Quite a few folks within pharma lament the current challenges and appear back to a gilded era when blockbusters provided rivers of money flow and supported development based activities – each R&D and marketing. And yet, could this present biotech’s greatest chance as an sector?
We are all too familiar with how the economics for significant pharma have changed in the final few years. Variables incorporate:
patent expiries (current and imminent)
declining R&D productivity (as measured by far more dollars for fewer approved goods)
healthcare payor pressures as governments search for price range cuts in all areas
paucity of future blockbusters in the pipeline
Biotech has often been suggested as a saviour with the suggestion that a focused research style based on deep insights, rather than wide pools of area expertise and serendipity, would lead to greater R&D productivity. After over 30 years of attempting, there does not seem to be any conclusive evidence that biotech’s study method has had any extra accomplishment. But, there is nevertheless trigger for hope, although for causes driven by necessity and economics rather than just science.
Biotechs by their nature get started out (and often stay) as small, nimble businesses possessing to uncover a niche within a substantially greater ecosystem. As with any smaller organism or business enterprise, you survive by being seriously fantastic at a focused region or developing niche knowledge. You simply do not have the sources to compete with the huge players.
Contemplating target markets, in spite of the prime-line attractiveness of blockbusters, biotechs generally target niche indications. While these may perhaps be little and initially only have sales possible in the hundreds of millions of dollars, that can nonetheless make a large difference to a smaller company. The equation for massive pharma is a lot tougher as they need new drugs, for growth or to replace patent expiries, to create greater sales to move the overall performance needle. And but some drugs which begin of in niche (or even orphan) indications, achieve approval and then widen their market place chance by means of label extension. Some examples incorporate:
Amgen’s erythropoietin stimulating agent, or ESA, franchise, which includes Epogen (also know as epoetin) and Aranesp. Epogen was initially authorized in 1989 for anaemia in sufferers with end stage renal illness, promoting $100 million in 1989. By 1997, the American Society of Clinical Oncology (ASCO) and American Society of Hematology (ASH) had been considering an “proof primarily based clinical practice guideline on the use of epoetin in cancer sufferers”. Considering that Amgen had licensed non-chronic kidney applications to J&J (created as Procrit), they further capitalised on expanding 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 finish up getting priced so richly that even these can lead to blockbuster status eventually. An example is Genzyme’s Gauchers disease franchise and Cerezyme which has more than $1 billion in sales (and in no little part driving Sanofi-Aventis acquisition of Genzyme this year for $20 billion).
A different example of growth by way of label-extension use incorporates Cephalon’s drug for sleep disorders, Modafinil or Provigil (trade name). This was initially authorized by the FDA in 1998 for improved wakefulness in patients with narcolepsy. In 2004, this label was expanded for approval to “boost wakefulness in patients with excessive sleepiness (ES) connected with obstructive sleep apnea/ hypopnea syndrome (OSAHS) and shift function issues (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 authorized 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 way of the company’s earlier history provided a significant cashflow bedrock to allow further pipeline development. Interestingly, Teva is acquiring Cephalon for $6.eight billion. When a single considers contribution to sales, and how its helped pipeline development, Provigil has played a significant element in supporting this transaction.
Other elements supporting a niche concentrate consist of the escalating hurdle with phase II failures. Reporting in Nature Critiques Drug Discovery, the Centre for Medicines Analysis identified that “Phase II good results rates for new improvement projects have fallen from 28% (2006-2007) to 18% (2008-2009)”. In Infinite Percent Partners LLC reviewing what is behind the phase II failures, Derek Lowe (In the Pipeline) notes that four therapeutic locations accounted for over 70% of the failures – cardiovascular, CNS, metabolic diseases (diabetes) and oncology. He recognises oncology and CNS as regular high threat areas and diabetes is a difficult effectively-served marketplace with higher existing typical of care (generating the efficacy barrier greater). However in cardiovascular, he suggests staying away from the significant, apparent plays:
…that’s fascinating, due to the fact that area has traditionally had 1 of the much better trial results rates. Possibly that a single is also suffering from the regular of care being fairly great (and frequently generic, or soon to be). So the high-achievement-price mechanisms of the old days are properly covered, leaving you to attempt your luck in the riskier ideas, while nevertheless attempting to beat some quite fantastic (and fairly inexpensive) drugs…