Quite a few folks inside pharma lament the existing challenges and appear back to a gilded era when blockbusters offered rivers of cash flow and supported growth primarily based activities – both R&D and marketing and advertising. And however, could this present biotech’s greatest chance as an business?
We are all also familiar with how the economics for huge pharma have changed in the last couple of years. Aspects include things like:
patent expiries (current and imminent)
declining R&D productivity (as measured by much more dollars for fewer authorized items)
healthcare payor pressures as governments search for budget cuts in all regions
paucity of future blockbusters in the pipeline
Biotech has often been suggested as a saviour with the suggestion that a focused research style primarily based on deep insights, rather than wide pools of location experience and serendipity, would lead to higher R&D productivity. After more than 30 years of attempting, there doesn’t look to be any conclusive proof that biotech’s research approach has had any more achievement. However, there is nevertheless trigger for hope, although for motives driven by necessity and economics rather than just science.
Biotechs by their nature commence out (and frequently stay) as tiny, nimble companies possessing to come across a niche within a significantly greater ecosystem. As with any modest organism or business enterprise, you survive by being actually excellent at a focused location or developing niche experience. You just do not have the resources to compete with the huge players.
Thinking of target markets, despite the top rated-line attractiveness of blockbusters, biotechs usually target niche indications. When these could be small and initially only have sales possible in the hundreds of millions of dollars, that can still make a big difference to a small business. The equation for huge pharma is a lot tougher as they require new drugs, for growth or to replace patent expiries, to generate greater sales to move the performance needle. And but some drugs which start of in niche (or even orphan) indications, obtain approval and then widen their market opportunity through label extension. Some examples incorporate:
Amgen’s erythropoietin stimulating agent, or ESA, franchise, including Epogen (also know as epoetin) and Aranesp. Epogen was initially authorized in 1989 for anaemia in patients with end stage renal disease, promoting $100 million in 1989. By 1997, the American Society of Clinical Oncology (ASCO) and American Society of Hematology (ASH) were taking into consideration an “evidence 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 building 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 being priced so richly that even these can lead to blockbuster status at some point. An instance is Genzyme’s Gauchers illness franchise and Cerezyme which has more than $1 billion in sales (and in no modest portion driving Sanofi-Aventis acquisition of Genzyme this year for $20 billion).
An additional example of development by means of label-extension use includes Cephalon’s drug for sleep problems, Modafinil or Provigil (trade name). This was originally approved by the FDA in 1998 for enhanced wakefulness in sufferers with narcolepsy. In 2004, this label was expanded for approval to “boost wakefulness in individuals with excessive sleepiness (ES) connected with obstructive sleep apnea/ hypopnea syndrome (OSAHS) and shift function problems (SWD)”. Provigil sales have been $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 developed to extend the sleep disorder franchise. This had 2010 sales of $186 million. Provigil and Nuvigil comprised around 46% of total Cephalon sales by 2010 (data from Cephalon 2010 SEC ten-K filings). Provigil’s development through the company’s earlier history provided a substantial cashflow bedrock to allow further pipeline development. Interestingly, Teva is acquiring Cephalon for $six.eight billion. When yoursite.com considers contribution to sales, and how its helped pipeline growth, Provigil has played a major component in supporting this transaction.
Other aspects supporting a niche concentrate involve the growing hurdle with phase II failures. Reporting in Nature Evaluations Drug Discovery, the Centre for Medicines Study found that “Phase II achievement rates for new development projects have fallen from 28% (2006-2007) to 18% (2008-2009)”. In his weblog 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 ailments (diabetes) and oncology. He recognises oncology and CNS as regular high risk regions and diabetes is a difficult well-served market with higher current regular of care (making the efficacy barrier higher). But in cardiovascular, he suggests staying away from the large, clear plays:
…that is fascinating, considering the fact that that region has traditionally had 1 of the greater trial achievement prices. Possibly that one is also suffering from the standard of care being pretty great (and usually generic, or quickly to be). So the higher-accomplishment-rate mechanisms of the old days are nicely covered, leaving you to try your luck in the riskier suggestions, while still trying to beat some pretty fantastic (and pretty low-cost) drugs…