Mike Wokasch's Pharma reform blog asks if the demand of new late stage drug projects is going to greatly outstrip the supply? The conclusion seems to be YES!
Succinctly, new Pharma drugs historically have come from big pharma R&D, academia, and small/mid-size biotechs. Big Pharma R&D has hit the wall and currently is being downsized and outsourced. Pharma is trying to buy late stage projects with known clinical utility and lower risk of failure. How many of these exist? Aren't all the companies, who have adopted this model, going to be fighting with their checkbooks over this limited pool?
Academia might be able to supply new candidate molecules but don't have wherewithal to take to proof of concept or generate clinical data packages to become "investment worthy". Similarly, with down economy the past couple years, most biotechs are cash strapped to do this type of work as well. Just look at a few message boards or communities out there where small guys are bemoning lack of capital available to do the work to attract Big Pharma money.
What to do? Big Pharma could assume more risk and invest earlier. I'm not sure that I see that happening right away - if you are going to do that why not invest in your own R&D department's efforts - unless you're convinced that you are dry.
Perhaps it is time Big Pharma engaged in more collaborative development and investment models. Resources can be pooled to acquire properties, share risk and development, and then share commercialization. This might be a more palatable way for the Big Guy's to invest earlier in the process and acquire more candidates - but at a cost acceptable to investors. It could also bring more academic centers and biotechs to the party.
We may need this type of pooled/collaborative model to get more of the early stage candidates fully invested in the pipeline. It could also have the benefit of lowering competition somewhat for all the late stage projects and make those somewhat cheaper as well -- as companies were more willing to share risk and develop more diverse "aged portfolios" of drugs at different stages in their pipelines.
Creating these more diverse portfolios may also allow companies to better stock their pipelines with a higher percentage of novel compounds to somewhat offset the expected onslaught of biosimilars. I don't expect this would eliminate biosimilars (nor should it) but could serve to balance each company's portfolio of novel early, late and biosimilar drugs.
Clearly some newer model will need to be reached besides everyone clamoring for late-stage, clinically proven candidates in a bidding war environment - where there are not enough drugs to go around and where good ideas are left unfunded at early stages.
Posted by Bruce Lehr June 23rd 2010.
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