Quite a few folks within pharma lament the existing challenges and look back to a gilded era when blockbusters supplied rivers of cash flow and supported development based activities – each R&D and advertising. And yet, could this present biotech’s greatest chance as an industry?
We are all too familiar with how the economics for huge pharma have changed in the final few years. Things include:
patent expiries (existing and imminent)
declining R&D productivity (as measured by far more dollars for fewer authorized merchandise)
healthcare payor pressures as governments search for price range cuts in all locations
paucity of future blockbusters in the pipeline
Biotech has usually been suggested as a saviour with the suggestion that a focused investigation style primarily based on deep insights, rather than wide pools of area experience and serendipity, would lead to greater R&D productivity. Soon after more than 30 years of trying, there doesn’t appear to be any conclusive proof that biotech’s study approach has had any far more good results. Yet, there is still lead to for hope, though for factors driven by necessity and economics rather than just science.
Biotechs by their nature start out (and normally stay) as small, nimble companies having to discover a niche inside a significantly greater ecosystem. As with any compact organism or business enterprise, you survive by being genuinely great at a focused region or establishing niche experience. You simply do not have the resources to compete with the massive players.
Thinking about target markets, regardless of the major-line attractiveness of blockbusters, biotechs frequently target niche indications. While these might be smaller and initially only have sales possible in the hundreds of millions of dollars, that can nevertheless make a massive difference to a smaller company. The equation for major pharma is substantially tougher as they need new drugs, for growth or to replace patent expiries, to produce higher sales to move the functionality needle. And yet some drugs which begin of in niche (or even orphan) indications, obtain approval and then widen their industry chance via label extension. Some examples involve:
Amgen’s erythropoietin stimulating agent, or ESA, franchise, such as Epogen (also know as epoetin) and Aranesp. Epogen was initially approved in 1989 for anaemia in sufferers with end stage renal disease, selling $100 million in 1989. By blood volume , the American Society of Clinical Oncology (ASCO) and American Society of Hematology (ASH) have been taking into consideration an “evidence based clinical practice guideline on the use of epoetin in cancer individuals”. Considering the fact that Amgen had licensed non-chronic kidney applications to J&J (created as Procrit), they further capitalised on increasing use of Epogen in cancer anaemia by developing Aranesp, approved in 2001. By 2010, Epogen and Aranesp had combined sales of around $5 billion, from Amgen 2010 10K SEC filing.
Other orphan drugs can end up being priced so richly that even these can lead to blockbuster status sooner or later. An instance is Genzyme’s Gauchers illness franchise and Cerezyme which has more than $1 billion in sales (and in no smaller component driving Sanofi-Aventis acquisition of Genzyme this year for $20 billion).
Another example of growth by way of label-extension use involves Cephalon’s drug for sleep disorders, Modafinil or Provigil (trade name). This was originally approved by the FDA in 1998 for enhanced wakefulness in patients with narcolepsy. In 2004, this label was expanded for approval to “strengthen wakefulness in sufferers with excessive sleepiness (ES) connected with obstructive sleep apnea/ hypopnea syndrome (OSAHS) and shift perform disorders (SWD)”. Provigil sales were $25 million 1999, the year of launch, and had grown to $1.12 billion by 2010. Nuvigil, a single-isomer formulation of Provigil, was approved in 2009, and created to extend the sleep disorder franchise. This had 2010 sales of $186 million. Provigil and Nuvigil comprised about 46% of total Cephalon sales by 2010 (information from Cephalon 2010 SEC ten-K filings). Provigil’s growth by means of the company’s earlier history provided a substantial cashflow bedrock to enable further pipeline development. Interestingly, Teva is acquiring Cephalon for $6.eight billion. When one particular considers contribution to sales, and how its helped pipeline growth, Provigil has played a significant part in supporting this transaction.
Other elements supporting a niche concentrate incorporate the escalating hurdle with phase II failures. Reporting in Nature Testimonials Drug Discovery, the Centre for Medicines Investigation discovered that “Phase II success rates for new improvement projects have fallen from 28% (2006-2007) to 18% (2008-2009)”. In his blog reviewing what’s behind the phase II failures, Derek Lowe (In the Pipeline) notes that four therapeutic places accounted for more than 70% of the failures – cardiovascular, CNS, metabolic ailments (diabetes) and oncology. He recognises oncology and CNS as traditional high risk regions and diabetes is a hard well-served marketplace with high existing normal of care (creating the efficacy barrier higher). However in cardiovascular, he suggests staying away from the massive, apparent plays:
…that is exciting, given that that area has traditionally had one of the much better trial good results prices. Maybe that one is also suffering from the regular of care being pretty good (and normally generic, or soon to be). So the higher-success-rate mechanisms of the old days are effectively covered, leaving you to attempt your luck in the riskier concepts, when nevertheless attempting to beat some quite excellent (and quite low-priced) drugs…
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