The Big Red Biotech Blog

Pharma R&D Spending vs Other Industries

Here's an interesting post from the In the Pipeline blog that comments on the amount of R&D spending that is seen in Big Pharma versus what occurs in all sorts of other industries.  It turns out that Big Pharma spends more as a percentage of sales than any other industry besides semi-conductors.  That is eye opening to a degree -- eh? 

The post also provides a link to the Booz study that was the source of this information and lays out R&D spending for a host of industries.  It is a good reference piece to have I'm certain.

Posted by Bruce Lehr May 20th 2013.  

Innovation as Illustrated by Beer

It's not often that you get a blog post that talks to innovation and uses references to both Homer Simpson and beer to drive home its point.  Today's award goes to the Innovate on Purpose blog for -- well -- bringing us this innovation in writing.

The thrust of the article is that when aspects around the product become the focus - rather than innovations in the product itself -- you know you've reached the point of diminsihing returns.  This kind of hits home in the pharma industry in the past decades where maybe as much effort was put in evergreening through reformulation, new delievery systems and maybe indication extension as was put in developing novel meds in many instances.  Maybe that's why pharma return on R&D has been so dismal the past decade (if not longer).

Time to get back to real innovation with the actual PRODUCT -- for new meds, new mechanisms of action that effectively address unmet needs and perform BETTER than what we have already.  BTW - I think we're starting to move in that direction again.

Posted by Bruce Lehr May 17th 2013.

 

R&D Spending may not be ALL Bad

Fierce Biotech yesterday reported that R&D spending was up as many significant biotechs -- like Gilead, Amgen, Celgene, Shire, Regeneron, Onyx and Biomarin.  In other words, many of the darlings of biotech investors -- companies who have experienced significant share price appreciation of late. Overall, the top 10 biotechs spent $11.8 B on R&D in 2012 -- nearly a 15% increase over the prior year.

So while it may be very trendy in Big Pharma to be trimming the internal R&D budget in favor of seeking outside collaborators or properties to fill the pipeline, focused, smart R&D spending in biotech seems to be working.  That suggests R&D spending is not inherently BAD as you could be led to believe if you spent all your time listening to Big Pharma CEOs and their R&D Heads. Rather, R&D appears to require focus with spending on the right projects at the right time -- while minimizing waste -- not eliminating the budget.

This suggests that the top 10 biotechs will continue to thrive and may well find themselves to be the well sought after beauties at the ball. That means possible acquisitions, partnerships or licensing deals on the horizon -- and expect the Big Pharma guys to be the callers.

Posted by Bruce Lehr May 9th 2013.

Build Blockbusters One Block at a Time

Fierce Biotech reports that Novartis CEO, Joe Jimenez, says that the company will switch away from expecting single indication drugs to result in blockbuster status (i.e. > $1 B in annual sales).  Instead, Novartis will introduce drugs, gain approval as quickly as possible, and then extend the drug's indications -- perhaps in niche markets -- to cobble together its $1 B in annaul sales across all the indications.

In other words, they will continue to do what they have been doing in cancer fields for a long time. Just build em one block at a time.

Posted by Bruce Lehr Mar 4th 2013.

One Little Indian

Late last year, GSK said it would release (anonymous) patient level information from clinical trials to allow researchers more access to provide independent analytics.  It is sticking to its guns by endorsing the AllTrials movement to do just that.  GSK also says that it is working on its web porthole that will provide researchers the promised open -- yet secure -- access to trial data.

Glaxo Clashes With PhRMA Over Data Disclosure // Pharmalot.

PhRMA -- which GSK belongs to -- and the Association for British Pharmaceutical Industry however both demur, saying it is a bad idea.  PhRMA claims that this level of disclosure will inhibit trial participants from signing up and also will promote second guessing of regulatory decisions -- both ideas being BAD in their view.

I guess they wouldn't be in favor of instant replay in baseball either?  Oh wait, I got them confused with Bud Selig.

Posted by Bruce Lehr Feb 5th 2013.

 

AZ Crashes into Speed Bump in Earnings

AstraZeneca reported its fourth quarter earnings today and it was a t least as bad as the analysts had expected.  And according to CEO Pascal Soriot, you can expect more downturn into next year too with a "mid- to high- single digit percentage" drop in sales.

AZ has already announced that it is killing a few big program in its pipeline. Soriot further communicated that is will not be buying back its own stock and will watch its dividends.  But to soften blow, profit magins will also suffer. What?

Soriot says, "We will be open to more disruptive acquisitions, larger acquisitions if they make sense."  Analysts quickly latched onto companies like Shire being a possible target -- such an acquisition would be expensive and much more than the $20 B mark being propped up as the current barrier Big Pharma wished to stay under. 

Surprisingly, AZ stock only dropped about 2.7% -- maybe all discounting has already occurred.  Need to check to see if Shire is going in the other direction or not.  But if you are a company with asserts to sell -- good or bad -- you might want to get Soriot on speed dial. This is especially true if you have more than a $20 B property to move as analysts believe there won't be much competition up in that stratosphere.  Likely true. See Fierce Biotech and In the Pipeline.

Posted by Bruce Lehr Jan 31st 2013.

New Global Academic Alliance To Speed Drug Discovery

Six leading institutions have formed an alliance designed to accelerate the translation of academic research into usable medicines and therapies.  The six include:

• The Centre for Drug Research and Development (CDRD), Canada
• Lead Discovery Centre (LDC), Germany
• The Scripps Research Institute, Scripps Florida, United States
• The Centre for Drug Design and Discovery (CD3), KU Leuven R&D, Belgium
• Medical Research Council (MRC) Technology, United Kingdom
• Cancer Research Technology (CRT), United Kingdom

PharmTech Talk » New Global Alliance Aims To Speed Up Academic Drug Discovery.

The six organizations plan to facilitate international cooperation, develop standards and performance measurements, share best practices, expertise and resources, and collaborate on drug development projects.  Ultimately , they will work together to improve the conversion of global early-stage research into much-needed new therapies. Currently, they have a portfolio of more than 165 innovative therapeutic projects targeting significant unmet medical needs. 

This is yet another shot at improving translational activities.  Lack of good translation seems to be a popular whipping boy as to one major element that plaques the current pharma model. We'll have to see if efforts by this group or others like NIH really have a winning effect. 

Can't Make Drug on Purpose? Why not Re-purpose?

Roche and Broad Institute are the latest groups to partner on "re-purposing" drugs.  That is to say, Roche will give Broad insititute 300 or so drug candidates that have failed in clinical studies with their original "purpose".  Presumably, these drugs have been found to effect a specific target and have shown safety in humans before -- so the hope is that if you can find a disease where these show a therapeutic effect then you are a lag up in getting the drug more quickly to market (with appropriate clinical trials, etc).

Some may view this as throwing stuff against the wall and seeing what sticks -- others think it is a rationale shortcut to try that has small relative cost and perhaps a big upside if you can find a good target. This is becoming a more popular approach to try with libraries of compounds sitting around in various companies, and apparently has academic centers like Stanford, Broad, or NIH who are willing to screen.  Given that's the case, then we shoudl have data sooner rather than later as to whether this is really worth the effort or not........See In the Pipeline and Fierce Biotech.

Posted by Bruce Lehr Nov 29th 2012

20 Major Pharma-Academic Alliances in 2012

Fierce Biotech reminds us of 20 major alliances that were established between pharma companies and academic institutions in 2012.  This reflected a shift towards down-sizing R&D groups in pharma companies -- particularly those with steep patent cliffs over the past 3 years -- and more investment with outsource partners.  In this case, those partners were academic institutions.

20 Major Pharma-Academic Alliances in 2012.

Check out the list and learn where Big Pharma is placing its bets and seeding projects that could yield big-time products in the future --- at least that is the strong desire.

Posted by Bruce Lehr Oct 3rd 2012.

10 Pharmas Form Non-profit to TransCelerate Their Profits

Or is it to just stem their R&D losses which have continued to climb? 

Regardless, 10 Big Pharma companies announced they formed a new non-profit organization in August to speed up the R&D of new drugs and save some money. These include the big names like:

• Abbott
• AstraZeneca
• Boehringer Ingelheim
• Bristol-Myers Squibb
• Eli Lilly
• GlaxoSmithKline
• Johnson & Johnson
• Pfizer
• Roche
• Sanofi

10 Pharmas Unite To Combat R&D Woes // Pharmalot.

The 10 companies state the new organization's goal is to boost the quality of clinical trials and speed up the typically slow pace of drug development.  New paradigms they believe will lead to substantial cost savings. Specifically, the group has agreed to focus on five initial projects:

• Development of a shared user interface for investigator site portals
• Mutual recognition of study site qualification and training
• Development of risk-based site monitoring and standards
• Development of clinical data standards
• Establishment of a comparator drug supply model

These pre-competitive type projects are expected to improve efficiency and reduce costs leading to better returns on R&D investments.

The FDA is on board with the idea.  Said Janet Woodcock, FDA's chief of drug regulation, "We applaud the companies in TransCelerate BioPharma for joining forces to address a series of longstanding challenges in new drug development. This collaborative approach, utilizing the collective experience and resources of 10 leading drug companies and others to follow, has the promise to lead to new paradigms and cost savings in drug development, all of which would strengthen the industry and its ability to develop innovative and much-needed therapies for patients." 

Here. here. See Fierce Biotech and PharmaTech Talk for more.

Posted by Bruce Lehr Sep 24th 2012.

Good Article on Security of Virtual Biotechs

Here is a good article from Stewart Lyman at Xconomy (I find I like a lot of Stewart's articles) regarding the solidity and security of virtual biotechs. The article questions whether this is a model that we'd want to perpetuate as a dominant form. Why not?

The basic argument against this type of company has two main prongs.  The more serious of the two in my view is that these companies are often built on a research idea or premise that they acquired somewhere else (often academia) and don't have the wherewithal to confirm whether the science is sound. If these companies embark on a development program with the underlying science being bad, they are doomed to fail.  Stewart cites many cases where the literature is either flawed (retractions) or non-reproducible. See the Amgen and  Bayer studies on this issue.  Reproducibility was less than 11% for "landmark" cancer papers for example.

The second argument is because the companies are virtual, they don't contribute to the development of vibrant biotech clusters. Clusters help sustain an ecosystem by providing a steady labor pool and a critical mass of intellectual power and innovation. Leading biotech clusters continue to draw investment in places like Boston, San Francisco and San Diego. Virtual companies -- are well -- virtual. They don't provide a lot of infrastructure and contribution to clusters.

The main reason virtual biotechs are popular of course is that they reduce the capital needs of the company.  The company really then focuses on a good management team and hopefully a good molecule/technology. But if the quality of the latter is compromised, that's where the idea falls apart. And of course, these companies are really just building a project to be sold.

Posted by Bruce Lehr May 4th 2012.

Tufts Report on Academic-Biopharm Partnerships

A new Tufts Center for the Study of Drug Development study shows academic medical center (AMC) and biotech partnerships are increasingly important to basic research and developing new medicines. The study looked at 3000 grants to AMCs from 450 biopharm sponsors through 22 medical schools. Their conclusion is that the nature of these partnerships is continuing to evolve and that they have not yet reached their full potential.

The report looks at 12 primary partnership models of AMC-biopharm collaboration. There is a shift occuring toward more risk- and resource-sharing models rather than the more traditional unrestricted research or fee for service models of the recent past.  Rather a range of partnership models is arising from corporate venture funds to pre-competitive research centers to academic drug discovery centers.

The report concludes that in the face of an increasingly challenging R&D environment (often discussd here) and overall global competition, we are likely to see the continued proliferation of AMC-biopharm partnerships.

See full report. Download Tufts AMC-biopharm R&D study

Posted by Bruce Lehr Apr 30th 2012.  

Pharma R&D Follies

Here's a couple of links to blog posts outlining possible reasons that Big Pharma R&D is experiencing such a low return in bringing new products to market --- especially over the last 10 years.  One factor that is discussed is -- CULTURE (see Life Sci VC and In the Pipeline). 

The basic premise?  

Fundamentally, I think the bulk of the last decade’s productivity decline is attributable to a culture problem. The Big Pharma culture has been homogenized, purified, sterilized, whipped, stirred, filtered, etc and lost its ability to ferment the good stuff required to innovate. This isn’t covered in most reviews of the productivity challenge facing our industry, because its nearly impossible to quantify, but it’s well known and a huge issue.

These effects are variously attributed to a multitude of large cross functional committes, with all their associated bureacracy, making all the decisions very s-l-o-w-l-y......, risk aversion (i.e. ass covering) and unwillingness to kill bad projects before they've dragged on past their due date, and mega-mergers or internal reorgs that constantly stall projects while all the new players and pieces get assembled and reassembled. All of this plays havoc on continuity, quick decision making, empowerment of development teams, nimbleness, innovation, blah blah blah --basically all the positive characteristics organizations say they are striving for.

But the basic conclusion, for now, is that Big Pharma's culture is its own worst enemy when it comes to R&D productivity.  There seems to be a need to simplify and empower teams if you really want to see any results in an acceptable time frame.

The stakes are high too. If you doubt that, just look at this article from Fierce Biotech that details the R&D spending of the Top 10 Big Pharma -- which is topping $70 B per annum now.  Then look at the productivity of many of these same organizations as judged by new drug introductions in the last 10 years........not very pretty.

Posted by Bruce Lehr Apr 25th 2012.

 

Bio Drug World is a Changin'

Nothing Earth-shattering here by any means, but a couple interesting reads in the blogs by Derek Lowe (via Matthew Herper) and an article by Luke Timmerman dealing with CHANGE in the world of drug development and commercialization.

The Herper/Lowe, piece to a degree, laments that the heads of drug companies may not value the "human capital, i.e. scientists" involved in the drug discovery process.  And as the economic gap widens between the number of new drug approvals (bringing in much needed revenue) and the high cost of developing and marketing new drugs -- well at present it looks like R&D scientists are paying for it with their jobs. The observation is made that maybe this isn't the best strategy to employ in a research/discovery driven business.  Nevertheless, there is also a hard economic reality and SOMETHING different clearly has to be done -- as the current model isn't sustainable any longer.

The Timmerman piece talks about some of the changes that are taking place on the commercialization of drugs that contributes to lower sales and higher costs - exacerbating a potential need to cut R&D staff (though that response is a choice).  On the comercialization side, it is not good enough to just get your drug to the market anymore.  You actually need to show it meets an unmet need and quite frankly works better than exisiting alternatives -- otherwise me, you, the insurance companies and the government don't want to pay for it. The whole concept of "comparative effectiveness" is bringing a new discipline to drug development -- and sets a higher bar too.

The two articles demonstate the World has changed.  An for an industry to survive in response to meaningful change -- it has to adapt or head for extinction (in this case layoffs or ceasing to exist as an independent business).  It has always been thus.  Just not in the (bio)pharma industry up till now.

Posted by Bruce Lehr Apr 2nd 2012.

 

Acquire, Acquire, Acquire......No, Divest, Divest, Divest

The tide has officially no turned it seems.  Over the past decade (or more) Big Pharma wanted to get BIGGER and BIGGER through mergers and acquisitions.  Now, as pipelines dwindle, patent cliffs are reached, and revenue holes develop --- its time to turn the ocean liner many pharma companies have become to get smaller smaller smaller and fast.

Abbott officially kicked off the activity with its break up into a diagnostic and pharma company (now called AbbVie).  Reports are now circulating that Pfizer's Ian Read wants to to begin his break up plan first discussed way back in March of last year.  See In the Pipeline and Bloomberg for more.

In general, the market has thus far rewarded Pfizer's stock price for this proposed move, and the closer it seems to reality the more the investors seem to like it.  Analysts seem more torn on the long-term (not short term) wisdom of such a move as Pfizer's portfolio does appear to provide some diversification protection and one could argue that the non-pharma businesses are doing better than the "core pharma" property that Read wants to invest in.

Needless to say, in a monkey see monkey do world, if two very large players decide to follow this path, many more lemmings are sure to follow.

Posted by Bruce Lehr Mar 29th 2012.

Which Pharma Spent The Most R&D On Each Drug?

Pharmalot just published (via Forbes) an analysis of Big Pharma R&D spending for period 1997-2011.  The data was provided by InnoThink Center For Research In Biomedical Innovation and Thomson Reuters Fundamentals via FactSet Research Systems.

Which Pharma Spent The Most R&D On Each Drug? // Pharmalot.

From this, one could calculate the dollars spent on R&D/new drug approved for each company concerned.  The link above provides a Table of the results for 12 Big Pharma (biotech).  Amgen, it turns out spent the least at $3.7 B per new drug (11) approved during this period.  AstraZeneca, it turns out spent the most at $11.8 B per new drug (5) approved during this period - OUCH!  This coupled with products reaching the patent cliff helps explain why the latter is experiencing really tough times now and cut over 30,000 jobs during the period.

Even $3.7 B per drug at Amgen seems like an astronomical amount of money.  It's no wonder the industry it trying to rethink its business and R&D model.  Clearly something better change when you are spending$3.7 B to $11.8 B PER DRUG.

One can't help but think to some degree this "ranking" over the period has a little to do with luck as well given some of the vaguaries in the approval process and perhaps timing of some projects relative to submission dates in this period.  I'm not certain you can state one company has any better development model than any other based on this data.  You can say Amgen made out slightly better than its peers for the period -- but who's to say that will hold up over the next period?  We're going to have to track some of these "new models" at companies like Novartis, GSK and Sanofi to see if they really see improvements.

Posted by Bruce Lehr Feb 10th 2012.

SEE some more commentary on this subject from In the Pipeline.

GSK DPU Score 4-3 (or was it 6-5)?

GSK management today announced the results from its first 3 year review of its "novel" Discovery Performance Units.   DPUs were formed in 2008 as a means of focusing drug discovery activities in some defined areas and were intended to bolster the pipeline, control costs, and increase ROI in R&D.  GSK has touted them from time to time ever since, so how'd they do in this very first time review?

Drumroll please. Well of the 38 DPUs, 3 will be terminate and 4 new ones will be formed (so now we have 39).  Six (6) DPUs will receive and increased budget and 5 will have their budgets cut. GSK CEO Andrew Witty says he is "quite satisfied" with the results so far.  GSK reports that's its R&D ROI rose from 11% to 12%, while their target remains at 14%. The overall R&D budget meanwhile is supposed to stay flat at $3.7 billon.

More to the bottom line, GSK plans to file for approvals on 4 new drugs and vaccines in 2012, including Relovair for COPD, Promacta for hepatitis C, and trametinib for melanoma.  Six other DPUs have late stage projects. In the next three year cycle, 30 more programs are targeted to move into late stage development. See Fierce Biotech and In Vivo Blog.

Per usual in this industry, the jury will remain out on DPUs until more than a 3 year track record is established and until several high revenue generating drugs actually hit the market.  One might be cautiously optimistic at present.

Posted by Bruce Lehr Feb 7th 2012.

Pharmalot Follows Pharma Investments

I liked this article from Pharmalot today that tracked Big Pharma's investment in R&D and Manufacturing facilities in the periods 2003-2006 and 2007-2010 respectively and collated the top 10 countries of the world where this occurred for each period.  The results are interesting (at least to me). 

Follow The Money: Where Pharma Is Investing // Pharmalot.

Top 10 Countries 2003-2006

1. USA  - $38.7 B
2. Ireland - $37.1 B
3. Singapore - $27.6 B
4. China - $19.7 B
5. Germany - $14.8 B

Rounding out the top 10 for this period were Spain, France, Puerto Rico, India and Sweden. Let's look at how the picture has changed over the next period.

Top 10 Countries 2007-2010

1. USA - $73.3 B
2. China - $29.8 B
3. Singapore - $17.7 B
4. India - $16.8 B
5. Ireland - $16.0 B

Rounding out the top 10 for this period are Italy, Germany, Switzerland, Canada and Brazil. You can see that the Asia-Pacific region is being enriched in the top 10.  European countries are dropping on the list, and 4 fell out of the 2007-2010 top 10 though 2 new Euro countries snuck in. 

The USA still is the lead country for investment though.  Someone please take note.  We have a leadership position and it would be a good time to implement policies that helped to cement that lead.  European financial issues and controls may be eroding their position as we write -- and Puerto Rico's new tax policy may hasten their further demise as well.

It appears indisputable to me that activity will continue to flow to the East if that's where the new investment in R&D and manufacturing is gaining momentum.

Posted by Bruce Lehr Jan 12th 2012.

 

 

Revenue Challenged Big Pharma Reveal Hopes to Cope

Both Merck and Eli Lilly were in the news today as two companies extremely revenue challenged due to expiring drug patents on top sellers with replacments not ready for prime time to pick up the slack.

Merck CEO, Ken Frazier, maintained that he was pushing his licensing group to pick up the pace to help fill in pipeline gaps -- and indicated he thought this was the future of the industry. He said Merck would be looking for early stage deals and in particular was interested plumbing the hepatitis C arena for new opportunities.  Merck is banking on its big bankroll in helping it see its was through this pipeline dip. See Fierce Biotech.

Lilly CEO, John Lechleiter, was more reduced to grasping at his pipeline to save him.  Lilly announced today that it expected to see a $3 B revenue drop from loss of patent protection on Zyprexa as the generics moved in.  Lechleiter continues to eschew big mergers and is banking on the 12 late-stage drugs Lilly has in its pipeline.  This did not prevent a price hit to its stock today however.  One big pipeline test that looms is for Lilly's Alzheimer's drug, solanezumab -- that's trial results should be shared in Q3.  There is a lot riding on this and one wonders what might happen to Lechleiter's plan (or even Lechleiter) should some of these key dozen projects go down. See Fierce Biotech.

One must remember though that Hope is not a Strategy.

Posted by Bruce Lehr Jan 5th 2012.

 

Preaching to the Choir on Merck's R&D Spend

I agree whole-heartedly with Mike Wokasch's comments on industry views of Merck's CEO Ken Frazer staying the course with R&D spending.  I do think it is consistent with Merck's mission to remain a leading supplier of innovative medicines that are clinically effective and differentiated -- and that can prove their value.

See post from Pharma Reform blog.

Let the view from the cheap seats from analysts who are interested in short-term financial results be damned. AMEN.

Posted by Bruce Lehr Dec 16th 2011.

The Big Squeeze Coming in Pharma

From In The Pipeline, it quotes Roche CEO Severin Schwan commenting on trend whereby pharma companies will divide into two camps - the R&D intense or the generics/biosimilars.  Schwan predicts that there will be companies that have managed to find drugs new enough and efficacious enough to convince regulatory agencies and payers that they're worth the price. And you'll have the generics competing on cost/price. The guys in the middle, the me-too drugs and line extensions and things that don't work as well as anyone had hoped - that's going to get squeezed, and if that's all you have in your product portfolio, you're going to get squeezed, too.

 

 

 

Posted by Bruce Lehr Dec 12th 2011

Glaxo Scientists ‘Live or Die’ With Project in Research Overhaul

Related to the previous post no doubt, three years ago Glaxo reorganized its R&D department into smaller, presumably more empowered and entrepreneurial units (called DPUs) to hopefully improve the level of success.  The catch?  The Discovery Performance Units are evaluated every three years to determine how well they've met milestones.

Glaxo Scientists ‘Live or Die’ With Project in Research Overhaul - Businessweek .

If they haven't met their goals?  Then they can lose funding, be disbanded and reassigned to other projects. It's the sink or swim approach to R&D.  The first three year cycle evaluation is upon us so we will get some idea as to how this is actually working -- or if it is working. Some rivals say the three year time line is too short.  We shall see.

Posted by Bruce Lehr Dec 4th 2011.

Drugmakers Go From Abundance To Scarcity

A new report from Oliver Wyman puts numbers to the dismal trend seen in Big Pharma R&D from 2005-2010 as compared to "boom" years of 1996-2004.  The down period was named the "drought" years and some of the more disturbing statistics appear below:

Drugmakers Go From Abundance To Scarcity // Pharmalot.

• R&D spending doubled to an average of $125 billion during the drought period, from $65 billion in better times. And the ROI dropped like a stone to an average of $75 million in sales during a product's fifth year for every $1 billion spent on R&D, down dramatically from $275 million in better days.


• The development drought also led to a declining economic value of approved drugs, to an average $430 million from $515 million. 


• Drug approval itself plunged about 40% in the dry years, amounting to 22 FDA approvals per year on average, versus 36 in the better years.


• Drugs produced an average of $9.4 billion in fifth-year sales in the dry period, half of the $18.3 billion during the more productive years. Fewer blockbusters and fewer new drugs overall contributed.


• In all, 17 of the 20 companies faced productivity declines, though Novo Nordisk, Bristol-Myers Squibb and Johnson & Johnson did better than most.  Dips in high levels of productivity hit everyone though.

What to do about it?

The paper's authors recommend raising standards for product innovation and working more closely with payers as they face pressures to hold down costs. They also want companies to treat new compounds as rare (don't take development success for granted), with focused investments that don't rely as much on speed to market, .i.e. actually create better products and understand more about their mechanism of action in treating disease.

Another recommendation: Play to win. This means using strategies like closely assessing the competition (to create novel products), seeking alternative financing and joint R&D efforts with other parties (including rival drug makers), and making everyone focus more on business development. (See Fierce Biotech).

Posted by Bruce Lehr Dec 4th 2011.

 

Those Returns On R&D Are Falling Fast

Here's one post (of many) reporting on the results of a new Deloitte study on the R&D productivity of the world's 12 largest BIG pharma companies.  As would be expected if you have been paying attention to talk of patent cliffs and dry pipelines, the results are not too pretty. 

Those Returns On R&D Are Falling Fast // Pharmalot.

Let me hit you with the Reader's Digest version of Deloitte's findings from last year:

• The average cost of bringing a drug to market rose by 25% to more than $1 B up from $830 M (note these figures are hotly disputed by others as "grossly inflated" and several posts on this site discuss the controversy)
• The number of late stage drugs in development dropped from 23 to 18 (22% decrease) per company on average
• Ten of twelve firms saw R&D ROI decline resulting in a group drop from 11.8% return to only 8.4%
• Two-thirds of the top 12 did realize "more value" from product commercialization than they lost in late stage failures (Thank God for minor blessings)
• Non-R&D costs declined across the top 12 to free up cash to go back into R&D

This analysis should be viewed as a snapshot and may or may not reflect a trend. Deloitee stated that more improvments need to be made, and suggested that "more collaboration" occur between companies to "pool" disease knowledge. In particular, sharing knowledge on failed molecules and approaches could be very helpful to industry learning. Drugmakers may also share "non-competitive" areas of R&D to reduce costs for all.  See more in PharmaGossip and Fierce Biotech.

Finally, In the Pipeline had an interesting post the same day talking about "what if" the principles espoused in Moneyball could be applied to the Big Pharma pipelines?  It's an interesting thought and one I'd like to see undertaken (at least do the math and assess predictive value as theoretical exercise).  Anyone got Bill James' phone number?

Posted by Bruce Lehr Nov 29th 2011

 

 

Novo Nordisk Stays True to China R&D Aims

Novo Nordisk senior execs state that their strategy to build a presence in China is centered on developing innovative new therapeutics. Staying true to that aim, they'll continue to steer clear of any big acquisitions in the growing Asian market.

Ronald Frank Christie, president of Novo Nordisk (China) Pharmaceuticals, says "We are not interested in bringing in generic (products). We are only interested in bringing new drugs to the market, to make a difference."

Its $100 million plan to grow a sizeable R&D program in Beijing and to boost the ranks of its Chinese scientists to 200 is its biggest research effort outside of Europe.  Recent market research indicates that the fast-growing number of diabetics in the country will help feed Novo's growth plans. The International Market Analysis Research and Consulting Group has estimated that the market for diabetes therapeutics will grow from $642 million to $2.8 billion in 2015.  Novartis also has plans to grow its manufacturing base in China. See Fierce Biotech.

As an aside, this is just another example of Western Big Pharma investment in China -- development and manufacturing.  It continually makes me question the wisdom of any pharma companies looking to eliminate China from their raw material supply chains.  It seems evident to me that China will become a major manufacturing center and a quality local supply chain will be needed to support this.  Efforts would be better placed to bring up local quality standards in manufacturing and quality assurance to support this obvious consequence (to me at least).

Posted by Bruce Lehr Nov 3rd 2011.