FocusNew product lines uncertain for pharma

12 October 2007 22:39  [Source: ICIS news]

By Feliza Mirasol

NEW YORK (ICIS news)--New products, longer lifespans and strong economies all led to growth in the pharmaceutical industry in 2006, but the business still has not addressed the slump in innovation, according to industry sources.

“Last year, 31 new molecular entities [NMEs] were launched in key [global] markets," according to analysts at IMS Health, a company that follows the pharmaceutical industry.

"Overall, the contribution to global market growth by products launched from 2001 to 2005 reached $13.5bn [€9.5bn] in 2006,” IMS said.

The general trend in productivity has shown a decline. In 2005 and 2006, the number of NMEs approved by the US Food and Drug Administration (FDA) held at 18.

In 1999, the FDA approved 35 novel drugs for the US market, a number that has not been seen since. The closest the industry has come since then was 31 in 2004.

The same trend holds true of therapeutic biological products. Last year, the FDA approved four, up from two in 2005. However, the number of approvals steadily declined since 2002, when it reached nine.

Some say that the innovation slump in the pharmaceutical industry is over.

Thomas Hofstaetter, Wyeth’s head of business development, said that the decline in R&D (research and development) productivity and dwindling innovation has ended. Hofstaetter made his comments in August at the Drug Discovery and Development of Innovative Therapeutics conference, held in Boston.

“The mistake that people often make when they look at this so-called productivity issue in the industry is [that they forget] the long time lines we are dealing with,” said Hofstaetter.

He said he expects these large pipelines will translate into interesting and innovative new products. If that does not bring a tsunami of new drugs, it will at least bring a slight wave.

Others take a more conservative outlook.

“It is too soon to say [the innovation rut has ended]," said Mervyn Turner, senior vice president of worldwide licensing and external research at Merck’s research division.

"Although the number of Phase I and Phase II molecules in development across the industry has risen sharply over the last five years, it has yet to translate into a robust, industry-wide Phase III pipeline,” he said. “As an industry, we have all gotten better at the early stage of drug discovery - the numbers demonstrate that."

However, failure rates are still high, due to commercial and regulatory barriers as well as the challenges of picking products that will have a large effect on diseases, he said.

“Our strategy is to build a strong internal research capability, coupled with the ability to identify and work with the best external opportunities in open collaboration,” Turner said.

The pharma industry as a whole is struggling with development costs.

Industry sources estimate that the average cost of developing an innovative new drug is more than $800m. This includes expenditures on failed projects at the value of forgone alternative investments, said a 2006 report by the US Congressional Budget Office (CBO).

The report said, “Perceptions that the pace of new drug development has slowed and that the pharmaceutical industry is highly profitable have sparked concerns that significant problems loom for future drug development.”

Demand for drugs will continue to expand by leaps and bounds as the population grows and ages and as obesity, chronic conditions and infectious diseases increase. A recent report by PricewaterhouseCoopers (PwC) estimates that the global pharmaceutical market will nearly double in value to $1,300 bn by 2020.

However, PwC warns that the industry must fundamentally change the way it operates in order to reap the benefits of these future growth opportunities.

In particular, R&D productivity must improve, PwC said. Compared with a decade ago, twice as much is being invested in R&D to produce two-fifths of the new medicines that have been produced within this decade-long time frame - an unsustainable business model, PwC said.

As the blockbuster sales model disappears, it will be replaced by a smaller, smarter and more effective sales force geared toward adding more value, rather than just selling more pills, PwC said. Focus in research is expected to shift from treatment to prevention, which presents a significant opportunity for both health-care providers and the pharmaceutical industry.

Transformational technologies will drive R&D, building on a trend toward more personalised medicines.

Genetic-based diagnostics have already shortened the R&D cycle for these personalised medicines, and the phase-based linear model of R&D will be replaced by collaborative, in-life testing and “live licensing.”

Live licensing would involve issuing continued treatment based on the ongoing performance of the drug over its life cycle.

($1.00 = €0.70)

By: Feliza Mirasol
+1 713 525 2653

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