By Malorye A. Branca
June 15, 2003 | Evidence is mounting that the pharmaceutical industry is hitting a sharp curve at a high speed — a spot in the road where poor sales could finally crash into stalled productivity. What’s new is that in an industry where the pack mentality has ruled, drug companies are beginning to go their own way.
The crisis isn’t yet here, but it looms. In what looks like good news, IMS Health reports worldwide pharmaceutical sales keep going up, rising approximately 9 percent from 2001 to 2002, to reach $430.3 billion. On the other side of those stats lies a bitter pill: The bulk of these sales rely heavily on traditional drugs and a pack of blockbusters, most of which are headed off-patent over the next few years. Also, the rate of growth has slowed from earlier years, and the number of new products introduced was lower than average.
How are pharmaceutical giants reacting? “Companies are trying a number of things,” says Dave Webster, of the Webster Consulting Group. He points to GlaxoSmithKline’s novel R&D structure that splits the department into six semi-independent centers, Aventis’s R&D reorganization around targets classes (e.g., kinases) as opposed to therapeutic areas, and Wyeth’s recent deal with Accenture.
That last arrangement essentially outsources a large slice of the pharma company’s clinical trial data management. Eighty Wyeth employees lost their jobs in the deal, which neither the pharma giant or Accenture will provide much detail about. “We think the alliance will have a positive impact on output,” says Wyeth spokesperson Doug Petkus.
Does anyone really know the best way to increase the flow of drugs to market? “A lot of these latest moves are really experiments,” Webster says. “People are trying things, but nobody really knows what’s going to work.”
Companies are, nevertheless, already pointing to how they’re overcoming the productivity dilemma.
GSK, for example, maintains that the restructuring of it’s R&D is showing signs of success. The company initiated 25 Phase I trials in 2002, compared with 15 in 2001. The plan is to launch another 32 Phase I trials in 2003. CEO Jean-Pierre Garnier recently said, according to Reuters, “We’ve turned the corner in terms of R&D productivity, at least in the early-stage pipeline,” and announced that the company would finally have an R&D day, later this year, it’s first since February 2001.
The key, however, will be what happens to those drugs next. Getting drugs into clinical trials has never been the problem: It’s getting them into the marketplace.
“There are some very attractive products coming out of discovery,” says Accenture’s R&D services head, Pradip Banerjee. “The challenge is how to fast-forward these through the preclinical process, and beyond that.”
Not only is there a dearth of new products, but biotechnology isn’t offering much of an alternative, at least in the short term. Tufts University’s Center for the Study of Drug Development’s (CSDD) latest Impact Report points to what CSDD Director Kenneth I. Kaitin called a “relentless trend toward longer clinical phase times” for new biopharmaceuticals.
Biopharmaceuticals are drugs made up of DNA, RNA, or protein, as opposed to traditional drugs or small molecules, which are chemicals. The Tufts CSDD’s latest study shows biopharmaceuticals are getting through the FDA approval process a bit faster now than they were 10 years ago, but it’s taking much longer to complete the preceding clinical trials. A comparison of 2000 through 2002 to 1982 through 1989, showed it took on average more than six years to get drugs through clinical trials between 2000 and 2002, versus just over two and a half years in the 1980s.
What’s the most likely reason for this lag in trial time? Most of the “easy” biopharmaceuticals, such as “recombinant” proteins mimicking insulin or blood factors, have already been developed. Creating the next wave is much more complicated. Biopharmaceuticals make up only a small percent of drugs, accounting for about 30 percent of new approvals between 2000 and 2002. But it’s been hoped that this would be a growth area for the industry.
The FDA also clearly has a role to play in solving this productivity crunch. According to the Tufts study, for example, the average time for clinical trials and approval of biopharmaceuticals varied according to which FDA center reviewed the application.
Seeking Straightforward Solutions
Consultants, as always, have some clear ideas about where the best solutions to pharma’s productivity problems lie.
According to the Webster group’s research, solving the data overload is a primary issue. A huge amount of information is coming in from genomics, high-throughput screening, and other areas, but it’s not being properly captured and managed. “There are no positive incentives for putting useful data into the system, nor any consequences for not putting it in,” says Webster. He sees “tremendous” opportunities to improve productivity through data management and standardization.
Banerjee sees a dramatic shift taking place on the chemistry side. “There used to be a lot of emphasis on random screening,” he says. “Now, people are looking more closely at what makes a compound ‘drug-like.’” Such compounds should have a better chance of getting through clinical trials.
The problem is a shortage of medicinal chemists to make these assessments. Hence, companies are starting to outsource this task. “Not having enough medicinal chemists is hard to fix quickly,” says Banerjee. He says companies are looking as far away as China, India, and Russia for this capability.
Tufts researchers, somewhat surprisingly, still see genomics as part of the solution to reaching “better, faster, and cheaper” drug R&D. Others have blamed genomics for providing more raw, poorly-defined targets than the industry could handle. But the CSDD group’s Outlook 2003 report points out that with better screening technologies, the wave of genomics targets could finally pay off.
Given Big Pharma’s widespread and acute need for late phase products, probably the most important strategy will be one that GSK has been stressing in the company’s recent presentations to analysts -- that is, becoming “The partner of choice for in-licensing.”