Central Labs West: Featured Annual Report: Navigating the Stormy Seas of Pharmaceutical Innovation – Tufts CSdd’s Annual Report on Drug Development

Kenneth I. Kaitin, PhD,
Director and Professor of Medicine, Tufts Center for the Study of Drug Development,
TUFTS UNIVERSITY

Kenneth has been with the Central Labs West conference for six years bringing information collected over the past year and to take a look at the direction the pharmaceutical industry will go through in the current year.

1. Current Environment
Patents are expiring – In the next 4 years the top ten products will total a loss of about 110 billion dollars in market share. Companies are looking to mergers and acquisitions as a way to rethink their model of innovation to avoid patent cliffs.

Marketplace is highly competitive

Market exclusivity periods have dropped – In the 1970’s it was about 10 years and this number has been declining. Time from 1st to 2nd follow ons has also declined steadily from the 1960’s where it was 16 years.

Public support has declined

****Total US healthcare expenditures is only about 10% - converted into 228 billion dollars and their spending growth is 4.9%.

Regulatory regime has changed - FDA has a very busy schedule and no longer has the time to go out there and evaluate the pharmaceutical industry

New drug approvals are not keeping pace with r&d spending. Investors don’t care that about your profits today, they care about your profits tomorrow and they are not confident that those profits will be there.

2. Up to date metrics

• Consistent declines of approval phases and clinical times are starting to go up again.
• Biopharmaceutical development times are increasing- avg times to bring these drugs to market is 8 years
• Why are there diff. among therapeutic classes? Longevity of treatment and how easily they are to measure.
• Overall clinical approval success rates for NCEs (New Chemical Entities) has dropped to 16%
• Capitalized cost per approved biotech product is similar to that of pharma
• Drivers of rising r&d costs – clinical trial size, late stage attrition, pat rec and ret, high cost of disc tech, market oriented studies, reg demands, etc.
• Business as usual is not sufficient anymore
• A merging of operational and strategic performance objectives

3. The evolving landscape for innovation – Growth rates in Asia and Latin America make these emerging markets new areas for companies to look to, to save money. The sponsor/cro relationship structures are also changes. The old model was to work with a provider that has transactional services where the new model is to partner with multiple FSPs and Alliances with definite advantages strategically for both parties. Demand for clinical

New R&D Strategies – new integration of operation and strategic industry

• R&D reorganization – more focused units, diversified functions and targeted medicines
• Partnerships – Academic institutions, PPPs and Patient Groups; large pharma/small pharma, pharma/pharma and others. Sharing activities and resources to get the best outcome
• Innovation Networks – FIPNets

Time cost and risk to bring new product to market continue to represent formidable challenges for drug developers – companies need to embrace change and the reorganization of partnerships will be the future of innovation.

Bottom line “Talk about change is no longer sufficient….embrace change and really look at different partnerships as the new outlook for innovation.”

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