Numerous people within pharma lament the existing challenges and appear back to a gilded era when blockbusters provided rivers of money flow and supported development based activities – each R&D and advertising. And however, could this present biotech’s greatest opportunity as an market?

We are all as well familiar with how the economics for huge pharma have changed in the final few years. Factors contain:

patent expiries (existing and imminent)
declining R&D productivity (as measured by far more dollars for fewer authorized items)
healthcare payor pressures as governments search for spending budget cuts in all places
paucity of future blockbusters in the pipeline
Biotech has normally been suggested as a saviour with the suggestion that a focused investigation style based on deep insights, rather than wide pools of area experience and serendipity, would lead to higher R&D productivity. Following over 30 years of attempting, there does not appear to be any conclusive proof that biotech’s study strategy has had any additional achievement. But, there is nonetheless result in for hope, though for reasons driven by necessity and economics rather than just science.

Biotechs by their nature begin out (and normally stay) as smaller, nimble organizations having to find a niche inside a a lot greater ecosystem. As with any small organism or business, you survive by getting really excellent at a focused region or developing niche experience. You basically do not have the resources to compete with the huge players.

Thinking about target markets, in spite of the top rated-line attractiveness of blockbusters, biotechs normally target niche indications. Though these may be small and initially only have sales prospective in the hundreds of millions of dollars, that can still make a massive distinction to a small business. The equation for big pharma is a great deal tougher as they need new drugs, for development or to replace patent expiries, to produce greater sales to move the overall performance needle. And yet some drugs which start off of in niche (or even orphan) indications, obtain approval and then widen their marketplace chance through label extension. Some examples incorporate:

Amgen’s erythropoietin stimulating agent, or ESA, franchise, like Epogen (also know as epoetin) and Aranesp. Epogen was initially authorized in 1989 for anaemia in individuals with finish stage renal disease, selling $one hundred million in 1989. By 1997, the American Society of Clinical Oncology (ASCO) and American Society of Hematology (ASH) have been thinking of an “proof primarily based clinical practice guideline on the use of epoetin in cancer sufferers”. Considering that Amgen had licensed non-chronic kidney applications to J&J (developed as Procrit), they further capitalised on increasing use of Epogen in cancer anaemia by creating Aranesp, approved in 2001. By 2010, Epogen and Aranesp had combined sales of around $5 billion, from Amgen 2010 10K SEC filing.

Other orphan drugs can end up being priced so richly that even these can lead to blockbuster status eventually. correlation coefficient is Genzyme’s Gauchers illness franchise and Cerezyme which has more than $1 billion in sales (and in no tiny part driving Sanofi-Aventis acquisition of Genzyme this year for $20 billion).

A different example of growth by means of label-extension use involves Cephalon’s drug for sleep issues, Modafinil or Provigil (trade name). This was originally authorized by the FDA in 1998 for enhanced wakefulness in patients with narcolepsy. In 2004, this label was expanded for approval to “increase wakefulness in individuals with excessive sleepiness (ES) related with obstructive sleep apnea/ hypopnea syndrome (OSAHS) and shift function disorders (SWD)”. Provigil sales had been $25 million 1999, the year of launch, and had grown to $1.12 billion by 2010. Nuvigil, a single-isomer formulation of Provigil, was authorized in 2009, and created to extend the sleep disorder franchise. This had 2010 sales of $186 million. Provigil and Nuvigil comprised about 46% of total Cephalon sales by 2010 (data from Cephalon 2010 SEC ten-K filings). Provigil’s growth by means of the company’s earlier history offered a substantial cashflow bedrock to allow further pipeline improvement. Interestingly, Teva is acquiring Cephalon for $6.eight billion. When one considers contribution to sales, and how its helped pipeline growth, Provigil has played a key portion in supporting this transaction.
Other factors supporting a niche focus consist of the growing hurdle with phase II failures. Reporting in Nature Reviews Drug Discovery, the Centre for Medicines Investigation identified that “Phase II achievement prices for new improvement projects have fallen from 28% (2006-2007) to 18% (2008-2009)”. In his blog reviewing what’s behind the phase II failures, Derek Lowe (In the Pipeline) notes that four therapeutic places accounted for more than 70% of the failures – cardiovascular, CNS, metabolic ailments (diabetes) and oncology. He recognises oncology and CNS as regular high risk locations and diabetes is a difficult properly-served industry with high current regular of care (producing the efficacy barrier greater). However in cardiovascular, he suggests staying away from the significant, clear plays:

…that’s interesting, because that area has traditionally had one particular of the superior trial achievement prices. Probably that one is also suffering from the regular of care being quite very good (and generally generic, or soon to be). So the high-results-price mechanisms of the old days are effectively covered, leaving you to try your luck in the riskier ideas, when nonetheless attempting to beat some fairly fantastic (and pretty cheap) drugs…