than the originally scheduled (the first half of 2005) (8). The company has had to move quickly to reassure its investors that its plans for the product remain on track. Furthermore, despite the delays regarding Roflumilast, the company continues to perform strongly in terms of sales and has predicted that it will be on course to meet its targets for the year.

 

Options and opportunities

On the R&D front it is not absolutely necessary to carry out all drug development functions in-house and a growing number of companies are turning to collaborations and outsourcing as options. In this way they can more effectively allocate resources, control costs, gain access to additional specialist expertise and staff and thus improve their chances of R&D success. This is particularly important as many companies are expanding the therapeutic range of their R&D efforts in order to seek out new opportunities in an increasingly competitive market (5). For example, in one analysis of current immunosuppressant projects in Phase II trials or beyond, it was noted that only a quarter were associated with top 20 companies (5). For companies entering this field, these new projects will present additional R&D obstacles to be overcome.

 

Given the difficulties that face companies developing new drugs one might wonder why any organization would seek to operate under such uncompromising conditions! Yet, despite the unflattering statistics and rising costs, there is no shortage of new entrants in the market and the major companies continue to paint an optimistic view of the future. The fact is that even in these difficult times there remains a high demand for new drugs and as long as there remain areas of unmet medical need, companies will always have a target market to aim for. In 2003, the global pharmaceutical market grew by 9%, with North American sales increasing by 11% over the previous year (9). In addition, with large populations, a growing spending on healthcare and stronger economic prospects, emerging markets such as Asia and Latin America are growing in importance. Similarly, in Europe, companies are gaining new markets through the May 2004 expansion of the European Union.

 

 

References

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

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

3.       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

4.       Anon (2002). Industry Profile. The Pharmaceutical Research and Manufacturers of America (PhRMA). http://www.phrma.org/

5.       Ansell J.A. (2004). Therapeutic Area Trends in R&D of the Top 20 Pharmaceutical Companies. Decision Resources. 30 September 2004. http://www.decisionresources.com

6.       Anon (2004). Curagen axes a third of its staff and narrows focus. Scrip. No. 2998. p9.

7.       Anon (2004). Maxim to slash 50% of workforce. Scrip. No. 2998. p8.

8.       Anon (2004). Update on Clinical Development Program of Roflumilast. Altana Press Release. 28 October 2004. http://www.altana.com

9.       Anon (2003). Lipitor leads the way in 2003. IMS Health.  http://www.ims-global.com/insight/news_story/0403/news_story_040316.htm

 

 

Dr Faiz Kermani

Last updated on: 27/08/2010 11:40:18

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