Source: Calvero. http://bit.ly/dGrWW3
In a one-page article entitled “Research and develop” in The Economist’s publication “The World in 2011”, GlaxoSmithKline (GSK) CEO Andrew Witty outlined the challenges facing the pharmaceutical industry today, and what to do about them.
Mr. Witty began with a familiar catalogue of challenges, including patent expiries and competition from generics, pricing pressure due to government health care policy changes, and increasing caution by regulatory agencies such as the U.S. Food and Drug Administration (FDA) and the European Medicines Agency (EMEA).
At the same time as marketed drugs–especially blockbuster drugs that Big Pharmas have been depending on for much of their revenue–have been losing patent protection, the productivity of pharmaceutical R&D has been declining. Mr. Witty observes that as long as there is a gap between the number of marketed drugs that go off-patent and the number of new drugs coming out of R&D, the size of the pharmaceutical industry will continue to diminish.
This is being accomplished via mergers and acquisitions, as well as severe cuts in budgets and in workforces. These cuts have been affecting all functions of pharmaceutical companies, from R&D through manufacturing, marketing, and sales. Pharmaceutical mergers and acquisitions were much in the news in 2009, while budget cuts and layoffs have been prominently features of pharma industry news in 2010.
Mr. Witty said that going forward it will be critical to “get R&D right”–reverse the decline in productivity, improve success rates for regulatory approval, and to launch drugs that will have major impacts in treating disease, rather than just incremental improvements.
While the numbers of approved new molecular entities (NMEs) and novel biologics–especially breakthrough drugs–that have been launched onto the market has declined, the cost of R&D has been going up. The dramatic rise in R&D spending between 2001 and 2008 or so has been mainly due to the industrialization of drug discovery–the attempt to use genomics, proteomics, combinatorial chemistry, high-throughput screening, and other technologies to create large-scale, automated platforms for discovering drugs. Some large pharmaceutical companies even established what they called “drug discovery factories” during the heyday of technology-driven drug discovery. And one prominent genomics-based biotechnology company claimed that they were “industrializing biology”.
According to Mr. Witty, shareholders no longer will support additional monies invested in R&D without commensurate increases in productivity. Based on a rational allocation of resources, R&D should instead be cut. This, in fact, is what has been happening in much of the industry.
Mr. Witty sees two solutions to this dilemma. The first is to “create an environment in the labs that reflects the fact that discovering a drug is as much an art as it is a process”, and to combine this approach with the allocation of resources “only to where the prospects for success are greatest”. This would be combined with streamlining of drug development, especially by ending the development of “drugs which do not offer the prospect of being truly distinctive” (and, presumably, drugs that are likely to fail in late-stage clinical trials) early.
The second is to implement more innovative R&D partnerships, including with small biotech firms and academia, and such Big Parma-Big Pharma collaborations as the specialized HIV company VIV Healthcare, which was created by GSK and Pfizer.
Presumably, the various precompetitive collaborations between Big Pharmas, such as Boston-based Enlight Biosciences, would also be included under the category of innovative collaborations between Big Pharmas. Enlight was founded by venture capital firm PureTech Ventures, in partnership with Merck, Pfizer, Lilly, Johnson & Johnson, Novartis, and Abbott. Enlight’s goal is to “develop breakthrough innovations that will fundamentally alter drug discovery and development”.
Our take on Andrew Witty’s article
Anyone familiar with our consulting group, Haberman Associates, our publications (going back to 1999), or this blog, is no stranger to the type of solutions set forth in Mr. Witty’s article. In particular, see our 2009 article, “Overcoming Phase II Attrition Problem”, and our blog posts of February 19, 2010 and of July 20, 2009. For a more in-depth presentation, see our 2009 book-length report Approaches to Reducing Phase II Attrition.
The basic problem with “industrialized drug discovery” is not so much that it is expensive, but that it does not work. The reason for this is that a genomics-based “numbers game” approach does not give the fundamental understanding of disease biology, and the role of a target in a disease, that is needed for effective drug discovery. This is compounded by the usual mismatch between compounds created by combinatorial chemistry (another “numbers game”) and disease-relevant targets.
One needs to instead identify those targets and drugs that have the best chance of success in the discovery phase, mainly via focusing on biology-driven drug discovery (i.e., strategies based on understanding of disease mechanisms), coupled with smart (and target-focused) chemistry, whether based on traditional medicinal chemistry, natural products, or some of the newer chemical technologies that we have discussed in several articles on this blog. Even during the era of industrialized drug discovery, most successful discovery of breakthrough drugs has been via biology-driven drug discovery.
These approaches to drug discovery should then be extended into early-stage development, via employing early stage proof-of-concept (POC) clinical trials to weed out drugs and targets that do not achieve POC. In addition to discussions of POC clinical trials in our 2009 publications, we have outlined specific, sophisticated examples of this strategy in oncology, in our blog posts of October 13, 2010 and of October 25, 2010.
If a company moves toward a strategy of this type, it should not only result in improved effectiveness, but also in very significant cost savings. Moreover, the company should be likely to keep its best researchers, and to motivate them to do their best work and to learn and apply new ways of doing things, in collaboration with biotech and academic partners. However, if the company starts with an emphasis on cost savings and across-the-board R&D workforce reductions without considering R&D and partnering strategies, it will not have solved the R&D productivity problem. That was the main point of our February 19, 2010 blog post.
It is great to outline strategies that appear to be congruent with what has worked in drug discovery in recent years (e.g., biology-driven drug discovery, “drug discovery as an art”), and with some of the best thinking in biotech/pharma companies and of science and technology consultants such as ourselves. However, especially in the case of a strategy that can be outlined in a one-page article (even though we are sure that the article is based on more extensive strategic thinking at GSK), fleshing out and implementing the strategy is easier said than done.
Fostering a pro-innovation environment
Mr. Witty ends his article by saying that the pharmaceutical industry will look very different in five years than it does today. It “will need to put a premium on management and human capital, while operating in an increasingly complex social, legal, scientific and political environment”. Mr. Witty then calls on governments to ensure that pharmaceutical companies can receive a fair reward for innovation, so that they can produce the new breakthrough drugs that patients and physicians need.
This scenario echoes–at least to some extent–a recent speech by Lilly CEO John C. Lechleiter, Ph.D., which we discussed in earlier blog posts. In that speech, Dr. Lechleiter outlined the components of an environment that supports medical innovation. Among these components is what Dr. Lechleiter called “a larger ‘ecosystem’ that allows innovation to flourish”. Such an ecosystem would include an “atmosphere” that allows innovation to thrive, “nutrients” in the form of monetary investments, and the “seeds” of human talent in relevant scientific disciplines.
In his speech, Dr. Lechleiter called for “public policies that enable and reward medical innovation”. These policies would include those pertaining to benefit/risk assessments, reimbursement decisions, and prescribing guidelines. They would also include “creation of a systematic and transparent regulatory approach to assessing the benefits and risks of new medicines.” Dr. Lechleiter noted the ongoing discussions with the FDA on the Prescription Drug User Fee Act, which is up for reauthorization in 2012. He sees these discussions as offering an opportunity for a “real victory for innovation and for patients.”
In the United States in particular, pharmaceutical and biotechnology companies, working individually and through such industry groups as The Pharmaceutical Research and Manufacturers of America (PhRMA) and the Biotechnology Industry Organization (BIO), as well as other stakeholders such as universities, “disease organizations”, and patient advocates, need to advocate more effectively through the political process for policies that foster and reward innovation. This should be based on demonstrating to government officials and the public that the industry is making real efforts to improve the productivity of R&D to address medical needs.
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