Pharmaceutical R&D Experiencing Fundamental Shift

Big Pharma’s failure to develop enough new blockbuster drugs is combining with other forces to drive fundamental changes in pharmaceutical research and development, according to Deloitte. Chief among these will be the emergence of “NewPharmaCos” concentrating on genotyped market segments. The companies may be startups or spinoffs of existing pharma companies, Deloitte says in a new report The Changing Face of R&D in the Future Pharmaceutical Landscape.

According to the report, current R&D programs focused on developing a small portfolio of high revenue blockbusters will evolve to R&D programs focused on high efficacy treatments developed for smaller patient populations based on specific genotypes. Such treatments, and their higher demonstrated efficacy, may ultimately have the potential for higher per treatment revenues.

Looking at the issue historically, the report lays out one of the problems faced by today’s pharmecutical firms:

In a classic Catch-22 situation, the more effective companies were at developing such mass market blockbusters, the more effective they needed to be in developing even larger revenue replacements, as patents on existing products expired and markets were lost to generics.

R&D budgets have greatly increased since the late 1990s. "However, massive scale has not increased R&D productivity. FDA approvals of New Molecular Entities have at best remained steady, with only a handful of these approvals being truly innovative, first-inclass molecules. Despite recent attempts at outsourcing and other modes of increasing effeciency, results have been mixed, and a more “fundamental shift in the industry’s operating environment is under way."

Yet, while individual companies have achieved performance improvements in different aspects of R&D, no significant industry-wide gain is evident.

Phenotyping of diseases is being replaced by an understanding of disease at the molecular level. Segmentation of patients based on observable characteristics is being replaced by segmentation based on genotype (with efficacy assessed by related biomarkers). This change cannot be underestimated, Deloitte says.

Technological advances are increasingly providing companies the opportunity to link treatments and efficacy to genetically homogeneous patient groups.

While typical blockbuster efficacy rates range from 35 - 75 percent, genotyped market segments and biomarker-assessed responses promise treatments with significantly higher efficacy rates, possibly approaching 100 percent.

A critical determinant of financial success for these new entrants will be ownership of the genotype–biomarker combination that identifies high-efficacy treatments for a particular patient–disease state. Whether determined upfront, as in the case of Genentech’s (DNA) Herceptin® or Imclone’s (IMCL) Erbitux®, or retroactively in the case of Sanofi’s (SNY) Clipidogrel, this knowledge permits the evaluation of current and potential products to identify and fill possible treatment gaps.

Deloitte expects the future makeup of pharmecutical R&D to include:

R&D strategies that support the assembly of treatment portfolios for the entire disease life cycle.

Virtual, disease-specific R&D networks.

Virtual R&D processes with significant outsourcing to maximize flexibility and manage development risk.

Focused R&D programs based on genotyped patients/subjects and biomarkers.

Partnering and collaborative ventures to access disease knowledge communities.