Three Game-Changers For Big Pharma

In the April issue of Nature Biotechnology, two articles: “Can ‘double blockbuster’ strengthen Amgen’s backbone” and “India IP snub” highlight three game changers for Big Pharma. As monoclonal antibodies (mAb) move from new tech to mature tech, I see little difference between Amgen (AMGN) and Genentech (DNA) and the traditional big pharmaceutical companies. With or without generic competition, big biotech is also struggling with showing real clinical benefits and product life cycle management. The British are already challenging the cost benefit of many high cost biologicals.

The game changers:

1. The FDA is not looking favorably on me-too drugs.
2. The FDA is requiring “outcomes” based clinical testing, with exceptions only for critical need.
3. Foreign countries are not allowing patent extensions for minor product life cycle changes.

Amgen’s denosumab not only had to prove that it increased bone mineral density (BMD) substantially more than Fosamax, but also had to show a meaningful reduction vertebral, hip, and the combination of humerus, hip and radius fractures. Amgen will be conducting a 7700 person pivotal trial on cancer treatment induced bone loss patients. Before the Merck (MRK)/Schering-Plough (SGP) Vytorin ENHANCE study disappointment, an increase in BMD would have let Amgen pass. The FDA has fluctuated on how much additional benefit a me-too drug had to show in the past, but now appears to be demanding real improvement.

The last item is most interesting. India is not allowing drug patents to be extended based on minor changes. Courts refused patent extensions for Roche (RHHBY) and OSI’s (OSIP) Tarceva and Novartis’ (NVS) Glivec. India’s compulsory license [CL] also allows generics in urgent and emergency situations.

The implications are profound for the world’s largest branded pharmaceutical companies. New drugs must show real clinical benefit and frivolous patent protection is weakening worldwide. All of the current life cycle management games will be short lived; first in the developing world, then Europe and eventually in America.

Pharmaceutical companies will eventual specialize in either drug discovery or marketing. Clinical trials and approvals will overlap. Fully integrated companies will no longer be efficient enough to sell drugs at a reasonable price. Generics will actually become irrelevant when the marketers lower prices and keep manufacturing after patents weaken or expire. ISIS Pharmaceuticals (ISIS) said it best; they have too robust a discovery engine to bother co-promoting.

Disclosure: Author is long ISIS.

Comments

[Ketan Desai:]

The author is incorrect in stating that Amgen will have to conduct a fracture study (instead of simply relying on BMD) for Denosumab due to the Vytorin. Fracture studies are the standard in phase III osteoporosis studies. Look at the FDA guidance document:

www.fda.gov/CDER/GUIDA...

Also, look at Novartis' Reclast that also had fracture in its studies:

www.bio-medicine.org/m.../

Finally, Denosumab is not a me-too drug. It is an antibody - not a bisphosphonate.

2008 May 15 09:46 AM

[Tom B:]

It is sad the FDA has lost focus on it mission: bringing safe new medicines to patients.

2008 May 21 09:17 AM