News on trends and issues in the biopharm and pharmaceutical industry. Commentary on current events,clinical pipelines, facility expansions, competition, technology, legal and economic matters. M&A and licensing activity across the globe.
I am a Director of Research and Devopment for a leading supplier to biopharmaceutical producers. The views expressed are mine. I do not speak for any company or corporation.
In the past 100 years, only 3 patent offices have ever led in the number of new applications -- those being US, Japan and Germany's Deutsches Patent and Marktnamt (DPMA). In 2011, 2.14 M applications were filed worldwide and this is the first time the 2 million mark has been breached.
Finally, with respect to country of origin, residents of Japan filed the largest number of applications worldwide (472,417), followed by Chinese residents and then US residents. Digital communications apps grew fastast at 8.1%, and biotech apps grew by 3%, while pharma actually dropped by 1.6%. So much for pharma R&D productivity! Japan also had the highest number of granted patents with 238,323 and was followed closely by the US with 224,505. Look for the Chinese to catch up here too in the near future.
Deloitte and Thomson Reuters generated data on the late stage drug programs of the top 12 Big Pharma companies. The good news - more drugs were approved in 2011-12 (41) versus 2010-11 (32). The bad news - forecasted revenues 2011-12 cohort ($211 B) versus 2010-11 ($309 B) -- an almost 32% drop. The latter translated into a 7.2% R&D return. The average cost of development was pegged at $1.1 B (see previous post where that figure was reported as $1.9 B). The D-TR Report further notes that 22 late stage drugs died in 2011-12 as compared to 19 the prior year. This wiped away $73 B and $77 B of potential value respectively in those two years.
Deloitte's head analyst, Julian Remnant, noted that half of the top 12 companies experienced a decline in net value realized from product commercialization last year. This is exacerbated as goverments and third party payers exert downward pressure on prices -- or make it more difficult to get reimbursement without clear product benefits over existing competition. They suggest companies battle this challenge through better clinical trial design aimed at targeted patient populations to establish the clear comparative benefit.
In other words, companies need to show payers why they should buy the new drug by demonstrating enhanced clinical benefit to patients and or superior cost effectiveness in use. As Mona Lisa Vito might say, "Oh my God. What a f**king nightmare!" See Fierce Biotech.
Fierce Biotech reports this morning that the Office of Health Economics (UK think tank) says that the average cost of developing an approved drug has risen from $199 M in 1970 to more than $1.9 B today. They cited four factors for this:
Soaring out of pocket R&D costs
A success rate that has been halved from 1:5 to 1:10
A vast increase spent in clinical trials up from 6 years to 13.5 years
Significant increase in cost of capital due to increasing regulatory complexity
Not everyone agrees with this of course, but if taken at face value the results are sobering. The Financial Times after looking the report over said that the increase to 13.5 years alone was enough to scare off venture capitalists for good.
Hey, I've got something for you Stat Junkies who like to review performance stats from various goverment agenices -- a new report from the Patents Doc Blog -- that outlines the 2012 US PTO performance in processing patent applications. Wow! Are you excited or what?
In a nutshell, the US PTO processed more patent applications in shorter times than their goals for 2012 called for and they improved across the board in all categories (see link above). Some highlights include:
Average first action pendency (21.9 months versus target of 22.6 months)
Average total pendency (32.4 months versus target of 34.7 months)
Patent applications filed electronically (97.1% versus target of 96.0%)
Number of applications filed increased from 537,171 in FY 2011 to 565,566 in FY 2012 (5.3% increase in both years)
Number of applications awaiting action dropped from 690,967 in FY 2011 to 633,812 in FY 2012 (4th consecutive year drop)
Total number of pending applications also decreased, dropping from 1,168,928 in FY 2011 to 1,157,147 in FY 2012.
For the next few years though, the sledding gets much tougher with respect to first action and total pendency. For first action pendency, the annual performance target drops from 22.6 months for FY 2012 to 18.0 months for FY 2013 and 15.8 months for FY 2014, and for total pendency, the annual performance target drops from 34.7 months in FY 2012 to 30.1 months in FY 2013 and 26.1 months in FY 2014.
In case you think Big Pharma is completely powerless against the patent cliff and the forces of generics, we have ths new study from Express Scripps with some counter data. It seems generics have made a whopping impact on drug prices in 2012 -- as prices for these drugs dropped by an amazing 21.9% since last September. Markedly different from the meager 2.9% decrease seen for the same drugs in 2011.
On the other hand, a "market basket" of widely used brnad name drugs was able to command a 13.3% increase in price during that same time period -- in a time when inflation was only 2%. Clearly, with loss of revenue facing them from drugs that have gone "over the cliff", Big Pharma has been able to counter by some degree with substantial price increases on brand name drugs. Biologics in fact were able to up their prices by 22.6%. Still these types of branded "specialty meds" represent only about 21% of the total market with generics making up the rest. So Big Pharma has to work hard to squeeze profits out of the existing pie.
Generics are making there impact clearly. Anyone doubt that pay for delay may actually prevent this from being worse (from Big Pharma point of view)? And Express Scripts uses the generic price drop coupled with the big biologics increase to lobby for more emphasis on getting a biosimilar pathway in place so it can start profting from big drops in the biologicals arena too when the first biosimilar drugs are approved. Not such a rosy profit picture for Big Pharma unless they have the ability to get new brand products on the market and extend the indications for the existing brand drugs -- before either generics or biosimilars start eating their lunch.
Fierce Biotech this morning reports on the top 10 Big Pharma companies investing in China. Clearly, these companies are jockeying for position to be able to exploit commercial opportunities in the BIG Chinese market. In many cases, these is seen as essential to future company growth and survival given some of the issues with patent cliffs, and stagnant growth in many of the traditional Western markets.
Pharma investments are aimed at gaining market access and in particular gaining face time with health budget decision makers. Investment in China is certainly seen by the government to be a "good thing" and goes a long way toward establishing credibility. Hooking up with local drug companies and developers is a good way to enter the market. Alliances with local players may ultimately be a necessity for the Western companies to crack this market -- and many have established early relationships accordingly.
This is interesting to me in that many of these same companies right now are trying to eliminate China-produced raw materials from their supply chains. Yet, if their goal is to crack the Chinese market and to partner with local developers and manufacturers to do so, then how can they eliminate Chinese suppliers in the long-term? They can't. You will want to source locally for manufacturing support -- maybe not some specialty items but bulk of raws will likely come from local sources. The economic drivers and incentives are just too great in my view -- and local goverment will expect it.
So time is now to start qualifying the best local suppliers, and to educate and incentivize them to continually improve their quality systems in anticipation of them being integral to a long-term supply chain. It only makes sense.
The Cell Culture Dish reprinted data from Nature Biotechnology that lists the top 10 selling biological drugs in 2011. It also indicates that 7 of the top 10 drugs are produced in CHO cells, 2 in E. coli, and 1 in mouse myeloma. So despite reports that more clinical development progams may be working with systems other than CHO -- particularly a resurgence in prokaryotic systems -- the dominant sellers are still in CHO and will remain so in the foreseeable future.
Should we blame all the higher costs of clinical trials on the regulatory bodies, like FDA? No, suggests a new study from Tuft's Center for the Study of Drug Discovery. The study claims that one 1 in 5 procedures performed in late stage drug development is done to pursue "supplementary secondary, tertiary, and exploratory endpoints." This adds on average $1.1 M per trial. Across the industry that accounts for $4B to $6B per year for non-core endpoints -- enough to fund 2 x 2 Presidential campaigns!
Tuft's says that biopharm and pharm companies should take heed of this study result and can act on it to reduce development costs. Maybe that would save a few jobs in this industry. It certainly would likely make shareholders happier. See Fierce Biotech.
A new survey (BioTrends Research) of oncologists in the US and around the world indicated that 42-45% on US docs would take a "wait and see" attitude toward prescribing biosimilar mAbs when they first become available. This contrasts with 25% docs in France and 33% docs in Germany for example. The same US docs also said that 75-80% of them would prescribe biosimilar ESAs or G-CSF when available.
So US docs are being more conservative in their approach with the mAbs to treat cancer -- like rituximab, trastuzumab, cetuximab and brevacizumab. They apparently want to see how these drugs perform in patients post-approval (just not their patients first!).
I'd find that surprising at first but it really isn't. Medicine is pretty conservative field -- afterall is based on "do no harm" as a first precept. What personal experience I have with a decision like this does mirror this behavior. My daughter is on Enbrel for AS. Her rheumatologist basically looked at the innovator drugs Enbrel, Humira and Simponi -- all anti-TNF alpha drugs, all approved from well known companies -- and opted for Enbrel as his first choice.
Why? Because he had the greatest clinical experience with it. Most of his patients on this drug class had seen it. It had been approved first and was around the longest. Also, he has a family member on it who has experienced success with it. Bascially, given the choice he'd follow the timeline of approval -- Enbrel, Humira and then Simponi -- given no other information. It's logical. Let experience be my guide. And that's with approved, innovator drugs. So it's not surprising that the first biosimilars may face some skepticism until they get some experience in the real world -- kind of like a new job applicant. See Fierce Biotech.
The only thing that is likely to change this dynamic in my view is a profound price difference between the two drug types and some powerful government or third party "incentives" (positive or negative) to pick a cheaper choice.
It's official. You can ingnore clinical trial results from R&D and very early stage studies. Don't be investing ten's of millions of dollars in upfront payments. That's for sure.
A recent study confirms that 90% of early positive studies failed to contnue with such results in late stage trials. In fact, it appears that 98% of follow-on studies that previously saw an early stage "big effect" failed to reproduce it in susequent trials.
The reason almost certainly? Small sample numbers. You can't do adequate science with very small samples. The random positive responses tend to distort trial results until you build the numbers in late stage trials. Surprise, surprise given all the late stage crashes that we've seen over the past several years. I'm sure I could knock you over with a sledge hammer about now. See Fierce Biotech.
Here's a piece in Patent Docs blog referencing the IPO Association's 29th annual list of the top 300 organizations receiving US patents. It seems Biotech/Pharma patent issuances are up again in 2012 (by 4.9%) but the number of applications is down (by 12%). This continues a trend seen since 2010.
Fierce Biotech published thumbnails on 15 top late stage drugs that it says analysts have pegged at having a chance to exceed $1 B in peak year sales. Predictably, most of these come from the biggest of Big Pharma and attack some of the reallybig disease classes like breast cancer or Alzheimer's. A drum roll please for our list:
In 2012, we've seen our share of big Phase III flame outs, as high profile drug programs have failed utterly in meeting their clinical endpoints. Many of these were being conducted by companies counting on the success of these projects to fill in flagging sales due to recent patent expiration of blockbusters. They also were trying to make their mark in lucrative therapeutic categories that have few good alternatives now.
In 2012, all of these hit an ice berg. Fierce listed them in descending order of magnitude of disaster but maybe you have additional nominees or a different order? Feel free to comment or reorder to your desire. Drug development though remains a tough business.
According to a new report by GBI on the global biopharm market, we can expect it to grow from $138 B in 2011 to more than $320 B by 2020 upping biopharmaceutical's percentage of market from its current 15.6%.
The report says more companies will incorporate disposables into their manufacturing to become more efficient and will use more microbial systems too. I'd like to see the data supporting the latter and what products that are expected to be made using microbial systems -- instead of say CHO cells.
Biosimilars are expected to boom (surprise, surprise). GBI is projecting biosimilar sales in the US to reach $9B by 2020. India, China and Korea are also expected to have very active biosimilar programs. India alone has more than 20 active biosimilar companies now with 55 products on the market -- including products like Enbrel and Rituxan that are still on patent in many Western countries. The South Korean government is heavily backing the biosimilars industry and has a goal of taking 22% global market share by 2020.
I guess that depends if you read the Pharmalot version or the Fierce Biotech version of the recent study published by BDO.
Sooooooooo. Either we focus on Small biotech's decreased R&D spending, job cutting and dampening revenues, or on Big biotech's (> $50 M revenues) increase in R&D spending, hiring rebounds and rising revenues.
Apparently, 90% of small biotechs reported losses in 2011 by an average of 12%, and decreased workforces by 3%. The industry as a whole though grew to $76 M from $62 M, and large biotech increased staff by 16%.
Twenty-four percent of Big guys raised equity capital while 64% of small biotech had to go that route as they had little cash from operations to rely upon. At years end, biotechs, on average, held 2.63 years worth of R&D spending in cash or liqud assets. And, a model employing virtual biotechs is gaining momentum.
Let me translate that headline for you. It's based on Moody's Investor Services revising its outlook for the global pharma industry as "stable". Since 2007, Moody's had given the industry a negative credit rating.
Why the change? Moody's believes the Industry is stable as it has hit rock bottom and will reach an earnings trough (caused by its latest patent cliff) in late 2012. Then there's no where to go but up from here. So after the industry has lost Lipitor and Plavix to generic competition -- what else can match that rapid free fall?
Nothing. To paraphrase the Doors, "Pharma's been down so god damned long, that it looks like up to we." Maybe its not time to crack out the bubbly though.
Luke Timmerman put together his definitive list of biotech movers and shakers that you should follow on Twitter (or at least a group of interesting Tweeters who offer insight in their areas of expertise). Luke should know, so check this esteemed "A list" out.
This just in from Forbes via PharmaGossip. Big pharma has been counting on emerging markets to help it fill in revenue gaps from big selling products that have been steadily coming off patent. Guess what?
According to the Forbes piece, citing Ernst & Young, big pharma's revenue estimates have been a tad overstated -- by a mere $47 B. It seems emerging markets are competitive too and local competitors can sell generics at 50% or less the price. Not to mention local governments are looking to save money and actually support sales fo generics. Who'd thunk?
The compound annual growth rate (CAGR) of the orphan drug market between 2001 and 2010 was 25.8 percent, compared to 20.1 percent for a matched control group of non-orphan drugs. According to the Reuters report, “this data, combined with the increasing number of orphan drug approvals, suggests that the CAGR of launched orphan drugs will outshine that of the non-orphan control drugs over the next 30 years.”
The data shows that trials focused on orphan drugs are significantly shorter and have a quicker review time than trials involving non-orphan drugs, and the report points to other positive factors, including favorable reimbursement, fewer hurdles to approval, lower marketing costs, and faster uptake. See PharmaTech Talk.
Pharmalot published a recent surveyconducted by Cutting Edge that looks at how much and how money is being spent by pharma companies on outcome research. It used to be getting approved was enough. Now companies need to show their product actually does something better for patients in order to increase their chances of third parties paying for the treatments.
At the 50 largest drugmakers, spending levels average $7.5 million on outcomes research. In the US, for instance, economics and outcomes research is typically being used to support 10 brands, although the 20 largest drugmakers are supporting nearly 20 brands, and the average spending per brand was $493,000. Budget changes among all companies compared with 2011 rose 42 percent, but among those who are clearly spending more, increases rose by 66 percent, on average. Small drugmakers report the largest increases at 79 percent.
What happens if you don't do outcomes research well and don't get good third party uptake? Looking at drugs like Dendreon's Provenge or HGS Benlysta might give some insight.............
The article on "innovation crisis myth", replete with its low estimates for drug development costs, that appeared in last weeks British Journal of Medicine sparked more than a little commentary from various quarters. As an emotional issue, this one resonates well.
Here is Derek Lowe's post on this In the Pipeline as well as today's response from the BMJ articles co-author Donald Light. Derek is a vocal critic of the low ball drug development cost estimates. Dr. Light, as is his wont, sticks to his guns and repeats his claimed cost of $43 M for the "net, median corporate cost of Development".
You can read both their points and decide who you think is closer to correct. Despite the heavy qualification of what Dr. Light's figure purportedly represents, I still think he is way low (by a factor of 10). Though he likely is also correct about the $1.3 B industry figure as being grandly inflated -- which of course leads to a ripe ground for controversy.
A new report from IMS Health that is being touted by the Generic Pharmaceutical Association (GPA) claims that generic drugs saved US consumers more than $193 M in 2011 and more than $1 TRILLION over the last 10 years.
Some more fun facts as to how generic drugs fared in the US over the past year:
Savings from generics rose by 22% the most in a single year since 1998
Savings from generics that hit the market since 2002 were $481 M in past 10 years
Nearly 80% of the 4 billion prescriptions written last year were for generics
BUT, the 20% of prescriptions for non-generics accounted for 73% of total cost of drugs
The surge in generics prescriptions was attributed to the increase in drugs coming off patent, such as Zyprexa (antipsychotic), Lipitor (cholesterol), and Concerta (ADHD). IMS forecasts that generic utilization will reach 87% by 2015.
Here is an analysis by Fitch Ratings projecting how many new drugs the FDA will approve in 2012. Fitch creates its estimate by following the activities of Abbott, Amgen, AstraZeneca, Bayer, BMS, Eli Lilly, GSK, J&J, Merck, Pfizer, Roche, and Sanofi.
Their prediction for 2012 is that it won't match the 30 approvals seen in 2011. Year to date, there have been 14 new approvals in 2012 versus 18 for the same period in 2011. And, filings are down for the second half of 2012. So expect a down year compared to last says Fitch.
So much for a reinvogorated pharma R&D model and pipeline -- at least using these numbers as "the evidence" as many commentators did in 2011. On the other hand, Fitch's analysis also depends on the above companies being the representative market basket of filers -- if that mix starts to change radically then using it as the sole indicator will result in flawed projections. One could argue other firms could be included in the mix.
Maybe not a buzz word, but apparently not embraced if the results of this survey are taken at face value. In this bioPULSE survey, 80% of industry respondents said they have used QbD methods at least once, and only 5% say it is worthless, but............only 29% say it is used routinely in their job in biopharmaceutical development. Only 3% in tech transfer jobs reported using it (though that may reflect low participation by tech transfer functions in this survey)
Lack of training may be one reason for low use. Many respondents (20%) believe that use of QbD will delay regulatory filings and 15% actually believe it will delay approvals. If the FDA isn't an advocate of using QbD who is? Only 26% of respondents believe use of QbD will expedite approvals.
The survey conductors believe that many respondents don't fully understand what QbD is. Perhaps, even more educational efforts are needed toward what QbD means to biopharm development and how it can help.